If you’re feeling overwhelmed at the thought of writing a business plan, this might put your mind at ease.
Paula Nelson, business pioneer and speaker, once said, “The best business plans are straightforward documents that spell out the who, what, where, why, and how much.”
Keep it simple and start with quality in mind. Putting quality first is a solid strategy when writing a business plan. You’ll have a document you can show anyone, and they’ll understand what you’re trying to accomplish and what your path is to get there.
A successful small grocery store might be a labor of love. You might notice a gap in the market, or perhaps you’ve always wanted to have your own business. Whatever the reason, you need a quality business plan to secure a loan or funding, and to use as a blueprint for opening and running your store.
We want you to succeed, so we’ve highlighted six mistakes you should avoid when writing your business plan. Let’s dive in!
6 Mistakes to Avoid: Your Small Grocery Store Business Plan
Every business needs a plan. Grocery stores are no exception. Think of a business plan as a snapshot of your grocery store today and where it will be in five years. You need a plan to lay out your business goals and the strategy you’ll use to reach them.
Lenders need to know how you will make your store profitable to secure a loan or funding. What kind of research will you do? From market research to demographics and location, you’ve got to cover all your bases and leave nothing to interpretation.
With a business plan, you not only lay out your goals and vision to others, but you can also use it as a roadmap for yourself. You’ll identify your target customers, develop a marketing plan, and detail financial projections. You’ll know the milestones you plan to reach, and set benchmarks along the way.
Ready to get started? Great! But before you do, make note of the following mistakes to avoid when creating your grocery store business plan.
1. Not Writing a Business Plan
OK, this is an obvious one, and we’ve just told you to go and write a business plan. But would you be shocked to know that many small business owners start their business as an extension of a hobby, or think it’s easy to start a business and don’t write a plan? Yet, companies that plan grow 30 percent faster than those that don’t.
Any small business needs a plan. Without a thorough and detailed roadmap, you’re leaving yourself open to mistakes and costly errors. Be smart about it, though. What matters is the kind of planning you do. A business plan just for the sake of it is time wasted.
It also matters when you start writing your business plan. You can’t rush it. You should be developing your plan as soon as you start talking to potential customers and looking for funding. Don’t guess what your customers need; learn by talking to them first.
2. You Don’t Have a Clear Business Model
Build a grocery store, and they will come, right? It’s not that simple.
What is your location? Does it need another grocery store? If you’re planning on positioning yourself as a local store, you need to know the demographics of your neighborhood.
Based on that research, what will you sell? Do you want to specialize in something? Are there specific communities in your area that need a store to cater to their needs? You might open a store that focuses on serving the Asian population.
You want your store to make a profit. It can only do that if it’s set up the right way – for your customer demographic, your location, and the needs of your customers.
How do you plan on generating revenue over and above your expenses? Are you prepared for low profit margins? What will you do to mitigate that? These questions might feel overwhelming, but with a detailed plan, you’ll spend wisely and come up with creative ways to turn a profit.
3. Failure to Estimate Your Financial Needs
Do you need a business plan to attract investors? For a business loan? Think through everything you need for your grocery store that you’ll need funding for, such as:
- Site preparation and modifications
- Initial equipment purchasing
- Covering expenses of the first year of operations
Other startup costs include initial inventory, insurance, building repair, maintenance equipment, and more. It’s not possible to overthink expenses. Plan for everything to ensure you don’t miss any and avoid surprises once you’re open.
Also, consider your financial projections. What are your revenue goals? What’s your estimated profit margin? Do you know how to calculate it? Think about cash flow statements, balance sheets, and income statements. If you need help with financial projections, speak to your accountant.
If you don’t want to use an accountant, you could work with accounting software providers like QuickBooks to manage income and expenses and keep track of the financial health of your store.
4. You Don’t Do Enough Research
You can’t create an effective marketing strategy for your store without knowing your target market, and your target market isn’t “everyone” just because you’re a grocery store.
You still need to take into consideration demographics and location. For example, even something as trivial as opening hours might differ depending on your location and the demographic. Do you plan to stay open later? Open earlier in the morning? Will you provide coffee facilities and fresh food? In affluent areas, you might stock organic, natural food for which you can charge a premium.
And as we mentioned above, which communities do you serve in your location? Clearly understand your customers and how your store will meet their needs. Perform an industry analysis and tie that to the demographic. For example, Generation X has more disposable income – and might pay more for better quality products.
Lastly, who are your competitors, and how will you differentiate yourself from them? Think about your competitive advantage and lean into it.
5. You Forgot to Create a Marketing Plan
With the “business side of things” taking up much of your capacity, it’s easy to forget how you’ll attract customers to your store. But you need a marketing strategy.
Marketing strategies vary depending on your location, demographics, and budget. When first opening your store, you’ll need to create awareness. You might take out full-page ads in local newspapers, you could have a grand opening event, or you could focus on building an online presence. Think about where your potential customers hang out.
It wouldn’t be a bad idea to bring on a team with experience in marketing retail stores and work with them to develop a strategy. Don’t forget to project your marketing efforts’ return on investment (ROI).
6. You Don’t Make Use of It
If you spend months creating your business plan to secure funding or a loan and then never use it again, you’re wasting it. It should be an evolving document. You can edit and add to it as you move along the process of opening your store.
Think about your mission statement and the vision you have for your store(s). What are your goals? They might change over time, but you must track your progress and hit benchmarks. Without your plan, you might forget your targets and coast along without genuinely knowing your numbers. It’s also rewarding to set milestones and reach them – from securing funding to finalizing the lease and your grand opening.
Included here might be your plan for operations:
- Who will operate the store?
- How will you manage employees?
- Who will be in charge of bookkeeping, payroll, and taxes?
As your store evolves, your operations will, too.
Factor a Modern Point of Sale (POS) System Into Your Business Plan
Consider the equipment you’ll need to succeed when opening your grocery store.
Our complete point of sale solution is customized to grocery stores. We make inventory management a breeze with an unlimited database of items, carton and case break inventory counts, and loss prevention features. It’s easy to manage employees and payroll, and you can keep customers happy and coming back for more with coupons, mix and match pricing, and loyalty programs.
We can help bring your business plan to fruition. Want to know how our POS system will work for your grocery store? Schedule a custom demo!
Then, use the build and price tool to build your dream POS system and get a quote.