Looking for a convenience store

[haleemski]

Hello everyone,

Newbie here. Wondering if anyone can provide some assistance or guidance as I recently been made redundant and looking at using some of the settlement to invest in a convenience store.
North London/Hertfordshire would be my ideal location.
What length of lease should I be ideally looking at?
Is unsecured finance available if I commit to 30% investment?
What is the most reliable formula to use when calculating the value of a business when negotiation the “premium”?

Thanks in advancez

 

[The Byre]

1. Considering that the only convenience stores likely to be up for sale are those that are failing, I would warn against this move. You are up against the likes of Aldi, Lidl and Tesco - riskier and riskier!

2. Have you run a convenience store before? Do you have any experience in this field?

3. Settlement? A functioning and profitable convenience store should set you back a few hundred thousand, so it must have been a very generous settlement! And a store that is not functioning is hardly a fun prospect!

4. Lease - the shorter the better as we are heading into a recession. It is better to fail quickly!

5. Finance - not my core subject, but I doubt an unsecured loan would be available for such a risky venture! Banks like to be in a win/win situation, i.e. they want to see some collateral!

6. Read this - http://ukbusinessbrokers.com/business-valuation-avoiding-traps/ Owners seem to think that all their time working came for free. They claim £80k profit, conveniently forgetting that both husband and wife put in 60-hour weeks. In other words, they didn't make any profit, they just worked themselves to death.

7. So what will work? Answer - things that do well in a recession. Home brewing. Home baking of bread. Some types of DIY tools do well. In other words, those things people can use to earn or save money.

My 30 cents worth - keep your powder dry and see if you can't get a better job.

 

[MBE2017]

OP only you can decide on your level of risk, but as mentioned above, most small stores that remain open tend to do this by being open for very long days.

They cannot buy better than the supermarkets, they cannot stay open for 24hrs a day unless you have a big family willing to work for a pittance. You can make a living, but they are unlikely to make you wealthy. Most people I know running them is more because they do not want to work for other people, but take into account early mornings, late finishes, lack of holidays, even opening on Xmas day very often, and you can see why many do not last.

Location for success comes into play a lot, better to be the only store on a big estate, or in a small row of shops, than on a busy high street.

 

[haleemski]

OP only you can decide on your level of risk, but as mentioned above, most small stores that remain open tend to do this by being open for very long days.

They cannot buy better than the supermarkets, they cannot stay open for 24hrs a day unless you have a big family willing to work for a pittance. You can make a living, but they are unlikely to make you wealthy. Most people I know running them is more because they do not want to work for other people, but take into account early mornings, late finishes, lack of holidays, even opening on Xmas day very often, and you can see why many do not last.

Location for success comes into play a lot, better to be the only store on a big estate, or in a small row of shops, than on a busy high street.

Thank you for your feedback really appreciated

 

[Paul Norman]

The main question is the one about unsecured finance.

The blunt answer is that it is just not available, and if it was, if would be at a very high interest rate indeed.

Secondly, running a convenience store with no experience is very risky indeed. You will need to learn the game fast, because otherwise it will leak money very quickly indeed.

For it to work it has to answer the description - be convenient. That means a perfect location, near lots of people who are not at the same time near a supermarket - or even a Co op or Tesco Express.

In our village there is a Co op. Two of the 3 convenience stores have failed in the last two years. The third seems to bump along, broadly selling sweets, cigarettes,and largely undrinkable wine, together with an array of dubious looking vegetables.

It can be done. But it is hard work. And you will have read about unitility cost increases. A store currently making £20k profit is about to head into loss territory, and £20k profit is no profit at all.

 

[WaveJumper]

Have a visit here and see if you can come up with a better option might give you some ideas:

National Franchise Exhibition

The National Franchise Exhibition returns to the NEC, Birmingham in October 2026.

www.thenec.co.uk

 

[Mark T Jones]

Here is a significant question:

Had you previously aspired to run a convenience store, drawn up a plan and only been thwarted by lack of funding?

If so, the process and the plan should form the basis of some productive questions and answers on here.

If not, I strongly suggest that you put your money somewhere safe (ideally with a lock of at least 12 months) whilst you think and plan what you actually want to do - because 'windfall' businesses are very much in the high failure category.

Despite the comments above, there is money to be made in the convenience sector and on common with every business, it starts with a clear and researched knowledge of who your customer is and what they are prepared to pay for, repeatedly.

 

[haleemski]

Hi Mark,

Many thanks for the feedback. Whilst I have never had any experience of running my own business, I have recently left a senior role in a company that was very much convenience retail focused so am very much aware of the sector and the opportunities that exist with the right location and focus.
I believe nothing in life is easy or comes on a plate so certainly resilience, hard work, commitment and commercial nous will be vital in making your own business a success.
Really appreciate the feedback.

Here is a significant question:

Had you previously aspired to run a convenience store, drawn up a plan and only been thwarted by lack of funding?

If so, the process and the plan should form the basis of some productive questions and answers on here.

If not, I strongly suggest that you put your money somewhere safe (ideally with a lock of at least 12 months) whilst you think and plan what you actually want to do - because 'windfall' businesses are very much in the high failure category.

Despite the comments above, there is money to be made in the convenience sector and on common with every business, it starts with a clear and researched knowledge of who your customer is and what they are prepared to pay for, repeatedly.

 

[Mark T Jones]

Hi Mark,

resilience, hard work, commitment and commercial nous will be vital in making your own business a success.
Really appreciate the feedback.

And the greatest of all these is nouse! (which can be compensated to some extent with research)

With regards to funding, it depends on amounts, but the Government-backed Start Up Loan scheme can help with a well researched business plan.