A hardware store is a highly profitable business with a captive audience. Bringing with it great potential for profitability. So, what are the steps needed to open a successful hardware business in South Africa? Here is a brief overview to get the creative juices flowing.
Study the market, understand the model and assess the competition
It is vital that you do a lot of research before you open your hardware store. This is to ensure you have a clear understanding of your local market, how the model works and who is already operating in this field. It is also important to learn about the customers you want to sell to so you have a clear idea of what they need and how you can provide that service.
The first step is to write a solid business plan. A large part of this process is getting your head around the overall idea and trying to gain a bird’s eye view of the business and all its components. Remember that you will be up against a lot of competitors with the same idea as you, so to be successful, you need to know both your main and indirect competitors, what they sell, and who buys from them.
Remember that hardware stores get business from various areas including building and civil construction, home and business renovations, small do-it-yourself jobs, as well as farming and maintenance work. A plus here is that the customers rely heavily on your service offering so you have a captive market. This will give you a lot of confidence as people will seek you out if you are doing it well. Just make sure you have a solid understanding of what you are getting yourself into and that you are filling a need in the market that isn't already being serviced better but someone else.
Secure a location
Next step is to find a great location for your store. This comes down to the area, as well as the building premises itself. Businesses with high ceilings are great for hardware stores because they make it easy to store a lot of items. Bear in mind that the building itself needs to be pretty wide because you might need to use a forklift to move large, heavy building supplies. There also needs to be enough room for all of your goods, equipment and shop fittings. Trucks should be able to quickly get access to your site, as this makes it easier to deliver goods from suppliers and for customers to pick up their orders.
When it comes to deciding on the location, the people you want to do business with will help you decide where to physically put your business. Opening a store in a residential area is a great idea. People who live in the area where your store is located will need you to know what they want so you can provide it. There are also opportunities to open in less urban areas, but make sure you understand the needs of the local community first so you ensure you are putting your efforts into the right area.
Understand your inventory requirements
Stock management is a core component of any successful hardware store business. Ignore this requirement at your peril as it is absolutely essential that you have strong stock control software that is tailor-made for hardware stores. Ideally, your stock management software should work well with both your point of sale and financial software so that your systems talk to each other and give you strong real-time information. This will make it easier and more accurate for you to keep track of your stock movement. Top inventory management software also allows you to see the bigger picture in your business so you can adapt your strategies and make important business decisions around sales and operations. It can also help manage shrinkage as it will empower you to keep track of your stock. If you handle your hardware store's stock well, you can keep track of which items are selling well and which aren't. This way, you can look at your sales and profits and maybe change any pricing methods that are affecting your profitability.
Management & staffing requirements
Next you need to consider your staffing requirements. This will include floor staff, managers, operational staff, shipping, back office and accounting. All of these staffing costs will need to be taken into account in your business plan. Also, budget for training costs which will be essential in the set-up period.
Consider a marketing plan
Make sure you have a plan to get the word out about your hardware store. To advertise your hardware store, you can execute a lot of strategies, like putting ads in local newspapers, creating a website, going to local trade shows and appearing on social media. If this is not your area of expertise, consider getting an external consultant in to help you plan your launch and initial marketing strategy.
The bottom line
Opening a hardware store in South Africa is a great way to do business. While this is a highly specialised area currently dominated by large chains, with the right research and expertise, you can carve out a nice niche for your business and service a local community that wants to support you. Wishing you all of the best in this exciting endeavour!