Hardware Retail Franchise Business Plan


Hardware Retail Franchise Business Plan


Wilusa Magazine conducted a survey of downtown residents last year and discovered that hardware stores were one of the top ten essentials to making downtown a great place for people to live. Downtown is a great spot to live and work.

Downtown Indianapolis has witnessed a significant shift in the demographics of home-ownership. Today’s hardware store is often cold and uninviting. It is also located far from downtown Wilusa. Hisarlik Hardware is uniquely positioned to take advantage of this new fact of life. Hisarlik Hardware has parts, materials, advice, and is easily accessible to all areas of Arazawa Township. The store’s goal is to assist customers in identifying what they want and need.

Hisarlik Hardware intends to capitalize on this potential opportunity by offering superior customer service, great product choices, and low prices. The location has been secured to provide excellent traffic and a magnet for the downtown’s only grocery store. The Building blocksparent organization will efficiently plan and lay out the store in order to increase sales and provide customers with the best possible attention. Hisarlik&#8217s management team is well-versed in all aspects of business, finance, and mechanical operations, which will make the venture a worthwhile investment. The projected growth rate for Hisarlik Hardware is quite steady and has the potential to grow exponentially along with the increase in residential development downtown.

Hisarlik Equipment will generate positive cash flow in its first year of operation. Hisarlik will also make a profit its first year of operation.

1.1 Objectives

This business plan has four main objectives. Three are immediate, and the fourth is longer-term.

  1. Assess the feasibility of opening a hardware store downtown.
  2. Develop the strategy to open, manage and grow a profitable downtown hardware store venture.
  3. Establish a firm budget to operate and manage the business from concept to start up to operation, with good cash flow and consistent profits.
  4. Exploit the potential for growth in the downtown markets and discover new opportunities to grow your business.

1.2 Mission

Hisarlik Hardware’s mission it to be a reliable and efficient downtown hardware store. The store will provide great service and a wide selection of hardware and other home improvement products in an environment that is friendly to customers.

Hisarlik Hardware serves downtown residents, business owners, contractors, and suburbanites. The great advice, prompt and professional service, positive staff attitudes, quality of the shopping experience and the ability to provide solutions for customers’ needs will make them loyal.

1.3 Feasibility of the Business

Hector Priamson and Troy Enterprises went through a long and thorough process of looking at different business ventures that would allow them to go into business and be a long-term success. The potential for retail hardware emerged through this process. The following items are ‘#8220′ must have items that will make Hector Priamson & Troy Enterprises a great success.

  1. An industry that is strong, resists economic swings, and allows an entrepreneurial to influence the stores’ results.
  2. A market that has the potential to provide the type of profit that will make a store profitable.
  3. Store location that is easy for customers to locate, allows easy access, ample parking, and offers economic terms that enable the store to succeed.
  4. A co-operative and productive “partner”, such as building blocks,a national Hardware Co-operative that will help to research, plan, market and run a hardware shop.

  • A financial package to allow the business’s operation and profitability, regardless of whether private investors are involved or not.
  • Participants must have strong business skills, a strong work ethic and the competitiveness to make the business succeed.

    • Building Blocks gives you all the tools. Hector Priamson possesses all the management, entrepreneurial, and financial skills necessary to succeed in this industry.

    1.4 Keys for Success

    • Hardware Industry According to the US Department of Commerce, the Home Improvement industry has grown at a steady rate of 7% per annum for the past decade. In 2002, the US had a total of $313 billion. The economy has fluctuated over the past decade but the growth in hardware has continued at the same pace. This country has seen a rise in the popularity of ‘#8220’ Big Box stores, which has had a positive impact on independent hardware stores.
    • Search: Troas Marketplace was the location for Hisarlik Hardware. Troas Marketplace a retail/commercial property at E. Anglia St. near N. Umberland St. to N. Mercia Blvd. Troas Marketplace is anchored by Buckbasket Cleaners and Scamander&#8217’s Food Market. It is a big draw. Scamander&#8217’s is the only grocery in downtown Wilusa. This location is easily accessible by all downtown residents. It is just one block away of the trendy and hip Wessex Avenue. Troas Marketplace offers ample parking, which is important for downtown.
    • Urban Product: An urban store in downtown Wilusa requires a different product mix to one found in a suburban shop. Urban dwellers will demand a special product mix. Blocks are a key part of the IAIS program (Inventory Often In Stock) that helps to determine the best products for urban dwellers. Hisarlik Hardware will be in touch with, and focus on, the downtown urban market, delivering products that are applicable to local customers, and marketing these items at competitive prices.
    • Customers: Hisarlik Hardware will work to be the hardware product source for every building or business in downtown Wilusa. We will try to establish strong relationships with property managers as well as service personnel. A delivery service will be set up to make it easier for customers to obtain the products they require, whenever they need them. Hisarlik Hardware might be convenient and easily accessible, but potential customers may find it difficult to leave their offices. To make doing business easy, it will be important that each customer has a business account.
    • Construction Blocks – It is vital to have a cooperative like Building Blocks behind efforts to create a store like Hisarlik Hardware. They provide all of the tools to be successful in the hardware business including research, floor plans, marketing, and systems and instructions for operating a hardware store. To become a Building Blocks Member (Member of the Building Blocks Co-op) really means they will provide an entrepreneur a “business in box”, yet allow the members to control their own business. The extensive marketing programs have been developed based on the input of members and are designed to increase sales, traffic, and profits.
    • Convenience and Service: Convenience and Service are key to this business’ success. These qualities are also strengths of independent hardware retailers. It should be easy for customers to access the store and to navigate. Our personnel have experience in high-end client hospitality. This will make it easier to deal with customers and clients. We will keep detailed records of what customers want that we don’t have in stock.

    As mentioned earlier, a delivery service will be established to make it possible for customers of businesses to receive their products in the workplace. We will also target suburban commuters. Happy hour specials to encourage shopping after the five o’clock whistle will be instituted.


    % agree

    I like to get everything I need for my home maintenance projects in one
    76.3%

    I love the ability to shop for home decor items and build materials
    31.4%

    A neighborhood hardware store meets most of my home improvement/maintenance needs
    25.8%

    For most purchases, I prefer a neighborhood hardware store instead of a large home improvement center
    24.1%
    —Retail Forward, Home Improvement Shopper Update, 2001

  • Repair/Project Area: Hisarlik Hardware will benefit from the established reputation of exceptional service built by other BlocksCooperative member stores. This reputation has helped Building Blocks to be one of the top independent hardware stores (from Consumer Checkbook Aug 2003). It also fills the gap in the #8220Big Box#8221 retailers one-size-fits all offerings. The Customer can access the Resource area and ask for assistance or directions at any time they visit the store. This area will offer help and support in the beginning of a project. It will help them find what they need, share their knowledge, and give advice on how to complete a job. Employees at the store will be trained in home repair/projects, home improvements, and mechanical repairs and retrofitting. The resource area can also be used for demonstrations and training in home repair and home improvements projects.
  • The Tool Room Rental: A rental business will be established under the Building Blocks’ “The Tool Room Rentals” tool rental program. This will help to generate additional revenue as each tool requires accessories. We will also think about party rental items to be included in the rental inventory. Building Blocks will aid in developing the right rental product mix for this urban market.

    • All these key factors will work together to increase sales and eventually net profit.

    Computer Hardware Reseller Business Plan


    Computer Hardware Reseller Business Plan


    American Management Technology will increase its sales by over $9 million within three years by focusing its strengths, key customers, and the fundamental values they require. This will allow American Management Technology to improve its gross margins on sales, cash management, working capital, and overall profitability.

    This business plan shows the way. It renews our vision and strategic focus: adding value to our target market segments, the small business and high-end home office users, in our local market. It provides a step-by-step guideline for increasing our sales, gross margins, and profitability. We plan to borrow $100,000 more long-term to help us implement these changes and increase profitability. This amount seems to be in-line with the capabilities of our balance sheets.

    AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. These vendors must be trusted as well as their professional service providers. AMT seeks these requirements and is striving to be the leading regional provider of business information technology.

    AMT provides small business with both computer products as well as services. We are especially focused on providing network systems and services to small and medium business. The systems are available in both minicomputer-server-based and PC-based networks. Our services include training, support, design and installation of network system, as well as training.

    Our keys to success for the next three year to achieve our objectives are:

    • By offering support and service, and charging for it, you can distinguish yourself from price-oriented and box-pushing businesses.
    • Increase gross margin to greater than 30%
    • Our non-hardware revenue will be 20% of total sales in the third year.

    AMT was established as a value-oriented reseller (VAR) in consulting. It became a reseller to meet the demand for personal computers on the market. AMT emphasizes service and support to distinguish itself from its price-oriented rivals.

    One location, a 7,000 square-foot store in a suburb shopping center is located near the downtown. It has a training area and a service department. There are also offices, offices, and a showroom.

    AMT is a privately held C corporation that is majority owned by Ralph Jones, its founder and president. Six people are part owners of AMT, which includes four investors and two employees. Under the leadership of the president and four others, there are 21 employees. Our major management divisions are service, sales, marketing, and administration. The service division handles support requests, training, development, and training. At present, we are weakest in the area of technical capabilities to manage the database marketing programs and upgraded service and support, particularly with cross-platform networks. We also need to find a training manager.

    Recent changes to the computer reseller market have adversely impacted AMT. Margin squeezes, longer collection periods and lower inventory turnovers are just a few of the factors that have adversely affected AMT. All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.

    Only way to stand out is to make the company an information technology ally for our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance that includes such intangibles as confidence, reliability, and knowing that somebody will be there to answer questions and help at the important times.

    Our support services, with which we hope to capture market share will include such services as; training, upgrade offers, installation services, network configuration services, etc. The company will seek to aggressively pursue new opportunities.

    AMT focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.

    We last saw a study that showed retail sales increasing at 5% per yr, while web sales are increasing at 25% to 30%.

    There are several different kinds of computer retailers within the industry including:

    1. Computer dealers often focus on a handful of major brands of hardware. They usually offer minimal software and variable levels of support.

    Their service and support are generally not very good. Also, their prices are often higher than those at larger stores.

  • Computer superstores or chain stores offer decent walk-in services, but very limited support.
  • Mail order offers aggressive pricing for boxed goods. For the purely price-driven buyer, who buys boxes and expects no service, these are very good options.

    • No one of these competitors offers the kind of personalized and personal service small businesses like our clients really want.

    Small business buyers are more comfortable buying from vendors who visit their offices. They expect copy machine vendors, office product vendors, and office furnishings vendors to visit their offices in order to make sales. Many small businesses immediately go to superstores (office supplies, electronics, and office equipment) to get the best price. They don’t realize there is an even better option at a fraction more.

    We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don’t need ongoing service, support, and training. Focus groups showed that the home office market is not focused on price. However, they would consider quality service if the offer was properly presented. Because they only see price, they think about it. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support; they end up in the box-pusher channels because they aren’t aware of the alternatives.

    We rely on newspaper advertising to reach new customers. However, as we shift strategies, we must also change the way that we market ourselves. We will be focusing our efforts on our core message of service via radio, cable TV and sales brochures. We must sell our company, not the products. We sell AMT, not Apple or IBM, Hewlett-Packard and Compaq.

    Our ambitious sales forecast is summarized in the Yearly Total Sales Chart. Sales are expected to rise from $5.3 million lastyear to more than $6million next year, and to more $9 million in this last year.

    1.1 Objectives

    1. Sales increasing to more than $9 million by the third year.
    2. Keep the gross margin at 30%.
    3. Selling $1.5 million worth of support, service, and training services by 1998
    4. By 1998, increase inventory turnover to six turns

    Success: 1.2 Keys

    1. By offering service and support, and charging for it, you can distinguish yourself from box-pushing and price-oriented businesses.
    2. Gross margin to 30%
    3. Our non-hardware revenues will reach 20% of our total sales in the third fiscal year.

    1.3 Mission

    AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. They should use quality vendors just like they use professional service suppliers as trusted friends.

    AMT is an example of such a vendor. AMT serves its clients as an ally and trusted friend. It provides them the benefits of both a business partner, and the economics of an external vendor. We ensure that our clients have the tools they need to operate their businesses efficiently and with reliability. We give our clients peace of mind because many of our information applications are critical.

    Retail Hardware Store Business Plan


    Retail Hardware Store Business Plan


    Opportunity

    Problem

    Today, 40% of the area’s homes are owned and occupied by women. Women also own 60% of the area’s rental properties. It is more often than not a woman who visits the hardware store to get repair parts or advice. The mega-store chains dominate today’s hardware store. These stores are uninviting, cold, and often require more driving.

    Solution

    Clara’s Hardware will provide quality hardware products in an easy-to-use shopping environment. Our customers will be able get help quickly and will leave the shop ready to finish the job correctly the first time. Clara&#8217, Hardware will continue to focus on meeting seasonal demands of its customers as well as providing top-quality products at fair prices. Clara&#8217s Hardware will travel an additional 15 minutes to reach a mega-hardware retailer, which can be too far and expensive to entertain.

    Market

    The South Gate area of Gilmore has seen dramatic changes in the demographics for home ownership. Today, women own more than 40% the area’s houses. In addition, 60% are women who own rentals in the region. Most often, it’s a woman who now heads to the hardware shop for parts and advice. Today’s hardware store, which more and more are dominated by the mega-store chains, are cold, uninviting and usually involve more driving time. Clara’s Hardware is uniquely positioned to take advantage of this new fact of life. Clara’s Hardware, conveniently located to service the South Gate, offers parts, material, advice, and assistance with any home-related repair. Customers are encouraged to identify the products they desire as soon as they walk into the store.

    Concurrence

    Clara’s hardware will be competing against:

    True Value Hardware chain stores: The new True Value hardware stores are designed specifically for women. In addition to better lighting and organization, there’s “an expanded assortment of decorative door knobs and drawer pulls.”

    Mom and pop owned stores like McGukin Hardware. This store stocks hardware, as well as other goods so that women need only go to one place to purchase everything they want.

    While there are many other shops in the vicinity, none of them have the same views as clara.

    Why Us?

    Clara believes a local hardware shop can offer a reasonable selection of the most essential product areas, be affordable in pricing, provide an environment that encourages repeat business, and give the customer a pleasant shopping experience.

    Expectations

    Forecast

    The store will be efficiently laid out to increase sales and give customers the best possible attention. Clara’s Hardware is expected to grow at a steady pace. The store will be profitable in six months.

    Financial Highlights per Year

    Financing Required

    Clara Johnson (founder) will donate $80,000.