How do I open a Convenience Store?

Hello everyone, as promised, I'm writing this post to share my experience opening a convenience store in Canada .

I have a 20% stake in a convenience store with a friend in the US and over 33% stake in two other convenience stores in Canada, located in Downtown Toronto's City Place area, with two other Indian partners. My time constraints don't allow me to manage everything directly, so I only invest capital. Is it profitable? Yes, it is. I wouldn't invest if it wasn't profitable; otherwise, I wouldn't waste my money.

So how do you make it profitable? Four years ago, each of my shares was worth 75,000 Canadian dollars. I didn't do the work, but I reviewed the accounting records to see if any changes were needed. And I even sourced some of the goods myself, for example, recently I've been selling face masks, gloves, and even nail polish through the business.

Now, getting to the main point, this article applies to both the US and Canada. But Canada has the advantage that lately, with the opening of convenience stores called " C-Stores " (I'll abbreviate that), it's even possible to immigrate to Canada. Last year was the peak for C-Stores in both the US and Canada because of the pandemic; people needed to buy personal items but didn't want to travel far, preferring to buy things near home. Because C-Stores opened late and weren't forced to close, they made a lot of profit last year, especially selling hand sanitizer, face masks, and toilet paper.

So why should we open a C-Store?

Before taking steps to learn more about how to open a convenience store, you need to carefully consider the pros and cons of opening a C-store. I've summarized the main points below.

Advantage:

• Be your own boss - Join the ranks of 32 million small business owners in North America.
• Stable customer base - Generally, convenience store customers are based on neighborhood or location and become regular visitors. Therefore, they should be opened in densely populated areas, especially those with a high concentration of immigrants, buildings, and condos.
• Financial stability - Although profit margins may sometimes be low, like selling a lollipop for only 75 cents, the income is stable because they sell a wide variety of goods. Convenience stores generally don't experience high financial risk; they have ample capital to buy in bulk, and if they run out of money this month, they buy just enough. This low financial risk also limits bankruptcy. If they stop running the business because they're tired, selling is also easy.
• It's relatively easy to start and open a store - Compared to many businesses like restaurants, cafes, bubble tea shops, and bakeries, a C-Store convenience store is quite easy to set up once you've determined what you need. It doesn't require skills like cooking pho, baking, or knowing how to make coffee…
• The main goods imported are sanitary pads, toilet paper, milk, instant noodles, medicine, lottery tickets, daily necessities… you'll see this clearly when you visit; I'm listing them all in detail.
• These things are easy for students, your children to help sell, you can hire staff, or you can do them yourselves.

Disadvantages:

• High employee turnover - Employee issues can eat into profit margins because if you hire two people, the salary is high, but if one is sick that day, there's no one to replace them. Or you might encounter bad employees: making mistakes, stealing inventory, and illegal activities like refusing card payments when selling alcohol/cigarettes, etc. Dealing with cash payments and embezzling cash. C-Stores generate a lot of cash if you have good prices and are the direct owner. I'm telling you everything so my fellow countrymen know. Many people already know this, but many others don't.
• Security and safety issues - Convenience stores have historically been targets of crime and theft, for items like cash and cigarettes.
• Inventory Losses - Convenience stores are particularly vulnerable to inventory losses due to theft and damage from expired or damaged products. Selling food items should be limited to avoid lawsuits; when buying biscuits, chocolate, or even orange juice and other juices, remember to check the expiration dates. These challenges require meticulous management to check incoming stock and expiration dates.
• C-Stores have long opening hours – If you're an independent owner, you might find yourself working long hours to maintain profitability (working for profit), especially in the first 2-3 years of business. Many families choose to rent two floors of a building and sell on the ground floor for convenience in managing the business. It's also convenient for a couple with young children to run the business. They can earn around 7-8 thousand a month after deducting all expenses. This is for small shops, of course. We'll talk about larger ones later. Many C-Store owners open their shops late at night or until midnight, 7 days a week.

What are the startup costs to open a C-Store?

It can typically cost between $120,000 and $300,000 to start a convenience store, depending on size and product range.

The cost of building a convenience store is much simpler than a restaurant. It's around $50,000-$70,000 because you need a restroom, electrical system, shelving, and large-capacity refrigerators. A point-of-sale system… Plus, new merchandise is expensive. Some convenience stores have investments of up to a million dollars (if you have a deep pocket). The majority of these startup costs are invested in initial inventory, rent, deposits, equipment, and construction.

It's important to remember to obtain an operating license.

Is owning a C-Store convenience store profitable?

Ah, this is the million-dollar question!

Can you make a million dollars owning and running a convenience store? Well, that depends on a lot of things.

Historically, I know of 8 convenience stores, and my friends know of 8 in particular. The average annual revenue for some stores reaches 450,000 VND, while larger, more upscale stores earn up to 1 million VND. Smaller stores earn around 250,000-400,000 VND per year.

Convenience store owners must constantly manage high fixed costs including rent, inventory, and operating expenses such as utility costs while optimizing product and pricing, and attracting pedestrian traffic to make purchases.
The key to maximizing your profit margin is knowing your product's profit margin and combining and displaying the right products in your store.

Products should be neatly and cleanly arranged, with clear signage to guide customers in their selection.

Most people assume that cigarettes and alcohol are the most profitable. That's not true; in fact, health and beauty products are also very profitable, with profit margins of around 25-40%.

Have you noticed that Shopper Drugs Mart-Rexall has been selling milk in recent years? They saw that C-stores were attracting more walk-in customers because of the convenience of selling large, liter-sized bags of milk at a cheaper price than Walmart.

Just a small example: some products are intentionally sold for less than $1 to attract customers. When you go in to buy a carton of milk, you'll glance at many other items you need. You might think you'll spend $5 on milk, but you'll end up spending $10-15 or even $20. Plus, there's the lottery ticket too. I also sell fresh milk, eggs, toilet paper, and instant noodles very cheaply to increase customer traffic. For example, if you go to Walmart or Costco, you might intend to buy something for $10-$20, but it's hard to control your spending because of the demand. It's the same at C-store.

Many shop owners invest in ATMs in their stores so customers can pay with cash. There are many ways to do this. I'll talk more about it at a workshop. Feel free to ask me questions and I'll share more tips.

How much does a convenience store owner earn annually?

According to Indeed.com, the average convenience store owner takes home $66,000 per year. That's after accounting for all expenses. If the owner is the one doing the selling, that's already included in the employee costs. That's for a small store; larger stores will earn more. Larger stores typically make a profit of around $80,000-$120,000 per year.

What are the options for opening a C-Store convenience store?

There are three options for owning a convenience store:

1. Buy an existing storefront from its previous owner.
2. Open a business by purchasing a C-Store franchise.
3. Open a convenience store, set it up yourself.

I prefer buying a franchise the most among the three options because it's less of a headache. I don't have to meticulously worry about every single candy, or find the cheapest suppliers for the merchandise.

Buying a franchise?

A franchised convenience store offers many benefits, including an established brand.

The parent company provides you with instructions and procedures, inventory lists, and covers marketing and advertising expenses across the territory and through mass media.

When buying or opening your own store, you will, of course, have to pay for all these services from your (already thin) profit margin.

I like franchising because it offers many advantages compared to starting a store from scratch, such as:

• In general, startup costs are lower.
• Faster time to generate profit (in general)
• Guidance and support from the franchisor for both startup and operational activities.
• Cross-border marketing increases the likelihood of customers finding the store. And especially, my family and relatives have moved here because I bought the store and gave them shares to register under their names so they can bring family members over to work. The application process is also easier with C-store Franchise compared to opening your own store.

10 things to keep in mind when opening a C-Store.

• Step 1: Develop a business plan for the store.
• Step 2: Choose a good location.
• Sit outside and count the customers for a few hours (or pay someone to do it).
• Ask the current shop owner about their revenue.
• Ask other businesses nearby if the shop would be doing well if you bought the old one.
• Step 3: Focus on financial management. Carefully check inventory, including incoming and outgoing goods, stock levels, and cash flow.
• Step 4: Offer gifts to your customers, especially long-time customers, and occasionally offer discounts to retain them. Word-of-mouth spreads faster than a rocket.
• Step 5: Keep the shop clean.
• Step 6: Monitor your competitors. If the store in the lower area sells coffee for $1.99 and you're selling it for $2.99, you should consider that you need to offer significantly better coffee than your competitors and have a price incentive to attract customers. In the convenience store business, customers pay attention to price because they know they're paying for convenience at a good price.
• Step 7: Invest in technology and a good point-of-sale (POS) system. For effective management, a point-of-sale (POS) system is necessary to track inventory and income. A POS system helps you manage and monitor sales, calculate store profits, etc. Additionally, you'll need to invest in modern security and anti-theft equipment such as CCTV cameras, burglar alarms, and POS monitors to prevent losses from having staff manage the store themselves. You can use a POS system for monitoring.
• Step 8: Understand your customers. Greet customers warmly upon arrival and ensure they leave feeling welcome.
• Step 9: Understand the product you sell and what consumer buying trends are.
• Step 10: Manage your purchasing (supplies) effectively.
• The store owner manages purchasing, and a crucial part of running a convenience store is managing inventory. Good inventory management boosts your profits.
• If you buy a convenience store, you will inherit a set of relationships with suppliers and related products, which is a good thing because over time you will have wholesale connections.
• Remember that for the past year, face masks, hand sanitizer, and toilet paper have been selling like hotcakes at C-Stores, making more profit than selling cigarettes.
• Stay updated on what's selling and what's not, and keep an eye on emerging trends like CBD products, ready-to-eat meals, and delicious espresso coffee.

Those are some experiences I remember right now to help you get started. Many of you have also asked me why I like this type of store; it's because I brought my family, especially my relatives, here by buying convenience stores. Fifteen years ago, many Indian families settled here this way. I also brought my relatives here in the same way.

I'm planning to hold an online seminar soon to share more information - if you're a family member or individual who hasn't yet moved to Canada and dreams of settling there, please join via this link. You can do business and settle down at the same time! Our team will contact you within 48 hours to support fellow Vietnamese in Vietnam who are considering moving to Canada this New Year. Please join via this link.
https://keyapply.com/pages/kinhdoanh-dinhcu

It's really a good idea to invest in opening a convenience store for the local people, especially small families. We can hire extra staff for the evening shift and divide the work among them. Sometimes, when things get really tough, we can close for a little while without any problems.

So I'll just write down everything I remember. If anyone has any further questions, feel free to comment. I'll reply as soon as I have time.

Wishing you all good health. Thank you for always accepting my sharing.

Dear,

Page Lưu

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