Business idea: how to open a building materials store
Reviews for a business plan for a building materials store ()
The main thing about the business plan of a building materials store in the year
Opening a building materials store: choosing a format
Building materials are traded everywhere today - in the market and wholesale base, in shopping centers and luxury stores. The demand for these products is high, which is what many businessmen use. If you have an idea to open your own hardware store business, be prepared for very serious competition.
The algorithm for opening a building materials store is practically no different from the organization of other retail outlets. Registration as an individual entrepreneur, selection of suitable premises, purchase of equipment for the store and, in fact, filling it with appropriate goods. But the first thing that interests a novice businessman is the amount of profit that he can count on when opening a business selling building materials.
The main factor influencing these numbers is the store format. By organizing a standard retail outlet in the market, an entrepreneur can earn no more than $ 500 a month. The owner of a large building materials store calculates his profit in tens of thousands of dollars. A novice businessman should clearly define what kind of return he expects from creating his business, and how much he is ready to invest in it.
The volume of the building materials market today is so great that not every businessman can find a buyer. The peculiarities of the trade in building materials are such that, as a rule, large areas are required for their implementation, but a novice entrepreneur is not always ready to spend significant sums on rent or purchase of such premises. At the same time, the success of the event depends on how correctly the format of the future outlet was chosen.
This can be, for example, a small pavilion or kiosk in the market with an area of no more than 100 sq. meters. The assortment of goods of a small building materials store does not please with a special variety, and usually consists of 15-20 items. For trade in this case, you can use used equipment - counters, display cases and racks for building materials. But, having decided to open a small building materials store with an area of up to 100 sq. meters, you should not count on a good profit.
Entrepreneurs who plan to create their own business by opening a building materials store on an area of at least 200 square meters find themselves in a more advantageous position. meters. The assortment of goods in such a store increases to 50-70 items, which gives the buyer a choice. And, finally, the most profitable scenario is the opening of a solid shopping center selling building materials. The optimal area of a retail space for building materials is from 1000 to 2500 sq. meters.
The final choice of a businessman depends on the amount of start-up capital and personal ambitions, which, as a rule, are supported by a professional example of a business plan for opening a building materials store with ready-made calculations. Relying on it, it is much easier for a businessman to assess the location of a hardware store, determine how profitable it is to take building materials for sale, and in what cases it is recommended to start by opening a modest building materials kiosk.
Opening of a building materials store: collecting documents
Starting a building materials store from scratch is not an easy task even for an experienced businessman. What can we say about aspiring entrepreneurs who have to deal with such a prose of life as the preparation of documents required to obtain a trade permit!
The first steps in such a matter as opening an enterprise - a building materials store, are being made in the direction of all kinds of instances that must be passed at the stage of preparation for creating a business. The opening of a construction store involves visits to the tax office, local self-government bodies, Rospotrebnadzor and Pozhnadzor.
Despite a rather serious recession in the economy, revenues from the construction business grow by 15-20% annually. Accordingly, building materials are in great demand. Recent studies have shown this. Therefore, many people began to think about opening a hardware store. A building materials store is one of the best cash investments. However, such a business has its own characteristics, which we will tell you about in our article.
Business plan for opening a hardware store
Before embarking on the implementation of the most daring ideas and undertakings, it is necessary to draw up a competent business plan that will allow you to fully experience the scale of future investments and the amount of profit. The construction business is no exception. Consider what it takes to open a hardware store.
Upcoming expenses may look like this:
- Paperwork and bureaucratic costs - 10 thousand rubles.
- Payment for rent for the first month - 60 thousand rubles.
- Purchase of the necessary equipment (for the store to function) - 80 thousand rubles.
- Purchase of the first batch of goods - 600 thousand rubles.
This list shows that the initial costs will be about 750 thousand rubles. In addition, it is worth considering the upcoming monthly expenses:
- Taxes depending on the form of ownership - from 10 thousand rubles.
- Monthly rental of premises - from 60 thousand rubles.
- Salary for employees - from 50 thousand rubles.
- Shop advertising - from 20 thousand rubles.
As you can see, monthly expenses will be about 140 thousand rubles, but these are only approximate amounts. In each case, they can be significantly higher. To cover them, you need to set an appropriate markup on the item When assigning it, be sure to consider the prices of your competitors. If you charge too high a percentage, customers will bypass your store. Typically, the mark-up on construction products ranges from 45% to 65%.
Taking into account the margin, the net profit from such a business is about 450 thousand rubles a month. However, it should be borne in mind that in the first months the flow of customers is expected to be very meager, since not everyone will know about the opening of a new home improvement store. Therefore, it is worth paying special attention to favorable pricing policy and good advertising, so that the number of buyers increases every day. Full payback occurs after about a year of successful work.
Proper store location is at least 50% success rate. Therefore, it is worth approaching with great responsibility the choice of premises for a hardware store. In order to maximize the profit from the business, it is necessary to pay attention to the specific nuances that the premises must correspond to.
SUMMARY OF THE PROJECT
The goal of the project is to create a trading enterprise, a wholesale base of building materials in Simferopol, Republic of Crimea. It is assumed that the region will develop actively in the coming years, associated with government infusions, as well as with an increase in its popularity as a resort. In this regard, an increase in construction volumes is expected, and, accordingly, an increase in demand for construction materials.
The main difficulties in the implementation of the project are related to the establishment of supply chains - the search for a manufacturer of quality materials from the assortment under consideration, as well as the organization of efficient logistics. First of all, attention needs to be paid to the organization of the transportation of goods through the Kerch Strait, which so far is carried out only with the help of a ferry crossing.
The project does not require the use of special technologies or the involvement of highly qualified specialists. Investment costs amount to 11,855,000 rubles.
Key indicators of economic efficiency of the project are given in Table. 1.
Table 1. Key project performance indicators
COMPANY AND INDUSTRY DESCRIPTION
The project is supposed to create a wholesale base of building materials in Simferopol. The main area of work is lumber; in addition, it is planned to expand the assortment due to sand, crushed stone, cement. At the first stage, such a narrow focus will allow to consolidate the volume of purchases and get a more favorable entry price. In addition, it will simplify logistics and warehouse management.
The territory of the base is an unheated warehouse with convenient access roads for heavy vehicles and a covered area; the presence of a railway dead end is also provided, i.e. delivery of goods will be carried out mainly by rail. In the immediate vicinity of the warehouse there is an office to accommodate administrative and sales personnel. Warehouse area - 100 sq. ., area - 250 sq. ., office area - 20 sq. ...
The main competitive advantage of the company is working directly only with manufacturers of building materials, due to which it becomes possible to provide a competitive price and uninterrupted supply of material in any volume. Narrow specialization, as mentioned above, also gives advantages in price, logistics and business, that is, it reduces operating costs, making the enterprise more profitable.
Today, the Crimean Federal District is a very attractive area for investment. The main source of income for the region is tourism and beach recreation. Due to the blocking of such popular destinations among Russians as Egypt and Turkey, one should expect extremely high interest in domestic tourist destinations. In addition, the popularity of Crimea as a resort is ensured by its political role. At the same time, the entire infrastructure of the peninsula is in a state far from the average for the country as a whole. Mass construction of hotels and tourist infrastructure facilities begins, primarily at the expense of private investors.
What business is worth starting in a crisis?
Despite the abundance of building materials stores, customer demand is not fully satisfied.
Before we start
First, you should familiarize yourself with the types of building materials stores and choose the option that suits you best in terms of financial capabilities.
- A small shop focused on small retail sales. The assortment consists of 150-300 items of the most popular goods. Enough room of 100 m². The starting capital is $ 10,000 - $ 15,000, but with such an assortment of quick payback and high profits, one should not expect.
- For a store with a volume of 4-6 thousand items, a room with an area of about 250 m² is required. Start-up capital - $ 45,000 - $ 55,000. The return on investment will be faster, because customers will be able to make complex purchases of most of the materials and decor elements needed for construction and renovation.
- A large supermarket with tens of thousands of items of goods will require a floor space of about 1,000 m². Starting capital - $ 250,000 - $ 300,000. A large assortment brings solid profits due to impressive turnover. The presence of a warehouse will simplify product demonstration, order picking and delivery. Such shops have the opportunity to work with wholesale buyers.
- Small wholesale base. To organize such a store, retail space is not needed - a warehouse with a small office space is enough. The assortment consists of popular and fast-selling building materials and products that do not need to be displayed. It will not be possible to set large markups, the profit is achieved due to a large turnover. Opening a small wholesale base will require $ 150,000 - $ 200,000.
The next step in starting a business is studying demand and competition. Put your maximum effort and patience into this process. Reliable information and detailed analysis will help you choose the best assortment and store location, prevent some risks and draw up a competent business plan.
The search for suppliers should start before the store opens. A beginner needs to make an advance payment for the product. Having gained the reputation of a reliable partner, you can count on preferential terms and delivery without prepayment.
If the starting capital does not allow opening even a small store, it makes sense to start looking for partners. For a beginner, the option of purchasing a franchise is possible. Among the advantages are minimal start-up costs, powerful diversified support for a large company. The downside is that you cannot form the assortment at your own discretion and you lose a certain part of the freedom in entrepreneurship.
Despite the demand for building materials, competition in this area is high. To survive and develop actively, you need quality goods, the highest level of service and a competent pricing policy. Do not strive for high markups, focus on increasing turnover.
Invest the first profits after paying salaries and other operating expenses to expand the range. Large retailers benefit from allowing customers to buy as many items as possible in one place.
There is seasonality in this direction. Think in advance of the assortment for the recession period or organize discounts - this will allow you not to lose profits.
SUMMARY OF THE PROJECT
The goal of the project is to open a construction store for retail sale of building materials in a city with a population of over 1 million people. The target audience of the hardware store are retail buyers, 60% of whom are the male population of the city aged 23 to 65, as well as wholesale buyers represented by construction and assembly teams with whom cooperation agreements have been concluded.
For the implementation of the project, a 200 m2 retail space is leased, located on the central street of the dormitory area of the city, in the immediate vicinity of residential buildings. The sales area is 130 m2.
The volume of the initial investment is 1 408 000 rubles. Investment costs are aimed at the acquisition of equipment, the initial purchase of goods and the formation of working capital, due to which losses of the initial periods will be covered. The main part of the required investments falls on commodity stocks - 50%. Own funds will be used to implement the project.
Financial calculations cover a five-year period of the project. According to the calculations, the initial investment will pay off in the fifteenth month of operation. The industry average value of the payback indicator is 10-18 months. The monthly net profit of the project is about 120,000 rubles. For the first year of the project, the net profit will amount to 1,082,000 rubles.
Table 1. Key project performance indicators
The dynamic development of the construction industry and the real estate market in Russia has led to a high demand for building materials. This trend was accompanied by an active growth in the number of home improvement stores and hypermarkets. The building materials market grew by 20% annually and by 2021 reached a volume of 1.46 trillion. rubles. The trend changed in 2021 against the background of the general economic downturn, when household incomes fell by 6.5%, and residential real estate commissioning - by 9%. In 2021, a record fall in the market of construction and finishing materials was recorded in recent years - 11%. At the end of 2021, the market volume amounted to 1.068 trillion. rubles. However, when compared with other segments, the building materials market, with a 5% decline, does not feel so bad - for example, the food segment sank by 10%.
The dynamics of retail trade in construction and finishing materials has also been subject to decline in the past two years. The most vulnerable were materials for construction and rough finishing - a decrease of 16.7%. The market of finishing materials showed itself the most stable, having decreased by only 0.3%. In other words, less construction has begun in Russia, but repair work has not been abandoned.
Figure 1 - Turnover of retail trade in construction and finishing materials
According to forecasts, the market of construction and finishing materials will be able to return to its previous volume no earlier than 2021. The recovery will begin in 2021, but it will be quite slow - only 2-3% per year, which is explained by the significantly reduced purchasing power of the population and the falling business activity. During this time, small and ineffective players will leave the segment, while large construction retailers will maintain their volume at the same level.
Today there are more than 1000 universal and specialized chains of construction stores on the market, while the top 10 largest retailers account for almost 25% of the market. The 2021-2021 crisis consolidated the success of large construction retailers. Increased competition in the market and intensified regional expansion of market leaders led to a decrease in traffic and deterioration in the financial condition of other Russian retailers. The difficulty of competing with construction hypermarkets lies in their aggressive pricing policy and a wide range of products covering all stages of construction and renovation. In this regard, since 2021, among construction stores, there has been a tendency to change the structure of the assortment with the replacement of building materials with goods for the home.
Thus, opening a hardware store has its advantages and disadvantages. The main advantage is the high demand for the product, which guarantees a stable income. According to statistics, the average family in Russia makes repairs every 5-7 years. This does not include purchases to maintain repairs. The profitability of a hardware store can be 30-32%, depending on the margin on goods.