How to open an electrical store from scratch
If you are looking for an interesting retail niche that will always sell, then consider opening an electrical store. This option is suitable for settlements of any size, it does not require serious investments and quickly pays for itself with the right approach.
Tips for businessmen opening an electrical store
Electrical is an interesting and practical niche for retail. You will have customers every day: one needs to buy a light bulb instead of a burned out one, the second - a cable for connecting a washing machine or wiring, the third - carrying, the fourth - a lamp, etc. The assortment of a good store consists of 2-3 thousand products and fully covers the needs of people in electrical goods.
Let's take a look at some tips on how to act correctly in order to open quickly and make good profits. The options are as follows:
- If you do not have your own premises, then issue a lease, and do not buy out real estate. Thanks to this, you will save on start-up capital, and if the business does not go well, you can do something new without any problems.
- The wider the assortment, the more sales, do not forget about the Paretto rule. Try to expand the assortment, finding out what exactly the customers lack.
- You have to be well versed in the goods in order to be able to advise the client on the things he needs. No special knowledge is required for this, but try to understand at least basic concepts and terms.
- At first, you can work on your own to save on hiring a salesperson and get a quick return on your investment. Subsequently, it is better to hire employees to deal with the expansion of the network.
- Look for suppliers based on reviews and try to knock out personalized discounts from them as you become a big buyer. If possible, contact the manufacturer directly to avoid middleman chains.
Business Competitive Advantages
Before drawing up a business plan for an electrical store, you should consider what competitive advantages the business has. First of all, you need to choose the proposed opening location (we will talk about how to do this later), and study it for the presence of competitors. If they are, then be sure to visit stores and purchase several inexpensive products in them to understand exactly how they work, what assortment they offer, what advantages and disadvantages they have. Think about how exactly you can compete with them, what you can offer customers. Try to make sure that your assortment coincides with their assortment by no more than 25-30%.
Attention: the main competitive advantage of a business is its versatility. You can serve both the public and the contractors by offering them nice discounts.
How to open an electrical store
Many novice businessmen hesitate to open their own electrical goods store if there is competition in the city in the form of a hypermarket. But practice shows that the majority of the population prefers small thematic shops, and there are several explanations for this. Firstly, the very atmosphere in them is more friendly and informal. Secondly, in them you can get a normal consultation, compare products with different characteristics, etc. Thirdly, in such shops prices are often lower than in large markets due to lower rent, savings on personnel, etc. Therefore, we will consider how exactly to open a sales outlet and what needs to be done for this.
Registration and legal aspects
There is no need to obtain a patent or other permitting documents to open a sales outlet. You just need to contact your local tax office and register with it. Registration can be of two types:
Any new business must be demand driven. Businessmen wishing to engage in electrical work can be sure that their enterprise will be popular with both citizens and public and private organizations. But before starting a business, it is important to pay due attention to planning.
Electrical work: specifics of supply and demand
The operation of buildings of any purpose cannot do without electrical work, therefore, electrical installation companies are always in great demand.
On the video: Where to get clients for electrical installation
Electrical work mainly includes the following:
- laying electrical lines;
- bringing electricians from electricity sources to sockets, switches and other points;
- replacement, full or partial, electrical wiring;
- installation of the cable channel; dismantling of faulty wiring;
- fixing lighting devices, electrical equipment, including air conditioners and other systems;
- laying cables for telephone, television and the Internet.
On the video: Where to get orders for finishing and electrical work
There are two main areas of activity for an organization specializing in electrical work. The first includes simpler steps for connecting, installing and repairing household electrical appliances. This direction is good because it is in great demand, makes a profit, and at the same time is relatively inexpensive in financial aspects, while not being difficult to implement. The second type of work is more complex and involves the organization of the development of electrification systems for various construction projects and their further maintenance. The second option will be more interesting and profitable, however, for the development of a start-up enterprise, the first type of activity will be much easier and more economical.
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The wider the range of activities the company covers, the more demand it will be. But in order to understand what services the company will be able to provide immediately after opening and what financial investments will be required for this, it is necessary to draw up a detailed business plan. This document includes all the expenses that the founder of the company will have to bear on the way of its foundation and development. Taking this into account, they form a list of works that the company will offer to potential customers, calculate the possible profit and form a pricing policy. With proper planning, the payback period for a company created from scratch can be from 1 to 2 years.
In the video: Assembling the switchboard
When drawing up a business plan, it is imperative to study the existing market for electrical installation services. First of all, this is necessary in order to understand which services are not enough at this stage, and which are already in abundance. Thus, it is advisable to select those industries in which potential customers are most in need, and therefore will be in demand.
Opening an electrical goods store from scratch and making regular profits - is it a profitable commercial project or an enterprise doomed to failure? On the one hand, bulbs, even the coolest ones, often burn out, repairs require new lamps and sockets, and home craftsmen have stock of wires and cables. At the same time, electrical goods are not basic necessities, they are bought not so often.
Is it profitable to open an electrical store?
To understand how effective the business of selling electrical goods is, it is necessary to conduct a comprehensive analysis of the initial data, evaluate the available resources, and write out an approximate business plan. It is better to act consistently, following step-by-step instructions.
Information collection and data analysis
At the preliminary stage, it is important to honestly and fully answer the questions:
- What do I know about the market for lamps, cables and other nomenclature? How is the logistics, financial and legal activities organized?
- Who are my main competitors? What product do they offer? How do they advertise their retail outlets? Do they sell wholesale or retail? What additional bonuses are given to clients?
- Who is my target audience? What goods do they need? Where do you buy electrical goods now?
After evaluating the information received, you can make a decision. It might be worth working as a sales manager or getting additional economic education. For a person who knows the subject firsthand, it is easier to correctly determine the vector of business development.
The payback period, the formation of the client base, the amount of profit will directly depend on how competently you formulate the concept of your business, what competitive advantages you indicate.
Key questions to be answered in as much detail as possible:
According to experts in this industry, electricity is the blood of modern civilization. And it is difficult to disagree with this statement, because it is impossible to imagine those technological processes of modern life that do without the "current running through the wires." Thanks to this world order, there is a huge amount of equipment that tends to break down. Logic dictates that opening an electrical store is a good business idea. Let's take a closer look at this issue.
Wholesale, retail or both?
There is one proven rule of thumb in any commodity trade: 90 percent of revenue comes from 10 percent of customers. And only 10 percent of the revenue comes from the remaining 90 percent of customers. This axiom is also valid for an electrical store (albeit not in such a strict proportion).
Who will be your customers is one of the main questions that it makes sense to answer before starting any activities to create a company.
- Option one. Ordinary people who have something burned out (or broken), and repairing or replacing it does not require qualified assistance. The simplest example on this list is a light bulb.
- Option two. You are targeting a small wholesale buyer: small companies and private teams that carry out repairs in apartments and offices.
Coming back to the rule mentioned above. A regular incandescent lamp that you sell to a resident of the surrounding houses will make a profit, but it will be small. Even a hundred incandescent lamps a day will not allow the enterprise to reach the level of profitability. But 10 chandeliers sold per day will have a much more serious economic effect.
How to determine the main consumer and product group that needs to be put on the shelves? At the initial stage, it is worth doing a simple competitive analysis - observing the retail outlets of electrical goods that operate in the area of the proposed location of the business.
Look at the assortment and people who are customers (professionals or ordinary people), what they buy, how the calculation is done. How well do customers know the terminology and understand the product? These nuances will give an idea of who to focus on in your case. Information of this kind is important and, importantly, will not cost a dime.
By the way, let's reveal a trick that allows you to find out the traffic of any outlet with an accuracy to the client. After opening, buy some small change in this store. Do the same before closing. The cash register receipts always indicate the serial number of the document. Subtract the first number from the second and get the number of sales that occurred that day in the store you are interested in.
Assortment or phone with a parrot
Some novice entrepreneurs may have a logical question: why trade in goods that give a minimum margin and only 10 percent of revenue, spend working capital, and occupy warehouse space. After all, you can concentrate on high-margin products - the same chandeliers.
And this is a mistake that can lead to business failure. Visit the online forums of professional electricians. There are discussions of shops everywhere and a lot of useful information can be gleaned here. The most common thought is:
“The store must have a FULL range of hot items. Sometimes we buy a cable in one place, machines in another, sockets in general on the other side of the city. When I find a store where I can buy everything at normal prices, I always go only there, ”says one of the users, a professional electrician.
The cutoff of electricity practically paralyzes modern life. Light, household appliances, transport, machine tools, equipment stop working. An electrical grid is always needed - a complex, capricious design that must be professionally installed. The business service wiring in the apartment is in demand and has the potential for steady development.
When there is no electricity, the refrigerator does not work, there is no light, you cannot watch TV, listen to music, or do laundry. Where the stoves are powered by electricity, you cannot cook. A business that allows you to avoid possible breakdowns, to equip a new apartment with high quality will always be in demand.
- individual entrepreneur;
- legal entity.
It is easier to issue an individual entrepreneur, you will have to pay less taxes. The enterprise is more costly, but it inspires more confidence among entrepreneurs and government agencies. The reason is the presence of a statutory fund, other requirements concerning legal entities. The tax inspectorate, seeing transactions between enterprises, asks fewer questions compared to services provided by individuals. When receiving government orders, LLCs are more likely to win a tender than individual entrepreneurs.
When opening a legal entity, you will need a charter, you need an authorized capital (more than 10,000 rubles), minutes of the meeting of founders, a receipt confirming the payment of state duty, and other documents.
Licensing for the provision of electrical installation services has been canceled. However, servicing capital construction projects, it is necessary to become a member of an SRO, to join a specialized organization that actually controls the quality of the electrical work performed. Business firms serving residential apartments, houses of individuals may not join it. It is possible to carry out the electrical installation of a one-room apartment without participating in this organization.
Although there is no compulsory license, it is necessary to obtain an admission using electrical equipment, having certain qualifications. A specialist in this area must have a specialized education, a third admission group, performing such work. When receiving qualification documents, you need to know:
- electrical engineering ;
- be able to use electrical installations, know the maintenance procedure;
- safety rules;
- help rules victim of electric shock.
After listening to specialized courses, they receive the necessary admission group. When setting up a business, the manager may not have the required professional qualifications. Employees are obliged to comply with the specified requirements. Experienced businessmen believe that the selection of employees is the most important and responsible business. The availability of the necessary documents is not enough to guarantee the reliability and quality of the hired employee.