How to Start a Small Grocery Store

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Grocery stores are the heart and soul of many communities.

You yourself probably have a favorite store that you like to pick up groceries from.

But what about having your own small grocery store?

The modern-day grocery store covers a wide range of products. This ranges from the food itself to cleaning materials and self-care items. In fact, owning your own grocery store can be very lucrative.

There are some things you should think about before getting into the grocery stores business though.

What You Should Consider Before Getting in the Grocery Store Business

If you are someone that enjoys point-of-sale work, managing, or handling food, a grocery store can be a good option.

Of course, with the nature of grocery stores, business will be competitive. If you have a good eye for business and know how to move produce, then you may be well suited to this business model.

More than anything though, to own a grocery store, you need to know food very well.

You should also have a passion for providing the best produce possible for picky customers buying their groceries.

Grocery stores make up the biggest share of food sales in the US. Despite this, food retail is classified as a high volume, low margin business.

Competition is high, with much of it coming from providers of food that are well-established. In order to not get overlooked in the market, small grocers have to come up with a niche angle in order to stand out.

Access to food is taken for granted by many people. Everyone needs food to survive. Yet there are communities that lack their own food markets. People in these communities may travel to towns or areas nearby, sometimes further to buy food.

To make up for time and distance, a lot of people shop at convenience stores. These types of stores, while useful, prioritize pre-packaged foods and have higher prices.

Fresh foods, while they provide the best nutrition, can be difficult to keep profitable amid the pressures of wastage.

This doesn’t mean that owning a grocery startup business is unattainable, however.

Many smaller grocery stores thrive in their respective communities. This is possible if the store in question has done enough research and created a business plan.

Steps to Start Up Your Own Small Grocery Store Business

Most revenue generated by grocery stores come from processed foods. These stores still make plenty of money from fresh produce, meats, and alcohol too.

Grocery stores need prices that are competitive, while still allowing for a decent profit. Having specialized amenities can give owners with smaller grocery stores a competitive advantage.

Consistent service and great products can make a store the preferred shopping space.

Finding the most lucrative places and targeting those people that live there can be a good way to make enough money.

In terms of a start-up investment, prospective grocery store owners will need to put down between $70-$100,000 on equipment.

Point of sale systems for supermarkets generally accounts for another $40,000 in costs.

The inventory itself can be in excess of $150,000. Factoring in other expenses, the total cost can be in excess of three times the inventory price.

Also, don’t forget to calculate your legal costs. Get your business an LLC registered and avoid any legal issues in the future. Generally, forming an LLC can cost you around $50 – $300. But if you do it with a northwest registered agent, you can get it at as low as $39 + state fee.

However, if you are ready to take the plunge, make sure you are set up legally and have carried out the following steps.

Business Plan

Having a proper plan is vital for your success as a business owner. A few things aspiring grocers need to take a look at include all your primary costs your target market in this timescale you have to break even.

Have a Legal Identity

Creating a business entity make sure to exempt from being liable personally in the event your grocery store is sued. This can be one of three types of partnership for a grocer.

Sole proprietors and general partnerships lack liability protection but have direct access to the business. Limited Liability Partnerships are based on one person running operations while investors contribute to the financial side of things.

Handling Money

You should also remember to register for taxes. Opening a business bank account, setting up accounting and having the necessary permits is also important. 

Proper Branding

Branding your store and finding the best location are also two very important factors. Know your market and the kind of angle you want to go for can help you to get a better idea of how to define your brand.

The location also has a very strong effect on the revenue that you bring in. Researching local competition can also be vital to how much you sell.

Equipment

In terms of equipment, you need to get hold of a cash register as well as utilities to process cards. Freezer and refrigerators are needed for perishable items.

Shelves are required for other types of products. Finally, baskets are necessary for customers to use while browsing.

Suppliers

Finding a good network of distributors to get products for your store can take a bit of legwork. It is, however, one of the most important aspects of setting up your grocery business.

You can use wholesale suppliers to form the backbone of your products, or you could go for a price club. You’ll have to transport items there yourself but you can save money.

You can also get help with delivering supplies by using management services or logistics companies.

Making sure you have a reliable stream of products is key to running a business carefully.

Advertising

Advertising your store starts with item placement. Many supermarkets and grocery stores put their most popular products at eye level. This encourages customers to buy them.

Overall, stores need a logical way of presenting items so they’re easy to find.

The internet means that having a strong web presence lets prospective customers know about your store before they visit. With the rise of social media, you can connect with grocery store customers ahead of your store being open. Build your supermarket brand to stand out from the rest!

It’s also smart to sell grocery online these days since so many customers are ordering groceries from smartphones and computers instead of in-store.

Owning a Successful Supermarket Store

Even though grocery stores have tiny margins, they make a great profit due to the volume of sales. Some grocery stores can make over a quarter million annually.

This does, however, depend on the area, the niche and the size of the supermarket store. Of course, investing in a small grocery store isn’t cheap.

Taking your time to build your grocery store business with the money you put in can take time to see returns. But having a business of this kind can be very rewarding for those involved.

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