Hardware Business Plan Template & Guidebook

Being successful in the hardware industry requires careful planning and a well-crafted business plan that lays out the details of your goals and strategies. Writing a business plan can be a daunting task, but with the #1 Hardware Business Plan Template & Guidebook, you can create a comprehensive plan tailored to your specific needs quickly and easily. Learn how to use this powerful tool to ensure the success of your own hardware business.

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  • How to Start a Profitable Hardware Business [11 Steps]
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How to Write a Hardware Business Plan in 7 Steps:

1. describe the purpose of your hardware business..

The first step to writing your business plan is to describe the purpose of your hardware business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a hardware business:

Our mission is to provide the highest quality hardware products and services to our customers; to foster a safe, welcoming, and inclusive environment where our team can thrive; and to be a leader in thought, innovation, and environmental stewardship in the hardware industry.

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2. Products & Services Offered by Your Hardware Business.

The next step is to outline your products and services for your hardware business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

  • What is my business?
  • What are the products and/or services that I offer?
  • Why am I offering these particular products and/or services?
  • How do I differentiate myself from competitors with similar offerings?
  • How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

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3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your hardware business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your hardware business includes the following elements:

Target market

  • Who is your target market?
  • What do these customers have in common?
  • How many of them are there?
  • How can you best reach them with your message or product?

Customer base 

  • Who are your current customers? 
  • Where did they come from (i.e., referrals)?
  • How can their experience with your hardware business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

  • How does it work, what features does it have, and what are its benefits?
  • Can anyone use this product or service regardless of age or gender?
  • Can anyone visually see themselves using this product or service?
  • How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

  • Which companies are competing with yours today (and why)? 
  • Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
  • What specific advantages does each competitor offer over yours currently?

Marketing channels

  • Which marketing channel do you intend to leverage to attract new customers?
  • What is your estimated marketing budget needed?
  • What is the projected cost to acquire a new customer?
  • How many of your customers do you instead will return?

Form an LLC in your state!

hardware startup business plan

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

  • The equipment and facilities needed
  • Who will be involved in the business (employees, contractors)
  • Financial requirements for each step
  • Milestones & KPIs
  • Location of your business
  • Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a hardware business?

  • Accounting software
  • Permits to operate a business in the local jurisdiction
  • Hardware inventory
  • Point of sale system
  • Cash register
  • Tax permits or certificates
  • Shop tools and supplies
  • Work tables or benches
  • Safety equipment and supplies

5. Management & Organization of Your Hardware Business.

The second part of your hardware business plan is to develop a management and organization section.

This section will cover all of the following:

  • How many employees you need in order to run your hardware business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
  • The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
  • How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Hardware Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a hardware business varies based on many different variables, but below are a few different types of startup costs for a hardware business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your hardware business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your hardware business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your hardware business plan:

  • Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
  • Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
  • Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
  • Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
  • Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
  • Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

hardware startup business plan

Frequently Asked Questions About Hardware Business Plans:

Why do you need a business plan for a hardware business.

A business plan for a hardware business is important to outline the goals and objectives of the business, such as determining the target market, defining product offerings, creating operational plans and setting financial goals. It also provides a roadmap for the future of the business, helping to ensure that decisions are made in line with those plans. Creating a business plan allows potential investors or lenders to assess the viability of the hardware business before committing funds.

Who should you ask for help with your hardware business plan?

You should ask a business consultant, entrepreneur mentor, or relevant industry experts for help with your hardware business plan.

Can you write a hardware business plan yourself?

Writing a business plan for a hardware business is a complex task that requires research, market analysis, and financial planning. Depending on your skill set and knowledge of the industry, you may be able to write your own business plan for a hardware business. If you decide to take on the project yourself, it is important to do thorough research and market analysis to understand the industry, be aware of any potential competition, and understand the key success factors for success in the hardware sector. Additionally, you should also familiarize yourself with writing a basic business plan, as well as use reliable financial projections to create realistic projections for your venture. Ultimately, it is recommended that you at least consult with an experienced business consultant or accountant before finalizing any decisions related to your business plan so that you can rest assured knowing that your plan adheres to best practices.

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How to Start a Hardware Store in 5 Steps

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Starting a hardware store — a brick-and-mortar shop that sells, essentially, brick and mortar (and everything else you need to build a house, fix a leaky faucet, or paint the garage) — might seem daunting in this day and age.

Smaller hardware stores, like small businesses in every industry, face cutthroat competition, not just from other local businesses but big box stores like Home Depot and e-commerce giants like Walmart and Amazon.

But if you have the expertise and passion for opening a hardware store, don’t get discouraged. You can actually control a number of factors to maximize your potential for success. Review these five steps in how to start a hardware store before you get your business started to see if you have a good shot at staying afloat.

hardware startup business plan

What you need to know about starting a hardware store

According to IBISWorld, there are nearly 20,000 hardware stores in the United States today, producing about $24 billion in revenue and employing just over 148,000 people.

Its analysis of the industry is in line with something you may have noticed if you’re interested in getting into the business: As the economy has improved over the last five years, the housing market has strengthened, leading to an increase in the number of home improvement projects that require trips to the hardware store.

Additionally, low mortgage rates have encouraged people to buy and renovate homes, putting countrywide brands like True Value and Ace Hardware in a good position to capitalize.

The report does note that hardware store growth is expected to slow a bit in the next five years, but the overall industry does have a positive outlook.

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Once we uncover your personalized matches, our team will consult you on the process moving forward.

How to start a hardware store in 5 steps

1. decide between opening your own hardware store or starting a franchise.

There are lots of completely independent hardware stores around the country, catering to the ultra-local community. If you’ve identified a market where you feel you can think about starting a hardware store and become the near-exclusive provider for — and if you’re a control freak who wants to make 100% of the decisions about how your business operates — you might feel good about opening your own shop. Starting a hardware store on your own also requires less money.

There is, however, another option: starting a hardware store with a popular franchise , which provides you access to an established name, as well as a proven operational model and efficient supply chain. You can still be the owner of the store with plenty of latitude to make business decisions.

That’s the situation at Waverly Ace Hardware in Baltimore, Maryland, which is part of an independently run co-op within the fold of Ace Hardware stores.

According to Michael Marren, the assistant manager of one of the 11 Waverly Ace Hardware stores across Maryland, Washington, D.C., and northern Virginia, the relationship between the store and the parent company is helpful and fruitful.

“Our parent, A Few Cool Hardware Stores LLC, is based out of the District, and the name denotes the company philosophy rather well. We're a small business, our leadership is independent and local — but we have the benefit of Ace's logistical umbrella,” he says.

For example, Marren says that his company offers “well above minimum wage” and “a robust benefits package,” which he notes is a distinct choice that makes employees happier.

It’s also nice when you’re starting a hardware store within an established franchise to have a supply chain and the logistics of running the store all ready for you to utilize, rather than figuring it out on your own.

2. Write a business plan

Whether you go with a brand or strike out on your own, you should have a business plan that details how you’ll put your hardware store in the best position to succeed.

Important things to cover include:

Knowing your customer: What does your typical customer look like? Are they DIY landlords and contractors, or homeowners doing pet projects? Depending on who you’ll be catering to, the way your store is designed and the weight of your stock will change.

What your finances look like: How much do you need to start up? Once you do get going, what is your break-even point? What do you expect your cash flow to be like on a monthly basis? If you’re joining an established brand, IBISWorld notes you need a minimum of $150,000 unencumbered cash available for investment in a True Hardware, while Ace requires between about $820,000 and $1.5 million — the total depends on how big your store will be and other factors.

Your marketing plan: If you join a national brand, you’ll have access to all kinds of programs and events you can use to boost your profile. But you should also consider local, perhaps even offline marketing campaigns, loyalty programs for repeat customers and a flexible national catalog program.

Location: This one is a no-brainer. You’ll want somewhere with a lot of foot traffic that doesn’t cannibalize the business of other stores — or put you in a position to be cannibalized in return.

3. Invest in supplies and excellent customer service

According to IBISWorld, the three most important factors for success are the ability to control stock on hand, an experienced workforce and having a loyal customer base.

These are sentiments that Marren echoes when discussing why people come to his hardware store, as opposed to shopping online with Amazon or hitting a big box store.

“In my view, people come to us for interaction, information, personalization, and proximity. We're closer, friendlier, and we'll actually help you when you come in,” he says.

But even the friendliest store associates can’t do anything for customers if what the customers need isn’t in stock.

“The first rule of customer service is having the thing that someone wants to buy,” says Marren. “Invest in inventory and point of sale software that can analyze the stock and keep your inventory responsive.”

IBISWorld says that challenges to starting a smaller hardware store revolve around competition — mainly those larger retailers and home improvement stores. Marren agrees, noting that bigger stores have an economy of scale that gives them an edge.

So, if you can’t beat the bigger stores on price, you need to beat them with better, more helpful, happier employees. Keeping those employees happy (e.g., with the benefits package Marren described) will go a long way toward gaining the loyalty and quality effort you need to succeed.

4. Obtain the necessary permits, insurance and a business bank account

You’ll need to register your business with your secretary of state, apply for a business tax identification number (also known as an employer identification number, or EIN) from the IRS, and open a business checking account .

Establish revolving lines of credit with your hardware distributors as well as with your financiers, if you have them, whether they are traditional banks or online lenders.

Depending on where you’re setting up shop, you may need specific local, state and city permits — and you might want to visit with an attorney or accountant familiar with local standards to make sure you’re in compliance.

Finally, get the right business insurance: If you have employees (and it’s doubtful you’ll be running one of these stores all on your own), you need workers' compensation insurance — a commercial insurance policy that covers the store inventory against loss or injury claims from customers.

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5. Adapt your inventory, marketing and staffing

Your hardware store will hardly be a static entity. As the homeownership market changes, the seasons shift, or new challenges (and challengers) enter the scene, you’ll need to adapt your inventory, marketing campaigns, and staffing needs.

What should remain consistent is that you:

Continue to maintain inventory levels so that you’re never out of stock at a crucial moment.

Your commitment to keeping your staff informed and engaged is unwavering.

Always look to growth within your niche rather than overextending yourself.

As Marren puts it: “We take a more ecological view of the market — we fit a niche. We're not in the business of putting other local stores out of business.”

After all, since you’re starting a hardware store, you’re in the business of helping people improve their homes, and by extension, their lives. Conduct your business appropriately.

On a similar note...

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Hardware Shop Business Plan

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Planning to start a hardware store? The extensive marketplace and consistently rising demands make starting a hardware store a lucrative business venture.

Anyone can start a hardware shop, however, a business plan can help you raise funds and map out its scalability for prolific growth.

Need help writing a business plan for your hardware shop? You’re at the right place. Our hardware shop business plan template will help you get started.

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Free Business Plan Template

Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

  • Fill in the blanks – Outline
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How to Write A Hardware Shop Business Plan?

Writing a hardware shop business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Products & services:.

Highlight the products you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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hardware startup business plan

2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

  • General hardware store
  • Specialty hardware store (automotive supplies, construction hardware, etc)
  • Online hardware store
  • Industrial hardware store
  • Plumbing hardware store
  • Electrical hardware store
  • Describe the legal structure of your hardware store, whether it is a sole proprietorship, LLC, partnership, or others.
  • Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established hardware store, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your hardware shop business plan:

  • Conduct market research, industry reports, and surveys to gather data.
  • Provide specific and detailed information whenever possible.
  • Illustrate your points with charts and graphs.
  • Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Hardware products:

Mention the products your business will offer. This list may include product categories like,

  • Building materials
  • Plumbing materials
  • Electrical material
  • Safety and protective equipment
  • Hardware and fasteners

Mention if your hardware store offers any niche-specific services to the customers.

Quality measures

: This section should explain how you maintain quality standards and consistently provide the highest quality service.

Additional Services

In short, this section of your hardware plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your hardware store business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your hardware shop, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & machinery:.

Include the list of equipment and machinery required for hardware, such as pipe cutters, pipe threaders, showroom displays, and fixtures, pressure testing equipment, cutting and measuring tools, office equipment, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your hardware shop’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your hardware store, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

  • Add a table of contents for the appendix section to help readers easily find specific information or sections.
  • In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
  • Provide data derived from market research, including stats about the hardware industry, user demographics, and industry trends.
  • Include any legal documents such as permits, licenses, and contracts.
  • Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your retail hardware store business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

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This sample hardware shop business plan will provide an idea for writing a successful hardware plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our hardware shop business plan pdf .

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Frequently asked questions, why do you need a hardware shop business plan.

A business plan is an essential tool for anyone looking to start or run a successful hardware shop. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your hardware store.

How to get funding for your hardware shop?

There are several ways to get funding for your hardware shop, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

  • Bank loan – You may apply for a loan in government or private banks.
  • Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
  • Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
  • Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

How do I write a good market analysis in a hardware shop business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

  • Stating the objective of your market analysis—e.g., investor funding.
  • Industry study—market size, growth potential, market trends, etc.
  • Identifying target market—based on user behavior and demographics
  • Analyzing direct and indirect competitors.
  • Calculating market share—understanding TAM, SAM, and SOM.
  • Knowing regulations and restrictions
  • Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

How detailed should the financial projections be in my hardware shop business plan?

The level of detail of the financial projections of your hardware shop may vary considering various business aspects like direct and indirect competition, pricing, and operational efficiency. However, your financial projections must be comprehensive enough to demonstrate a complete view of your financial performance.

Generally, the statements included in a business plan offer financial projections for at least the first three or five years of business operations.

What key components should a hardware shop business plan include?

The following are the key components your hardware shop business plan must include:

  • Executive summary
  • Business Overview
  • Market Analysis
  • Products and services
  • Sales and marketing strategies
  • Operations plan
  • Management team
  • Financial plan

What's the importance of a marketing strategy in a hardware shop business plan?

Marketing strategy is a key component of your hardware shop business plan. Whether it is about achieving certain business goals or helping your investors understand your plan to maximize their return on investment—an impactful marketing strategy is the way to do it!

Here are a few pointers to help you understand the importance of having an impactful marketing strategy:

  • It provides your business an edge over your competitors.
  • It helps investors better understand your business and growth potential.
  • It helps you develop products with the best profit potential.
  • It helps you set accurate pricing for your products or services.

About the Author

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Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Hardware Store

Back to All Business Ideas

How to Start a Hardware Store

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 24, 2022 Updated on February 14, 2024

How to Start a Hardware Store

Investment range

$83,550 - $119,100

Revenue potential

$547,000 - $1.37 million p.a.

Time to build

1 – 3 months

Profit potential

$55,000 - $137,000 p.a.

Industry trend

With the growing interest in DIY projects, particularly among millennials, hardware stores have been thriving, expanding nearly 46% in the last decade. If you have a passion for tools, you could start your own hardware store, provide an invaluable local service and eventually grow into the next Ace Hardware or Home Depot. 

But first you’ll need to know the nuts and bolts of starting a business and being an entrepreneur. Luckily, that information is all packed into this handy step-by-step guide, which will prepare you to launch and operate a successful hardware store. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Starting a hardware store has pros and cons to consider before deciding if it’s right for you.

  • Resilient Market – Hardware stores even fared well during the pandemic
  • Provide Value – Tools are required for many necessary tasks
  • Good Money – Most tools are relatively expensive
  • Investment Required – Building inventory requires upfront money
  • Crowded Market – Compete with brands like True Value and Ace Hardware

Hardware store industry trends

Industry size and growth.

  • Industry size and past growth – The US hardware stores industry is worth $35.1 billion in 2022 after expanding 4.8% annually for the last five years.(( https://www.ibisworld.com/industry-statistics/market-size/hardware-stores-united-states/ )) 
  • Growth forecast – The US hardware store industry is projected to experience a very slight decline in 2022. 
  • Number of businesses – In 2022, 14,918 hardware store businesses are operating in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/hardware-stores-united-states/ )) 
  • Number of people employed – In 2022, the US hardware stores industry employs 169,387 people.(( https://www.ibisworld.com/industry-statistics/employment/hardware-stores-united-states/ )) 

hardware store industry size and growth

Trends and challenges

Trends in the hardware store industry include:

  • The DIY home improvement market is growing, led by millennials, with many hardware stores branding themselves as DIY stores and offering classes. 
  • Hardware delivery is on the rise, presenting an additional revenue opportunity for hardware stores.

Challenges in the hardware store industry include:

  • The proliferation of online hardware stores is creating new competition for traditional hardware stores.
  • The rise of stores like Home Depot and Lowe’s has driven many small hardware stores out of business. 

hardware store industry Trends and Challenges

How much does it cost to start a hardware store business?

Startup costs for a hardware store range from $85,000 to $120,000. The largest cost by far is the inventory. Other costs include the space rental and preparation. 

Alternatively, you could sharply reduce the initial costs by starting out with an online hardware store before opening a physical location. 

How much can you earn from a hardware store business?

Prices for items sold will obviously vary. These calculations will assume that your average customer will spend $50 Your profit margin after cost of goods sold, rent, labor, and overhead, should be about 10%.

In your first year or two, you might have 30 customers a day, bringing in $547,000 in annual revenue. This would mean $55,000 in profit, assuming that 10% margin. As your brand gains recognition and your store becomes more well known, you might get 75 customers a day. With annual revenue of $1,370,000, you’d make an outstanding profit of $137,000.

hardware store earnings forecast

What barriers to entry are there?

There are a few barriers to entry for a hardware store. Your biggest challenges will be:

  • The high startup costs of inventory
  • Facing a large number of competitors

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Step 2: hone your idea.

Now that you know what’s involved in starting a hardware store, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research hardware stores in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a small hardware store that offers DIY classes, or a hardware store that offers same-day delivery.

hardware startup business plan

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as plumbing supplies or power tools.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Your products will be any number of hardware items, from nails to power tools. You can earn additional revenue by offering deliveries or holding DIY classes.

How much should you charge for hardware?

Prices will vary by hardware item. Typically, you should mark up your prices from wholesale prices to have a gross profit margin of 40%. After the costs of rent, labor, and overhead, your net profit should be about 10%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be mainly homeowners and contractors. You should spread out your social media marketing to include TikTok, Instagram, Facebook, and LinkedIn.

Where? Choose a hardware store location

To choose the ideal hardware store location, start by researching the local market to pinpoint areas with strong demand for your products.

Opt for a location with good visibility, easy access by car and public transportation, and ample parking.

Ensure the chosen site has sufficient space for product display, storage, and customer flow.

Lastly, consider the competition, safety, and neighborhood quality, as these factors contribute to attracting and retaining customers.

You’ll most likely need to rent out a storefront. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

hardware store idea rating

Step 3: Brainstorm a Hardware Store Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “hardware” or “hardware store”, boosts SEO
  • Name should allow for expansion, for ex: “Ace Hardware Co.” over “Plumbing Parts Palace”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Hardware Store Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: A brief summary outlining the core elements of the hardware store business plan, including its mission, goals, and key financial projections.
  • Business Overview: An overview of the hardware store business, including its mission statement, location, legal structure, and a brief history or background.
  • Product and Services: A detailed description of the hardware products and services the store will offer, emphasizing the unique selling points and value proposition.
  • Market Analysis: An examination of the target market for the hardware store, including demographics, market size, trends, and potential opportunities and challenges.
  • Competitive Analysis: An assessment of the hardware store’s competitors, identifying strengths, weaknesses, opportunities, and threats in the market.
  • Sales and Marketing: A plan outlining how the hardware store will attract and retain customers, including marketing strategies, sales tactics, and promotional activities.
  • Management Team: Profiles of key individuals responsible for managing and operating the hardware store, highlighting their qualifications and roles.
  • Operations Plan: Details on how the hardware store will operate on a day-to-day basis, covering inventory management, suppliers, facilities, and other operational aspects.
  • Financial Plan: A comprehensive financial projection for the hardware store, including startup costs, revenue forecasts, profit and loss statements, and cash flow projections.
  • Appendix: Supplementary materials that provide additional information, such as resumes of key team members, detailed market research data, and any other supporting documents.

what to include in a business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hardware stores. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hardware store will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

types of business structures

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

hardware startup business plan

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

hardware startup business plan

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a hardware store business. 

types of business financing

Step 8: Apply for Hardware Store Business Licenses and Permits

Starting a hardware store business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hardware store business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as  LS Retail ,  Vend , or  Retail Pro , to manage purchasing, inventory, and invoicing.

  • Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

For your hardware store, the marketing strategy should focus on showcasing the variety and quality of your products, your expertise in home improvement and DIY projects, and your commitment to customer service. Emphasize any unique offerings like specialized tools, local products, or services such as tool rental or repair. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

  • Professional Branding : Your branding should convey reliability, quality, and expertise. This includes your store’s signage, logo, staff uniforms, and overall store layout and design.
  • Direct Outreach : Network with local contractors, tradespeople, and DIY enthusiasts. Offer workshops or training sessions at your store to draw in these customers.

Digital Presence and Online Marketing

  • Professional Website and SEO : Develop a website that lists your products, services, and store information. Use SEO best practices to rank for local searches related to hardware stores, home improvement, and DIY projects.
  • Social Media Engagement : Utilize platforms like Facebook, Instagram, and YouTube to showcase your products, share DIY tips, and highlight customer projects.

Content Marketing and Engagement

  • DIY Blog or Video Series : Share informative content about home improvement projects, tool usage tips, and DIY ideas. Video content can be particularly engaging and useful for demonstrating how to use certain tools or complete specific projects.
  • Email Newsletters : Regular newsletters can inform your customers about new products, upcoming workshops, and special promotions.
  • Expert Advice and FAQs : Offer expert advice sections or FAQs on your website to help customers with their DIY queries and position your store as a knowledgeable resource.

Experiential and In-Person Engagements

  • In-Store Workshops and Demonstrations : Host regular workshops or live demonstrations on various home improvement topics to attract customers to your store and engage with them directly.
  • Community Events : Participate in or sponsor local community events to increase brand visibility and connect with potential customers.

Collaborations and Community

  • Partnerships with Local Businesses : Collaborate with local contractors and home service businesses for mutual referrals. Partnering with local craftspeople or manufacturers can also diversify your product offerings.
  • Local School and Community Projects : Engage in local school projects or community building projects, providing materials or expertise.

Customer Relationship and Loyalty Programs

  • Loyalty Rewards Program : Implement a program offering discounts, points, or special perks to regular customers.
  • Contractor and Tradesperson Discounts : Offer special discounts or accounts for professional contractors and tradespeople to encourage repeat business.

Promotions and Advertising

  • Targeted Local Advertising : Use local newspapers, radio, community boards, and online platforms to advertise your store and any special promotions or events.
  • Seasonal Promotions and Sales : Take advantage of seasonal cycles in home improvement and gardening to offer relevant promotions and sales.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hardware store meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hardware store business could be: 

  • Your hometown hardware store has you covered! 
  • All the hand and power tools at great prices
  • Your #1 resource for DIY projects 

unique selling proposition

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a hardware store, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in hardware stores for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in hardware. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a hardware store business include:

  • Store Clerks – make sales, customer service
  • General Manager – scheduling, ordering, inventory management, accounting
  • Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Hardware Store – Start Making Money!

Good old-fashioned hardware stores are an important part of any community. Many people prefer the small local shop, rather than going into a store that looks like a giant warehouse and getting lost. If you have a passion for tools and DIY, you could create a community hardware store, provide value to customers, and start building your hardware empire! 

You’ve got business knowledge in your toolbelt now, so it’s time to hit the ground running and start your successful hardware store. 

  • Hardware Store Business FAQs

Yes, hardware stores can be very profitable. The key is to offer a variety of hardware items and provide great customer service that will keep people coming back.

The biggest hardware store company is The Home Depot, followed by Lowe’s and Menards.

A successful hardware store typically offers a wide range of products, excellent customer service, knowledgeable staff, fair pricing, and a convenient location. Additionally, successful hardware stores may provide additional services such as equipment rental, repair or installation services, or educational workshops and events.

To differentiate your hardware store from competitors, you could focus on providing a personalized and consultative approach to customer service, offering unique or specialized products, using eco-friendly and sustainable practices, or providing additional services such as delivery or installation. You could also consider partnering with local businesses or community organizations, hosting events or workshops, or using targeted advertising to attract new customers and encourage loyalty.

Effective marketing and advertising strategies for promoting your hardware store could include creating a strong online presence through social media and a user-friendly website, offering promotions or discounts to attract new customers and encourage loyalty, hosting events such as DIY workshops or tool demonstrations, using visual merchandising and signage to create an inviting and attractive shopping environment, and offering exceptional customer service to encourage positive word-of-mouth referrals. 

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  • Decide if the Business Is Right for You
  • Hone Your Idea
  • Brainstorm a Hardware Store Name
  • Create a Hardware Store Business Plan
  • Register Your Business
  • Register for Taxes
  • Fund your Business
  • Apply for Hardware Store Business Licenses and Permits
  • Open a Business Bank Account
  • Get Business Insurance
  • Prepare to Launch
  • Build Your Team
  • Run a Hardware Store - Start Making Money!

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StartupBiz Global

Starting Hardware Store Business Plan (PDF)

Hardware Store Business Plan

Starting a hardware store business is an incredibly lucrative venture, boasting robust profit margins and a constant demand for its products and services. As the backbone of any community’s building and repair needs, hardware stores serve as essential hubs where customers can find a wide range of tools, construction materials, and home improvement supplies. These stores are more than just places to purchase tools, supplies, and building materials—they are hubs of knowledge, expertise, and essential resources for homeowners, contractors, and DIY enthusiasts alike. In an era of rapid urban development and increasing home renovation projects, the hardware store industry remains resilient and holds significant growth potential.

It is projected that the 21 st century will continue to be characterized by concerted construction activities. That stems, in part, from the projected increase in the global population. Plus, regions that have had mostly archaic infrastructure are being upgraded. Governments and the private sector are stepping up property and infrastructure development projects. Overall, residential, commercial, and industrial domains are experiencing a construction boom. For instance, the most sought-after materials right now are concrete, steel, and wood. All these dynamics are creating a huge market for hardware supplies. Thus starting a hardware retail store is bound to be lucrative owing to the ever-expanding market.  This article will outline how to start the hardware store business, and the hardware store business plan – PDF, Word and Excel.

Market Research

Carrying out market research is essential before starting the hardware store business. Market research involves identifying a market for hardware products and services, including important measurable characteristics. Seek to find out the market size for hardware products and services. Whilst doing that find out the popular products or services being offered. Check out up to date hardware industry statistics to help you in those regards. There are usually major players already operating and you should study them. Find out what kind of hardware products and services they offer. Find out about the market shares they own and control. Take time to also evaluate their customer dynamics. All this will help you zone in on a strategic target market. That is why the other area to look into is consumer attributes. What are the general hardware buying habits of consumers in your intended target market? What do they buy, how often, and how much do they spend on average? What are their source of incomes and their average incomes? Whilst you can get ready-made reports on these details, it would be wise to also conduct surveys yourself. You can unearth more details this way. By putting all these together you get a comprehensive understanding of the market. You should ensure that you have a hardware business plan before you venture into this business.

Location And Premises for a Hardware Store

A significant percentage of the demand for hardware products and services stems from the construction industry. So you can identify a location at or near a steadily growing residential area where people are at various stages of constructing their houses. It isn’t enough to only look at the steady growth of such areas alone. These must be people who generally have substantial income levels such that they can afford to buy your products. So that shouldn’t be overlooked because you might regret it later if you don’t find out about it prior.

Your location must be spacious enough to have parking space that adequately accommodates any type of vehicle i.e. for customers and suppliers. The interior of the hardware complex will also have to be spacious with products well arranged in a way that optimizes customers’ buying experience. The road network surrounding or leading to the complex must be well networked and in good shape to promote ease of access for both vehicles and those walking in on foot. Your hardware store business plan should take into account the cost of purchasing or renting premises.

Permits/Licenses, Insurance & Business Bank Account

It depends on where you will be operating from but a hardware store business has to be licensed. In most cases it starts from the basic business or company registration that is mandatory. Then you will usually need a hardware store license. You will also have to be registered with the applicable revenue authority for tax purposes. Other types of permits or licenses might be needed depending on the nature of the hardware products or services you deal with. There are countless risk factors associated with running a hardware store. Your hardware store would need insurance cover for at least general liability, property, crime, and workers. You can get more comprehensive details from reputable insurance providers. In addition to all this you must open a business bank account for your hardware store. Desist from using your personal bank account for your hardware store operations. Having a dedicated business bank account streamlines taxation and bookkeeping. It also presents an authentic brand image. It shields you from business debt liability thus protecting your personal assets. In cases where you need to apply for funding it increases your chances of being considered. Costs of insurance and licenses should be included in your hardware store business plan.

Products for a Hardware Store Business

There’s a very broad range of hardware products that you can sell in your hardware store. Some of the broad categories are agricultural implements, tool sets, protective clothing, building materials, electrical items, plumbing supplies, ironwork materials. So the range of products you can sell is quite diverse e.g. cement, bricks, paint, steel rods (or bars), pipes, adhesives, timber products, door frames, window frames ceramics, various kinds of associated accessories, water reservoirs, glassware, safety shoes, nuts, bolts, nails, screws, work suits, various assortments of hand tools and so on.

Your product range can start relatively small and grow as you add more products informed by recurring customer needs. Earlier we discussed about doing market research because it greatly helps you in knowing what to put in stock. Obviously your hardware store business plan should include money for purchasing the hardware products. Usually as a business person you might be having financial challenges to startup the business so it would be important to know what’s in demand and start off with that.

hardware store business plan

Inventory Management

Inventory management (or inventory control) refers to the recording and tracking of hardware stock in your store.  Proper inventory management is key to having a profitable hardware store business. The goal is to maintain an optimum number or amount of all inventory items. You should be able to have in stock what a customer seeks. You should be able to detect in good time hardware items that need to be replenished. If this is not properly done it leads to disruptions in sales thus negatively affecting the profitability of your hardware store business. In this day and age you are better off using inventory management software than using manual approaches. The ideal setup is to have an electronic point of sale system or software (EPOS) for your hardware store business. An EPOS with an integrated inventory management function is the best.

Business Model

The business model is the fundamental framework that outlines how a hardware store operates, generates revenue, and creates value for its customers. In the hardware store industry, the most common business model involves the sale of a wide range of tools, building materials, hardware, and related products to both individual consumers and contractors. This model often relies on maintaining an extensive inventory of products to meet the diverse needs of customers. Revenue is primarily generated through the sale of these products, with profit margins varying based on the type of items sold.

To enhance profitability, hardware stores often adopt a mix of strategies. They may offer additional services such as tool rental, key cutting, paint mixing, or even repair services for certain tools and equipment. These supplementary services not only generate additional income but also create a more comprehensive customer experience, making the store a one-stop destination for various hardware-related needs.

In recent years, hardware stores have also embraced digital transformation by establishing an online presence. This allows customers to browse products, check inventory, and place orders online, which can significantly expand the store’s reach and customer base. Some hardware stores may also explore e-commerce as a complementary revenue stream, allowing them to tap into a broader market beyond their physical location. Overall, the hardware store business model continues to evolve to meet the changing needs and preferences of customers while remaining grounded in providing essential products and services for home improvement and construction projects.

Competitive Analysis

Competitive analysis is the assessment of the differences between your hardware store’s performance and that of its competitors. The goal is to detect and examine the factors that cause those differences. In essence you are studying your competition in order to outsmart them. What you unearth from competitive analysis informs your business strategy. Identify who your competitors are and segment them e.g. primary (major focus), secondary, and tertiary. Assess their place or stake in the market. Then do a comparison of what they offer and what you intend to offer. When doing competitive analysis for your hardware store business, you are not just assimilating information. The thrust is to identify market gaps which will be the openings you need. Lacking in skillsets and experience on the current players can be a market gap. You will also get to notice some outstanding pain points consumers still struggle with. Maybe there could be a hardware niche or niches that are underserved – those are market gaps. Regulatory and legislative aspects can also provide insights into market gaps. The marks of a well done competitive analysis will be you identifying market gaps.

Staff And Management

The effective running of a hardware business requires a significant workforce. As a rule of thumb staffing needs are always informed by your intended scale of operations. Some of the key areas in this business are operations management, supply chain management, financial management and inventory management. You’ll need cashiers/till operators, general hands, supervisors, shop attendants and customer attendants as some of the vital components of your operations management team.

The operations team will be central to overseeing the supply chain and inventory management aspects. You must understand that smooth flow of a hardware store business entails consistent monitoring and evaluation of stocks. There’s also a need for a seamless framework for timeous sourcing and receipt of stock from suppliers. Financial accounting is critically important for a hardware business so as to empirically keep track of all transactions.

A hardware shop business also draws more customers when it offers delivery services. Having marketing agents is also strategic because marketing needs serious attention in light of the existence of competitors. As you can see, synching and optimizing all these components together requires a strong and dedicated team. The top management will, depending on scale of operations, constitute of either qualified hired personnel or family members. The hardware business plan should include provisions of salaries for all your workforce.

The major causes of failure of hardware stores include poor financial management resulting in losses. No wonder financial accounting must be thoroughly done when running this business. It’s also encouraged that you conduct stock takes regularly, an exercise that’ll feed into your financial management efforts.

Marketing Plan

Digital marketing must be your biggest focus. Get a website developed for the business to have brand visibility online. Buttress this by setting up active social media accounts on Facebook, LinkedIn, WhatsApp, Instagram and Twitter. Leverage on those platforms’ features such as stories, reels, and status updates to daily send out brand awareness content. Take advantage of print (e.g. fliers, posters, banners) and digital (e.g. e-fliers) media for brand awareness. Aim at exhibiting or being at strategic events such as trade fairs, expos, and the like. Explore options to get featured in strategic publications such as blogs, newspapers, podcasts, radio shows, and so on. Come up with promotionals e.g. discounts. Institute a customer loyalty programme which will be instrumental in boosting word of mouth marketing. Engage social media influencers to tap into large pools of potential customers. Overall, strive to devote at least 5 percent of your revenue towards marketing initiatives. The hardware store business plan should include a proper marketing plan for your business.

Market for Hardware Products

There are several customer sources for a hardware shop. These include building and construction (both new constructing projects and renovations), Do It Yourself (DIY) projects, agriculture industry, electrical and plumbing projects, and maintenance work. Property owners carry out renovations, upgrades, repairs on their properties, and to do that they need hardware products.  Other potential customers for a hardware store business include construction companies, organisations, housing cooperatives, schools, private companies, individuals, farmers and the government.

Keys To Profitability

Starting a hardware store business can be a lucrative venture, but like any other business, success depends on various factors. To ensure profitability in your hardware store, it’s crucial to focus on a few key strategies. First and foremost, effective inventory management is essential. Maintaining the right balance of products, avoiding overstocking or understocking, and regularly reviewing your inventory can help reduce carrying costs and increase your bottom line. Additionally, understanding your target market and offering products that cater to their specific needs and preferences can set you apart from the competition and boost sales. Diversifying your product range is essential. Offering a diverse selection of products, including traditional hardware items, seasonal products, tools, gardening supplies, and home improvement materials, can attract a broader customer base and increase sales opportunities throughout the year. Cost control is another crucial aspect of profitability. Carefully monitor expenses and overhead costs, and regularly review your financial statements to identify areas where you can cut unnecessary spending. Negotiating favorable terms with suppliers, considering bulk purchasing for commonly sold items, can help you secure better pricing on products, increasing your profit margins.

An efficient store layout and visual merchandising are critical. Creating an organized and visually appealing store layout that makes it easy for customers to find what they need can encourage impulse purchases and boost overall sales. Proper signage and strategic product placement can further enhance the shopping experience. Provide exceptional customer service. Customers often return to stores where they receive personalized assistance, expert advice, and a pleasant shopping experience. Well-trained and knowledgeable staff can make a significant difference in customer satisfaction and loyalty. Embracing technology and modernizing your hardware store operations can contribute to profitability. Implementing point-of-sale systems, inventory management software, and an online presence can streamline processes, improve efficiency, and attract a wider customer base. Marketing and promotion are indispensable for drawing customers to your hardware store. Utilize a combination of traditional advertising methods, such as local newspapers and flyers, along with digital marketing techniques like social media, email campaigns, and a user-friendly website. Offering promotions, discounts, and loyalty programs can incentivize repeat business and increase revenue.

Advantages Of A Hardware Store Business

Starting a hardware store business offers several compelling advantages that make it a promising venture in the retail industry. First and foremost, hardware stores benefit from a steady and consistent demand for their products. Whether it’s for routine home maintenance, DIY projects, renovations, or construction work, people rely on hardware stores year-round, providing a reliable customer base that can help stabilize your store’s revenue over time. Providing excellent customer service and a well-stocked inventory can lead to repeat business. Many customers return to hardware stores for ongoing projects, maintenance, or additional supplies. Building a loyal customer base can contribute significantly to long-term success.

Another significant advantage is the diverse product range that hardware stores typically offer. From basic tools and fasteners to power equipment and building materials, these establishments cater to a broad spectrum of customers, including homeowners, contractors, do-it-yourself enthusiasts, and hobbyists. This diversity not only broadens your customer base but also increases sales opportunities, as customers often find a wide array of products under one roof, making their shopping experience more convenient. The business is also very profitable. While individual items may have lower profit margins, hardware stores often make up for it through the volume of sales. High inventory turnover and a consistent flow of customers results in healthy overall profit margins.

Additionally, hardware stores tend to be recession-resistant businesses. During economic downturns, people often prioritize home maintenance and smaller-scale improvement projects, rather than undertaking major renovations or new construction. This inclination toward more modest projects can lead to increased sales for hardware stores, making them relatively resilient in challenging economic times. This stability is a compelling advantage for entrepreneurs looking to invest in a business with long-term sustainability.

Why You Need A Hardware Store Business Plan

A business plan is instrumental in helping you comprehend the profitability of your hardware store business by providing a detailed financial analysis. It outlines the expected revenue streams, including sales projections, pricing strategies, and market demand analysis. Moreover, it delves into the various factors that impact profitability, such as operational costs, volumes sold and markup margins. By quantifying these variables and examining their interplay within the plan, you can gain a comprehensive understanding of the financial landscape, enabling you to make informed decisions, identify potential areas for cost optimization, and ultimately enhance the profitability of your hardware store.

A business plan is also an essential tool for securing funding for your hardware store business. It serves as a detailed blueprint that demonstrates your business’s viability, growth potential, and financial projections to potential investors, lenders, or partners. A well-structured business plan showcases your understanding of the market, competition, and target audience, instilling confidence in financiers about the soundness of your venture. It provides a clear roadmap for how you intend to utilize the funding and achieve your business objectives, giving investors assurance that their investment will be wisely used. In essence, a business plan is your persuasive document that not only attracts financial support but also establishes a sense of trust and credibility, making it a vital tool in securing the funding needed to launch or expand your hardware store.

A comprehensive hardware store business plan is an indispensable asset for those embarking on or expanding their hardware store ventures. It provides clarity of vision, enabling you to define your store’s mission, vision, and objectives clearly. Articulating your business’s purpose and outlining your goals ensures that you and your team are on the same page, working towards a common vision. It also serves as a strategic roadmap, delineating the strategies and tactics essential for your hardware store’s growth and development. This roadmap helps in making informed decisions and acts as a reference point for measuring progress and making necessary adjustments in a dynamic market landscape.

Pre-Written Hardware Store Business Plan (PDF, Word And Excel): Comprehensive Version, Short Funding/Bank Loan Version and Automated Financial Statements

For an in-depth analysis of the hardware store business, we encourage you to purchase our well-researched and comprehensive hardware business plan. We introduced the business plans after discovering that many were venturing into the hardware business without enough knowledge and understanding of how to run the business, lack of understanding of the financial side of the business, lack of understanding of : the industry, the risks involved , costs and profitability of the business; which often leads to disastrous losses.

The StartupBiz Global hardware shop business plan will make it easier for you to launch and run your hardware store business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. It will be easier to plan and budget as you will be aware of all the costs involved in setting up and running the hardware business.

Uses of the Hardware Business Plan (PDF, Word And Excel)

The hardware shop business plan can be used for many purposes including:

  • Raising capital from investors/friends/relatives
  • Applying for a bank loan
  • Start-up guide to launch your hardware retail business
  • As a hardware store business proposal
  • Assessing profitability of the hardware business
  • Finding a business partner
  • Assessing the initial start-up costs so that you know how much to save
  • Manual for current business owners to help in business and strategy formulation

Contents of the Hardware Store Business Plan (PDF, Word And Excel)

The hardware business plan include, but not limited to:

  • Industry Analysis
  • Marketing Strategy
  • Market Analysis
  • Financial Statements (monthly cash flow projections, income statements, cash flow statements, balance sheets, break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortization)
  • Risk Analysis
  • SWOT & PEST Analysis
  • Operational Requirements
  • Operational Strategy
  • Why some people in the hardware business fail, so that you can avoid their mistakes
  • Ways to raise capital to start your hardware store business

The hardware business plan package consists of 4 files

  • Hardware Store Business Plan – PDF file (Comprehensive Version – 70 Pages)
  • Hardware Shop Business Plan – Editable Word File (Comprehensive Version – 70 Pages)
  • Hardware Store Business Plan Funding/Bank Loan Version- Editable Word File (Short version for applying for a loan/funding – 44 pages)
  • Hardware Store Business Plan Automated Financial Statements – (Editable Excel File)

The business plan can be used in any country and can be easily edited. The financial statements are automated. This implies that you can change eg the percentage markup, salaries etc, and all the other financial statements will automatically adjust to reflect the change. 

Click below to download the Contents Page of the Hardware Store Business Plan (PDF)

Hardware Business Plan PDF

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Many thanks for your incredibly efficient service and thorough business plan. I am very impressed with the business plan. Before I bought the business plan, I tried to do my own business plan – it was such a nightmare and it turned out badly, also not to mention the stress it caused me. I wish I knew about your website earlier!

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StartupBiz Global provided a very professional and comprehensive business plan which I used for my business. The business plan was easy to edit, and I was able to get the funding which I wanted. I highly recommend their business plans.

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Get the Hardware Business Plan (PDF, Word And Excel)

Click Buy Now  below to purchase using Paypal, Credit Card, or Debit Card. After you have purchased, you will immediately see the download link for the business plan package on the screen. You will also immediately get an email with the business plan download link. The Pre-written business plan package (PDF, Word, and Excel) costs $30 only!

hardware store business plan

If you want to purchase multiple business plans at once then click here: Business Plans Store.

The business plan package is a zipped compressed file containing the PDF, Word and Excel documents. To open the package after downloading it, just right click, and select Extract All. If you have any problems in downloading and opening the files, email us on [email protected] and we will assist you.

We wish you the best in your hardware store business! Check out our collection of business plans  , and more business ideas .

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Home » Sample Business Plans » Wholesale & Retail

How to Write a Hardware Store Business Plan [Sample Template]

Are you about starting a hardware store? If YES, here is a complete sample hardware store business plan template & feasibility report you can use for FREE . So we have considered all the requirements for starting a hardware store. We also took it further by analyzing and drafting a sample hardware store business marketing plan template backed up by actionable guerrilla marketing ideas for hardware stores. So let’s proceed to the business planning section .

Why Start a Hardware Store Business?

If you are looking for a business to start as an entrepreneur and you know you have an interest in running a store, then you should consider starting your own hardware store business. Although you don’t need a college degree to establish your own hardware store, but you would need some form of informal training.

It would help you to learn how to manage your own store. It is important to point out that hardware store business is one the businesses that can’t go out of fashion because of the role it plays in our society.  The startup capital for this type of business can be considered to be moderate.

As a matter of fact, you can start your own hardware store and then grow it big within a short period of time by reinvesting your profits back to the business. Below is a sample hardware store business plan template that will help you successfully write yours without much stress

A Sample Hardware Store Business Plan Template

1. industry overview.

Stores in the Hardware Stores industry primarily retail a broad range of home renovation equipment and related supplies. Products such as hardware, plumbing, electrical and paint-related tools et al are the most commonly stocked goods you will likely find in a hardware store.

If you are a follower of happenings in the industry, you would have noticed that the industry has steadily improved over the five years to 2017. As the housing market has strengthened and consumer confidence has revived, individuals have started home improvement projects that had been put on hold during the recession.

Low mortgage rates during the period have also encouraged individuals to purchase and renovate new and existing homes. This flurry of construction activity has boosted demand for industry products from both contractors and do-it-yourself consumers. Going forward, revenue generated by the Hardware Stores industry is projected to grow at a slower rate.

The Hardware Stores Industry is indeed a large industry and pretty much active in all the countries of the world. Statistics have it that in the united states of America alone, there are about 19,935 registered and licensed hardware stores scattered all across the United States responsible for directly employing about 148,516 people and the industry rakes in a whooping sum of $24 billion annually.

The industry is projected to grow at 1.3 percent within 2011 and 2016. It is important to state that Ace Hardware, Do It Best and True Value Company have the largest chunk of the available market share in the industry. A recent report published by IBISWorld shows that the Hardware Stores industry has moderate barriers to entry.

The report further stated that high startup costs and the saturated nature of the market may deter new companies from entering the industry. Operators that plan to enter this industry need to consider the capital investment required to establish or purchase a store.

For example, to be eligible to join True Value Company, prospective operators must have a minimum of $150,000 unencumbered cash available for investment, while the total investment to open an Ace store ranges from $823,495 to $1,563,495, depending on store size and other variable factors. Of the total investment, $150,000 to $250,000 cash is needed.

The tough part as it relates to start-up costs most likely are the need to establish a supply of hardware and other related goods from wholesalers or directly from manufacturing companies. This is so because a hardware store business cannot be started without sourcing products for sale.

Regardless of moderate barriers to entry, the competitive nature of the industry makes it very difficult for new operators to break even within a short period of time in the industry.

Lastly, the Hardware Stores industry is pretty much open for aspiring entrepreneurs to launch their business. One good thing about hardware stores business is that the business can be opened in any part of the United States and if proper market survey and feasibility studies are conducted, then you can be rest assured of the profitability of the business.

2. Executive Summary

Mike Mendez® Hardware Stores, Inc. is a standard hardware store that will be located in High Street, Short North Arts District, Columbus – Ohio. We have been able to lease a facility that is big enough (a 4 thousand square foot facility) to fit into the design of the kind of standard hardware store that we intend launching and the facility is located in a corner piece along a major road close to one of the largest residential estates in Columbus – Ohio.

Mike Mendez® Hardware Stores, Inc. will retail products such as hardware, tools, plumbing and electrical supplies, lawn, garden and farm supplies, paint and lumber and other building materials from different manufacturers in the United States and abroad. We are set to service a wide range of clientele in and around Columbus – Ohio.

We are aware that there are several large and small chains of hardware store outlets all around Columbus – Ohio, which is why we spent time and resources to conduct a thorough feasibility studies and market survey so as to be well positioned to favorably compete with all our competitors.

We have an online – service option for our customers, and our outlet is well secured with various payments of options. Mike Mendez® Hardware Stores, Inc. will ensure that all our customers are given first class treatment whenever they visit our store.

We have a CRM software that will enable us manage a one on one relationship with our customers no matter how large our customer base may grow to. We will ensure that we get our customers involved in the selection of brands that will be in our store and also when making some business decisions that directly affects them.

Mike Mendez® Hardware Stores, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our customers’ needs precisely and completely whenever they patronize our products. Mike Mendez® Hardware Stores, Inc. is a family business that is owned by Mike Mendez and his immediate family members.

Mike Mendez has a Diploma in Business Administration with over 5 years of experience in the retailing stores industry, working for some of the leading brands in the United States. Although the business is launching out with just one outlet in Columbus – Ohio, but there is a plan to open other outlets in major cities in the United States and Canada.

3. Our Products and Services

Mike Mendez® Hardware Stores, Inc. is in the hardware stores industry to service a wide range of clients and of course to make profits, which is why we will go all the way to make available a wide range of hardware and other related products from top manufacturing brands in the United States and other countries of the world.

Our product offerings are listed below;

  • Retailing hardware
  • Retailing tools and equipment
  • Retailing plumbing fixtures and fittings
  • Retailing electrical supplies
  • Retailing paint and supplies
  • Retailing garden products and equipment

4. Our Mission and Vision Statement

  • Our vision is to become one of the leading brands in the hardware stores industry in Columbus – Ohio and in other key cities in the United States of America and Canada.
  • Our mission is to establish a world – class hardware store business that will make available a wide range of hardware and other related products from top manufacturing brands at affordable prices to the residents of Columbus – Ohio and other key cities in the United States of America and Canada where we intend opening chains of hardware retail stores.

Our Business Structure

Mike Mendez® Hardware Stores, Inc. do not intend to start a hardware retail store business like the usual mom and pop business around the street corner; our intention of starting a hardware retail store business is to build a standard retail store outlet in Columbus – Ohio.

Although our hardware retail store business might not be as big as Ace Hardware, Do It Best and True Value Company et al, but will ensure that we put the right structures in place that will support the kind of growth that we have in mind while setting up the business.

We will ensure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stakeholders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more. In view of that, we have decided to hire qualified and competent hands to occupy the following positions;

  • Chief Executive Officer (Owner)
  • Store Manager
  • Human Resources and Amin Manager

Merchandize Manager

Sales and Marketing Manager

Information Technologist

  • Accountants / Cashiers
  • Sales Agents / Customer Services Executive

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

  • Grows management’s effectiveness by employing, selecting, orientating, preparation, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
  • Accountable for fixing prices and signing business deals
  • Accountable for providing direction for the business
  • Builds, interconnects, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
  • Accountable for signing checks and documents on behalf of the company
  • Evaluates the success of the organization

Admin and HR Manager

  • Responsible for overseeing the smooth running of HR and administrative tasks for the organization
  • Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Defines job positions for recruitment and managing interviewing process.
  • Carries out staff induction for new team members.
  • Responsible for training, evaluation and assessment of employees.
  • Accountable for arranging travel, meetings and appointments.
  • Oversees the smooth running of the daily office cum business activities.

Store Manager:

  • Responsible for managing the daily activities in the store.
  • Ensures that proper records of hardware and other related products are kept and the warehouse does not run out of products.
  • Ensures that the store facility is in tip top shape and goods are properly arranged and easy to locate.
  • Interfaces with third – party suppliers.
  • Controls hardware distribution and supply chain inventory.
  • Oversees the workforce in the hardware sales floor.
  • Manages vendor relations, market visits, and the ongoing education and development of the organizations’ buying teams
  • Helps to ensure consistent quality of hardware, tools, plumbing and electrical supplies, lawn, garden and farm supplies, paint and sundries and lumber and other building materials et al from different manufacturers are purchased and retailed in good price that will ensure we make good profit
  • Accountable for planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
  • Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
  • Model demographic information and analyze the volumes of transactional data generated by customer purchases
  • Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
  • Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
  • Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
  • Develops, executes and evaluates new plans for expanding sales
  • Document all customer contact and information
  • Represents the company in strategic meetings
  • Helps to increase sales and growth for the company
  • Manages the organization’s website
  • Handles ecommerce aspect of the business
  • Responsible for installing and maintenance of computer software and hardware for the organization
  • Manages logistics and supply chain software, Web servers, e-commerce software and POS (point of sale) systems
  • Manages the organization’s CCTV
  • Handles any other technological and IT related duties.

Accountant/Cashier:

  • Accountable for preparing financial reports, budgets, and financial statements for the organization
  • Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
  • In control of financial forecasting and risks analysis.
  • Performs cash management, general ledger accounting, and financial reporting
  • Responsible for developing and managing financial systems and policies
  • Responsible for administering payrolls
  • Ensures compliance with taxation legislation
  • Handles all financial transactions for the organization
  • Serves as internal auditor for the organization

Client Service Executive

  • Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
  • Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
  • Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries
  • Finds out the customer’s needs, recommend, select and help locate the right merchandise, describe a product’s features and benefits.
  • make suggestions and encourage purchase of products
  • Provides information about warranties, manufacturing specifications, care and maintenance of merchandise and delivery options
  • Bags or packages purchases
  • Responsible for cleaning all the products and the store facility at all times.
  • Ensures that toiletries and supplies don’t run out of stock.
  • Handles any other duty as assigned by the store manager.

6. SWOT Analysis

Our intention of starting just one outlet of our hardware retail store in Columbus – Ohio is to test run the business for a period of 3 to 5 years to know if we will invest more money, expand the business and then open other outlets all over major towns in Ohio and key cities in the United States.

We are quite aware that there are several hardware retail stores all over Charleston and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.

Mike Mendez® Hardware Stores, Inc. employed the services of a Business Analyst with bias in retailing to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives. This is the summary of the SWOT analysis that was conducted for Mike Mendez® Hardware Stores, Inc.;

Ability to control stock on hand, experienced work force and having a loyal customer base are some of our core strength. So also, our location, the business model we will be operating, varieties of payment options, wide range of hardware and other related products from different manufacturing brand and our excellent customer service culture will definitely count as a plus for Mike Mendez® Hardware Stores, Inc.

A major weakness that may count against us is the fact that we are a new hardware retail store outlet in Columbus – Ohio and we don’t have the financial capacity to compete with multi – million dollars’ hardware retail store outlets like Ace Hardware, Do It Best and True Value Company and co when it comes to retailing at rock bottom prices.

  • Opportunities:

The fact that we are going to be operating our hardware retail store in a corner piece property along a major road close to one of the largest residential estates in Columbus – Ohio provides us with unlimited opportunities to sell our hardware and other related products to a large number of individuals.

We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they visit our hardware store outlets.

Just like any other business, one of the major threats that we are likely going to face is economic downturn. Another threat that may likely confront us is the arrival of a new hardware store in same location where ours is located. So also, unfavorable government policies may also pose a threat to businesses such as ours.

7. MARKET ANALYSIS

  • Market Trends

Recent trends in the hardware industry show that external competition has slightly dampened both industry revenue and profit growth. Hardware stores have shifted business models to deal with heightened external competition and they will continue to be pressured by online retailers and larger home improvement stores. Experts projected that in 2017, the hardware stores industry is expected to profit from growing global economic conditions.

The hardware retail stores landscape has seen tremendous changes in the last 20 years; it has grown from the smaller outlets to a more organized and far reaching venture. The introduction of franchise and online store makes it easier for a hardware retailer to reach out to a larger market far beyond the areas where his physical store is located.

8. Our Target Market

Those who patronize hardware stores cut across all genders above 18 years with the financial means, and who own an apartment or office/business hence the target market for the hardware store business is all encompassing. In essence, your target market can’t be restricted to just a group of people but all those who reside in and around our store location.

In view of that, we have positioned our hardware retail store to service the residents of High Street, Short North Arts District, Columbus – Ohio and every other location where franchise cum outlets of our hardware retail stores will be located.

We have conducted our market research and feasibility studies and we have ideas of what our target market would be expecting from us. We are in business to retail a wide range of hardware and other related products to the following groups of people and corporate organizations;

  • Construction and Real Estate Companies
  • Banks, Insurance Companies and other related Financial Institutions
  • Real Estate Owners, Developers, and Contractors
  • The Government (Public works department)
  • Schools (High Schools, Colleges and Universities)
  • Sport Facilities
  • Individuals and households

Our Competitive Advantage

A close study of the hardware stores industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry.

We are aware of the stiff competition and we are well prepared to compete favorably with other leading stores in Columbus – Ohio and throughout the United States. Mike Mendez® Hardware Stores, Inc. is launching a standard one stop hardware store that will indeed become the preferred choice of residents of Columbus – Ohio and every other location where our outlets will be opened.

One thing is certain; we will ensure that we have a wide range of hardware and other related products from leading manufacturers available in our store at all times. It will be difficult for customers to visit our store and not see the type of hardware they are looking for. Our excellent customer service culture, online store, various payment options and highly secured facility will serve as a Competitive Advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives. We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

  • Sources of Income

Mike Mendez® Hardware Stores, Inc. is in business to retail a wide range of hardware and other related products to the residents of Columbus – Ohio. We are in the hardware stores industry to maximize profit and we are going to go all the way out to ensure that we achieve or business goals and objectives.

Mike Mendez® Hardware Stores, Inc. will generate income by selling the following products;

10. Sales Forecast

When it comes to hardware retail stores, if your store is well stocked with various types of hardware and centrally positioned, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.

We are well positioned to take on the available market in Columbus – Ohio and we are quite optimistic that we will meet our set target of generating enough income from the first six months of operation and grow the business and our clientele base.

We have been able to critically examine the hardware retail industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions that are peculiar to startups in Columbus – Ohio.

Below are the sales projections for Mike Mendez® Hardware Stores, Inc. it is based on the location of our business and other factors as it relates to hardware retail startups in the United States;

  • First Fiscal Year: $250,000
  • Second Fiscal Year: $450,000
  • Third Fiscal Year: $750,000

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor within our market space. Please note that the above projection might be lower and at the same time it might be higher.

  • Marketing Strategy and Sales Strategy

Before choosing a location for Mike Mendez® Hardware Stores, Inc. we conducted a thorough market survey and feasibility studies in order for us to penetrate the available market. We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time.

We hired experts who have good understanding of the hardware retail industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Columbus – Ohio.

In other to continue to be in business and grow, we must continue to sell the hardware and other related products that are available in our store which is why we will go all out to empower or sales and marketing team to deliver. In summary, Mike Mendez® Hardware Stores, Inc. will adopt the following sales and marketing approach to win customers over;

  • Open our store in a grand style with a party for all.
  • Introduce our hardware store by sending introductory letters alongside our brochure to residents, businesses and other key stakeholders in Columbus – Ohio.
  • Ensure that we have a wide range of hardware and other related products from different brands at all times.
  • Make use of attractive hand bills to create awareness and also to give direction to our store.
  • Position our signage/flexi banners at strategic places around Columbus – Ohio
  • Position our greeters to welcome and direct potential customers.
  • Create a loyalty plan that will enable us reward our regular customers.
  • Engage in roadshows within our neighborhood to create awareness for our hardware retail store.
  • List our business and products on yellow pages ads (local directories).
  • Leverage on the internet to promote our business.
  • Engage in direct marketing and sales
  • Encourage the use of Word of mouth marketing (referrals).
  • Join local chambers of commerce and industries to network and market our products.

11. Publicity and Advertising Strategy

Despite the fact that our hardware retail store is well located, we will still go ahead to intensify publicity for the business. We are going to explore all available means to promote our hardware retail store.

Mike Mendez® Hardware Stores, Inc. has a long-term plan of opening outlets in various locations all around Ohio and key cities in the United States and Canada which is why we will deliberately build our brand to be well accepted in Columbus – Ohio before venturing out.

As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Mike Mendez® Hardware Stores, Inc.;

  • Place adverts on community based newspapers, radio and TV stations.
  • Encourage the use of word of mouth publicity from our loyal customers.
  • Leverage on the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
  • Ensure that we position our banners and billboards in strategic positions all around Columbus – Ohio.
  • Distribute our fliers and handbills in target areas in and around our neighborhood.
  • Advertise our hardware retail store business in our official website and employ strategies that will help us pull traffic to the site.
  • Brand all our official cars and trucks and ensure that all our staff members and management staff wears our branded shirt or cap at regular intervals.

12. Our Pricing Strategy

Aside from quality, pricing is one of the key factors that gives leverage to hardware retail stores, it is normal for consumers to go to places where they can get hardware and other related products at cheaper price.

In view of that, our prices will conform to what is obtainable in the industry but we will ensure that within the first 6 to 12 months, our products will be sold a little bit below the average price of various hardware stores in the United States of America. We have put in place business strategies that will help us run on low profits for a period of 6 months; it is a way of encouraging people to buy into our brand.

  • Payment Options

The payment policy adopted by Mike Mendez® Hardware Stores, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Mike Mendez® Hardware Stores, Inc. will make available to her clients;

  • Payment via bank transfer
  • Payment with cash
  • Payment via credit cards/Point of Sale Machines (POS Machines)
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
  • Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client make payment for our hardware and other related purchases without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our products.

13. Startup Expenditure (Budget)

From our market survey and feasibility studies, we have been able to come up with a detailed budget on achieving our aim of establishing a standard hardware shop in Columbus – Ohio and here are the key areas where we will spend our startup capital;

  • The total fee for registering the business in the Unites States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of Mike Mendez® Hardware Stores, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant – $2,500.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $105,600.
  • The cost for shop remodeling (construction of racks and shelves) – $20,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ( $2,500 ).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for start-up inventory  – $350,000
  • The cost for counter area equipment – $9,500
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost of purchase and installation of CCTVs: $10,000
  • The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
  • The cost of launching a website: $600
  • The cost for our opening party: $7,000
  • Miscellaneous: $10,000

We would need an estimate of $750,000 to successfully set up a standard hardware retail store in Columbus – Ohio.

Generating Funds/Startup Capital for Mike Mendez® Hardware Stores, Inc.

Mike Mendez® Hardware Stores, Inc. is a private registered business that is solely owned and financed by Mike Mendez and his immediate family members. They do not intend to welcome any external business partner which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.

These are the areas we intend generating our startup capital;

  • Generate part of the startup capital from personal savings
  • Source for soft loans from family members and friends
  • Apply for loan from my Bank

N.B: We have been able to generate about $250,000 (Personal savings $200,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $500,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.

One of our major goals of starting Mike Mendez® Hardware Stores, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to retail our wide range of products such as hardware, tools, plumbing and electrical supplies, lawn, garden and farm supplies, paint and sundries and lumber and other building materials et al from different manufacturers (brands) a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

Mike Mendez® Hardware Stores, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

  • Business Name Availability Check: Completed
  • Business Registration: Completed
  • Opening of Corporate Bank Accounts: Completed
  • Securing Point of Sales (POS) Machines: Completed
  • Opening Mobile Money Accounts: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of Insurance for the Business: Completed
  • Leasing of facility and remodeling the shop: In Progress
  • Conducting Feasibility Studies: Completed
  • Generating capital from family members: Completed
  • Applications for Loan from the bank: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents and other relevant Legal Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Graphic Design and Printing of Promotional Materials: In Progress
  • Recruitment of employees: In Progress
  • Purchase of the needed furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business both online and around the community: In Progress
  • Health and Safety and Fire Safety Arrangement (License): Secured
  • Opening party planning: In Progress
  • Compilation of our list of products that will be available in our store: Completed
  • Establishing business relationship with vendors – manufacturers and suppliers of hardware and other related products: In Progress

More on Wholesale & Retail

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How to Start a Hardware Store

start a hardware store

Starting a hardware store can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful hardware store.

Importantly, a critical step in starting a hardware store is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

14 Steps To Start a Hardware Store :

  • Choose the Name for Your Hardware Store
  • Develop Your Hardware Store Business Plan
  • Choose the Legal Structure for Your Hardware Store
  • Secure Startup Funding for Your Hardware Store (If Needed)
  • Secure a Location for Your Business
  • Register Your Hardware Store with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Hardware Store
  • Buy or Lease the Right Hardware Store Equipment
  • Develop Your Hardware Store Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Hardware Store
  • Open for Business

1. Choose the Name for Your Hardware Store

The first step to starting a hardware store is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your hardware store:

  • Make sure the name is available . Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  • Keep it simple . The best names are usually ones that are easy to remember, pronounce and spell.
  • Think about marketing . Come up with a name that reflects the desired brand and/or focus of your hardware store.

2. Develop Your Hardware Store Business Plan

One of the most important steps in starting a hardware store is to develop your business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  • Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your hardware store.
  • Company Overview – this section tells the reader about the history of your hardware store and what type of hardware store you operate. For example, are you a home improvement store, a specialty hardware store, or a big-box store?
  • Industry Analysis – here you will document key information about the hardware industry. Conduct market research and document how big the industry is and what trends are affecting it.
  • Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
  • Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  • Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
  • Product : Determine and document what products/services you will offer 
  • Prices : Document the prices of your products/services
  • Place : Where will your business be located and how will that location help you increase sales?
  • Promotions : What promotional methods will you use to attract a loyal customer base to your hardware store? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  • Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  • Management Team – this section details the background of your company’s management team.
  • Financial Plan – finally, the financial plan answers questions including the following:
  • What startup costs will you incur?
  • How will your hardware store make money?
  • What are your projected sales and expenses for the next five years?
  • Do you need to raise funding to launch your business?

Finish Your Business Plan Today!

3. choose the legal structure for your hardware store.

Next you need to choose a legal structure for your hardware store and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the hardware store owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to open a hardware store together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a hardware store include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a hardware store is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your hardware store, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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4. Secure Startup Funding for Your Hardware Store (If Needed)

In developing your hardware store business plan, you might have determined that you need to raise funding to launch your business. 

If so, the main sources of funding for a hardware store to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a hardware store that they believe has high potential for growth.

5. Secure a Location for Your Business

There are a few things to consider when looking for a location for your hardware store. 

First, you’ll want to think about the population of the area. You’ll want to be sure there are enough people in the area who will be potential hardware shoppers. 

Additionally, you’ll want to think about the competition. If there are already several independent hardware stores in the area, you’ll need to find a location that offers something different or better than what is already available. 

You’ll also need to find a space that is big enough to fit all of your inventory. Finally, you’ll want to think about your budget and find a location that is affordable.

6. Register Your Hardware Store with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire store personnel, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

7. Open a Business Bank Account

It is important to establish a bank account in your hardware store’ name. This process is fairly simple and involves the following steps:

  • Identify and contact the bank you want to use
  • Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  • Complete the bank’s application form and provide all relevant information
  • Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your hardware store to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing a small business loan and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

To launch a hardware store, you will need a business license and a tax ID number. You will also need to contact your local zoning commission to find out what restrictions are placed on hardware stores in your area. Depending on the size of your store and how it will be laid out, you may need a building permit.

10. Get Business Insurance for Your Hardware Store

The insurance you need to operate a hardware store may vary depending on your state’s laws and regulations. 

Some common business insurance policies you should consider for your own shop include:

  • General liability insurance : This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
  • Auto insurance : If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
  • Workers’ compensation insurance : If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
  • Commercial property insurance : This covers damage to your property caused by fire, theft, or vandalism.
  • Business interruption insurance : This covers lost income and expenses if your business is forced to close due to a covered event.
  • Professional liability insurance : This protects your business against claims of professional negligence.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

11. Buy or Lease the Right Hardware Store Equipment

To run a hardware store, you will need the following equipment: cash register, computer, phone, security cameras, and shelves.

12. Develop Your Hardware Store Marketing Materials

Marketing materials will be required to attract and retain customers to your hardware store.

The key marketing materials you will need are as follows:

  • Logo : Spend some time developing a good logo for your hardware store. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  • Website : Likewise, a professional hardware store website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
  • Social Media Accounts : establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your hardware store.

13. Purchase and Setup the Software Needed to Run Your Hardware Store

To run a hardware store, you will need accounting software and customer relationship management (CRM) software. You will also need software that will help you manage your inventory, track your sales, and create purchase orders. Additionally, you will need a point of sale (POS) system to handle purchases made by customers.

14. Open for Business

You are now ready to open your hardware store. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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How to Start a Hardware Store FAQs

Is it hard to start a hardware store.

No, it is fairly easy to launch a hardware store. All you need is an idea of the type of product you want to sell and where you want to sell it. You should also define your business model and plan how you're going to market, promote, maintain, and manage it.

How can I start a hardware store with no experience?

There are a few ways to go about starting a hardware store with no retail and hardware experience. One way would be to research the industry and learn as much as possible about the business. Another option would be to team up with someone who has experience in the industry. Finally, you could take on a consultant to help you get started. Whichever path you choose, make sure you have a clear plan and are prepared to put in the hard work necessary to make your own hardware store a success.

What type of hardware store is most profitable?

Generally speaking, stores that sell higher-priced items such as appliances or tools tend to be more profitable than stores that sell lower-priced items such as plumbing supplies or light bulbs. Additionally, stores that are located in high-traffic areas tend to be more profitable than stores that are located in low-traffic areas.

How much does it cost to start a hardware store?

It can cost a lot of money to open a hardware store. You'll need to invest in inventory, and you'll also need to pay for rent, utilities, and employee salaries.

Some startup costs involved in starting a hardware store include:

  • Security system 
  • Computer system 
  • Purchasing inventory
  • Credit card machines
  • Building a retail space
  • Fixtures and display cases
  • Licenses and permits

What are the ongoing expenses for a hardware store?

Ongoing expenses for a hardware store generally include utilities, rent, and inventory. Additional expenses to keep in mind include insurance and wages.

How does a hardware store make money?

Hardware store owner s make money by selling products to repair or improve a home. These products can include tools, building supplies, appliances, and more. The store makes money by selling products and by charging customers for the labor to install hardware or appliances.

Is owning a hardware store profitable?

Owning a hardware store can be a profitable business venture. This is because hardware shops typically have high margins. This means that the store can sell products at a higher price than it paid for them, and thus make a profit. 

Why do hardware stores fail?

Most hardware stores lose a large portion of their clientele due to the internet and the fast-paced shopping experience that comes with it. A lot of people now choose to order online because they can do so from the convenience of their own homes with the click of a mouse. Most often these transactions will be cheaper as well.

Another common reason hardware stores fail is from being in business for too long without changing their offerings with evolving customer preferences. Sometimes they fail because consumers simply need different goods than what the old-fashioned store offers. For instance, key cutting, lawn care booklets, or landscaping materials may not be as in demand as they once were.

Finally, some chain retail hardware stores fail because they are in the wrong location. If the store is in a location that is not easily accessible or visible to passersby, it may not get enough customers to sustain its operations.

Other Helpful Business Plan Articles & Templates

Business Plan Template & Guide For Small Businesses

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The Key Elements of a Business Plan for Hardware Startups

As an advisor to new hardware entrepreneurs, I often hear the myth that a business plan is no longer required to find an investor, if your idea is good enough.

hardware startup business plan

This article is written by Marty Zwilling who is an angel investor and startup business consultant. He is also one of the experts in the Hardware Academy .

You may have heard that venture capitalists in Silicon Valley no longer read business plans. What you don’t realize is these famous investors only deal with entrepreneurs who sold their last company for a $100M dollars or more.

For the rest of us, we need a business plan, as well as a product plan. Some of you may be convinced that your product specification communicates the product message even better than a business plan, so why be redundant?

Get your FREE Ultimate Guide - How to Develop and Prototype a New Electronic Hardware Product in 2023

Let me assure you that a business plan and product plan are two different things. You need both to survive.

To be clear, I define a product specification as the technical definition of your product, to be used for development and testing purposes, with a quick business summary for context.

A business plan is the outward facing definition of the business you hope to drive with your hardware solution, with a hardware overview in the intro to highlight customer value and competitiveness.

You may not be familiar with the key elements of a business plan, and the way to use it correctly to support and add credibility to your hardware solution. So I offer the following outline for how to organize and present your business plan, with specific examples:

Table of Contents

Start by outlining customer problem and your solution

Use non-fuzzy terms to quantify customer value. For example, “We just patented a new battery technology that will cut your smartphone charge time and cost in half.”

Be sure to include this in your “elevator pitch,” which you must always deliver as a prelude to your technology features.

Description of the business entity you plan to form

The most common business entity used for startups is a Limited Liability Corporation (LLC), which is the cheapest and simplest to manage.

If your goal is a large national corporation with more than 100 investors, and multiple classes of stock, you might prefer a C-Corp or S-Corp.

Quantify the market opportunity in business terms

The answer is not “if we build it, they will come.” Investors and advisors want to see recent survey data and projections from industry professionals here, not just your opinion.

For example, “Nielsen projects that the market for smart phones will double every year for the next five years.”

Highlight your advantages over three top competitors

Call out your top competitors, highlighting your sustainable competitive advantage, including patents, trade secrets, and trademarks. Don’t denigrate your competitors, but use their limits to highlight your edge.

For example, rather than saying, “Competitor X has poor reliability,” use a positive approach to list your reliability features compared to X. If possible, quantify these in non-technical business terms, such as dollars saved or replacement costs over time.

Provide specifics on the customer business model

All startups need revenue to thrive, such as from subscriptions, retail sales, online sales, licensing, or services.

Positioning your hardware solution at a low cost may sound attractive to customers, but it won’t attract investors. They want to see revenue to share in the return.

Document why your team is the best for this challenge

Don’t assume titles will convey this information. Professional investors and even customers invest in people, rather than just a product.

NOTE: If you are a member of the Hardware Academy you should highlight that in your business plan since it shows you are getting guidance from industry experts.

Include marketing, sales, and customer rollout plans

Don’t let your passion convince you that word-of-mouth and viral marketing will suffice against well-funded competitors and ever more demanding customers.

Set specific targets for the sales channels and marketing initiatives you need, including the use of social media, brand building, franchising, trade shows, affiliates, and distributors. Budget time and dollars for each.

Target income and expenses by year plus funding

Here I recommend a 5-year projection of revenue, expenses, and funding requirements. Major milestones along the way should be outlined.

Scale your funding requests to the value of your startup today, consisting of assets, contracts, and intellectual property you currently own. The best way to do this is to reference actual data from a recent similar startup success.

Investors look for high-growth-potential companies who can double revenues yearly, hit break-even in two or three years, and penetrate at least 10 percent of the opportunity you quantified for the first five years, to give them a 10X return on their investment.

Outline a viable exit strategy for you and investors

Investors want to know how and when they might see some return on their investment, since startups require some event to show value.

The options here include going public (IPO), merger/acquisition, liquidate, or no exit (just paying off investors). Most investors don’t want long-term commitments.

Summarize all of the above in an executive summary

Since everyone wants a quick overview of the whole plan, you need a tightly written and formatted two-page content summary, using the first paragraph of each of the above sections.

This summary is often extracted as marketing collateral, with text and graphics for pitch handouts.

Based on my experience in the investment world, aspiring entrepreneurs seeking an investment with no written business plan are routinely requested to come back later, when “you have more traction.”

Every good technologist should start with at least a single page business plan, or construct a “pitch deck” of maybe a dozen PowerPoint slides to cover all the important content.

Most of the business plans I see getting funded today are less than 30 pages in total, even including financial statement attachments.

Final Thoughts

What investors expect, and what you should be looking to provide for your own use, are answers to all the relevant questions a good advisor might ask about your business goals, objectives, structure, and milestones over time.

I personally find that writing down my business plan is a good discipline for thinking through all the issues, and doing the research on the alternatives available.

I know from experience that most investors look for written plans to separate what they call “hobbyists” from serious entrepreneurs.

If you have no idea what needs to be included in your business plan, fortunately there are many useful templates available online and books on how to write business plans are in every bookstore.

Several software applications are also available to at least partially automate this process. Part of the fun of starting a business is the learning process, and this is an easy place to start.

If all else fails, working on your business plan is a good time to ask for help from a peer entrepreneur, or follow up on a friendly relationship with someone who has been there and done that.

In fact, if you lack prior business experience this is your best opportunity to attract a co-founder who has the business skills and interests that are complementary to your strengths.

Keep in mind that multiple  studies  have found that entrepreneurs who create a good business plan at least double their chances of securing funding and growing a business to change the world.

Other content you may like:

  • Lesson 2: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
  • Business Models and Recurring Revenue for Hardware Startups
  • 5 Most Impactful Mistakes You May Not Survive
  • The First Critical Steps When Bringing a New Hardware Product to Market
  • Lesson 1: The Strategic Way to Develop and Sell Your New Electronic Hardware Product

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A Touch of Business

How to Start a Hardware Store

Main Sections In This Post Steps To Starting A Hardware Store Points to Consider Knowledge Is Power Featured Video

This article provides a comprehensive blueprint for initiating a hardware store. Within, you’ll find an array of examples and samples.

Access the latest information in our “Knowledge Is Power” section, tailored for startup stages and ongoing operations.

Considering the extensive information, consider sharing and saving this post for future reference.

Let’s get started with the steps.

The Steps to Take To Start Your Hardware Store

Below are the steps to starting a hardware store.

Each step is linked to a specific section, allowing you to jump to your desired section or scroll to follow the steps in order.

  • An Overview of What You’re Getting Into
  • Hardware Store Overview
  • Researching Your Hardware Store
  • Looking at Financials
  • Creating Your Mission Statement
  • Creating A Unique Selling Proposition (USP)
  • Choose a Hardware Store Name
  • Register Your Company
  • Create Your Corporate Identity
  • Writing a Business Plan
  • Banking Considerations
  • Getting the Funds for Your Operation
  • Software Setup
  • Business Insurance Considerations
  • Supplier and Service Provider Considerations
  • Setting Your Prices
  • Physical Setup
  • Creating a Website
  • Create an External Support Team
  • Hiring Employees
  • Getting Customers Through the Door

1. An Overview of What You’re Getting Into

Engaging in a profession that aligns with one’s passions is a blessing. The degree of passion you possess can significantly determine your success, especially in owning and operating a hardware store.

Passion serves as a compass during challenging times. A passionate individual seeks solutions when confronted with issues, while one without it might consider an exit strategy .

Consider this scenario:

Imagine a life where you’re financially secure, owning every desired asset, free from debts, with a robust savings account and a consistent monthly income from wise investments.

Here’s a pivotal question: Would you willingly run a hardware store without any monetary gain if financial constraints were non-existent?

A ‘yes’ indicates a genuine passion for the hardware store business. Conversely, a ‘no’ invites introspection. What endeavor truly captures your heart? Perhaps it’s wiser to chase that dream.

To conclude, a genuine passion for the hardware business can strongly predict success. Before diving in, ensure your heart and intentions align with the venture.

For More, See How Passion Affects Your Business . Also, see Considerations Before You Start Your Business to identify key points for a new business owner.

2. Gaining an Overview of Owning a Hardware Store

Next, let’s spend some time on key issues to give you an overview of what to expect from owning and running your business.

a.) A Quick Overview of Owning a Hardware Store

A hardware store is a retail establishment primarily selling tools, equipment, and supplies necessary for home improvement, maintenance, and repair projects. This can include nails, screws, hand and power tools, plumbing and electrical supplies, gardening products, and paint.

The daily operations of running and managing a hardware store encompass a range of tasks:

  • Inventory Management: Regularly checking, restocking, and organizing inventory. This ensures products are readily available and easy to find for customers.
  • Customer Service: Assisting customers by answering questions, offering product recommendations, and helping locate items. Ensuring customer satisfaction is paramount.
  • Sales and Checkout: Managing point-of-sale transactions, handling cash, processing electronic payments, and issuing receipts.
  • Staff Supervision: Overseeing staff, assigning tasks, and ensuring they are adequately trained on store products and equipment.
  • Store Maintenance: Keeping the store clean, orderly, and safe for customers and employees. This includes tidying up aisles, ensuring neat displays, and promptly addressing safety concerns.
  • Bookkeeping and Administration: Tracking sales, expenses, and profits. This also involves handling any required paperwork or permits and ensuring compliance with local regulations.
  • Marketing and Promotion: Implementing strategies to attract customers, including sales promotions, advertisements, or loyalty programs.
  • Supplier Relations: Regularly communicating with suppliers, placing orders, and negotiating prices or delivery terms.

Running a hardware store requires balancing customer service, inventory management, staff supervision, and administrative tasks.

The ultimate goal is to ensure customers find what they need, receive excellent service, and leave satisfied, all while maintaining a profitable operation.

b.) Hardware Store Models

While offering a similar core product range, hardware stores can be differentiated by their setup and business model.

Here’s a concise list of hardware store types and their respective business models:

  • Traditional Brick and Mortar: This is the most common setup, where the store is in a physical space. The revenue is generated primarily through in-store sales, often with the addition of services such as tool rentals or repair services.
  • Franchise Model: Entrepreneurs buy into a known brand and follow their established business operations. The upfront investment is higher, but there’s the advantage of brand recognition and an established customer base.
  • Online Hardware Stores: A purely digital presence where products are sold online and shipped to customers. The primary revenue is generated through online sales, potentially augmented by affiliate marketing or advertising.
  • Specialty Stores: These stores focus on a particular niche within the hardware domain, e.g., only plumbing or electrical supplies. The business model often involves high expertise in the chosen niche and may offer specialty services related to the products.
  • Warehouse-Style Stores: Larger than traditional hardware stores, these establishments operate on a bulk buying and selling model. They often offer a broader product range at competitive prices.
  • Membership-Based Wholesale Stores: These cater primarily to professionals in the trade and require membership for shopping. The business model relies on annual membership fees and bulk sales.
  • Mobile Hardware Vans: These are mobile stores, often catering to specific job sites or areas without a nearby hardware store. The model revolves around the convenience of bringing products directly to the customer.

Choosing a suitable business model from the beginning is crucial, as switching your model later is more challenging.

Identifying a business model that feels right for your hardware store is essential for a smooth and structured startup phase.

c.) Making Your Hardware Store Stand Out

  • Specialized Knowledge: Staff should be well-versed in the products they’re selling. Free workshops on basic home repairs or DIY projects can create a loyal customer base that appreciates the extra value.
  • Eco-Friendly Products: Dedicate a section to sustainable and eco-friendly products, showcasing your store’s environmental commitment.
  • Innovative Displays: Use interactive displays that allow customers to test tools or see demonstrations of how certain products work.
  • Loyalty Programs: Implement a points system or discounts for regular customers to encourage repeated business.
  • Local Artisan Corner: Dedicate a corner for local artisans to display their hand-crafted items, turning part of your store into a mini marketplace.
  • DIY Kits: Offer curated DIY kits with all the necessary items for specific projects, simplifying customer shopping.
  • Customization Services: Offer paint-mixing stations where customers can choose custom colors or engraving services for tools.
  • Seasonal Themes: Rotate product displays based on seasons or upcoming holidays, showcasing relevant products prominently.
  • Interactive Mobile App: Develop an app to help users visualize their DIY projects, create shopping lists, or locate items within the store.
  • Community Engagement: Host community events or sponsor local initiatives, making your store a recognized and respected part of the community.

d.) Add-ons for a Hardware Store

  • Tool Rental Service: Not everyone wants to buy tools for one-time use. A rental service can cater to these customers and bring in additional revenue.
  • Repair Services: Set up a corner where customers can bring damaged tools or equipment for repair.
  • Home Improvement Consultation: Collaborate with interior designers or carpenters who can offer in-store consultations for home improvement or redesign projects.
  • Delivery and Installation: Offer home delivery for bulky items. Add an option for professional installation, especially for complex equipment or fixtures.
  • Recycling Point: Set up a point where customers can return used batteries, light bulbs, or old tools, emphasizing your commitment to sustainability.
  • Workshop Spaces: Designate spaces where customers can attend workshops or even rent the space for their DIY projects if they lack space at home.
  • Custom Wood Cutting: Offer wood cutting services where customers can get wood cut to their specified dimensions.
  • Gardening Center: Expand into a gardening section where you offer plants, garden tools, and accessories. You could also offer landscaping consultation services.
  • Coffee Corner: A small coffee shop or kiosk inside the store can be a welcome addition for customers looking to take a break.
  • Gift Cards and Kits: Offer gift cards for those looking to gift shopping credits to others. Additionally, curated gift kits for DIY enthusiasts can be a hit during the holiday season.

In both endeavors – making your hardware store stand out and thinking of add-ons – it’s crucial to gauge the needs and preferences of your target audience.

Regularly collecting feedback and staying attuned to industry trends will aid in implementing the most effective strategies.

e.) Pros and Cons of Owning a Business

Owning a business brings both rewards and challenges. While many focus on the benefits, it’s essential to consider potential obstacles.

By understanding potential issues, you can anticipate and mitigate surprises, ensuring better preparedness.

For more, see Pros and Cons of Starting a Small Business.

f.) Challenges You Could Face When Starting and Operating a Hardware Store

Challenges When Starting a Hardware Store:

  • Capital Investment : One of the primary challenges is securing enough capital. Opening a hardware store requires a significant investment in inventory, equipment, and a suitable location.
  • Location Decisions : Finding the right location is crucial. It should be accessible in an area with potential customers but also consider competition proximity.
  • Inventory Management : Deciding what products to stock can be daunting. Too much inventory can tie up funds, while too little can lead to missed sales opportunities.
  • Supplier Relationships : A significant challenge is establishing reliable supplier connections to ensure a consistent stock of quality products.
  • Licensing and Permits : Navigating local regulations, obtaining necessary licenses, and staying compliant with zoning laws can be complicated and time-consuming.
  • Staff Hiring and Training : Recruiting the right team and ensuring they are adequately trained in customer service and product knowledge is essential for a positive store image.
  • Competition : The market might already have established hardware stores, initially making it difficult to secure a customer base.

Challenges When the Hardware Store is in Full Operation:

  • Customer Retention : Keeping customers loyal in a competitive market requires continuous effort in service, pricing, and product availability.
  • Inventory Turnover : Efficiently managing inventory so that products aren’t sitting on shelves too long, thereby tying up capital, can be an ongoing struggle.
  • Seasonal Demand Fluctuations : Hardware stores often experience seasonal variations in sales, which can challenge cash flow and inventory management.
  • Operational Costs : Rising rent, utility bills, or supplier costs can erode profit margins if not monitored and adjusted for.
  • Staff Turnover : The retail industry can have high turnover rates, leading to recurring hiring and training costs.
  • Keeping Up with Trends : The hardware industry can evolve with new products and technologies. Keeping updated and stocking modern items is essential.
  • Marketing and Promotions : Regularly devising effective marketing strategies to attract new customers while retaining the existing ones is a continual challenge.
  • Regulatory Changes : Local or national regulations might change, requiring adaptations in operations or products.
  • Unexpected Maintenance : Whether it’s a broken cash register or a malfunctioning HVAC system, unforeseen issues can arise that disrupt business and require unplanned expenses.
  • Economic Fluctuations : Economic downturns can decrease consumer spending on home improvement and hardware items.

In conclusion, starting and running a hardware store comes with various challenges.

Whether in the startup phase or full operation, understanding potential pitfalls is crucial to navigating them effectively and ensuring the business’s longevity.

g.) Questions You Need to Consider for Your Hardware Store

Starting a hardware store can be a rewarding endeavor, but it requires meticulous planning and foresight.

By answering the following questions, you will prepare yourself for some of the issues you may encounter if you start your hardware store.

  • Business Model : What type of hardware store model are you considering?
  • Skill Set : Do you have the skills to manage and operate a hardware store?
  • Workforce : Will you do all the work alone or hire employees? Do you intend to manage your business, or are you planning to hire a manager?
  • Customer Acquisition : How will you get customers?
  • Customer Retention : How will you keep customers coming back?
  • Partnerships and Investment : Are you interested in finding partners or investors?
  • Financing : How will you finance your startup costs?
  • Profitability Timeline : Have you considered how long it will take to become profitable?
  • Personal Finances : How will you support yourself during the early stage of operation, which can be financially challenging?
  • Product Lineup : What products and services will you offer?
  • Market Demand : How do you know people will want what you have to offer?
  • Unique Selling Proposition : What will you provide to differentiate you from your competition?
  • Positioning : How will you position your Hardware Store: High-End, Average, or discount operation?

These questions are fundamental starting points to evaluate your readiness and the viability of your hardware store venture.

3. Research

Inside information hardware store research.

Before embarking on your journey to start a hardware store, meticulous research is non-negotiable. Comprehensive information equips you with foresight, guarding against unforeseen setbacks.

One invaluable resource is the counsel of seasoned hardware store proprietors. Their experiential insights are reliable and enlightening, making time spent with them invaluable.

Identifying and approaching such individuals requires strategy and tact, topics extensively addressed in a dedicated article.

For a comprehensive guide on connecting with industry veterans, refer to An Inside Look Into the Business You Want To Start for all the details.

Supply, Demand, and Your Location

Determining market demand is a pivotal step before starting a hardware store, regardless of whether it is a physical location, an online venture, or a combination of both.

The absence of demand, irrespective of product quality or pricing, spells imminent business failure. A lack of demand equates to unsold inventory, unsustainable operations, and potentially insurmountable debts.

Competition Analysis:

Thoroughly analyze your competitors. Engaging with well-established competitors is an uphill battle unless you offer distinct and unparalleled services.

Maintaining a competitive edge becomes arduous if competitors can easily replicate your offers.

Location Choice for Physical Stores:

Ideally, your store’s location should be a confluence of ample demand and minimal competition.

While populated locations promise more foot traffic, ensuring the location’s rent or purchase cost doesn’t devour your potential profits is vital.

Conversely, while remote or less-populated areas might seem financially appealing, they might not offer the customer base needed for profitability.

Online Ventures:

In the digital realm, understanding market demand and competition is equally pivotal. Sole reliance on search engines for traffic in a saturated market might yield little to no visibility.

Simultaneously, traffic generation becomes a challenge if your product’s search volume is negligible.

Furthermore, international shipping considerations, like high costs and customs delays, become pertinent. Using local distributors in high-demand regions can be a solution.

Strategies to Determine Market Demand:

  • Surveys and Questionnaires: Deploy these in your target area to measure interest.
  • Analyze Competitor Sales: High sales figures in a region indicate demand.
  • Local Trade Shows and Exhibitions: Engage with potential customers and get firsthand insights.
  • Google Trends: Check for product search trends in specific regions.
  • Use Analytics Tools: Employ tools like SEMrush or Ahrefs to identify the search volume for your products.
  • Pilot Launch: Initiate a small-scale launch to assess demand before fully investing.
  • Feedback from Local Communities: Engage with local forums and communities to ascertain interest and demand.

In conclusion, knowing your market’s pulse is instrumental for business longevity and success.

Whether you choose a brick-and-mortar approach, an online store, or both, a calculated understanding of demand and competition is non-negotiable.

For more, see the Demand for Your Products and Services and Choosing The Best Location for Your Business.

Target Audience

The benefits of understanding your target audience are profound. A comprehensive knowledge of your target market facilitates tailored products and services.

Instead of casting a wide net and offering an extensive range of products, you can zero in on precisely what your customers want, optimizing inventory and marketing efforts.

Target Market Ideas for a Hardware Store:

  • Homeowners and renters undertaking DIY projects.
  • Local contractors and builders.
  • Landscapers and gardeners.
  • Property management companies.
  • Home improvement professionals.
  • Interior designers.
  • Local schools for craft and technical projects.
  • Local businesses needing maintenance supplies.

For more, see How To Understand Your Target Market.

4. Looking at Financials:

Understanding the numbers and making good decisions is a crucial factor in succeeding.

You will struggle to manage a successful operation without putting in the time and effort to understand and monitor the financials of your hardware store.

Let’s look at startup costs, operating costs and profits.

Start-Up Costs:

hardware startup business plan

Startup Cost:

Accurate estimation of startup costs is paramount for a smooth transition from planning to opening your hardware store.

Underestimation can lead to budget shortages, halting your startup, while overestimation portrays high risk.

Your costs hinge on factors like operation size, location, employee hiring, equipment type, and your online, rented, leased, or home-based business setup.

To estimate costs:

  • List requisites and obtain their prices.
  • Continual research might bring up overlooked expenses.

However, relying solely on sample estimates is not foolproof. No single source, including this, can provide precise costs—each business model is unique.

Operationally, online ventures are cost-effective, both in initiation and running. Whether it’s your primary operation or a home-based adjunct, it’s financially leaner than conventional brick-and-mortar setups.

For an accurate cost prediction, thorough research and obtaining precise estimates ensure that starting a hardware store is financially feasible for you.

Sample Startup Cost For a Hardware Store 

The purpose of the list below is to focus on the items in the list more than the numbers because these are general samples, and your figures will be different.

SAMPLE Estimated Startup Costs for a MID-Sized Hardware Store in the USA

Lease/Rent for Location

  • 12-months lease (monthly costs may vary based on location and size)
  • Lower Value: $3,000/month – Total: $36,000/year
  • Upper Value: $5,000/month – Total: $60,000/year

Store Build-Out & Interior Setup

  • Shelving, display counters, interior decor
  • Lower Value: $10,000
  • Upper Value: $50,000

Initial Inventory Purchase

  • Tools, building materials, paint, plumbing supplies, electrical items, etc.
  • Lower Value: $100,000
  • Upper Value: $200,000

Point of Sale System & Software

  • Lower Value: $1,000
  • Upper Value: $5,000

Licensing and Permits

  • Business license, special permits for certain products, etc.
  • Lower Value: $500
  • Upper Value: $2,000

Insurance (1st Year)

  • Liability, property, workers’ compensation (if hiring from start)
  • Lower Value: $3,000
  • Upper Value: $7,000
  • Outdoor sign, indoor branding, department signs
  • Upper Value: $10,000

Marketing & Promotion

  • Grand opening advertising, flyers , initial online ads, etc.
  • Lower Value: $5,000
  • Upper Value: $15,000

Fixtures & Equipment

  • Cash registers, security system, trolleys, etc.
  • Lower Value: $15,000
  • Upper Value: $30,000

Professional Fees

  • Accountant, lawyer for setting up the business structure
  • Lower Value: $2,000
  • Upper Value: $6,000

Miscellaneous & Contingency

  • Unexpected costs and other minor expenses

TOTAL ESTIMATED STARTUP COSTS:

  • Lower Value Total: $180,500
  • Upper Value Total: $400,000

Note: These values are SAMPLE estimates and can vary based on a myriad of factors, including the specific location within the USA, current market conditions, and specific choices made by the business owner.

For more, refer to my article on Estimating Startup Costs.

Monthly Operating Costs:

Monthly operational costs for a hardware store can vary considerably based on numerous factors.

For instance, operating solo or with an entire staff can significantly shift monthly expenditures. Your location choice also plays a role: prime, high-traffic areas have a heftier price tag than less frequented spots.

Additional variances may arise from loan repayments, ambitious marketing endeavors, unforeseen repairs, etc. The concept is that numerous elements dictate your monthly outgoings.

Maintaining minimal expenses is pivotal to ensuring smooth business operations and managing revenue dips. However, curbing costs shouldn’t compromise quality, service, or efficiency.

SAMPLE list of estimated monthly expenses for a MID-sized hardware store

Again, the purpose of the list below is to focus on the item in the list more than the numbers. The numbers are a general idea, and your numbers and list will differ. 

Sample Monthly Expenses for a Mid-sized Hardware Store in the USA:

  • Upper Value: $1,200
  • Lower Value: $12,000
  • Upper Value: $20,000
  • Upper Value: $3,500
  • Lower Value: $800
  • Upper Value: $1,500
  • Upper Value: $3,000
  • Upper Value: $25,000
  • Lower Value: $300
  • Upper Value: $1,000
  • Lower Value: $200
  • Upper Value: $500
  • Miscellaneous (unexpected expenses, equipment replacement, etc.):

Total Monthly Expenses:

  • Lower Value: $29,300
  • Upper Value: $63,700

(Note: These values are hypothetical and can vary based on location, business decisions, market conditions, and other factors. Always consult with a financial expert when budgeting for a business.)

Looking at Profits

Understanding profit margins is crucial, but operational decisions largely determine your net profit. High overhead costs can substantially reduce profits, even with impressive sales figures.

Accurately estimating the profit of a hardware store is challenging due to myriad variables.

The setup, management style, and operational nuances are unique to each business, making the owner the most suitable person to estimate potential profits.

Your store’s high-end, standard, or discount positioning will directly affect your profit margin.

To get an idea of potential earnings, calculate the cost per sale, estimate monthly sales, and subtract your overhead.

Your sales strategy is also pivotal. A high-profit-per-item approach may fall short if sales volume is low.

Conversely, a strategy based on high volume with smaller profit margins demands ensuring each sale covers costs and still turns a decent profit.

For More, See Estimating Profitability and Revenue.

Final Thoughts on Financials 

The financial health of a hardware store is a critical component of its operational success.

Beyond the requisite tracking and recording of transactions for legal and tax obligations, there’s immense value in actively analyzing these financials.

You can discern underlying trends and patterns by consistently monitoring profits and expenses and generating insightful reports.

For instance, if there’s a noticeable dip in weekly sales, it prompts a deeper dive. Did market dynamics shift? Is there an issue with your product line or service quality? Has a new competitor emerged in the locality?

A passive approach to your hardware store’s finances can be perilous. When issues become overtly evident, rectifying them might be challenging, if not impossible.

Monitoring and proactive analysis of your financials can preempt potential problems, allowing for timely intervention.

Consider revisiting Step 3. Researching your hardware store , where there is a technique to get inside information, will benefit you in this step.

5. Create Your Mission Statement

A mission statement is pivotal in clearly defining the overarching purpose and objective of your business.

It acts as a compass, guiding every action and decision by highlighting the core values and primary goals.

For a business owner, it provides clarity, ensuring the organization remains aligned with its foundational principles.

It communicates the chief benefit they can expect from the business for customers and the community.

Examples of a mission statement for a hardware store:

  • “Empowering communities by providing high-quality tools and resources for every home project.”
  • “Delivering trust, reliability, and expertise in every product, every time.”
  • “Bridging the gap between ambition and accomplishment with the right hardware solutions.”
  • “Your neighborhood partner in building dreams and fixing challenges.”
  • “Commitment to quality, service, and community – one tool at a time.”

For more, see How To Create a Mission Statement.

6. Creating A Unique Selling Proposition (USP)

A Unique Selling Proposition (USP) pinpoints the distinct advantage or characteristic that makes a business stand out from its competitors.

Businesses must identify their USP, as it differentiates them in the market and communicates to customers the primary reason they should patronize that specific business over others.

A strong USP can command attention, foster customer loyalty, and drive sales, making it an essential aspect of a business’s strategy.

Examples of a USP for a hardware store:

  • “Get expert advice with every purchase – we hire professionals, not just salespeople.”
  • “24-hour delivery guarantee or your money back.”
  • “An unmatched range of eco-friendly tools and products for the conscious builder.”
  • “Every tool rented is a tree planted – building with a cause.”
  • “Specializing in rare and hard-to-find hardware parts – if we don’t have it, it doesn’t exist.”

7. Choose a Business Name

When selecting your business name , prioritize a memorable and pertinent name to the hardware industry. It should be easy to pronounce and evoke the trustworthiness and reliability customers expect from a hardware provider.

The long-term impact of your chosen name cannot be overstated, as it’s a moniker you’ll likely carry throughout your business’s existence.

Furthermore, a congruent domain name is crucial when establishing an online presence. It’s essential to ensure your desired name isn’t already in use by another entity.

Here Is a List of Sample Hardware Store Names:

  • BuildMate Hardware
  • UrbanEdge Tool Supply
  • ProCrafters Hardware Hub
  • TrueBlue Builders’ Mart
  • MetroMend Hardware Haven
  • CityScape Tool Center
  • EverBuild Hardware Emporium
  • PrimeGrade Tool Supply
  • FirstPick Builders’ Boutique
  • HandyHive Hardware House
  • PinnaclePro Hardware Haven
  • UrbanNest Tool Supplies
  • EliteEdge Hardware Outlet
  • CraftedCave Hardware Hub
  • SolidStone Tool Supply
  • ToolTrust Hardware Co.
  • ModernMend Hardware Market
  • TrustTech Tool Mart
  • MetroMaster Hardware Shop
  • Builder’s Bliss Tool Center
  • PeakCraft Hardware Point
  • UrbanElite Tool and Fix
  • EnduraEdge Hardware Solutions
  • BuilderBuddy Mart
  • Craftsmen’s Corner
  • EverTrust Hardware Center
  • CityCrafters Tool and Supply
  • PureCraft Hardware Shop
  • ToolTrend Hardware Boutique
  • BuildNest Hardware Solutions.

For more, see the following articles:

hardware startup business plan

  • How To Register a Business Name
  • Registering a Domain Name For Your Business

8. Register Your Company

Ensuring the legality of your business is paramount before starting operations. Failure to adhere to local, state, and federal regulations can lead to penalties, fines, or even a business shutdown.

Consulting a legal professional or business advisor is highly advisable to ensure compliance and maximize tax benefits and liability protection.

These experts can provide guidance tailored to your unique business model and location.

Common Types of Registrations for a Hardware Store:

  • Business Entity Registration (LLC, Corporation, Sole Proprietorship)
  • Employer Identification Number (EIN)
  • Sales Tax Permit
  • Doing Business As (DBA) Name

Permits and Licenses to Consider for a Hardware Store:

  • Business License: Required to operate legally within your municipality.
  • Sales Tax Permit: Necessary for selling goods in most states.
  • Sign Permit: If you’re putting up signage outside your store.
  • Health and Safety Permits: Ensuring the safety of your customers and employees.
  • Home Occupation Permit: If running a part of your business from home.
  • Seller’s Permit: Depending on your state, this may be necessary for retail operations.
  • Fire Department Permit: Required if you handle flammable materials.
  • Environmental Permits: If dealing with hazardous materials.

Registration:

  • How to Register Your Business
  • How To Register a DBA
  • How to Register a Trademark
  • How to Get a Business License

Business Structures:

  • How to Choose a Business Structure
  • Pros & Cons of a Sole Proprietorship
  • How To Form an LLC
  • How To Register a Business Partnership
  • How To Form a Corporation
  • How To Choose a Business Registration Service

9. Create Your Corporate Identity

A Corporate ID, or Corporate Identity, is a cohesive visual representation of your business. It includes your logo, business cards, website, business signage, stationery, and promotional materials.

These components collectively present a consistent and professional image to prospective and existing customers.

This uniformity not only builds brand recognition but also instills trust and credibility in the eyes of your clientele.

You can see our pages for an overview of your logo , business cards , website , and business sign , or see A Complete Introduction to Corporate Identity Packages.

10. Writing a Business Plan

A Business Plan Is Essential:

A business plan is a foundational tool for startups, critical for securing financing and attracting investors.

Beyond these initial uses, it serves as a roadmap, guiding you through establishing and growing your business.

It Takes Time and Effort to Create an Effective Business Plan:

Crafting a business plan demands both time and diligence. It visualizes your future business, requiring careful thought and articulation.

The investment in time pays off, offering clarity on startup requirements and operational strategies.

Options Are Available:

There’s flexibility in how you approach your business plan. You can start from zero, employ a professional, use predefined templates, or leverage business plan software.

Regardless of the method, your active involvement is paramount. Engaging an expert ensures your vision and operational ethos are effectively conveyed.

There Is a Good Chance That Your Business Plan and or Operations Will Change:

A business plan is not set in stone. With growing experience and evolving market conditions, adjustments might be necessary.

Business Plan Template for a Hardware Store

Executive Summary

  • Introduction: Briefly describe the hardware store, location, and target audience.
  • Mission Statement: Convey the store’s core purpose and its benefit to the community.
  • Objectives: Outline short and long-term goals, e.g., reaching X sales in the first year.

Business Description

  • Nature of the Business: Elaborate on the hardware store’s primary operations and products/services.
  • Industry Background: Discuss current trends, market size, and growth potential.

Market Analysis

  • Target Market: Describe your ideal customers, demographics, and buying patterns.
  • Competitive Analysis: Analyze the strengths and weaknesses of competitors and your store’s unique selling proposition.

Marketing and Sales Strategies

  • Product/Service Strategy: Detail your range of products or services.
  • Pricing Strategy: Explain your pricing model, considering market demand and competitor prices.
  • Promotion and Advertising: Outline plans for advertising, promotions, and customer loyalty programs .

Organizational Structure

  • Management Team: Highlight key team members, roles, and experiences.
  • Employee Roles: Describe roles, responsibilities, and potential salaries.

Operational Plan

  • Location: Discuss the location, considering factors like customer accessibility and rental costs.
  • Suppliers: List major suppliers and backup options.
  • Inventory Management: Describe the process for inventory control, restocking, and minimizing waste.

Financial Projections

  • Startup Costs: Break down initial costs like inventory, licensing, and location setup.
  • Sales Forecast: Project monthly sales for the first year, considering seasonal fluctuations.
  • Profit and Loss Statement: Provide a monthly P&L projection for the first year.
  • Break-Even Analysis: Calculate the point where the business will start making a profit.

Legal Considerations

  • Business Structure: Determine whether the store will operate as a sole proprietorship, partnership, LLC, etc.
  • Licenses and Permits: List required local, state, and federal permits.
  • Insurance: Describe the types of insurance needed, e.g., liability, property, workers’ compensation.
  • Resumes: Attach resumes of key management team members.
  • Supplementary Data: Include any additional information or studies that support the business plan.

Suggestions:

As you populate each section, remember to provide realistic data, backing claims with research where possible.

For financial projections, consider seeking assistance from an accountant familiar with the retail industry.

The more thorough and fact-based your business plan is, the more effective it will be for decision-making and securing investments.

See How to Write a Business Plan for information on creating your business plan.

11. Banking Considerations

Choosing a local bank that prioritizes small businesses can be advantageous.

A business account segregates personal and business transactions, simplifying expense tracking and accurate report generation for tax purposes.

Building a professional rapport with your banker can provide valuable insights and facilitate access to financial services.

Additionally, a merchant account or online service to process credit and debit card transactions is imperative, enhancing sales by offering convenience to customers.

For more, see How to Open a Business Bank Account. You may also want to look at What Is a Merchant Account and How to Get One.

12. Getting the Funds for Your Operation

Various options exist when seeking financing for your hardware store, including traditional banks, private loans, securing investors, or liquidating personal assets.

Additionally, government grants tailored for startups might be available to assist in your endeavor.

Considerations When Meeting a Loan Officer:

  • Be punctual and professional.
  • Research and understand the bank’s lending criteria.
  • Be prepared to articulate your business plan and vision.
  • Anticipate questions regarding the loan’s purpose and amount.
  • Be honest about potential risks and your mitigation plans.

Sample List of Documents Needed for a New Business Loan:

  • Detailed business plan.
  • Personal financial statement.
  • Credit report.
  • Cash flow projections for at least a year.
  • Personal and business income tax returns.
  • Resumes of key business personnel.
  • Legal documents: business licenses, articles of incorporation, franchise agreements, if applicable.
  • Collateral documentation if required.

For more, see the following:

  • Getting a Small Business Loan
  • SBA Small Business Grants
  • Search: Hardware Store Start-up Loans
  • Search: Grants For a Hardware Store

13. Software Setup

Selecting the right software from the outset is crucial for your hardware store. Implementing a system initially is more straightforward than transferring data between different platforms later.

Always opt for established software companies to ensure future support.

Use demos when offered to get a feel of the system before investing.

Peruse software reviews and forums to gain insights into others’ experiences. For accounting purposes, consult your bookkeeper or accountant to select the best software tailored to your needs.

Types of Software a Hardware Store Owner Might Use:

  • Inventory Management Software: To track and manage stock levels.
  • Point of Sale (POS) System: For processing sales and transactions.
  • Accounting Software: For managing financials and taxes.
  • Employee Scheduling Software: To handle staff shifts and hours.
  • Customer Relationship Management (CRM) Software: For managing customer interactions.
  • E-commerce Platform: If offering online sales.
  • Security Software: To protect against theft and unauthorized access.
  • Supply Chain Management Software: To manage supplier relationships and orders.

Check out Google’s latest search results for software packages for a hardware store.

14. Get The Right Business Insurance

Ensuring your hardware store is adequately insured is paramount, as unforeseen incidents can occur without warning.

The right insurance safeguards your business assets and the well-being of customers, employees, and visitors on site.

Professional liability insurance can shield you from potential lawsuits arising from operational mishaps.

Moreover, Interruption Insurance can prove invaluable, providing financial support if an unexpected event forces your business to close temporarily.

Engaging a skilled insurance broker is advisable to navigate the complexities of insurance policies, ensuring you obtain comprehensive coverage tailored to the unique risks of running a hardware store.

For more, see What to Know About Business Insurance . You can also browse the latest Google search results for hardware store insurance .

15. Suppliers and Service Providers

Choosing suitable suppliers and service providers is foundational for a hardware store.

Dependable suppliers ensure consistent inventory, enabling smooth operations and satisfied customers.

Securing competitive prices from them can enhance your profit margins, benefiting the business and its clientele. A symbiotic relationship, where both parties benefit, promotes longevity and trust.

Items and Services from Suppliers:

  • Power tools and hand tools
  • Paints and solvents
  • Fasteners (nails, screws, bolts)
  • Lumber and building materials
  • Electrical and plumbing supplies
  • Gardening tools and supplies
  • Safety equipment
  • Cleaning products

Services from Providers:

  • Equipment maintenance and repair
  • Point-of-sale system services
  • Delivery and logistics
  • Shelving and storage solutions
  • Marketing and promotional materials
  • Professional training for employees

Maintaining mutual respect and ensuring financial advantages for both parties solidifies the business relationship, ensuring steady support when needed.

For More, See How To Choose a Supplier.

16. Setting Prices

Thoroughly researching pricing when initiating a hardware store is pivotal. Appropriate pricing not only influences your profit margins but also dictates market positioning. Overpricing may deter potential customers, rendering you uncompetitive.

On the other hand, underpricing, while potentially increasing customer volume, can endanger sustainability by diminishing profits and potentially preventing you from covering operational expenses.

Striking a balance is paramount. This involves understanding the market landscape, competitor pricing, and the intrinsic value of your products and services.

A well-calculated price should reflect the current market conditions and the distinct value your hardware store provides, ensuring profitability and market relevance.

See the following for more:

  • Setting the Price of Your Products and Services
  • Search Results for Pricing Strategies for a Hardware Store.

17. Physical Setup

Inventory Management:

Effective inventory management is paramount to success in the realm of hardware stores.

This entails a careful balance between purchasing and displaying products that customers genuinely desire instead of trying to push items that hold little appeal.

The primary objective here is to offer a diverse range of products that augment the value proposition for your clientele.

Controlling your inventory quantity is the fine line to tread in this aspect. An excess of stock can lead to financial resources being tied up unnecessarily, which could be better allocated elsewhere in your business.

Conversely, insufficient inventory will result in missed sales opportunities. Therefore, meticulous inventory control is a requisite for any hardware store owner.

Strategic Product Display:

How you present your products is just as significant as what you choose to stock.

To maximize sales, it is essential to strategize your product displays. Experimentation and record-keeping of various display setups will help pinpoint the most effective methods.

Expiry Dates Consideration:

While managing inventory, be mindful of expiry dates, particularly for items subject to such constraints.

Avoid stocking products with impending expiration dates, as these can lead to losses due to unsold goods. Striking the right balance here is key to minimizing waste while satisfying customer demand.

Layout and Setup:

The layout and setup of a hardware store play a pivotal role in customer experience. Ensure that your store is organized logically, with products categorized sensibly.

This facilitates ease of navigation for customers and helps them quickly find what they need. Adequate signage and labeling can enhance the overall shopping experience.

Signage Placement:

A well-thought-out signage strategy is integral to your hardware store’s professionalism. Your main business sign should be prominent and easily visible from a distance, serving as a beacon for potential customers.

Additionally, directional signs in parking lots, clear exit signs, and specialized area markers contribute to a seamless shopping experience. These signs aid customers and demonstrate your commitment to professionalism and customer service.

Office Organization:

Running a hardware store is time-consuming and necessitates a well-organized office space. An efficient office setup enhances your productivity by effectively managing various aspects of your business, such as inventory tracking, financial management, and customer service.

Equip your office with the necessary tools, technology, and supplies to ensure smooth operations.

In conclusion, the hardware store business demands meticulous attention to inventory, product display, expiry dates, layout, signage, and office organization.

Striking the right balance and optimizing each aspect is essential for long-term success and customer satisfaction in this industry.

See Here are Considerations for The Setup of Your Office for tips and ideas to make your office work for you. Also, have a look at our article About Company Signs.

18. Creating a Website

A website is an essential asset for your hardware store, serving as the primary point of contact with potential customers.

Unlike a social media account, a website is under your ownership and control when you host and register a domain name. This freedom allows you to convey crucial information about your business.

Furthermore, your website can be a potent marketing tool. By regularly blogging about your industry and offering valuable tips and insights tailored to your customer base, you can earn their trust and establish yourself as an industry expert.

This enhances your credibility in their eyes, potentially translating into increased patronage. In today’s digital age, a well-maintained website is an indispensable tool for the growth and success of your hardware store.

For more, see How to Build a Website for Your Business .

19. Create an External Support Team

An external support team for your hardware store is a dependable group of professionals who offer advice and services crucial to your business.

It’s essential to clarify that these individuals are not on your payroll but are engaged as needed.

You can utilize their services for various purposes, including specific projects, tasks on a contractual basis, hourly rates, or even retainers.

While you may already collaborate with some of these professionals, acknowledging them as part of your team underscores their significance and opens the door to potentially expanding your network.

It’s unnecessary to assemble this team all at once, as building strong professional relationships takes time, but it’s an ongoing effort.

Your team can comprise experts such as accountants, lawyers, financial advisors, marketing specialists, technical advisors, and consultants.

Cultivating this support network ensures you have reliable resources to turn to when your hardware store needs their expertise.

For more, see Building a Team of Professional Advisors for Your Business.

20. Hiring Employees

Running your hardware store alone in its early stages can help control costs, as payroll is a substantial expense during startup.

However, the workload may become overwhelming as your business expands, necessitating employee hires.

It’s crucial to focus on recruiting qualified individuals with strong work ethics who fit their respective roles.

The following are job positions or outsourced services you may want to consider as your hardware store grows:

  • Store Manager
  • Sales Associates
  • Inventory Manager
  • Purchasing Manager
  • Marketing Specialist
  • Customer Service Representatives
  • Warehouse Staff
  • Accounts Manager
  • Maintenance and Repair Personnel
  • Delivery Drivers
  • Security Personnel
  • Cleaning and Maintenance Services
  • Legal and Financial Advisors
  • External Accountant/Bookkeeper

Expanding your workforce strategically is vital for maintaining efficient operations and catering to the evolving needs of your growing hardware store.

For more, see How and When to Hire a New Employee.

21. Getting Customers Through the Door

When you have reached this step, your business is set up and ready to go, with one more final step, which is important: getting customers through the door.

There are numerous ways to do this, like advertising, having a grand opening , word of mouth, etc.

Let’s dig a little deeper into the following sections.

Marketing Considerations

A hardware store without customers is merely a premise. Success hinges on attracting the right clientele, which can be challenging initially as your operation is new and relatively unknown.

Building a solid reputation over time will make this endeavor more manageable and bolster your marketing prowess.

Marketing your hardware store is an ongoing effort. The more you invest in effective marketing strategies, the greater your revenue potential.

While you don’t always need a marketing agency or expert, it’s an option worth exploring when the right fit arises.

Simplify your marketing approach by considering it as a means to raise awareness about your business, seizing opportunities as they come.

Simple Methods to Promote Your Hardware Store:

  • Local Advertising: Utilize local newspapers, radio, or online classifieds to announce your store’s presence.
  • Social Media: Create and maintain active social media profiles to engage with potential customers.
  • In-Store Promotions: Offer special discounts or promotions to attract foot traffic.
  • Networking: Attend local business events and join community organizations to establish connections.
  • Customer Referral Program: Encourage satisfied customers to refer others to your store in exchange for rewards.
  • Flyers and Direct Mail: Distribute flyers or postcards in your neighborhood to promote special offers.
  • Online Listings: Ensure your store is listed on online directories and review platforms like Google My Business.
  • Partnerships: Collaborate with complementary local businesses to cross-promote each other.
  • Community Involvement: Participate in community events, sponsor local initiatives or host workshops.
  • Signage: Invest in clear and eye-catching store signage to attract passersby.

Implementing these methods can help raise awareness of your hardware store and draw in the right customers.

See How To Get Customers Through the Door and our marketing section to provide ideas to help you bring awareness to your business.

Sample Ad Ideas:

Display Ad 1:

Headline: “Upgrade Your Home with Quality Tools!” Unleash your DIY potential at [Store Name] – Your Trusted Hardware Store. Find top-notch tools and expert advice for your home improvement projects today.

Display Ad 2:

Headline: “Save Big on Hardware Essentials!” Discover unbeatable deals on hardware essentials at [Store Name]. From nuts and bolts to power tools, we’ve got you covered for all your DIY needs.

Display Ad 3:

Headline: “Turn Your Projects into Masterpieces!” Transform your ideas into reality with premium hardware from [Store Name]. Visit us now for the tools and supplies that make dreams come true.

Display Ad 4:

Headline: “Your Hardware Store, Your Solutions!” Get the right solutions for every project at [Store Name]. We’re here to equip you with quality products and expert guidance.

Display Ad 5:

Headline: “Find Inspiration in Aisle A, Innovation in Aisle B!” Visit [Store Name] for an unmatched selection of hardware and tools. Explore endless possibilities for your next home project today.

To expand your customer base and forge valuable partnerships, collaborating with complementary businesses through referral programs can be a strategic move.

Here are some types of businesses you could approach for potential partnerships, along with ways you can structure mutually beneficial arrangements:

  • Offer a referral fee for contractors who recommend your hardware store to their clients for purchasing materials and tools. In return, you can refer your customers to their services, strengthening both businesses.
  • Real estate agents often encounter homeowners in need of home improvement supplies. Establish a referral program where they refer their clients to your store for any necessary repairs or upgrades and reciprocate by referring customers looking for new homes or renovations.
  • These professionals have a consistent need for plumbing and electrical supplies. Provide them with a discount on their purchases in exchange for referring their clients to your store for additional hardware needs.
  • Collaborate with interior designers by offering a referral fee when they recommend your store for home improvement projects. You can also refer your customers to their design services for a comprehensive home makeover.
  • Create a symbiotic relationship with landscaping businesses. They can send customers your way for outdoor hardware and gardening supplies, and you can refer your customers to their landscaping services.
  • Partner with home insurance companies and offer home safety and maintenance supplies discounts to their policyholders. In return, they can promote your store as a trusted source for these products.
  • Home inspectors can refer home buyers or sellers to your store for repair or maintenance materials. You can refer your customers to their inspection services to ensure the quality of their homes.
  • Collaborate with kitchen and bath showrooms to cross-promote your products. They can refer customers needing hardware and tools for remodeling, while you can recommend their showroom for fixtures and appliances.
  • Establish a reciprocal arrangement with building supply companies, referring clients to each other based on specific needs. This can create a network of businesses catering to different construction and renovation aspects.
  • Handyman Services:
  • Partner with local handyman services, offering discounts on supplies in exchange for referring their clients to your store. You can also direct your customers to their services for minor repairs and installations.

Approaching these businesses with well-structured referral programs can foster mutually beneficial relationships, expand your customer base, and create a network of trusted partners in the home improvement industry.

Remember to clearly outline the terms and benefits of the partnership to ensure its success.

Points To Consider

Next, let’s review essential points for more tips, insights, and considerations before starting your hardware store.

We will cover sections, including skills to consider, points to focus on, and equipment. Then you’ll reach the “Knowledge Is Power,” section, where you will want to use the resources for valuable information.

Hours of Operation:

Hours of Operation: Consider operating your hardware store during the following hours:

  • Monday to Saturday: 8:00 AM – 6:00 PM
  • Sunday: 10:00 AM – 4:00 PM

Tasks Outside Regular Hours: Certain tasks may require additional time before and after regular hours:

  • Inventory Management: Allocate 1-2 hours before opening and after closing for stock assessment and restocking.
  • Maintenance: 1 hour daily for store upkeep.
  • Bookkeeping: Weekly, allocate 2-3 hours post-closing for financial record-keeping.
  • Marketing: Periodically, allocate time for marketing planning and online updates.

Equipment and Supplies

A List of Equipment and Supplies to Consider for a Hardware Store:

Setting up a hardware store requires various equipment and tools to facilitate operations. Here is a comprehensive list of essential equipment and items you may need:

  • Shelving Units: To display and organize products efficiently.
  • Cash Registers or Point-of-Sale Systems: For processing transactions.
  • Shopping Carts and Baskets: For customer convenience.
  • Display Racks: To showcase merchandise effectively.
  • Security Cameras and Surveillance Systems: To deter theft and enhance security.
  • Computer Systems: For inventory management and administrative tasks.
  • Label Printers: To create price tags and labels.
  • Pricing Guns: For quick and accurate labeling.
  • Barcode Scanners: To streamline inventory tracking.
  • Handcarts and Dollies: For moving heavy items.
  • Pallet Jacks: For handling bulk shipments.
  • Scales: To weigh bulk products.
  • Locks and Safes: To secure cash and valuable inventory.
  • Office Furniture: Desks, chairs, filing cabinets, etc.
  • Phones and Communication Equipment: For customer service and inquiries.
  • Signage: Exterior and interior signage for branding and directions.
  • Lighting Fixtures: To ensure adequate in-store lighting.
  • Power Tools: For store maintenance and assembly.
  • Ladders and Step Stools: For accessing high shelves.
  • Cleaning Supplies: To maintain store cleanliness.
  • Fire Extinguishers and Safety Equipment: For safety compliance.
  • First Aid Kits: For emergencies.
  • HVAC System: Heating, ventilation, and air conditioning for customer comfort.
  • Restroom Facilities: To provide convenience to customers and staff.
  • Trash and Recycling Bins: For waste disposal.
  • Paint Mixing Station: If offering paint products.
  • Key Cutting Machine: For offering key-cutting services.
  • Shelving Accessories: Hooks, brackets, dividers, and pegboards.
  • Store Fixtures: Display cases, bins, and hangers.
  • Shopping Bag Dispensers: For customer use.
  • Price Checking Stations: To allow customers to verify prices.
  • Shopping Cart Corrals: For cart collection and organization.
  • Loading Dock Equipment: If handling larger deliveries.
  • Material Handling Equipment: For moving bulk materials.
  • Inventory Management Software: To track and manage stock efficiently.
  • Safety Signs: For indicating hazards and safety instructions.
  • PPE (Personal Protective Equipment): For staff and customer safety.
  • Cash Handling Supplies: Money trays, coin rolls, and cash bags.

The specific equipment you’ll need may vary based on the size and focus of your hardware store, but this comprehensive list should serve as a good starting point for your hardware store setup.

Key Points To Succeeding in a Hardware Store

Succeeding in the operation of a hardware store is a multifaceted challenge that demands careful attention to various key points:

  • Focusing on a Niche: Specialization can set your hardware store apart. Concentrate on a particular niche, such as tools, building materials, or home renovation , to attract a specific customer base.
  • Building a Customer Base: Establishing a loyal customer base is challenging during startup. Offer exceptional products and services to entice early patrons.
  • Building Relationships: Forge strong connections with customers, suppliers, and employees. Nurture these relationships as they are vital for long-term success.
  • Providing Desired Products and Services: Stock products and services that cater to your customers’ needs and preferences. Regularly solicit and act upon customer feedback.
  • High-Level Customer Service: Prioritize exceptional customer service, as your customers are the lifeblood of your business. Go above and beyond to meet their needs.
  • Providing Value: Consistently offer value to your customers through competitive pricing, quality products, and knowledgeable staff.
  • Hiring the Right Team: Assemble a competent and dedicated team. The right personnel are instrumental in your business’s triumph.
  • Effective Staff Management: Treat your staff respectfully and promote a healthy work environment. Effective management and teamwork enhance staff retention.
  • Managing Cash Flow: Vigilantly manage your finances to ensure a healthy cash flow sustains your business operations.
  • Cost Control: Keep costs in check without compromising product quality or customer service.
  • Adapting to Change: Embrace change, whether it involves industry trends, business processes, or technology advancements. Adaptation is critical to staying relevant.
  • Handling Revenue Fluctuations: Develop strategies to navigate revenue fluctuations, including seasonal variations.
  • Competition Management: Effectively address competition by differentiating.
  • Effective Marketing: Invest in effective marketing strategies to increase awareness of your hardware store. Whether you handle it in-house or hire professionals, marketing is essential for attracting customers.

Operating a hardware store requires meticulous attention to detail and a commitment to ongoing improvement.

Success hinges on balancing customer satisfaction, efficient operations, financial stability, and adaptability to industry changes.

Addressing these critical points, you can position your hardware store for enduring success in a competitive marketplace.

It’s vital to assess your skill set when running a hardware store. Ensure you possess the necessary skills or consider learning them.

If a crucial skill is lacking, hiring someone with expertise in that area is an option.

Essential Skills for a Hardware Store Owner:

  • Product Knowledge: A deep understanding of hardware and construction materials.
  • Customer Service: Excellent interpersonal and communication skills.
  • Inventory Management: Ability to manage stock efficiently.
  • Financial Management: Budgeting, accounting, and financial analysis.
  • Marketing: Strategies to promote the business.
  • Team Management: Leadership and personnel management.
  • Technical Skills: Familiarity with hardware tools and equipment.
  • Problem-Solving : Quick decision-making and creative solutions.
  • Adaptability: Staying updated with industry trends and technology.
  • Negotiation: Effective negotiation with suppliers and customers.

Knowledge Is Power if You Use It!

Knowledge, when applied, empowers businesses. Explore industry-specific information via the provided links for startup guidance and sustained operational success.

Trends and Statistics

Analyzing industry trends and statistics offers foresight, aids strategic planning, and positions hardware stores for market success.

See the latest search results for trends and statistics related to the hardware stores industry.

Hardware Store Associations

Trade associations provide industry news updates and valuable networking opportunities, offering members a competitive edge.

See the search results related to hardware store associations and the benefits of Joining the Chamber of Commerce.

The Top Hardware Stores

Studying established hardware stores reveals industry gaps, competitive advantages, and potential oversights for new entrants.

See the latest search results for the top hardware stores.

The Future of the Hardware Stores Industry

Researching the industry’s future aids in understanding market trends , ensuring informed decisions and strategic positioning for a new hardware store.

See the search results for the future of the hardware store industry.

Find a Hardware Store For Sale

Purchasing an existing business carries its advantages and drawbacks.

Benefits of acquiring an established hardware store:

  • Immediate revenue generation upon acquisition.
  • Avoidance of initial startup challenges.
  • Established operational procedures.
  • Transparent financial data, including revenue, profit, and expenses.
  • Instant access to a pre-existing customer base.
  • Benefits from an already established reputation.
  • A higher purchase price is often due to goodwill, accounting for the established customer base.
  • Altering operational processes may alienate existing customers.
  • Acquisition includes both the positive and negative reputation of the business.

While a perfect hardware store might not be on sale, exploring the broader industry for potential acquisitions remains worthwhile.

Prospective buyers can venture into the provided link to discover available opportunities in the sector.

The latest search results for a hardware store for sale and others in the same category.

Franchise Opportunities Related to a Hardware Store

Owning a hardware store franchise warrants consideration before business initiation. Exploring such opportunities might introduce unforeseen prospects within the hardware domain.

  • Adopt a tried-and-true business model provided by the franchisor.
  • Leverage an established reputation and benefit from existing marketing.
  • Obtain comprehensive knowledge about the operational aspects upfront.
  • Receive consistent support from the franchise’s corporate office.
  • Initial and ongoing costs can be high.
  • Restrictions on implementing significant changes without the franchisor’s consent.
  • Limited to approved products or services.
  • Must strictly adhere to the franchise agreement’s stipulations.
  • Periodic franchise fees are a recurring expenditure.

While a perfect match may not always be available, exploring franchises within the broader industry might prove beneficial.

Seek related franchise opportunities in the given industry through the specified link.

See the latest search results for franchise opportunities related to this industry.

Customer Expectations

Examining search results on customer expectations offers insight into hardware store shopping experiences.

It reveals potential oversights and opportunities to exceed expectations. Ensure all aspects are addressed.

See the search results related to customer expectations for a hardware shopping experience.

Expert Tips

Expert tips benefit all skill levels. Experts discover refined methods, while novices gain foundational knowledge and skill enhancement.

See the latest search results for hardware sales to gain tips and insights.

Hardware Store Insights

Reviewing tips and insights aids in identifying best practices and pitfalls for hardware stores, enhancing industry knowledge.

See the latest search results about insights into running a hardware store.

Hardware Stores Publications

Publications provide essential updates and ideas on hardware stores, ensuring you remain informed on industry trends.

See the search results for hardware store publications.

Hardware Stores Forums

Visit hardware store forums to engage in industry discussions. Gain insights from customer perspectives to understand their needs.

See the latest search results related to hardware store forums.

Online or local courses enhance skills and knowledge, benefiting your hardware store.

See the latest courses that could benefit a hardware store owner . Also, see our management articles for tips and insights for managing your business.

Hardware Store Blogs

Subscribe to leading hardware blogs. Filter out inactive or non-valuable ones. Achieve a refined, informative blog collection.

Look at the latest search results for top hardware blogs to follow.

Hardware Stores News

Consult news outlets for current media coverage on hardware stores. Stay informed.

See the latest results for hardware store news.

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HARDWARE STORE

Related business ideas, discover your perfect domain, hardware store mini business plan, earnings expectations:, actions to hit those numbers:, not what you had in mind here are more ideas, grab your business website name, step 1: determine if starting a hardware store is right for you, breakdown of startup expenses, breakdown of ongoing expenses, examples of ways to make money, step 2: name the business, step 3: develop a business plan, outline of goals and objectives, market analysis, financial plan, step 4: secure financing, options for financing, tips on securing financing, step 5: choose a location, step 6: obtain necessary licenses and permits, applying for licenses and permits, cost of licenses and permits, renewing licenses and permits, step 7: set up shop, inventory and supplies needed, tips on setting up shop, step 8: market the business, step 9: monitor the business, explore more categories, take the next steps.

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Hardware Retail Franchise Business Plan Sample

AUG.09, 2022

Hardware Retail Franchise Business Plan Sample

Hardware retail franchise business plan for starting your own business

Whether it be a technological thing such as a computer or a purely natural setting such as a garden, hardware installation is a must. In addition to the usage of big hardware tools, smaller ones like miniature screwdrivers are also increasing in demand. And the demand for sophisticated hardware and tools is expected to increase even more.

So, if you are wondering whether or not you should open a hardware store with franchise, you should keep all the worries aside and read this blog. In this business plan we will be listing all the details of Sam Hardware World, a hardware retail franchise in New York City. It will help you in knowing how to set up a hardware business in the United States. 

Moreover, the financial part would give you an insight into the profits you can earn via it. You could also discover whether or not you need to also consult business plan for loan to launch the startup.

Executive Summary

2.1 the business.

Sam Hardware World will be based in New York City. The business will operate in both B2B and B2C modes. The startup aims at providing hardware for setting ranging from technological to household to business offices.

2.2 Management of hardware retail franchise business

To manage hardware retail the first step is to create a business plan for a hardware store . In that business plan you must enlist all the equipment to be procured and personnel you must staff to manage the operations. Since the business activity overlaps with other businesses as well, you will need to consult retail discount store business plan and toy business plan as well besides the hardware retail franchise business plan.

In this sample business plan for a hardware franchise, we’ll explain how Sam conducted and managed his business. Since he underwent the procedure to get a franchise, you can also see this if you need to study a business plan for a franchise .

2.3 Customers of hardware retail franchise business

Knowing the customers before starting a business will help you in understanding their demands, likes, and purchasing power. The customers of the hardware retail franchise business are:

  • Construction Enterprises
  • Educational Institutes

2.4 Business Target

Sam Hardware World aims at boosting sales at a specified rate after regular intervals that will be mentioned later in this sample. The financial targets for the first three years are given in this graph:

3 Years Profit Forecast - Hardware Retail Franchise Business Plan Sample

Company Summary

3.1 company owner.

Sam has acquired a degree in management sciences. After working as a business consultant in a tech firm for two years, he decided to capitalize on hardware store franchise opportunities.

3.2 Why the hardware retail franchise business is being started

Sam started the hardware shop business to benefit from the perks of doing one’s own business. He had unique hardware business ideas thus he decided to step only into this type of enterprise.

3.3 How the hardware retail franchise business will be started

Step1: Conduct Research

The first step is to research the types of hardware businesses with a special focus on franchise hardware stores. You must search for hardware store franchises for sale and select the best among them.

Step2: Make Hardware Business Plan

Next, you will have to devise a hardware shop business plan to ensure you systematically carry out the operations of your business. In your business plan for hardware shop, you should enumerate in detail the executive plan, marketing plan, sales strategy, and financial plan.

Step3: Set up the Hardware Store

In the next stage, you must acquire the place where you would be installing your setup. While procuring the equipment, it is equally important to start recruiting talent.

Step4: Market & Establish a Web Presence

To reach your target customers, you will need to exploit the media platforms and websites to get renowned.

Step5: Manage Finance

Last, you will have to create balance sheets for cost analysis and determining prospective profits.

Startup Cost - Hardware Retail Franchise Business Plan Sample

Services of hardware retail franchise business

If you are thinking of starting a hardware business you must want to know are hardware stores profitable? Well, running a store can be extremely profitable provided you have some unique ideas. To get them, you should search for how to start a hardware business or how to start a store, mark your location, and analyze what others in the domain are doing. Your prospects will depend on your research on potential localities and selecting the right one for launching your franchise hardware store.

  • Technical Hardware Products

Our major products will be hardware related to technology use such as computers and components, input and output devices, mobile parts and accessories, etc.

  • Construction Hardware

The second category of our products will include hardware that is needed during construction projects.

  • Garden Décor & Hardware 

We’ll also provide hardware that is generally needed by households and institutions to set up the deck, or do landscaping. 

  • General Tools

We’ll also provide hardware tools that are required for minor and major repairs.

Marketing Analysis of hardware retail franchise business

Before you open a hardware store you must undergo a thorough analysis of all the available markets and explore hardware store franchise opportunities related to each market. It is to first, determine your customer groups, and second, identify the market trends and the price you can set provided your financial targets. The rates of your competitors in retail store hardware businesses and purchasing power of your target customers should also be catered to in the analysis.

excellent work

excellent work, competent advice. Alex is very friendly, great communication. 100% I recommend CGS capital. Thank you so much for your hard work!

Considering the importance of accurate marketing analysis in the business plan, you should hire a marketing expert. However, for a rough idea, you can search on your own on how to start a hardware company and the best locations to open a hardware franchise. 

In this hardware shop business plan pdf we are providing the details of Sam Hardware World. 

5.1 Market Trends

According to IBISWorld, nearly 15k hardware stores are running successfully in the United States. If you go through the hardware store financial district and some hardware retailing magazines you can see that the market size has reached $36 billion in the US alone. Therefore, the market trends are going right and you should not worry about the prospects if you completely understand how to start a hardware store and conduct it. Source – https://www.ibisworld.com/united-states/market-research-reports/hardware-stores-industry/#IndustryStatisticsAndTrends

5.2 Marketing Segmentation

In this section, you should divide the whole population into distinct groups of your target customers. Since the customer groups of hardware stores overlap with other businesses, you can take help from business plan for video game store as well as business plan for farmers market .

Marketing Segmentation - Hardware Retail Franchise Business Plan Sample

5.2.1 Construction Enterprises

Our biggest group of customers will belong to the construction enterprise. They are expected to procure our hardware specified for their work as well as the general tools that are needed for generic tasks.

5.2.2 Offices

The second category of our target customers will be the offices. They will avail of our services and products mainly for setting up the office spaces. The products they would need would range from printers and computers to electronics.

5.2.3 Households

The third category of our target customers comprises households who will need all of our products but in a minor number. Their purchases can be related to technological items as well as garden & yard tools.

5.2.4 Educational Institutes

Educational institutes will also be a group of our target customers as they will be needing the same products that are demanded by offices and households.

5.3 Business Target

The business targets of Sam Hardware World are:

  • Attaining a CSAT score of more than 90% within a year of our launch
  • Expand the product line by the end of the first year

5.4 Product Pricing

For the first year, we aim at keeping our prices lower than that of our competitors. Afterward, we’ll bring them in the same range as theirs.

Marketing Strategy of hardware retail franchise business

If you are looking for a marketing plan, you have landed on the right page. In this business plan sample, we’re providing a detailed business plan for Sam Hardware World.

6.1 Competitive Analysis

  • Our location is ideal for a hardware store. It is because we have several colleges, offices, and small businesses in our vicinity. In addition, the residential community is also not far away.
  • We will be offering discounts to construction managers so that they procure the hardware from us and come into a long-term partnership.
  • Our strategy to keep prices low during the first year will benefit us in reaching out to the target customers.

6.2 Sales Strategy

In this sample business plan for a hardware franchise, we are giving the sales strategy of Sam Hardware World. However, for more ideas you may also want to visit business plan for a stationery and vape shop business plan .

  • We will offer small hardware products as gifts with large purchases.
  • We will run social media campaigns to get known to a wider audience.
  • We will offer a 20% discount to customers who enter into a long-term partnership with us.

6.3 Sales Monthly

Sales Monthly - Hardware Retail Franchise Business Plan Sample

6.4 Sales Yearly

Sales Yearly - Hardware Retail Franchise Business Plan Sample

6.5 Sales Forecast

Unit Sales - Hardware Retail Franchise Business Plan Sample

Personnel plan of hardware retail franchise business

If you’re looking for how to start a hardware business , you must know that hiring the right people for the right job is of utmost importance. Owing to its significance, you must include the list of required people along with their job descriptions in a business plan in any format. This will enable you to select the most talented individuals for opening a hardware store with a franchise. 

7.1 Company Staff

Sam will be the CEO. He will need the following people for available positions:

  • 2 Sales Managers to manage hardware sales in different domains
  • 1 Accountant to maintain financial record
  • 1 Social Media Manager to manage online platforms
  • 1 Store Operator to manage the inventory
  • 1 Customer Care Executive to maintain contracts with long-term customers
  • 1 Cleaner to maintain the facility
  • 3 Drivers to procure and transport inventory to and from sites

7.2 Average Salary of Employees

Financial plan of hardware retail franchise business.

You may be starting a business out of passion, but you would want to know how much profit can anyone make after they open hardware stores. Practically, hardware stores earn a lot. If the business operations and financial flows are managed then the business can yield immense profit.

To ensure that the finances go as projected, you must make a comprehensive financial plan for your business. That should include the break-even analysis, projected profits on a monthly and yearly basis for at least the first three years, gross margin calculations, balance sheet, and business ratios.

In this retail business plan we are providing the financial plan of Sam Hardware World.

8.1 Important Assumptions

8.2 break-even analysis.

Break-even Analysis - Hardware Retail Franchise Business Plan Sample

8.3 Projected Profit and Loss

8.3.1 profit monthly.

Profit Monthly - Hardware Retail Franchise Business Plan Sample

8.3.2 Profit Yearly

Profit Yearly - Hardware Retail Franchise Business Plan Sample

8.3.3 Gross Margin Monthly

Gross Margin Monthly - Hardware Retail Franchise Business Plan Sample

8.3.4 Gross Margin Yearly

Gross Margin Yearly - Hardware Retail Franchise Business Plan Sample

8.4 Projected Cash Flow

Projected Cash Flow - Hardware Retail Franchise Business Plan Sample

8.5 Projected Balance Sheet

8.6 business ratios.

How profitable is a hardware store?

As you can see from the financial part of this hardware retail franchise business plan in pdf, the hardware store can be immensely profitable if you provide unique services. If you have competitive advantages, that would be a plus.

How do I start my own hardware business?

If you are looking for how to set up a hardware store you must study at least one sample hardware retail franchise business plan. The first step is doing research and the second is documenting a detailed business plan. 

Is a hardware store a good investment?

Owning a hardware store is the best investment you can make. It is because setting up and running a hardware store is not much difficult. You can make profits right after starting a hardware store.

Download Hardware Retail Franchise Business Plan Sample in pdf

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Hardware Business plan | The Profit Monster Of India

screw

Hardware stores are standing in front of a great shift in terms of technology. The way modern technology has changed the work it has done the same for hardware business in India. If you agree with this perspective then you are in the right direction to start a hardware business in India .

Due to the digital revolution, opportunities have been created in the hardware industry. In this guide, we will show you how you can grab those opportunities and transform them into a big success.

Before moving to know about a great deal of hardware industry, you need to formulate a complete business plan that will help you to set up hardware business in India.

Let us know where you can start.

Define business structure .

Starting a hardware store will call for a basic understanding of legal forms of business . You are required to choose among these legal forms by weighing their pros and cons.

Sole Proprietorship

When a business is operated solely by a single owner then it is termed as a sole proprietorship. It is not recommended by a hardware store to operate as a sole proprietor.

A company is a different person than it’s owners. Company has shares which can be sold to get funding. This type of legal structure is recommended for a large scale business.

Franchising

Hardware stores mostly opt for franchising due to hardcore competition with big giants in the hardware industry. These giants can purchase inventory at a reasonable price whereas a small business can’t. Hence it is a recommended option.

Partnership

If you and some of your friends or relatives want to open a hardware store then the partnership is the best legal structure. It will help you out in various ways such as profit sharing and decision making.

Market Understanding 

Starting a business requires a detailed understanding of the market. You need to know where products are purchased and to whom these products are sold. What is the costing and what are profit margins? Use below strategies.

Hardware Business plan | The Profit Monster Of India 3

Analysis of Industry

You can take help of the online researches and then interpret the data according to your area of operation. Alternatively, you can approach various hardware stores to collect personal data and use it wisely.

Industry Trends

Hardware store is going through various trends. To understand these trends you will be required to know your customers. By stepping into the shoes of your customers, you can understand the market demand and market trends.

Competitors Research

Know your competitors well. You need to understand the hardware stores present in your city. If any of those stores are able to provide raw material at a cheaper rate then how? Try to talk to different suppliers.

Products Offering 

After understanding the market well, it is time that you identify the products which are used more by customers. 

hardware business

Use these factors to identify products to be offered

You can talk to various suppliers of raw material and then get different prices for every product. In this way you can understand which products are relatively low in cost and high in demand. Use that for your business.

Profit margins

Keep those products that provide a high-profit margin. You have already researched the market and now is the time to use that data. You need to analyse which products are offered much higher than it’s cost.

Availability

You may have identified the products that you are going to sell but are they available for the whole year. It may be possible that they are not supplied for a period of time then consider that period too.

Customer demand

You should be able to predict customer demand. You can do that by using previous year market trends. Either use the online data or research yourself. 

While choosing a location there are various factors that are must to keep in mind. One mistake can drag the traffic to a different store.

  • Customer Attraction Your place should be able to attract enough customers.
  • Visibility Location should not be in the corner area.
  • Convenience It should be easily possible to reach at your location.
  • Parking proper space for parking should be provided.
  • Space Enough space should be available for raw material and working area.
  • Competitors Stable competition should be available.
  • Cost of the place Affordable costing in accordance to your profits.
  • Accessibility to Customers Proper facility of roads to reach at your place.

Equipment Required 

drill machine

In a hardware store, your raw material which will be sold is termed as equipment. The major raw material that will be required in a hardware store is listed below:

  • Payment machine
  • Nuts and bolts

Legal Permits 

Get your business registered officially through these licenses.

GST registration Every business is required to pay taxes on the selling of goods and services.

Business license Business is required to be registered according to your legal structure.

Business insurance You must get your business insures to avoid future problems.

EPF Registration If you register more than 20 employees, then getting employee provident fund registration is mandatory.

Starting a hardware business will require initially to market your business. It will help you attract first customers.

Refer to Friends

Reach out to your friends and ask them to refer your service to other people. This is the most popular ways of getting customer in a hardware store.

Attend social events and seminars so that you can build more contacts. People will contact you if they know about your quality of services.

Digital Presence

You can have a business account in Google and WhatsApp to get orders online. This creates convenience for your customers.

Growth Opportunities 

Once your business is settled and you want it grow in respect of sales. Then use these strategies.

Expand Products

Start providing more products variety. More variety of products will lead to targeting new customers. You can attract different markets too.

Approach To Suppliers

Take help of your suppliers and know-how they do the processing of raw material. You can work with them. They can refer your services to the people your suppliers know.

Take Social Initiatives

If you are taking social initiatives then it contributes to your society. You can use eco-friendly systems and green initiative to build an image in the society.

Hardware Business plan | The Profit Monster Of India 4

After 2018 hardware business has been rising. You can use this opportunity to set up your business. You need to be updated with the market trends.

Here is a TIP# Get experience as much as you can. It will help you out in a more productive way.

Be consistent with your hard work and take the first step by using the above strategy.

Have any queries? Don’t wait, Comment Below.

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How to start Hardware Business in India?

  • by SBH Team
  • December 1, 2023

The hardware business is about trading tools, implements, and other items used in home life and activities such as construction, gardening etc.

This is an in-demand business, so you can easily start it without any second thought.

In this article, we will give you complete information related to the hardware shop business, which includes a business plan, Pros & cons, licenses and certificates required, hardware business cost, profit margin, etc.

In this Post

Hardware business plan

  • The first step in the hardware business is to choose a good location for your business. The area with high footfall is the ideal location for the hardware shop business.
  • You need a shop with a minimum of 800 to 1200 square feet of space. To store additional stocks and items like pipes you may require an additional warehouse. So overall you may require 1500 square feet of space.
  • For this business, a shop rental of 13,000 to 20,000 rupees can be considered safe. It depends on the location and the total space.

Sourcing materials to sell

The next step is sourcing materials. For this, you have to contact different companies, salespersons and dealers. Most of the dealers will give you 25 days credit period.

You can also visit wholesale markets in big cities ( like chawri bazar in Delhi ) and buy products from the wholesalers.

Also, there are websites like indiamart.com, through which you can contact dealers from all over India.

The types and the categories of products you can sell in a hardware shop are listed in the last section of this article.

If you have a limited budget, start with materials or categories that are high in demand, later you can add more categories. The products like paint require more investment.

Manpower Required

For a hardware shop business, you may require 2 to 3 employees. For them, you can set salaries between 15,000 and 17,000 rupees per month.

The total manpower depends upon the scale on which you are planning to start your business.

Marketing your hardware shop

Make a good network of plumbers, carpenters, electricians, and masons in your area. They are the primary customers of your business. But usually, they purchase on credit, so you have to be careful while choosing them.

If possible, keep more varieties for products you sell and keep trending items. Over time you will get customers by word of mouth.

You can use offline line marketing like distributing flyers to promote your business. For online you can use social media marketing.

Why Choose the Hardware Shop Business?

  • Items sold in hardware shops have a long expiration date. So if you don’t get the expected sales in a month, you are less likely to lose.
  • This trade is not a seasonal business. There will be demand for hardware products in all seasons.
  • Most items sold in the hardware store do not include MRP. So you can set your own rate according to the demand in your area.
  • Online businesses are affecting most offline retailers, but hardware businesses are not affected by online trends.

Challenges in the hardware business?

  • From plumbing to electrical supplies, the hardware business has a large product portfolio. So you need a wide range of products in different varieties to meet customer demand.
  • Material overstocking is one of the major challenges in the hardware business. Even though hardware items have a long expiration date, Deadstock causes a shortage of working capital. This makes it difficult to run the business.
  • Another challenge is to control debt in the hardware business. Generally, local plumbers and electricians buy things on credit, so you can expect more than 50% sales on credit.

Licenses and registration required

To start a hardware business, you require these licenses and certificates,

  • Shop and Establishment Certificate
  • MSME Registration
  • GST Registration (required only if your annual turnover is more than 40 lakhs)
  • Business Registration – Sole proprietorship is enough
  • Business insurance if required

MSME registration helps you in getting a business loan from the bank. You can also approach banks like SIDBI.

Hardware business cost

To start a hardware business in India, you require an investment of 8 lakh to 10 lakh rupees.

As you know, the total investment depends upon the total categories of products you are going to sell and the product varieties you offer. So the investment relies on the scale on which you are going to do the business.

In this type of business, you require large working capital. If you have a limited category in your shop, then it would become difficult to serve the customer demand.

The initial investments required are,

  • Shop interior works -> 1.5 to 2 lakhs ( racks, table, chair, signage boards etc.)
  • Stock purchase -> minimum 5 to 7 lakh rupees
  • Shop security deposit -> 50,000 rupees ( depends upon you location)
  • Marketing and Registrations -> 10,000 rupees
  • Miscellaneous works -> 15,000 rupees

To start a hardware business on a large scale you may require up to 15 lakh to 20 lakh rupees investment.

The ongoing monthly expenses are shop rent, employee salary, material purchases, utility bills, etc.

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  • Building Material Shop Business | Complete Guide
  • Tiles Shop Business in India | Complete Guide
  • Electrical Shop Business | Complete Guide

Hardware business profit margin

In the Hardware business, you can expect a profit margin of 25% to 30% on your revenue.

A hardware shop has a wide range of product categories, so each product type has a different profit margin.

For example, you can expect a margin of 25% from plumbing and fabrication supplies and 10% to 15% from electrical supplies.

Also, most of the products in a hardware shop don’t have the MRP printed on them, you can set the profit margin by looking at the competitors in your area.

If you are dealing with a single brand or company for a specific product category, you may receive cash discounts and bonuses from the company.

But to achieve this you must reach the target monthly sales set by the company.

In a hardware business, you can earn up to 35 to 50 thousand rupees per month.

Of course, if you have a big shop with large product types and volume, you can earn more.

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Products to sell in a hardware Shop

These are some of the products or items you can sell in a hardware shop. You should decide on the products as per your initial budget and the demand in your area.

  • Joinery fittings: Screws, nuts, nails, L angles, L button, hooks, etc.
  • Hand tools: Screwdrivers. hammers. pliers, measurement tape. wrenches, hand saw, etc.
  • Adhesives: W hite glue, silicone, masking tape, Epoxy, bonds, etc.
  • Meshes: Wire meshes and fence meshes in metal, GI, aluminium and stainless steel finish etc.
  • Plumbing supplies: Pipes, bathroom fittings, kitchen fittings, PVC, Cpvc, Gum, commode, Basin, etc.
  • Electrical supplies: electrical wire, cords, lighting supplies, motor pump, switches, fan, etc.
  • Door and window fittings: Hinges, locks, handles, door buffer, door closer, angles, channels, etc.
  • Curtain fittings: Curtain pipes, heads, rings, curtain wire, etc.
  • Furniture fittings: Magnet catcher, L angles, bi-folders, brackets, oval pipes, tower bolt, locks, rollers, spacers, etc.
  • Sheets: Plywood, MFD, GI, mild steel, aluminium etc.

You can also add shutter and gate locks, kitchen Baskets, water tanks, cleaning products, welding sticks, agricultural tools, gardening tools etc.

Adding a full range of paint products, in the beginning, may become expensive. So initially you can sell basic paints, putty, white cement, red oxide, thinner, turpentine, brushes, sanding paper, waterproofing products, etc.

How much space is required to start a building material business?

You require a minimum of 1500 square feet of space to start the business.

How much investment is required to start a hardware business?

You can start with an 8 lakh to 10 lakh rupees investment.

What is the profit margin in the hardware business?

You can expect a profit margin of 25% to 30% on revenue.

I hope this article has resolved many of your doubts related to the Hardware business. If you have any suggestions feel free to mention them in the comment box below.

4 thoughts on “How to start Hardware Business in India?”

Iam hajarthalli D goudageri Nanu kundagol talluq neda ingalagi neda Nanu hardware business madabeykanth anddkondene Sir nange help madde Sir

Iam hajarthalli D goudageri Nanu kundagol talluq neda ingalagi neda Nanu cmeint business madabeykanth anddkondene Sir nange help madde Sir

Really appreciate

Thank you good knowledges

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Starting a Hardware Store Business in South Africa – Business Plan (PDF, Word & Excel)

Posted by BizBolts | All Articles , Business Ideas , Business Plans , Retail Industry

Starting a Hardware Store Business in South Africa – Business Plan (PDF, Word & Excel)

Hardware stores in South Africa provide a variety of goods like building materials, plumbing supplies, electrical products, tools, and hardware equipment. A hardware store is a very lucrative business to start in South Africa, with huge profits. Hardware stores cater for both large and small projects. These projects range from small home improvements to big construction projects. The tools and materials needed to complete these types of projects are available at hardware stores. Setting up a hardware store can be a very rewarding experience. However, it is critical to remember that in order to be successful in the long run, you must constantly expand your business. These days, hardware stores have to offer more than just tools and building supplies. It is important to find ways to differentiate your shop from the competition to draw customers’ attention to your business. This article will outline how to start a hardware store business in South Africa, and the hardware store business plan – PDF, Word and Excel.

Market Research

It’s important that you carry out market research before you start the hardware store business. Important decisions to make include deciding on the location of your business, the products you will offer, your target market and the size of your business. Understand your target market, and what kind of products they want. Assess the competition at your proposed location. You should always carry out a feasibility study, market research and write a business plan before you venture into any business. Do not make the mistake of starting a hardware store business before carrying out research and without a good hardware store business plan.

When setting up a hardware store, you need to understand your customers. If you do not understand your customers, you will have a hard time making informed decisions on where to open your business, where to locate your store, and the right hardware products to sell. You must know who your customers are, and why they would buy from you. When conducting market research, look for common characteristics and interests among the people you intend to target. Gather as much information as you can about your potential clients. Some important factors to consider include their age in terms of generation, where they live, and their spending habits. This will help you understand which geographic areas to target and figure out what hours are most important for your customer service and sales reps to be available. That information will help you schedule your marketing promotions offline and online to ensure the best visibility. Understanding spending power and patterns will help you set competitive prices for your hardware products. You must also learn about your potential clients’ hobbies and interests, especially if they are DIY junkies or only buy hardware products when something is broken. Understanding their interests will also help you find ways to keep your clients engaged.

Hardware store Business Model

A hardware store typically sells hand and power tools, building materials, fasteners, keys, locks, hinges, chains, electrical supplies, plumbing supplies, cleaning products, housewares, utensils, and paint. The products and services your hardware store will offer can range from small nails to power tools. To make more profits, you can earn additional revenue by delivering these products to your customers or by holding DIY tutorials. When looking for customers, consider homeowners, contractors, and DIY consumers. Take advantage of social media marketing by posting videos on TikTok, Instagram, Facebook, and LinkedIn. It is much easier to attract these kinds of customers, who will need to source supplies for their projects. You can also set up trade accounts with local tradesmen to earn consistent business. Making your business more profitable would mean supplementing your main source of income with other services. You can partner with a local carpenter and offer installation services in addition to the carpeting products you sell. You can also do this for windows, doors, roofing, or any other major project.

Location & Premises

Business premises that have a high ceiling are ideal for hardware stores to create ample storage space. The premises also need to be quite spacious in terms of width, you might have to use a forklift to move large and heavy building materials. The space needs to be large enough to fit all your products. Your premises should also be easily accessible by trucks, as this creates convenience when delivering your products from suppliers or when customers are collecting their products.

Location is an important decision to make, and it’s determined by your target market. There are several places when you can locate your hardware store. People are always looking to improve their homes by extending them or renovating them. Residential areas are ideal places to set up shop. A hardware store at a residential area will need you to understand your market so that you can offer exactly what they need. Explore unlikely locations such as rural areas. Houses are expensive and land is also expensive in urban areas some have resorted to building their dream houses at rural areas where land is ample and building is much cheaper. Rural areas that still don’t have electricity and running water have less construction and developments happening compared to rural areas with electricity and running water. There are new development projects that take years to complete due to the amount of construction and the amount of work involved. The work is mostly completed in phases and can take up to 8 years to complete. Opening a hardware store close to a new development project can prove to be lucrative. Your hardware store business plan should cater for the costs of renting or buying premises.

Products for Hardware Store Business

Hardware shops in South Africa sell a variety of products including building materials, plumbing materials, tools, safety materials, agricultural equipment and electrical products. Examples of hardware products include Brickforce , Cement, Door Frames, Window Frames , Doors , Glass, Asbestos , Ceiling Products , Tiles, Abrasives , Adhesives , Brushware, Hinges , Nuts, Bolts, Nails, Screws,  Sockets , Cables, Fencing & Wire , Lawnmowers , Wheelbarrows , Hoses, DIY Hand Tools , Screwdrivers , Spanner Sets , Paint, Water Tanks, Timber Boards, Bathroom Accessories, Toilet Seats , Safety Boots & Shoes, Pipes, Hand tools,  Power tools,  Garden tools etc. The kind of products which you sell will depend on your targeted market and the amount of capital which you have. The products can be sourced from South Africa manufacturers, Distributors and International Suppliers. 

Hardware Shop Business Plan South Africa

Inventory Management

Taking control of your stock is an important part of running any kind of business that handles inventory. If you do not get that right, it will negatively impact your profit margins. For a hardware store business, you need stock control software that is especially built for your industry. In order to get the best possible results for your business, your stock management software should work seamlessly with both your point of sale and accounting functions. This will help you efficiently and accurately track the movement of stock through your hardware store. Consider an efficient inventory management software for your hardware store that can highlight areas of your business for improvement. Inventory management will help you prevent employee theft and keep track of your inventory. A proper stock management for hardware stores will enable your company to track best-selling versus underperforming products. This way you can analyze your sales and profits and potentially revise any pricing strategies that aren’t generating maximum profit.

Competitive Analysis

When you open a hardware store, you will be competing with a number of other stores, all of whom are vying for the largest market share. In order for you to stand out, you need to conduct a market analysis. You must know who your direct and indirect competitors are, as well as the products and services they offer, and who their customers are. You must find out what your competitor’s strengths and weaknesses are. A competitive analysis will also assist you in figuring out where you fit in the market. There are a number of opportunities that you can take advantage of, which a competitive analysis can help with. You need to figure out where there are gaps within the hardware market. There are various big and small hardware stores in the country that you will compete with, so it is important to conduct a competitive analysis and find your place in the market.

Staff & Management

The number of employees you need will depend on the size of your hardware store business. The is need for finance/accounting personnel who will be responsible for all the day to day transaction accounting for the hardware store business. This will include the tracking of all transactions and the management of cash flow, and ensuring there are enough funds available to meet the day to day payments.

Operations & logistics personnel are responsible for coordinating with suppliers and sourcing all the products which will be sold in the hardware, and arranging delivery of sold products to customers. They are also responsible for inventory control, ensuring that the shop has all the products in stock and in the right quantities, and determining when to place new orders. You also require cashiers and hardware shop assistants. Your hardware shop business plan should cater for the salaries of your employees.

Knowledgeable staff members will add value to your team by helping the customers buy the correct products. There is a wide range of products available at hardware stores, customers often get confused. Anyone can easily find themselves making small blunders such as purchasing wall tiles instead of floor tiles. If you have inexperienced staff members on your team their training program should focus more on learning about the different products sold in the store so they are able to give informed advice to customers.

Sales and Marketing Plan

There are different kinds of hardware stores that sell various products, and then there are stores that specialize in specific types of hardware, such as plumbing supplies or electrical products. One way to stand out is by specializing in a specific type of hardware product. You can make your store more appealing to customers looking for a particular kind of product. This can also make your store more efficient by stocking specific products you need. Another way to make your hardware store business stand out, is by offering products that your customers can’t find at other stores. Providing unique or hard-to-find products can help you set your store apart from the competition and attract new customers looking for specific products. It can also help you create a sense of exclusivity, making your store more appealing to customers. You can also do this by catering to a specific audience. This could be focusing on customers looking for high-end products or catering to a specific demographic, such as do-it-yourselfers or professional contractors. By focusing on a specific audience, you are able to create a more targeted marketing strategy and better understand your customers’ needs. This will help you improve your store’s product selection as well as create a more enjoyable shopping experience for your customers.

A hardware business has multiple sources of customers, these include; building & civil construction, home and business renovations, small DIY projects, agriculture, and maintenance work. All these projects can’t be completed without a hardware store. This type of business has the advantage of offering services to a market that’s totally dependent on it. Having a reliable market makes you feel more secure and confident, you feel less anxious about the possibilities of failure. You already have a reliable market, it’s all up to you to make sure that you are ahead of your competition. Studying what your competitors do with the intention to see what you can do better will help you get ahead.

Many individuals are constructing houses in South Africa, and are always in need of the building materials.   From time to time individuals carry out improvements, repairs and upgrades on their properties, and this requires hardware products. Other potential customers include farmers, organisations, schools, companies, construction companies, housing cooperatives and the government.

PRE-WRITTEN HARDWARE STORE BUSINESS PLAN (PDF, WORD AND EXCEL): COMPREHENSIVE VERSION, SHORT FUNDING/BANK LOAN VERSION AND AUTOMATED FINANCIAL STATEMENTS

For an in-depth analysis of the hardware shop business in South Africa, purchase our hardware store business plan. We decided to introduce the business plans after noting that many South Africans were venturing into the hardware business without a full understanding of the industry, market, how to run the business, the risks involved, profitability of the business and the costs involved, leading to a high failure rate of their businesses.

Our business plan will make it easier for you to launch and run a hardware shop business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. It will be easier to plan and budget as the hardware shop business plan will lay out all the costs involved in setting up and running the hardware business. The business plan is designed specifically for the South African market.

USES OF THE HARDWARE SHOP BUSINESS PLAN (PDF, WORD AND EXCEL)

The hardware store business plan can be used for many purposes including:

  • Raising capital from investors/friends/relatives
  • Applying for a bank loan
  • Start-up guide to launch your hardware shop business
  • As a hardware store project proposal
  • Assessing profitability of the hardware stores business
  • Finding a business partner
  • Assessing the initial start-up costs so that you know how much to save
  • Manual for current business owners to help in business and strategy formulation

CONTENTS OF THE HARDWARE STORE BUSINESS PLAN (PDF, WORD AND EXCEL)

The business plan includes, but not limited to:

  • Market Analysis
  • Industry Analysis
  • 5 Year Automated Financial Statements [ Income statements, cash flow statements, balance sheets, monthly cash flow projections (3 years monthly cash flow projections, the remaining two years annually),break even analysis, payback period analysis, start-up costs, financial graphs, revenue and expenses, Bank Loan Amortisation]
  • Marketing Strategy
  • Risk Analysis
  • SWOT & PEST Analysis
  • Operational Requirements
  • Operational Strategy
  • Why some South Africans in the hardware business fail, so that you can avoid their mistakes
  • Ways to raise capital to start your hardware store business in South Africa
  • Directory (Contact details of hardware products suppliers)

The Hardware Store Business Plan package consist of 4 files

  • Hardware Store Business Plan – PDF file (Comprehensive – 83 pages)
  • Hardware Store Business Plan – Editable Word File (Comprehensive – 83 pages)
  • Hardware Store Business Plan Funding Version – Editable Word File (Short version for applying for a loan – 48 pages)
  • Hardware Store Business Plan Automated Financial Statements – (Editable Excel file)

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Many thanks to the BizBolts team for putting together a fantastic business plan, I could not have done this business plan on my own. I managed to get funding from investors to start my butchery business using your business plan.

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The business plan was very helpful, you did a great job of taking ideas and putting them into words as well as pointing out other aspects of the business plan I wouldn’t have thought of. I got funding using your business plan and it’s now 4 months since I started my poultry business, and everything is going well.

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GET THE HARDWARE STORE BUSINESS PLAN (PDF, WORD AND EXCEL) - R500 Only.

We decided to make the business plan affordable to anyone who would want to start the business, and the price for the pre-written business plan is only 500 Rand.

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Nvidia shatters stock market record by adding over $230 billion in value in one day. Here’s why it’s dominating the AI chip race

Nvidia CEO Jensen Huang holding a GPU.

Chip designer Nvidia has emerged as the clear winner in not just the early stages of the AI boom but, at least so far, in all of stock market history. The $1.9 trillion AI giant surged to a record-high stock price on Thursday, putting it on course to add over $230 billion to its market capitalization and shatter a one-day record only weeks old : Meta’s $197 billion gain in early February .

It’s dominating the market, selling over 70% of all AI chips , and startups are desperate to spend hundreds of thousands of dollars on Nvidia’s hardware systems. Wall Street can’t get enough, either—Nvidia stock rocketed up an astonishing 15% after the company smashed its lofty earnings goals last quarter , bringing its market cap to over $1.9 trillion on top of its stock value tripling in the past year alone. 

So … why? How is it that a company founded all the way back in 1993 has displaced tech titans Alphabet and Amazon , leapfrogging them to become the third-most valuable company in the world ? It all comes down to Nvidia’s leading semiconductor chips for use in artificial intelligence.

The company that ‘got it’

Nvidia built up its advantage by playing the long game and investing in AI years before ChatGPT hit the market, and its chip designs are so far ahead of the competition that analysts wonder if it’s even possible for anyone else to catch up. Designers such as Arm Holdings and Intel , for instance, haven’t yet integrated hardware with AI-targeted software in the way Nvidia has.

“This is one of the great observations that we made: We realized that deep learning and AI was not [just] a chip problem … Every aspect of computing has fundamentally changed,” said Nvidia cofounder and CEO Jensen Huang at the New York Times DealBook Summit in November. “We observed and realized that about a decade and a half ago. I think a lot of people are still trying to sort that out.” Huang added that Nvidia just “got it” before anyone else did: “The reason why people say we’re practically the only company doing it is because we’re probably the only company that got it. And people are still trying to get it.”

Software has been a key part of that equation. While competitors have focused their efforts on chip design, Nvidia has aggressively pushed its CUDA programming interface that runs on top of its chips. That dual emphasis on software and hardware has made Nvidia chips the must-have tool for any developer looking to get into AI.

“Nvidia has done just a masterful job of making it easier to run on CUDA than to run on anything else,” said Edward Wilford, an analyst at tech consultancy Omdia. “CUDA is hands down the jewel in Nvidia’s crown. It’s the thing that’s gotten them this far. And I think it’s going to carry them for a while longer.”

AI needs computing power— a lot of computing power. AI chatbots such as ChatGPT are trained by inhaling vast quantities of data sourced from the internet— up to a trillion distinct pieces of information. That data is fed into a neural network that catalogs the associations between various words and phrases, which, after human training, can be used to produce responses to user queries in natural language. All those trillions of data points require huge amounts of hardware capacity, and hardware demand is only expected to increase as the AI field continues to grow. That’s put Nvidia, the sector’s biggest seller, in a great position to benefit.

Huang sounded a similar tune on his triumphant earnings call on Wednesday . Highlighting the shift from general-purpose computing to what he called “accelerated computing” at data centers, he argued that it’s “a whole new way of doing computing”—and even crowned it “a whole new industry.” 

Early on the AI boom

Nvidia has been at the forefront of AI hardware from the start. When large-scale AI research from startups such as OpenAI started ramping up in the mid-2010s, Nvidia—through a mixture of luck and smart bets—was in the right place at the right time.

Nvidia had long been known for its innovative GPUs, a type of chip popular in gaming applications. Most standard computer chips, called CPUs, excel at performing complicated calculations in sequence, one at a time. But GPUs can perform many simple calculations at once, making them excellent at supporting the complex graphics processing that video games demand. As it turned out, Nvidia’s GPUs were a perfect fit for the type of computing systems AI developers needed to build and train LLMs.

“To some extent, you could say they’ve been extremely lucky. But I think that diminishes it—they have capitalized perfectly on every instance of luck, on every opportunity they were given,” said Wilford. “If you go back five or 10 years, you see this ramp-up in console gaming. They rode that, and then when they felt that wave cresting, they got into cryptocurrency mining, and they rode that. And then just as that wave crested, AI started to take off.”

In fact, Nvidia had been quietly developing AI-targeted hardware for years. As far back as 2012, Nvidia chips were the technical foundation of AlexNet , the groundbreaking early neural network developed in part by OpenAI cofounder and former chief scientist Ilya Sutskever, who recently left the nonprofit after trying to oust CEO Sam Altman. That first mover advantage has given Nvidia a big leg up over its competitors. 

“They were visionaries … For Jensen, that goes back to his days at Stanford,” said Wilford. “He’s been waiting for this opportunity the whole time. And he’s kept Nvidia in a position to jump on it whenever the chance came. What we’ve seen in the last few years is that strategy executed to perfection. I can’t imagine someone doing better with it than Nvidia has.”

Since its early AI investments over a decade ago, Nvidia has poured millions into a hugely profitable AI hardware business. The company sells its flagship Hopper GPU for a quarter of a million dollars per unit. It’s a 70-pound supercomputer, built from 35,000 individual pieces—and the waiting list for customers to get their hands on one is months long . Desperate AI developers are turning to organizations like the San Francisco Compute Group , which rents out computing power by the hour from its collection of Nvidia chips. (As of this article’s publication, they’re booked out for almost a month.)

Nvidia’s AI chip juggernaut is poised to grow even more if AI growth meets analysts’ expectations. 

“Nvidia delivered against what was seemingly a very high bar,” wrote Goldman Sachs in its Nvidia earnings analysis. “We expect not only sustained growth in gen AI infrastructure spending by the large CSPs [communications service providers] and consumer internet companies, but also increased development and adoption of AI across enterprise customers representing various industry verticals and, increasingly, sovereign states.”

There are some potential threats to Nvidia’s market domination. For one, investors noted in the company’s most recent earnings that restrictions on exports to China dinged business, and a potential increase in competition from Chinese chip designers could put pressure on Nvidia’s global market share. Nvidia is also dependent on Taiwanese chip foundry TSMC to actually manufacture many of the chips it designs. The Biden administration has been pushing for more investment in domestic manufacturing through the CHIPS Act, but Huang himself said it will be at least a decade before American foundries could be fully operational.

“[Nvidia is] highly dependent on TSMC in Taiwan, and there are regional complications [associated with that], there are political complications,” said Wilford. “[And] the Chinese government is investing very heavily in developing their own AI capabilities as a result of some of those same tensions.”

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1) Starve Ups

Starve Ups

Starveup is Oregon's first startup accelerator and only scalerator. It has helped 250 startups from the beginning to the point where they were bought out by another company.

Details of the startup:

  • Started in: 2000
  • Industries: Industry Agnostic
  • Number of investments: 142
  • Number of exits: 26

You can find their website here .

2) Oregon Story Board

Oregon Story Board

Oregon Story Board is a non-profit that works to improve the digital storytelling industry in Oregon by giving businesses and entrepreneurs the tools they need to succeed.

  • Started in: 2013
  • Industries: VR, AR
  • Number of investments: 05

3) Oregon Technology Business Center

Oregon Technology Business Center

OSC, which stands for Oregon Startup Center, has a number of programs to help entrepreneurs and business owners do well.

  • Started in: 2005
  • Industries: Technology, Consumer Goods, Food Production, Travel
  • Number of investments: 03

4) VertueLab

VertueLab

VertueLab is a non-profit economic development engine that helps cleantech startups. The State of Oregon pays for it.

  • Started in: 2007
  • Industries: Cleantech, Information Technology, AgTech
  • Number of investments: 02

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5) Digital Industries

Digital Industries

Digital Industries runs and speeds up businesses that are focusing on technology startups.

  • Started in: 2016
  • Founders: Jon Love, Paul Weinert
  • Industries: Digital Marketing, Information Technology, RetailTech

6) Cascadia CleanTech Accelerator

Cascadia CleanTech Accelerator

The Cascadia CleanTech Accelerator is a 12-week program that helps early-stage cleantech startups with mentorship, a curriculum, connections, and funding opportunities.

  • Industries: Cleantech, Hardware
  • Accelerator Duration (in weeks): 12

C2M

C2M is an EB-5 facilitator and business accelerator that provides consulting services and capital investment strategies.

  • Started in: 2012

8) TargetPath

TargetPath

TargetPath works with you to make the business plan, go-to-market strategy, and operational strategy, and to put them into action.

  • Founders: Scott Hix
  • Industries: Technology

9) Portland State University Business Accelerator

Portland State University Business Accelerator

The Portland State Business Accelerator (PSBA) helps tech, bioscience, and green companies grow and develop from the time they are just starting out.

  • Started in: 2004
  • Industries: Biotech, Bioscience, Greentech

10) ChehalemVIA

ChehalemVIA

ChehalemVIA is a non-profit tech business accelerator that is supported by the community and run by the Chehalem Valley Chamber of Commerce.

  • Industries: Manufacturing, AgTech Medical, Dental Tech

ONABEN

Onaben helps Native and Indigenous communities become more entrepreneurial by offering curriculum, training, and building the capacity of organisations.

  • Started in: 1991

12) EO Portland

EO Portland

EO is a group of entrepreneurs who work together to help each other grow their businesses, improve themselves, and make important connections with each other.

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The Complete Moscow Startup City Guide

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January 10, 2019, the complete moscow startup city guide, by: anastasia borisova, published on: march 21, 2017.

Russia's capital Moscow is, despite stereotypes, a city developing its entrepreneurial identity. Find out what this city has to offer & what it takes to make it as a startup founder:

Moscow is a charming city that carries the image of several epochs of Russian history and surprises with the number of cultural events taking place during one single day. However, the recent years have made Moscow even more attractive as innovative projects have become the center of business attention and the ecosystem for startups began to grow.

Why Choose Moscow To Found Your Startup?

Being the capital, Moscow always had intensified business life. Now, it is even more saturated as young projects got new opportunities to develop. Let’s see how it happens and where to find support if you are one of those dreamers.

Advantages Of Building A Startup In Moscow:

  • Moscow is the economic center of Russia: forums and meetings take place here, people from different regions and companies can be found.
  • The Russian capital is proud of the saturation of its international connections – from a growing tourist flow to foreign companies departments.
  • It is a modern megacity with proper infrastructure (for instance, free WiFi is available in the streets and on public transport) and a large population (more than 12 million in 2016).
  • Moscow is an educational center. There are a lot of young people with a strong background and passion for changing the world. Sometimes they are ready to wfork for experience only. What’s more, the universities of Moscow create business incubators and offer special business courses.
  • The determination to develop highly innovative industries in Russia is shared by the government and businesses.
  • In general, prospective (or cool) business ideas are the matter of great public interest. Business is the major topic for a lot of media outlets.

What Founders Have To Consider:

  • Networking events are mostly in Russian. It doesn’t mean members of the community don’t speak English (most likely, they do), but the majority of services is in Russian.
  • The attitude towards new projects is rather cautious, though it is really changing now. But still, they often choose a less risky project as a partner (“They don’t believe in startups in Russia!”, entrepreneurs often say).
  • Many founders only rely on their own resources, connections, and skills instead of using special services for new projects.

Though there is a strong belief that founding a startup in Moscow would be very challenging, this perception is changing now. Capital owners learn to work with new small projects, founders learn to communicate with each other and to use available opportunities more efficiently. What is more, there will be no lack of innovations in Moscow as the availability of scientific centers makes the city very potent in constantly providing business with new technologies and ideas for products.

Dive Into Moscow’s Startup Community

The Complete Moscow Startup City Guide

Moscow startup community is represented by young scientists and entrepreneurs on the one side and professional businessmen, coaches, consultants, and experts on the other side. The life of the community is rather rich, it is hardly possible to attend all the meetings and events, but they are really worth visiting. Try the following pages to find them.

Find Info About Upcoming Events, Meetups & Other Occasions:

  • Moscow State University Business Incubator has a very useful news page. Follow them on Facebook or on Vkontakte (which is a Russian social network) to find local events and competitions.
  • Rusbase Media has an online calendar with events of innovations industry taking place across Russia.
  • The state web-portal ‘ Moscow Small Business ’ collects information about upcoming lectures, conferences, and workshops in one calendar.
  • Digital October has an interesting event-list as the place holds educational courses and events for innovative projects. They sometimes have series of weekend educational events devoted to a field of development (e.g. Blockchain Weekend , BioTech Weekend )
  • DI Telegraph is a space for educational and business forums, conferences and lectures.

Media Outlets For Startups:

  • Vc.ru media (created on basis of popular Russian media about IT ‘Zuckerberg will call’) publishes startup news in a separated section, covering interesting (or successful) ideas for projects and business events.
  • Firrma is a media outlet for technological and venture business. There you’ll find announcements of upcoming events and opinions or comments from leading people of different industries.
  • Inc.Russia has special sections for business ideas (‘To invent’) and successful startup stories (‘To take up’).
  • Spark is an online platform for small business communication and exchanging experience. This is where one can find advice or even partners.

Major Events, Festivals Or Conferences:

  • Open Innovations Startup Tour is organized every year to find promising projects in different cities of Russia and the Commonwealth of Independent States. Participants attend workshops, make appointments with mentors and investors and compete for receiving an invitation to Startup Village.
  • Startup Village is an international yearly technological conference for investors, startups, and innovators taking place in Skolkovo . In 2017 the event is planning to attract more than 20,000 participants with 4,000 startups and 1,500 investors.
  • Open Innovations Forum takes place every autumn and is aimed at promoting technological development, enhancing collaboration in innovative business and exchanging experience.
  • Russian Internet Forum and the Conference of the Internet and Business is the major event in the sphere of digital communications in Russia. It is traditionally held as a three-day activity taking place in a holiday residence near Moscow where participants share their views on the development of the Russian digital industry and the Russian Internet.
  • Startup Cup Russia is a part of the global Startup Cup Competition. Projects participate to get feedback from mentors, consulting assistance and financial support.
  • The Startup Of The Year Award from RosBusinesConsulting (RBC) is given to the best projects chosen by both, open public vote and experts’ opinion.
  • The Higher School of Economics holds its’ own Startup Of The Year Award ceremony. They elect best companies in 4 categories: FinTech, hardware, socially important project and global project.

Volunteering Possibilities:

  • Mosvolunteer is an organization connecting managers for meetings, conferences, etc., and those willing to participate in preparation and holding of the events. Mosvolunteer sometimes needs volunteers for business events (Startup Village in 2015 was held with their help ).
  • Check the official pages of the events if you want to attend, they often seek volunteers and publish all the information for possible participation.

Volunteering is quite a common type of collaboration in Moscow so never hesitate and offer your help to event managers or startup founders (even if they don’t look for volunteers, try writing them a letter). People of the sphere will appreciate your determination and interest in their activity.

Choose One Of Moscow’s Coworking Spaces

The Complete Moscow Startup City Guide

As renting an office can turn out to be expensive for small companies (frankly speaking, Moscow is an expensive city not for small companies only), coworking spaces are very popular with startup founders. Residents appreciate the variety of services, round-the-clock access, pleasant atmosphere and the community of creative people that can be found in coworking spaces.

  • #tceh is not simply coworking – it is a place for business courses and useful contacts as well. Founders sometimes meet their investors there or use it as ‘feedback’ facility to discuss their projects with experts. What is more, #tceh enjoys the collaboration with Fund for Internet Initiatives Development .
  • StartHub is a coworking center located in one of the creative centers of Moscow – ‘Flacon’ design-factory. The venue is very popular with artists, designers, and filmmakers because of its’ unusual atmosphere of a former factory. ‘Flacon’ is a symbol of creativity and new approaches towards a common process. A swimming pool, a canteen, and a fitness center are located close to StartHub.
  • Coworking 2.0 was created for both freelancers and young projects. Depending on each resident’s needs, this place offers different sets of services (for instance, a resident can rent a working space for 24/7 access during a whole month or make several reservations for the meeting room only) which allows to be economical and not to pay for unneeded facilities.
  • Work Station has several venues in Moscow. The most famous of them is located at Gorky Park and in summer they open terrace for residents. Another center of Work Station, the biggest of all, is located on the Dmitrovskaya metro station and has a capsular hotel and free breakfasts.
  • Arma Coworking holds business meetings and lectures. Residents can choose to rent a mini-office or simply use the coworking space. Arma is proud of the atmosphere of the place created by the local architecture, residents, and staff.
  • DI Telegraph Coworking is located in the very center of Moscow on Tverskaya Street and has many successful VC, media, IT, and educational projects among its residents.

Get Investment In Moscow

The Complete Moscow Startup City Guide

Moscow enjoys the role of the financial center so many companies and private investors do business here. Besides, government and commercial organizations are interested in innovative projects and create special supporting programs. There are many possibilities to get investment at any stage of the project development.

Incubators:

  • The Higher School of Economics Business Incubator provides two types of programs for startups. Residential program HSE{pro} offers working space and assistance from tax advisory to PR-support. It has been the starting point for successful Russian startups (for instance, TimePad ). The educational program HSE{goods} was designed for those planning to open a social business project. It can help even if the idea of the project is not yet clearly articulated. The fees for incubator services can be delayed in case the resident is a HSE employee or student. HSE itself is known for reinforcing the collaboration between the scientific community, business and government.
  • The Plekhanov Russian University of Economics Incubator supports business teams at early stages or helps realize elaborated ideas in IT, new materials, gadgets, smart house systems and robotics. University students and graduates should represent at least 50% of the team to enter the incubator.
  • Strogino TechnoPark is the venue for innovative projects at any stage. It has coworking, pre-incubator and incubator programs and a prototyping center. Companies at the stage of expansion or growth can become residents of TechnoPark to construct laboratories or production. The major advantage of being a member of Strogino TechnoPark is gaining access to governmental support as the center is working in strong partnership with Business departments of Moscow authorities .
  • Branch Agricultural Business Incubator in Timiryazev Russian State Agrarian University provides agrarian innovative projects with laboratories, science research equipment and coworking spaces. It also attracts investment and expertise. By the end of 2016, there were many interesting projects among the residents of the center, for instance, an online shop delivering weekly sets of local farm products by subscription .
  • MGIMO (Moscow State Institute of International Relations) created completely free incubator for students and graduates. The program has already helped several companies to successfully enter the local market; one of them is Octa Smart Food, the products of which are now sold online and in several stores in Moscow.

Accelerators:

  • SKOLKOVO Startup Academy is an educational facility for founders at any stage. There will be lectures, meetings with business coaches and opportunities to find investment. Entering the community of Skolkovo can be very beneficial as funds, laboratories, consulting services, educational centers and many other business facilities are located there.
  • Future Fintech offers an acceleration program for startups in financial and blockchain technologies, information security, payment instruments, banking and insurance services. They are looking for projects introducing software, marketing, technical or analytical products. Future Fintech attracts practicing specialists in the field to collaborate with residents’ projects and helps to find financial support.
  • Internet Initiatives Development Fund offers an accelerator program for IT-companies that already have created a product and started sales. Each team will come through individually focused consulting services working full-day in the accelerator space. After the program is done, the best companies will have an opportunity to participate in a Demoday and present their products before potential investors and partners. Participants can choose to pay for the program or to give a share in their company as payment.
  • GenerationS is an accelerator program containing several stages from online pre-accelerator to final competition of all participating projects. The results of the pitch session at the competition define the best companies, which then share Grand Prix fund (the fund is said to constitute 15 million rubles or about 242.000 EUR). GenerationS welcomes participants from many fields of innovations: smart city, creative industries, life science, finance and banking technologies, etc.
  • Disruptive has been created by MetaBeta founder and ex-CEO, Dmitry Maslennikov after MetaData founders decided to work separately in 2016. The new program is considered to be more than an accelerator. Though Disruptive doesn’t provide investment, it offers startups help with finding the needed specialists, a marketing strategy or anything the project misses. The company also hires people willing to bring powerful startups to life.
  • Territory is accelerating program in the sphere of production which gives access to an ecosystem consisting of an accelerator, a design center and an investment company. The goal of Territory’s activity is to help implement manufacturing innovative ideas in prototypes and small-scale production, with an eye to further large-scale production and sales.

Grants & Subventions:

  • Innovation Assistance Fund provides investment for research and implementation of innovations. Their Umnik program offers the opportunity to get grants (up to 500.000 RUB or about 8000 EUR) for young scientists developing ideas for projects in IT, medicine of the future, materials, apparatus and bio. The Start program supports startups at early stages. New innovative companies can obtain up to 5 million rubles (80.000 EUR). The supporting plan consists of two parts and two years: during the first year, a team completes research in their field and then, during the second step, the project can receive part of needed investment from the Innovation Assistant Fund (in case the team manages to find some other sources as well).
  • The Skolkovo Fund Granting Program offers many investment opportunities. The preferred fields of projects are energy preservation and efficiency, nuclear technology, space technology and telecommunication, biomedical technology, strategic computer technology and software.
  • The Moscow State Department of Science, Industrial Policy, and Entrepreneurship has created a lot of possibilities for small business development by providing subventions. Besides, there is a chance of getting a low-interest loan from the Venture Investment Development Fund for startups that already get finance help from a private investor. The amount of the loan can be up to two times the amount of the received private investment.
  • Innovative Entrepreneurship Support Fund of the Higher School of Economics holds yearly competitions for startup projects. There can be up to five winners and each can get up to 700.000 rubles (about 11.000 EUR) to implement their ideas or be given consulting assistance from invited experts.

Crowd Investing Platforms:

  • Planeta.ru , by its’ own estimation, has helped to collect more than 589 million rubles (or more than 9.500.000 EUR) by March 2017 (the project started in June 2012). It is one of the earliest and most successful crowd funding platforms in Russia. The project now also provides PR, promotion and education services. Planeta.ru withholds from 10% to 15% of the successfully collected sum (except for charity projects when the fee is not taken).
  • BoomStarter is the crowd funding platform which helps to attract investment for new projects. According to BoomStarter’s rules, the goal of the money collection should be clearly defined and fit one of the 15 set categories created by the platform founders. The fee for the use of the service constitutes 5% of collected sum and is only charged if the needed sum was gained. Apart from the fee, payment systems would withdraw another 5% of the sum and the tax would be collected.

Angel Investors:

  • The National Business Angels Association unites Russian regional angels’ communities connecting startups with investors and helping to develop the venture investment industry in Russia.
  • The Private Capital National Business Angel Network helps to find finance and to organize the presentation of the projects for potential investors withholding 5% of the successfully invested sum.

Venture Capital Investors:

  • Internet Initiatives Development Fund selects best companies completing its accelerating program and provides an opportunity to get up to 25 million rubles (400.000 EUR) for project development.
  • Altair Fund invests in projects at early stages in mobile and IT spheres.
  • Moscow Seed Fund – a co-investment fund of Moscow, is providing additional finance for technology innovation projects in case they obtain support from other investors.
  • Starta Capital was founded in 2011 in Moscow and now also has a department and an accelerating program in New York. The company provides investment for technological projects.
  • The Untitled Ventures collaborate with cloud technology startups with an already elaborated product. The company has also created The Untitled club of private investors for co-financing projects.
  • Bright Capital is a venture capital company with the main focus on CleanTech, BioTech, IT, and telecom projects. Bright Capital supports projects from all over the world and invests at any stage of a company’s development.
  • Addventure Fund is the former holder of Delivery Club – a successful Russian startup project that introduced a platform for food delivery.

Other Investment Opportunities:

  • The Russian Venture Company does not invest itself but unites many venture investment providers from different spheres. A special form will help projects to find a fund among investors of RVC depending on the project’s field, goals and needs.
  • RusNano works as a co-investor, financing in high-tech production chains or technologies at early stages. The projects applying for support should be nanotech-related and Russia based.
  • StartTrack is a platform that helps investors in finding startups and helps projects in finding investment. The platform was created with the support of Internet Initiatives Development Fund . Using StartTrack is beneficial for both investors and startups as each new member of the platform is carefully checked. Entering projects should provide business development indicators and update them each month.
  • Pipeline is an online service of Rusbase that allows entering a network and finding an investor from the partners of Rusbase. The company also organizes meetings with investors in Speed Dating format which lets investors get to know several projects during one evening and gives startups a chance to be presented to many potential investors.
  • ToWave is one more online platform for investors and startups with many successful venture funds on the list of investors.
  • Start2Up is an advertising service bringing together those who need investment and those who look for a project or look for partners to start a new business. There are a lot of advertisements from different regions of Russia.

As one of Moscow startup founders said, “Despite the wide-spread prejudice, a project with a good idea would be able to find investment in Moscow”.

Seek Further Advice In Moscow

The Complete Moscow Startup City Guide

  • MSU Science Park provides assistance and consulting at any stage and lends spaces for technology innovations companies.
  • The Innovative Navigator around Moscow can help to find an incubator or learn about the support a new project can get from authorities.
  • Moscow Small Business web-portal can be useful for checking tax regime, possibilities for getting subventions and working spaces in Moscow. Moreover, the organization provides advisory for entrepreneurs concerning starting and running a business in the city.

So be brave and join the community of people breaking stereotypes. Moscow is a city that challenges you to make the world better and, as you see, the chance of improving the world is real!

_______________________

The guides are like startup communities – they constantly change and grow. Make sure to check for updates and if you have something to add to one of them or want to publish one for your city, get in touch right away ! And don’t forget to enrich the startup ecosystem by creating your company profile at StartUs!

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Tax Time Guide 2024: What to know before completing a tax return

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IR-2024-45, Feb. 21, 2024

WASHINGTON — During the busiest time of the tax filing season, the Internal Revenue Service kicked off its 2024 Tax Time Guide series to help remind taxpayers of key items they’ll need to file a 2023 tax return.

As part of its four-part, weekly Tax Time Guide series, the IRS continues to provide new and updated resources to help taxpayers file an accurate tax return. Taxpayers can count on IRS.gov for updated resources and tools along with a special free help page available around the clock. Taxpayers are also encouraged to read Publication 17, Your Federal Income Tax (For Individuals) for additional guidance.

Essentials to filing an accurate tax return

The deadline this tax season for filing Form 1040, U.S. Individual Income Tax Return , or 1040-SR, U.S. Tax Return for Seniors , is April 15, 2024. However, those who live in Maine or Massachusetts will have until April 17, 2024, to file due to official holidays observed in those states.

Taxpayers are advised to wait until they receive all their proper tax documents before filing their tax returns. Filing without all the necessary documents could lead to mistakes and potential delays.

It’s important for taxpayers to carefully review their documents for any inaccuracies or missing information. If any issues are found, taxpayers should contact the payer immediately to request a correction or confirm that the payer has their current mailing or email address on file.

Creating an IRS Online Account can provide taxpayers with secure access to information about their federal tax account, including payment history, tax records and other important information.

Having organized tax records can make the process of preparing a complete and accurate tax return easier and may also help taxpayers identify any overlooked deductions or credits .

Taxpayers who have an Individual Taxpayer Identification Number or ITIN may need to renew it if it has expired and is required for a U.S. federal tax return. If an expiring or expired ITIN is not renewed, the IRS can still accept the tax return, but it may result in processing delays or delays in credits owed.

Changes to credits and deductions for tax year 2023

Standard deduction amount increased. For 2023, the standard deduction amount has been increased for all filers. The amounts are:

  • Single or married filing separately — $13,850.
  • Head of household — $20,800.
  • Married filing jointly or qualifying surviving spouse — $27,700.

Additional child tax credit amount increased. The maximum additional child tax credit amount has increased to $1,600 for each qualifying child.

Child tax credit enhancements. Many changes to the Child tax credit (CTC) that had been implemented by the American Rescue Plan Act of 2021 have expired.

However, the IRS continues to closely monitor legislation being considered by Congress affecting the Child Tax Credit. The IRS reminds taxpayers eligible for the Child Tax Credit that they should not wait to file their 2023 tax return this filing season. If Congress changes the CTC guidelines, the IRS will automatically make adjustments for those who have already filed so no additional action will be needed by those eligible taxpayers.

Under current law, for tax year 2023, the following currently apply:

  • The enhanced credit allowed for qualifying children under age 6 and children under age 18 has expired. For 2023, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where AGI income exceeds $200,000 ($400,000 in the case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020 except that the maximum ACTC amount for each qualifying child increased to $1,500.
  • The increased age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2023 to be a qualifying child.

Changes to the Earned Income Tax Credit (EITC). The enhancements for taxpayers without a qualifying child implemented by the American Rescue Plan Act of 2021 will not apply for tax year 2023. To claim the EITC without a qualifying child in 2023, taxpayers must be at least age 25 but under age 65 at the end of 2023. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2023.

Taxpayers may find more information on Child tax credits in the Instructions for Schedule 8812 (Form 1040) .

New Clean Vehicle Credit. The credit for new qualified plug-in electric drive motor vehicles has changed. This credit is now known as the Clean Vehicle Credit. The maximum amount of the credit and some of the requirements to claim the credit have changed. The credit is reported on Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit , and on Form 1040, Schedule 3.

More information on these and other credit and deduction changes for tax year 2023 may be found in the Publication 17, Your Federal Income Tax (For Individuals) , taxpayer guide.

1099-K reporting requirements have not changed for tax year 2023

Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS recently released Notice 2023-74 announcing a delay of the new $600 reporting threshold for tax year 2023 on Form 1099-K, Payment Card and Third-Party Network Transactions . The previous reporting thresholds will remain in place for 2023.

The IRS has published a fact sheet with further information to assist taxpayers concerning changes to 1099-K reporting requirements for tax year 2023.

Form 1099-K reporting requirements

Taxpayers who take direct payment by credit, debit or gift cards for selling goods or providing services by customers or clients should get a Form 1099-K from their payment processor or payment settlement entity no matter how many payments they got or how much they were for.

If they used a payment app or online marketplace and received over $20,000 from over 200 transactions,

the payment app or online marketplace is required to send a Form 1099-K. However, they can send a Form 1099-K with lower amounts. Whether or not the taxpayer receives a Form 1099-K, they must still report any income on their tax return.

What’s taxable? It’s the profit from these activities that’s taxable income. The Form 1099-K shows the gross or total amount of payments received. Taxpayers can use it and other records to figure out the actual taxes they owe on any profits. Remember that all income, no matter the amount, is taxable unless the tax law says it isn’t – even if taxpayers don’t get a Form 1099-K.

What’s not taxable? Taxpayers shouldn’t receive a Form 1099-K for personal payments, including money received as a gift and for repayment of shared expenses. That money isn’t taxable. To prevent getting an inaccurate Form 1099-K, note those payments as “personal,” if possible.

Good recordkeeping is key. Be sure to keep good records because it helps when it’s time to file a tax return. It’s a good idea to keep business and personal transactions separate to make it easier to figure out what a taxpayer owes.

For details on what to do if a taxpayer gets a Form 1099-K in error or the information on their form is incorrect, visit IRS.gov/1099k  or find frequently asked questions at Form 1099-K FAQs .

Direct File pilot program provides a new option this year for some

The IRS launched the Direct File pilot program during the 2024 tax season. The pilot will give eligible taxpayers an option to prepare and electronically file their 2023 tax returns, for free, directly with the IRS.

The Direct File pilot program will be offered to eligible taxpayers in 12 pilot states who have relatively simple tax returns reporting only certain types of income and claiming limited credits and deductions. The 12 states currently participating in the Direct File pilot program are Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming. Taxpayers can check their eligibility at directfile.irs.gov .

The Direct File pilot is currently in the internal testing phase and will be more widely available in mid-March. Taxpayers can get the latest news about the pilot at Direct File pilot news and sign up to be notified when Direct File is open to new users.

Finally, for comprehensive information on all these and other changes for tax year 2023, taxpayers and tax professionals are encouraged to read the Publication 17, Your Federal Income Tax (For Individuals) , taxpayer guide, as well as visit other topics of taxpayer interest on IRS.gov.

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Subsets helps subscription businesses reduce churn with ‘retention experiments’ and explainable AI

hardware startup business plan

Recurring revenue is pretty much the holy grail for any business — it’s precisely why Apple has segued toward being almost as much a services company as it is a hardware company, with 20% of its revenue now emanating from Apple TV+, Apple Music, iCloud, and an array of other subscription and non-subscription-based services.

The cost of acquiring new customers has also reportedly increased by more than 200% over the past decade, which highlights the importance of predictable revenue streams. But there are inherent challenges with subscription-based business models — not only must companies focus on growing the number of people willing to pay for a given service, but they must also be mindful of retaining those that they already have. Reducing churn is the name of the game.

This is something that fledgling Danish startup  Subsets is setting out to help companies achieve, with an AI-enabled platform designed to “bridge the retention gap in the subscription industry.”

Explainable

Founded out of Copenhagen in 2022, Subsets leans on “explainable AI” to tell companies which current subscribers might be about to jump ship, and serves up “experiments” to find the best way of enticing them to stay.

Explainable AI is a concept that describes AI’s ability to “explain” or justify any decisions and insights it provides in a way that humans can parse, and it has emerged as one of the cornerstones of a wider societal push to make AI more trustworthy — most of the major large language model (LLM) providers are trying to appease critics by addressing the much-maligned “black box” problem.

Six months on from its launch, Subsets has already claimed some decent customers, including the New York Times–owned  Athletic and Danish newspaper Børsen . But the company is now looking to double down on this recent traction with a fresh $1.65 million in pre-seed funding led by Nordic early-stage VC Upfin and Y Combinator (YC), following Subsets’ participation in YC’s Summer ’23 program .

The media business

While Subsets could be applied to any subscription business, it’s currently focused on the digital media vertical.

“We are limiting our use case to digital media at the moment — this includes digital publishers, streaming [platforms], subscription apps, and telecoms,” Subsets co-founder and CEO Martin Johnsen told TechCrunch. “Subsets can be applied more broadly across digital consumer subscriptions later — I see us broadening into, for example, mobility, banking, and food delivery. Even more offline subscription categories, as everything becomes more digital.”

Companies connect Subsets to their various internal systems, such as CRM (customer relationship management), CMS (content management system), billing, data warehouse, and so on to garner subscriber data points — this can include things like demographics, how each subscriber consumes a specific piece of content (e.g., times, category preferences), and any other relevant items related to the product and how the customer interacts with it.

On the front end, Subsets serves a web app through which commercial teams can delve into the “churn audiences” via easy-to-understand visuals and natural language. For example, it might highlight thousands of subscribers who used to engage across myriad different titles under a particular media brand but are now showing signs of losing interest.

Subsets: Audience discovery

Subsets: Audience discovery Image Credits : Subsets

Subsets allows nontechnical teams to run retention “experiments” on subsets (hence the company name) of their subscriber base, to see what actions might lead a customer to staying on board. These experiments might be a series of push notifications or email offering a subscription discount, or perhaps a free upgrade to unlock new features. The specifics of these “retention flows” can be tweaked by each customer.

Subsets: Experiment

Subsets: Experiment Image Credits : Subsets

Whatever steps are found to have reduced churn in the experimentation phase are presented in the form of results that showcase what worked — it’s designed to take at least some of the guesswork out of a company’s retention endeavors and allows the company to “automate what works.”

“Some of these experiments will yield very good results on subscriber retention — the experiments that yield good results are automated,” Johnsen said. “Because an audience is defined by a specific subscriber behavior which triggers churns, these audiences are typically dynamic, and new subscribers will flow in and out of an audience. All the subscribers flowing into an audience receive the flows that have proven to yield good results.”

Subsets: Results

Subsets: Results Image Credits : Subsets

Connections

With a mathematic modeling and computation education background, Johnsen tells TechCrunch that the company has developed its own AI algorithms using “gradient-boosting models with temporal sequencing methods.” Gradient-boosting essentially combines multiple “weak” predictive models to create a single stronger predictive model, while temporal sequencing incorporates time-related features into the modeling process. Subsets then uses frameworks from Elon Musk’s xAI  to make “churn-driving behavior understandable,” as Johnsen puts it.

While Subsets doesn’t use any of OpenAI’s GPT.x models at present, Johnsen said that they are working on building some additional “downstream functionality” into its product using the same foundational model that powers ChatGPT.

In a social media post this week, YC president and CEO Garry Tan said that around half of all YC companies “are using LLMs in some way,” which certainly aligns with its latest investment in Subsets. Securing YC as an early backer is also proving fruitful for Subsets’ growth plans given YC’s historical connections — indeed, Subsets’ customer the Athletic is also a YC alum, graduating from the Summer ’16 program six years before it was bought by the New York Times.

“YC has an impressively strong network, which has given us some exciting opportunities,” Johnsen said.

Aside from lead backers Upfin and YC, Subsets’ pre-seed round included investments from a slew of institutional and angel investors, including Cuesta Labs, Sandhill Markets, and Peakon founder Phillip Chambers.

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