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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
- Offices
- Households
- 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:
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.
| Start-up Expenses | |
| Legal | $152,200 |
| Consultants | $0 |
| Insurance | $25,200 |
| Rent | $35,200 |
| Research and Development | $10,000 |
| Expensed Equipment | $52,200 |
| Signs | $3,400 |
| TOTAL START-UP EXPENSES | $278,200 |
| Start-up Assets | $252,400 |
| Cash Required | $181,000 |
| Start-up Inventory | $35,520 |
| Other Current Assets | $251,000 |
| Long-term Assets | $252,400 |
| TOTAL ASSETS | $972,320 |
| Total Requirements | $1,250,520 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $278,200 |
| Start-up Assets to Fund | $972,320 |
| TOTAL FUNDING REQUIRED | $1,250,520 |
| Assets | |
| Non-cash Assets from Start-up | $1,260,240 |
| Cash Requirements from Start-up | $145,100 |
| Additional Cash Raised | $50,000 |
| Cash Balance on Starting Date | $35,000 |
| TOTAL ASSETS | $1,490,340 |
| Liabilities and Capital | |
| Liabilities | $18,420 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $62,500 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $80,920 |
| Capital | |
| Planned Investment | $1,250,520 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,250,520 |
| Loss at Start-up (Start-up Expenses) | $158,900 |
| TOTAL CAPITAL | $1,409,420 |
| TOTAL CAPITAL AND LIABILITIES | $1,490,340 |
| Total Funding | $1,250,520 |
Franchise Business Planning
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.
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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.
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.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Construction Enterprises | 39% | 44,200 | 53,040 | 63,648 | 76,378 | 91,653 | 10.00% |
| Offices | 34% | 34,200 | 41,040 | 49,248 | 59,098 | 70,917 | 10.00% |
| Households | 16% | 24,400 | 29,280 | 35,136 | 42,163 | 50,596 | 10.00% |
| Educational Institutes | 11% | 10,400 | 12,480 | 14,976 | 17,971 | 21,565 | 11.00% |
| Total | 100% | 113,200 | 135,840 | 163,008 | 195,610 | 234,732 | 10% |
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
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Technical Hardware Products | 4,500 | 4,770 | 5,056 |
| Construction Hardware | 3,500 | 3,710 | 3,933 |
| Garden Décor & Hardware | 2,000 | 2,120 | 2,247 |
| General Tools | 2,500 | 2,650 | 2,809 |
| TOTAL UNIT SALES | 12,500 | 13,250 | 14,045 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Technical Hardware Products | $99.00 | $114.84 | $133.21 |
| Construction Hardware | $149.00 | $172.84 | $200.49 |
| Garden Décor & Hardware | $119.00 | $138.04 | $160.13 |
| General Tools | $99.00 | $114.84 | $133.21 |
| Sales | |||
| Technical Hardware Products | $445,500.00 | $547,786.80 | $673,558.65 |
| Construction Hardware | $521,500.00 | $641,236.40 | $788,464.28 |
| Garden Décor & Hardware | $238,000.00 | $292,644.80 | $359,836.05 |
| General Tools | $247,500.00 | $304,326.00 | $374,199.25 |
| TOTAL SALES | $1,452,500.00 | $1,785,994.00 | $2,196,058.22 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Technical Hardware Products | $20.00 | $22.00 | $23.10 |
| Construction Hardware | $30.00 | $33.00 | $34.65 |
| Garden Décor & Hardware | $25.00 | $27.50 | $28.88 |
| General Tools | $20.00 | $22.00 | $23.10 |
| Direct Cost of Sales | |||
| Technical Hardware Products | $90,000.00 | $104,940.00 | $116,798.22 |
| Construction Hardware | $105,000.00 | $122,430.00 | $136,264.59 |
| Garden Décor & Hardware | $50,000.00 | $58,300.00 | $64,887.90 |
| General Tools | $50,000.00 | $58,300.00 | $64,887.90 |
| Subtotal Direct Cost of Sales | $295,000.00 | $343,970.00 | $382,838.61 |
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
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Sales Managers | $64,500 | $70,950 | $78,045 |
| Accountant | $33,500 | $36,850 | $40,535 |
| Social Media Manager | $33,500 | $36,850 | $40,535 |
| Store Operator | $30,500 | $33,550 | $36,905 |
| Customer Executive | $33,500 | $36,850 | $40,535 |
| Cleaner | $25,500 | $28,050 | $30,855 |
| Drivers | $64,500 | $70,950 | $78,045 |
| Total Salaries | $285,500 | $314,050 | $345,455 |
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
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.12% | 8.20% | 8.26% |
| Long-term Interest Rate | 8.40% | 8.44% | 8.47% |
| Tax Rate | 24.03% | 24.21% | 24.60% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5340 |
| Monthly Revenue Break-even | $132,500 |
| Assumptions: | |
| Average Per-Unit Revenue | $231.00 |
| Average Per-Unit Variable Cost | $0.62 |
| Estimated Monthly Fixed Cost | $163,800 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $1,452,500 | $1,785,994 | $2,196,058 |
| Direct Cost of Sales | $295,000 | $343,970 | $382,839 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $295,000 | $343,970 | $382,839 |
| Gross Margin | $1,157,500 | $1,442,024 | $1,813,220 |
| Gross Margin % | 79.69% | 80.74% | 82.57% |
| Expenses | |||
| Payroll | $285,500 | $314,050 | $345,455 |
| Sales and Marketing and Other Expenses | $145,000 | $148,000 | $156,000 |
| Depreciation | $2,300 | $2,350 | $2,500 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,900 | $3,000 | $3,100 |
| Insurance | $2,100 | $2,100 | $2,100 |
| Rent | $2,900 | $3,000 | $3,200 |
| Payroll Taxes | $24,000 | $25,000 | $27,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $464,700 | $497,500 | $539,355 |
| Profit Before Interest and Taxes | $692,800 | $944,524 | $1,273,865 |
| EBITDA | $692,800 | $944,524 | $1,273,865 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $138,560 | $188,905 | $254,773 |
| Net Profit | $554,240 | $755,619 | $1,019,092 |
| Net Profit/Sales | 38.16% | 42.31% | 46.41% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $51,000 | $55,080 | $59,486 |
| Cash from Receivables | $22,000 | $23,760 | $25,661 |
| SUBTOTAL CASH FROM OPERATIONS | $73,000 | $79,570 | $85,936 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $74,000 | $79,000 | $85,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $42,000 | $42,000 | $45,000 |
| Bill Payments | $27,000 | $28,000 | $31,000 |
| SUBTOTAL SPENT ON OPERATIONS | $69,000 | $70,000 | $76,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $69,000 | $74,520 | $80,482 |
| Net Cash Flow | $21,000 | $23,000 | $25,000 |
| Cash Balance | $27,000 | $30,000 | $33,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $275,000 | $308,000 | $338,800 |
| Accounts Receivable | $24,000 | $26,880 | $30,213 |
| Inventory | $4,300 | $4,816 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $282,000 | $315,840 | $355,004 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $19,400 | $21,728 | $24,444 |
| TOTAL LONG-TERM ASSETS | $24,400 | $27,328 | $30,744 |
| TOTAL ASSETS | $294,000 | $329,280 | $370,440 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $18,700 | $20,944 | $23,541 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $19,000 | $21,280 | $23,919 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $15,000 | $16,800 | $18,883 |
| Paid-in Capital | $30,000 | $30,000 | $31,000 |
| Retained Earnings | $53,000 | $57,770 | $63,547 |
| Earnings | $193,400 | $210,806 | $231,887 |
| TOTAL CAPITAL | $285,000 | $310,650 | $341,715 |
| TOTAL LIABILITIES AND CAPITAL | $300,000 | $329,280 | $370,440 |
| Net Worth | $293,400 | $319,806 | $351,787 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.25% | 8.03% | 8.90% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.21% | 10.20% | 11.31% | 9.80% |
| Inventory | 5.39% | 5.97% | 6.62% | 9.90% |
| Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
| Total Current Assets | 149.80% | 151.00% | 152.00% | 158.00% |
| Long-term Assets | 11.55% | 11.60% | 11.64% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.90% | 4.94% | 4.98% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.59% | 7.65% | 7.72% | 7.38% |
| NET WORTH | 100.45% | 101.25% | 102.19% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.60% | 97.15% | 99.87% | 99.00% |
| Selling, General & Administrative Expenses | 93.56% | 96.09% | 98.78% | 97.80% |
| Advertising Expenses | 1.52% | 1.56% | 1.60% | 1.40% |
| Profit Before Interest and Taxes | 41.50% | 42.62% | 43.81% | 33.90% |
| Main Ratios | ||||
| Current | 34 | 35 | 36 | 32 |
| Quick | 33 | 33.8 | 34.645 | 33 |
| Total Debt to Total Assets | 0.18% | 0.18% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 74.08% | 74.89% | 75.00% | 75.00% |
| Pre-tax Return on Assets | 96.30% | 101.12% | 106.17% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.56% | 34.60% | 35.67% | N.A. |
| Return on Equity | 55.80% | 57.53% | 59.31% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 32.4 | 34.02 | 35 | N.A. |
| Accounts Payable Turnover | 15.6 | 16 | 16.3 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.5 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $244,000 | $257,664 | $272,093 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.85 | 0.87 | 0.89 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 29 | 29.12 | 29.16 | N.A. |
| Sales/Net Worth | 2.1 | 2.2 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
FAQ
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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