Convenience Store Business
 

Hey guys,

I am seriously considering buying a convenience store business. It will be my first business. Does anyone have any experience or have family/friends that have owned such businesses?

My goal is to own/operate this business for 2-3 years, mostly to learn how to run my own business before I get into something bigger.

All insights will be much appreciated. Thanks!

I've heard profit margins are very slim on those types of businesses.

I have a friend whos family owned one for many years and he said it was horrible with ppl stealing and his parents have been help up with a gun/knife...not worth it imo, but i suppose a lot of it has to do with location...

i think regardless of location..you are subject to theft and robbery. not worth it IMO

The general tip on buying a business is just to do your own homework and be a cynic about everything. People will tell you all sorts of great things about their business but they are not really telling you the real reasons why they are getting out.

Remember it's always easy to get into something rather then getting out. So low ball and act like you are not "seriously" interested. You probably will need to get professionals (accountants, lawyers...) involved in the transaction. Yes you will have to pay a fee but it will save you a lot of headache and money down the road.

have you ever worked retail? stocking shelves, helping customers, ordering stock, doing cash?

if you say NO - then its not for you.

Thanks for all your responses! :D

My first choice is actually a car wash business, but none are for sale (that I can find).

I've been working @ my family's restaurant business since i was a kid (so I am familiar with retail, getting supplies, handling cash, etc.). We are selling so that's why I am looking for a small business to operate. The reason I am looking @ this type of business is because it seems to be as basic as it gets and my uncle was also in this business and he's doing really well now (he's in real estate development now). My main goal is the learning experience but I do expect a decent salary.

Any further insights are greatly appreciated! :D

Also, about getting robbed: I think that's something that all businesses have to deal with. My family's in the restaurant business and we've been robbed many times, once even @ gunpoint lol.

PS. Regarding location, I am looking @ Vancouver West Side or DT for now if that makes any difference.

Be aware that if you decide to open a convenience store in DT, you will be exposed to many habitual shoplifters (junkies, crackheads, boosters) whom will make an attempt to shoplift at your store, it's unavoidable, but I can help you minimize your loss.

Shoot me a message and we'll go from there.

Not as bad as people describe here,
I do know some owners as clients in the DT district that make quite a bit of money, it depends on location.

Obviously theft and the possibility of robberies are part of the job description. But it also depends on how you run it.

Funny thing is, the write offs for this particular business is acutally pretty damn good for some odd reason, that and my clients probably have kick ass accountants.

Hi, there is one car-wash business for sale in port moody, it is on a leased land though..

As for convenience store, yes the profit margin is slim if ONLY you sell beverages, and confectionary. Chips are not that bad. My parents own one, and the average profit we get from a $1.00 + tax bar of chocolate is 7 cents. However they added Deli, Produce, Slushies, Sandwiches and they have decent profit margins. Now some people may be impressed with lottery and tobacco revenues but dont be fooled! for every $1 scratch ticket we sell, the profit is 3-5 cents. I think it is the same for quick picks well. BCLC dont give much profits because they need the money for payouts lol. The primary reason for having lottery + tobacco is to increase more customer traffic who may buy other goods due to "impulse buying"

For robbery and Break and enter... besides little teenagers stealing chocolate thankfully we havent had any hold-ups but in vancouver/burnaby it may be scary.

Oh and one HUGE plus of owning a convenience store is the airmiles you can accumulate with various credit cards. Think free international first-class flights a month. Too bad you never get time off as an owner to go on a vacation though unless you have a manager :)

Your post is very informative, thank you very much! :D

What are the hours of operations of your parents' biz? daily sales? yearly net income (if you don't mind)? Also, where is your parent's business located? $1 for a candy bar seems really cheap, usually I see them for selling for approx $1.25. I plan on adding a flower section to the business to increase revenue, since all the largest grocer's I've seen sell flowers. Do your parents have experience in this area? Selling sandwiches is an awesome idea that i'll definitely implement if i do this!

If you come up with any other insights, please let me know! (you can PM me if you prefer)

Thanks again! :D

Great post!

Can you expand on the potential write offs? Are you an accountant? If I do go through with this biz, maybe we can talk? :D Any other insights will be greatly appreciated!

Thanks!

you can deduct so many expenses against your business income. some examples are cca (depreciation of fixed assets) and inventory (once you sell an item). There are other more complicated deductions related to prepaid and accrued expenses, but you should probably see an accountant regarding those.

if you have a dog, wrap a "Quatchi Convinience Stores Ltd" banner around it and write it off + all dog related expenses ( food , vet , etcc.) as an expense. cuz it is the co. mascot and advertising vehicle :).

OP if you wanna talk about biz write off, pm me. You dont need "crazy" accountants to write things off - u just need a competent one that understands the biz/owner (for tax purposes).

^ Of course you can deduct amortization and inventory...those are normal costs of business..are you in high school accounting?

You can also deduct vehicle expenses, your car lease, phone bills, etc..
You can also push it with meals and entertainment, a new laptop, clothes....just about anything can be deducted as long as it's somewhat related to your business

But I think it's hard to profit from selling small items with low margins..
What area are you looking to purchase a business in?
Why don't you open up another restaurant?

This is my first business so that's why I want something to be as simple as possible and I am doing this for the experience mostly, money is secondary. Opening a restaurant is an option, but not right now, it costs way too much and I am just not ready to handle such a large operation. :D I am looking @ Vancouver West End and DT mostly right now. I checked out a few in Burnaby but they're all really dead (typical suburbia).

Thanks for all the replies guys! Keep them coming! :D

the most important thing about c-stores is the location. You cant advertise with a c-store so location is key to attracting customers.
The second is inventory turnover, if you are not selling items fast, it's a death sentence to your business as most inventory you own are perishable. Around 70% of inventory you can purchase at a costco, including tobacco so that is a plus. Purchasing $90 000 of tobacco onto your amex card = 1 free flight right there. Getting decent suppliers is important for the remaining 30%. I find that Pepsi/Coca Cola are very nice, with generous rebates and free stuff. Same goes for Frito-lay and Old Dutch, they will buy back at a discounted rate for expired goods. SYSCO was nice but they jacked up the prices alot recently. IMO I think it is too hard to develop a C-store around Vancouver/DT, too much competition, If you sold gasoline as well, maybe. Be advised that you need at least $1 million to invest in anything in Vancouver.

As for deducting expenses, meals/entertainment/clothes/laptop dont EVER deduct, they are pointless to a C-store owner and more towards realtors, accountants etc. my parents got audited once and although we passed they frowned on our suburban lease, saying that it is too luxurious, they only let it go after we told them that it is better than a silverado + pick up cover. If my dad listened to my whining and got a Escalade ESV, we would've got fined $20-30 000?

Oh and watch out for wal-mart, if they move into the neighbourhood = good-bye c-store!

no_clue, your posts are amazingly informative! info I wouldn't be able to find anywhere else! so TYVM! :D

check your PM! :D

My family has ran a convenience and gas station for over 18 years that we built from the ground up. If your only making 7 cents from a chocolate bar your doing it wrong. A c-store without gas can be tough unless you are in a real good location. Also running a c-store is a lot of work. You can't just hire a bunch of people to work for and just manage it you have to be will to work at the till. By yourself you will have a tough time running it because it's a 7 days a week 365 days a year business. If you have some help it you can make money running a C-store, we do.

For us Frito-lay and Old Dutch is a guaranteed sale same goes for coke pesi and Quality sandwiches. If it expires they will credit us what ever they sold it to us for. If you get something at a good price fast turn around is not that important but we do sell a lot of things you won't find at a 7-11. Best example time foil roasting trays for turkeys. Buy them at the $ store and they sit in the back of the store for 5 or 6 months. Christmas day comes around and theirs always some one that needs one hes willing to pay $6 for 1.

Walmart is also not a death blow because if someone needs 2l of pop he's not going to wast 30 min driving to Walmart, find parking and then wait in line just to save a buck when he could be in and out of a C-store in 5 min.

Your parents also need to find a better accountant.My brother is an accountant and use to be the head of the tax department at KPMG in Vancouver we right off lots of stuff including a Mercedes ML 500 that he bought new for work.

Here's a random thought, go into a convenience store and speak with the manager to get a feel for things. Don't listen to people who make posts like "I heard it's not very profitable..." etc. No one knows what its like to run one of these except the people who actually do. no_clue actually has a clue, despite his username lol. Good posts from him/her.

A manager won't tell you anything, we won't even give our cigarette prices over the phone.

7 cents per chocolate after expense + mortgage is pretty good IMO My parents paid it off now but I stated that since its the only number I can remember. How many employees do your parents have? Ours employs up to 6 during the day. Also im assuming that yours is a franchise gas station as well. Ours is just a c/mini grocery store, so although Wal-mart didnt kill us, we noticed a 8% decrease in sales of snacks, however most C-stores in the vancouver area has very little parking stalls besides 7-11 franchises. We also do deduct our suburban as a business lease, however it is a LTZ so it's price is similar to a ML. However we got audited by the CRA, and they were the ones who frowned, not the accountants. I assume your brother hasnt been audited yet, how he is going to explain how a ML500 is essential to his business? It has a tiny cargo space and he certainly doesn't need to impress clients with it as he is a C-store owner