Business Plan – Convenience Store

Business Plan Buster’s A cozy Store that designed for your needs [pic] Business Plan by Lydia Chan CONTENTS[pic] 1. Executive Summary Buster’s is a convenience store specialized in servicing daily needs of occupants of the office building where it is located. It offers variety of products to satisfy customers’ daily needs including snacks, pre-wrapped sandwiches, bottle/canned beverages, stationery, greeting cards, newspapers, paperback books and small gift items. The first Buster’s Store was set up in 2007, a 1,000 square feet store located in the lobby of Empire Centre in Kennedy commercial district.

This store is solely owned and managed by Lydia Chan. With fully focused and correct business strategy, Buster’s been able to get break-even in the eleventh month, and reaches to an annual revenue to US$300,000 last year. It has successfully built up an image of a convenience store that is friendly and customized to the occupants of the Empire Centre and the neighborhood buildings. With the proven success of the first Buster’s Store, Lydia is fully confident to expand the business by opening a second store with identical business strategy. The key to success is to find another perfect location.

The golden opportunity is now appearing, there is a new office building, Sky Tower, will be opened by end of this year. Sky Tower is just two blocks away from Empire Centre. Besides the advantage of easy management derived from the close by location of the two stores, to make this location perfect for Buster’s is that Sky Tower is an A grade eighty-storey office building which create huge number of potential customers for Buster’s. 1. Mission The Mission of Buster’s is to provide friendly service and good quality of products to occupants of the buildings.

Good mix of variety product items are perfectly meet customers’ needs in their daily work lives. 2. Objectives 1. To make Buster’s the preferred convenience store for the occupants of the building where it is situated and the neighborhood. 2. To break-even by the end of the first year. 3. To achieve a net profit of 5% by year three. 3. Keys to Success 1. Establish an image that Buster’s is “their” convenience store for the customers. 2. To turn over inventory an average of 15 – 20 times per year. 3. To provide friendly service and premium quality products. 2. Company Summary

The first Buster’s store is owned and operated by the founder, Lydia Chan, in Sole Proprietorship. The concept of this new venture is a convenience store that specially services occupants of the office building where it is situated. The first store was set up in 2007 located in Empire Centre in Jordan district. It is a 1,000 square feet store in the lobby with 2 full time employees. In 2009, annual revenue of this store is US$300,000. With the earned capital and experiences from the first store, Lydia believes it is the mature time to expand her business by establishing a second store.

In order to strengthen the financial and professional background, the second store will be in partnership set up. 1. Ownership The new Buster’s store is privately owned corporation in partnership basis. Lydia Chan owns 75% of the second store. She will work full-time in the store in the first year to ensure smooth day to day operation. In the second year and onwards she will be half day in the first store and half day in the second one. Carmen Chan owns 25% of the second store. Carmen is the elder sister of Lydia, she is a chartered accountant in Hong Kong Bank.

She will provide financial advice and assistant for Buster’s. 2. Employees Base on the experience of the first store, we anticipate two employees are sufficient for the daily operational need. There are two full-time shop assistants in the first Buster’s store, Christine and Mina. Christine, high school graduated, joined Buster’s since it was launched in 2007. Her experiences in nurturing infancy Buster’s and daily operation are valuable to the second store. She will be promoted as shop supervisor and transfer to the new store.

Christine will be responsible to coach and mentor the other new hired shop assistant, service customers, keep tract inventory/replenishment and report customers’ comments/complaints to Lydia for ensuring corrective action be taken. We will hire another shop assistant to work together with Christine. Criteria are High school graduate with 1-2 years retailing sales experience. 3. Financials 1. Start-up Finance Summary Anticipated start-up cost of the new store is US$200,000. The main cost of start-up will be inventory.

It is estimated that the initial inventory purchase will be $100,000. In addition, $30,000 will have to be spent on fixtures and fittings for the store. Since it is a brand new building, there will be no maintenance needed before move-in. Funding will be come from the combination of the two owners from their own savings. Lydia Chan (75% ownership) – contributes US$150,000 Carmen Chan (25% ownership) – contribute US$50,000 2. Start-up Cost Summary This table shows a summary of start-up cost and expenses [pic] 3. 3 Anticipated Revenue and Operating Cost for the First Year pic] 3. 4 Pro-forma cash flow projection for the first year of operation [pic] 5. Break even Analysis The following chart and table show the break-even analysis for Buster’s [pic] [pic] 3. 6 Anticipated return on investment in the first three Years The following table provides the anticipated return on investment from the perspective of three years into the revenue [pic] 4. Marketing /Sales 1. Summary of Marketing and Sales Strategy Buster’s new store will be situated in the lobby of Sky Tower, a new office building in a concentrated commercial area, Kennedy District.

Busters’ key customers are occupants of Sky Tower. According to the information from the Building Management office, 80% of the total vacant units were leased out and under interior fixtures and fittings stage. These companies will be moving in within two to three months which will secure customers flow when Buster’s is launched. 4. 2 Market Segmentation Occupants of the building are owners and employees of medium to sizable international corporations. They can be divided into 3 market segments : A) Aged 25 – 39 Male They require speedy service, just pick and pay.

Half of them are wealthy Yuppies in managerial level, they do not mind to pay a little higher for the convenience and good quality. They are busy in work and social life, our fresh pre-wrapped sandwiches, popular bottled beverages and high end imported snacks will suit their needs. B) Aged 22 – 35 Female Same phenomenon as other prosperous cities, all ladies are keen to slim down their bodies and are cautious in selecting food. It is more obvious for this age group of ladies. They always search for healthy food and snacks.

On every category of food, Buster’s will have a special corner for healthy food with notes on shelves for their easy perusal. Healthy food including vegetarian brown bread pre-wrapped sandwiches, low calories snacks, herbal tea and fruit juice types of bottled beverages and etc. These ladies may be secretaries or work in the administrative departments who are responsible to purchase stationeries for the offices. They will naturally select Buster’s for convenience while they are purchasing their own personal needs. This is a critical customers group for Buster’s.

C) Miscellaneous This includes the middle-aged group, outsiders/visitors and etc that they have varied or unpredictable buying pattern. Continuous analysis of this group is required in a quarterly basis when Buster’s store is launched to ensure our service and products cover their needs. 3. Product Strategy Buster’s emphases are on friendly service and good quality of products that fit the requirements of people in their workplace. We do not just follow what selling in super markets or franchised convenience stores. We focus on customization.

The following listed are the key categories for Buster’s. A) Pre-wrapped sandwiches : Homemade sandwiches with 4 different choices of fillings : egg and ham, beef, chicken breast and assorted vegetables. These are basic pre-wrapped sandwiches. In addition, we also provide small individual packed fillings such as chess, tomato, cucumber and eggs as supplements, so customers can design and make their own sandwiches in their offices. This will satisfied customers who are looking for variety of choices but without burdening our inventory. B) Bottled/Canned beverages

The most popular bottled/canned beverages are available in Buster’s which including soft drinks, coffee, tea and milk. We also provide healthy drinks such as herbal tea, flower flavored tea, juice, Soya bean milk, flavored mineral water, and etc. C) Snacks Popular branded snacks of chips, chocolates, candies and gums are must items in the shelves. To take care of the needs for customers who are pursuing for healthy life, special selection of snacks such as sun-dried fruits, organic food, low calories/calcium crackers, sugar free candies/gums are also available in our “Healthy Corner”.

D) Stationery and Greeting Cards To take care of the sudden or urgent needs of the office people, we will provide certain basic items of stationery and greeting cards but to cautiously control this category of goods occupying not exceed 10% of total display/shelf space. E) Gifts Small gifts can also be found in Buster’s. Regular items are gift sets of premium chocolates and tea bags which are appropriate round the year and for all occasions. Buster will display specialty gifts in front desk for festivals like New Year, Valentines’ day, Easter, Halloween, Christmas and etc.

The specialty gift sets to serve both purposes of stimulating sales and decorating the store to lift up spirits. F) Newspapers & Magazine The top five Best selling newspapers are available in Buster’s. 6 – 8 different categories of magazines about fashions, accessories, entertainment, computers, automobiles to cover varied customers’ desires. 4. Pricing Strategy As mentioned in the product strategy section, most of the categories are not common products as other convenience stores because Buster’s emphasis is on premium quality food and drinks.

She is comparatively not facing harsh price comparison as other franchise convenience stores for different target customers. Buster’s customers, occupants of Sky Tower, mainly are yuppies and office ladies, who are willing to pay a little more for convenience and better quality. Therefore, Buster’s price ranges for key products are : ? Pre-wrapped sandwiches US$4. 0 – US$5. 5. ? Premium quality and healthy snacks US$2. 5 – US$7. 0 ? Canned/bottled beverages US1. 2 – US$3. 0 ? Common products that are also available in other convenience stores : 5 to 10 percent higher than them.

Target is to reach gross margin (sales deduct cost of goods) at 37. 5 – 38% 4. 5 Promotion Strategy Buster’s customer base is concentrated and close-by, they will pass by the store everyday when they go to work. Location is our best promotion tool. Occupants of Sky Tower will know the existence of Buster, so our focus of promotion is to attract them to stop by Buster’s and to experience the difference with other ordinary convenience stores. They will be impressed by our friendly service, wide ranges and unique food and beverages.

Word-of-mouth will be our largest promoter. A) Flyers Flyers, an effective and inexpensive way to notify people in Sky Tower and neighborhood buildings that their store “Buster’s” is opening soon. Flyers will be passed around at the building entrance a week before grand opening. On face side of flyers is an attractive designer sketch of the Buster’s store (sketch is used to be more attractive than photo or words), and on the reverse side is a list of product items that will be available in Buster’s. Distribution of flyers will be continuous after Buster’s is opened.

Distribution spots will also be increased to cover the neighborhood buildings. B) Buster’s Card For initial purchase exceeding US$10, a Buster’s Card will be provided with a Buster’s logo stamp on it. Each $10 purchase onwards will earn a stamp. When accumulated to 5 stamps, a free gift will be given. This is effective to stimulate customers to buy more, or to request their colleagues to consolidate the purchase (Word-of-mouth advertising). Gifts are selected products from the store such as snack, stationery, chocolate, etc and will be changed each month to maintain freshness of the game. . 6 Competition Despite of having the competitive edge of location, we anticipate Buster’s will face competition from 2 areas. A) Convenience Stores This competition will be from national franchises such as 7-11 and Circle K. They have established extensive network of chain stores and are well-known to Hong Kong people. People are almost pass by two to three these convenience stores in their everyday life. Due to consolidation of bulk purchase, these franchises obtain strong bargaining power with suppliers for both costs of goods and payment terms.

There is one 7-11 store located in the main street, 8 minutes walking distance from Sky Tower, and one Circle K in the opposite corner to 7-11. It is inevitably Sky Tower people will pass by these stores. Buster’s strategy in competing with these stores is not pricing but differentiation. ? Product flexibility Franchise convenience stores are selling standardized products regardless of demographic/geographic needs. Buster’s customer base is concentrated and focused. Products are selected according to their lifestyle, habits and preferences.

We are also flexible and prompt to alter products items base on customers’ and sales feedbacks. ? Unique and high quality food and beverages Buster’s target is to have 70% of product items not identical to those convenience stores. Our tasty homemade sandwich is a typical example while other stores are selling mass produced sandwiches. ? Customers’ relationship Buster’s customers are actually our neighbors that we are working in the same building. This benefits us to build close relationship while other convenience stores focus on speedy in-and-out service. B) Plagiarist

Start-up capital of lobby convenience store is comparatively lower than other main street retailing stores or franchise convenience stores. Low entrance barrier will attract people who want a start-up venture by copying the same concept as Buster’s. 5. Operation 1. Location of the business The new business venue of Buster’s will be located in the lobby floor of Sky Tower, a new office building in No. 23 Harbor Road, Kennedy District, Hong Kong. When Lydia, owner of the first Buster’s store, decided to open the second store, she had gone through serious research and calculation because location is essential to be successful and profitable.

The following listed are factors why Sky Tower is the right place. ? Scale and income level of Customer base Sky Tower is an A-grade commercial building, tenants are mainly big corporations in business relating to international trading, banking and investment, insurance, accounting and etc. Anticipated total occupants will be 3,000 to 4,000. Most of them are professionals and/or high income level employees. This creates a beneficial customer base for Buster’s. ? Close by location of the two Buster’s Stores

Sky Tower is just two blocks away from the first Buster’s store, this creates advantage for the owner to manage the two stores in the long run. In addition, the two stores can help each other if there is urgency for products that are out of stock. Staff can deliver the urgently needed goods to the other store within 10 minutes. ? Surroundings Sky Tower’s surroundings are also commercial buildings, with some exclusive restaurants and casual cafe. No convenience store located in adjacent buildings, just two which are 8 to 10 minutes walking distance.

All these neighbors are valuable and potential for Buster’s. 2. Operation of the business A) Hours of Operation The common working hours for offices (white collar) in Hong Kong is 9:00 AM to 6:00: PM, Monday to Friday, some work on Saturday 9:00 AM to 1:00 PM. For Buster’s, business hours is 8:00 AM to 7:30 PM Monday to Friday, 8:30 AM to 2:00 PM on Saturday. Opening at 8:00AM is to serve breakfast for customers. Close at 7:30 PM is to take care of the needs for customers who are required for over-time works which is very common in Hong Kong.

To ensure Buster’s employees are not exhausted by long working hours, operation will be in two-shift. The 2 employees work from 8:00 AM to 5:00 PM, and the shop manager (that is the owner) take the second shift from 10:00AM to 7:30PM. B) Service Procedures Friendly service is Buster’s emphasis and promise to our customers. This must be clearly shared with employees that without their efforts, Buster’s will not get success. They are required to follow the below listed service procedures to ensure a cheerful shopping experience to every customers. ? Greeting with smile

Greet every customer with a friendly smile who enters the shop. For familiar customers, chat with them to build-up an on-going relationship. ? Serve efficiently and effectively For customers who have clear decision on what to buy, serve them efficiently. For customers who are browsing, hesitating what to buy or unfamiliar with Buster’s products, staff must to offer help by providing advices/recommendations or a brief introduction of Buster’s products according to customers’ desires. Nevertheless, no hard sale, customers are still welcomed without purchase. ? Interaction

When customers prepare to pay and leave, we must to say “Thank you” and “Goodbye” with eye-contact and friendly smile. This is the last process step and interaction with customers in a transaction, it is vital to leave a cheerful image in their mind which can be deep-rooted. C) Inventory management Effective inventory management is essential for Buster’s to maintain wide variety of product items in limited space. Ultimate goal is to maintain a minimal but adequate stock and make replenishment in a weekly or bi-weekly basis depend on products’ feature and turn-over.

POS system will be employed to control in-and-out systematically and to minimize human error. Cashier will input sold items automatically. Every end of the day, Christine (Shop’s supervisor) to generate and check inventory status report and pass to Shop Manager for analysis and deciding which items needed to replenish. Christine is also responsible to input data everyday when suppliers deliver goods to ensure inventory record is up-to-date. 6. Legal Issues The following listed legal documents and licenses will be well prepared and to ensure they are all completed and valid before the launch of Buster’s. Business license in partnership proprietor basis ? “Buster’s” trade mark registration ? Tenancy Agreement with Sky Tower Property Management Office ? Employment contract with the two Buster’s employees ? Purchase Medical insurance for employees ? Business Insurance Legal Consultant will be hired to ensure accuracy of legal documents and coverage. 7. Challenges A) Sustainability of Buster’s competitive edge Location is Buster’s competitive edge as we are close to the concentrated customer base. This edge will be threatened if there are any new retail tores open in the surrounding areas, they can be hypermarket or new concept food stores that tempting Sky Tower people willing to sacrifice the convenience but to walk a little bit far to try new shopping experience. B) Constantly excite customers Our customer base is young, high-income group; they have strong purchasing power that leads them to have extensive options. They pursue for premium quality and trendy commodities. It is an on-going challenge for Buster’s to keep having products that excite customers. – End –

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