1.0 Executive Summary
The purpose of this business plan is to secure $175,000 for the development of a convenience store based in New Orleans, Louisiana. Matt’s Fine Food and Essentials LLC (“the Company”) was founded by Matthew Deutsch. The Company will commence revenue generating operations starting in the second quarter of next year once the development of the retail store is completed.
Operations
The Company will offer a wide range of life essentials, including package goods, toiletries, snacks, automotive supplies, and a wide range of beverages. The business will achieve contribution margins of approximately 50% on each sale.
To complement these operations, the Company will have a prepared food section where freshly prepared meals will be offered. The Company will also have a small deli counter so people can order sandwiches.
In addition to these primary revenue streams, Matt’s Fine Food and Essentials will also produce income from the sale of lottery tickets as well as usage of its ATM machine.
The third section of this convenience store business plan or further to discuss the operations of the business.
The Financing
As noted above, the company is currently seeking a $175,000 business loan in order to commence operations. Matthew Deutsch will contribute $50,000 towards the venture which will be principal used for working capital.
It is not expected that the Company will require any further capital outside of this business loan to establish operations. In the event that Mr. Deutsch wishes to establish additional locations with the greater New Orleans Metropolitan area, he may seek additional funding. Given the profitability of this business, there is also the potential that the development of subsequent locations could be financed with retainer earnings.
The Future
It is fully expected that the business will reach a steady state of revenue generation relatively quickly. Management has sourced they highly visible location on an immensely traffic road within New Orleans. The business will increase the prices of its products in lockstep with the prevailing inflation rate. There is a possibility that additional locations may be developed, but this will not occur until after the fifth year of operation.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funds discussed the executive summary, including Mr. Deutsch investment, will be used for the following:
2.2 Management and Investor Equity
Matthew Deutsch is the 100% owner of Matt’s Fine Food and Essentials LLC.
2.3 Exit Strategies
Given the highly predictable streams of revenue generated from the ongoing sale of convenience store items, this business could easily be sold to a third-party entrepreneur for a moderate earnings multiple. Typically, convenience stores have a price to earnings ratio of 2 to 3 times the prior year’s EBITDA. It is not expected that the business will be sold for a period of at least ten years.
3.0 Operations
Matt’s Fine Food and Essentials will offer a wide range of every day essentials via its easy to reach location in New Orleans. The primary focus of the Company’s operations is to provide staple goods such as packaged snacks, bottled beverages, freshly prepared coffee, toilet, toiletries, automotive accessories, and candies.
A significant portion of the Company’s profitability will come from prepared food operations. On a daily basis, a number of simple meals that can be reheated at home or an office will be offered. Customers will also be able to order freshly prepared sandwiches from the Company’s deli counter.
The Company will also provide sales a lot of tickets and usage of its ATM machine. This is a high margin revenue center for the business.
4.0 Overview of the Organization
4.1 Registered Name
Matt’s Fine Food and Essentials LLC. The business is registered as a limited liability company in the State of Louisiana.
4.2 Commencement of Operations
Revenue generating operations will commence in the second quarter of next year.
4.3 Mission Statement
To provide a wide range of everyday essentials at an affordable price.
4.4 Vision Statement
To become a recognized convenience store that is well known for the wide inventory carried.
4.5 Organizational Objectives
• Work with numerous vendors of the business can source inventories on a cost-effective basis.
• Maintain an online presence so that ongoing deals and discounts can be offered which will drive additional traffic to the convenience store.
• Adhere to all laws regarding the preparation of foods that are meant for immediate consumption.
• Potentially develop additional locations within the greater New Orleans metropolitan area.
• Provide freshly prepared baked goods, which will be provided by regional bakeries.
• Provide a stable place of employment for the Company’s convenience store staff.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of convenience store business plan will focus on the industry, the current economic climate, the competition, and the demographics.
At this time, the economic climate with the United States is moderate. As a result of changing trade policies and higher than expected inflation, there is concern about this degree of volatility in the market. However, the Federal Reserve, as well as numerous government agencies, are taking the appropriate steps to ensure a reduction of inflation while concurrently improving the condition of the economy.
It should be noted that the revenue of this convenience store will be relatively immune from negative economic changes. It is offering a wide range of everyday life essentials and food products which have a relatively low cost. Furthermore, the Company is operating within New Orleans, which has a substantial population density.
5.2 Industry Analysis
There are 50,000 companies that own and operate one or more convenience store locations. Each year of these businesses produce an excess of $46 billion revenue. The convenience store industry employs 200,000 people.
This is a highly mature and established in industry within the United States. One of the ways that convenience sources have expanded their revenues over the past five years is to enroll among delivery application suites so that individuals can place orders for everyday items that can then be delivered to their homes and offices. Matt’s Fine Food and Essentials will capitalize on this trend in order to further expand revenue generation.
5.3 Customer Profile
The following profile is noted:
• Annual household income of $50,000+
• Will spend $15 per visit
• Lives or works within 5 miles of the Matt’s Fine Food and Essentials location
5.4 Competitive Analysis
The Company will face ongoing competition from established convenience stores within the greater New Orleans metropolitan area. The Company will maintain a differentiating factor by having a wide range of inventories across a number of manufacturers. Additionally, the ability to provide freshly prepared foods as well as made to order sandwiches will provide a strong competitive advantage.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Matt’s Fine Food and Essentials will have sustainable operations as a result of the following:
• The revenues of Matt’s Fine Food and Essentials are highly predictable in nature, which will fully support the underlying financial obligations of the business.
• A Founder, Matthew Deutsch, that has extensive experience in the field of managing retail enterprises.
• The Company can easily scale to maintain numerous locations throughout the greater New Orleans area and will benefit from economies of scale.
• The Company will work with numerous vendors in order to be able to cost-effectively source its inventory.
6.2 Basis of Growth
The Company will expand via the following methods:
• Natural increases in revenue of the population of New Orleans grows.
• Yearly price increases on underlying inventory to keep in line with inflation.
• Development of additional locations throughout the greater New Orleans Metropolitan area.
7.0 Marketing Plan
7.1 Marketing Objectives
• Maintain a moderate sized online platform so that when searches for convenience stores are conducted in the target market area the business can be quickly found.
• Conduct direct outreach with bakeries, so the business can provide freshly prepared breads within its sandwich production operations.
• Finalize the sourcing of a highly visible location so that the business can be seen by thousands of passersby by on a daily basis.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The Company will generate $732,000 in its first year of operation.
• Gross profits from sales will each $783,000.
Year 2
• Management expects that revenue will increase by 7%.
• Total income will reach $783,000.
Years 3-5
• By Year 5, revenue will reach $960,000.
• Gross profits will reach $563,000.
7.4 Marketing Strategies
The ongoing marketing that will be required by this convenience store will be relatively straightforward. Most importantly, Matthew Deutsch has sourced a highly visible retail location on a very busy road within New Orleans. The facilities will have substantial exterior signage so that people understand it is a convenience store that also provides freshly prepared foods and sandwiches.
The business will maintain a modest online presence that will be search engine optimized specific for the New Orleans market. This will ensure that when searches for convenience sources or everyday essentials are conducted, the website will appear frequently.
The company will also maintain a presence on social media platforms in order to benefit from social signaling. Ongoing deals and discounts regarding slow to move inventories will be offered through all major platforms.
The business will also provide financial contributions to civics organizations in groups that will brand their marketing materials with that of Matt’s Fine Food and Essentials’ logo and location. This will further increase brand new visibility within the New Orleans market.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The company will acquire $175,000 a debt to establish the convenience store in New Orleans.
• Matthew Deutsch will contribute $50,000 to the venture which will be primarily used for working capital.
• Matt’s Fine Food and Essentials will achieve a compounded annual growth rate of 7%.
• The Company will achieve contribution margins of 59%, aggregately.
9.2 Financial Highlights
• Highly predictable streams of revenue from the ongoing sale of life essentials, prepared foods, and made to order sandwiches.
• The Company can integrate other types of products that are in demand and can be quickly sold in the convenience store.
9.3 Sensitivity Analysis
Only an incredibly severe recession would impact Matt’s Fine Food and Essentials’ ability to generate revenue would maintain profitability. Convenience sources operate with a substantial degree of economic stability as they deal almost exclusively in food and other life essentials. The significant contribution margin generated from all sales will ensure that the business is able to cover its underlying expenses while concurrently servicing its debt obligation.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Limited competition among other entities that operate in a convenience store capacity near the planned location.
• The Company will offer a wide range of products which will provide a significant differentiating factor.
• The ability to provide freshly prepared foods will be a major profit center for the business.
Weaknesses
• Changes in foot and vehicle traffic near the location could impact revenues.
• General operational complexities as it relates to inventory sourcing as the business will carry thousands of items.
Opportunities
• Development of additional Matt’s Fine Food and Essentials branded convenience stores within the greater New Orleans metropolitan area.
• Expansion of discount offers and deals.
• Expansion of the types of inventories carried.
• Integration of delivery operations through third-party application suites.
Threats
• The ongoing issues with inflation could it cause the underlying inventory cost of the business to increase.
Appendix B – Risk Analysis
Development Risk – Low
Matthew Deutsch has already sourced the potential location that will be used for the convenience store. The principal matter that needs to be addressed to securing the capital discussed in this document.
Financing Risk – Low/Moderate
The $175,000 of debt will be principally use for the build out of location, furniture, fixtures, and equipment. The highly predictable streams of revenue that will be produced on a monthly basis was significantly reduced the financing risk of the business.
Marketing Risk – Low
Foremost, the use of a highly visible retail location will drive traffic on a daily basis. This will be complemented by the use of social media campaigns that will promote deals and discounts that will drive additional traffic to the location.
Management Risk – Low
Matthew Deutsch is a highly experienced retail entrepreneur that has extensive experiencing owning and managing convenient store locations. He will be able to bring the operations of Matt’s Fine Food and Essentials to significant profitability in the coming years.
Valuation Risk – Low
The valuation risk is offset by:
• Convenience stores have low economic risks.
• The business will benefit from the use of delivery application suites.
• Limited competition within a one-mile radius of Matt’s Fine Food and Essentials.
Exit Risk – Low
Although it is not expected to happen for a significant period of time, there is a possibility that Matt’s Fine Food and Essentials could be sold to a third-party. In this event, Matthew Deutsch will retain a business valuation specialist to determine the fair market value of this convenience store. From there, a qualified business broker or business sales professional will be retained to market the business to a buyer.
The Convenience Store Business Planning Process
Regardless of how the economy is doing, people will continue to need products that are sold at convenience stores. These businesses are able to generate substantial amounts of revenue on a highly predictable basis from the ongoing sale of life essentials. In many cases, convenience stores will often have an affiliation with a fueling company which often act as a major driver of traffic to the store. One of the nice things about these businesses is that they are not only able to thrive during difficult economic climates, but they also have relatively moderate startup costs. These businesses are also frequently come onto market for sale, and they can be acquired relatively easily.
The approach we take when developing a convenience store business plan is to first conduct an extensive amount of market research. The first step in this process is completing the competitive analysis in order to ensure that that there is not a significant amount of competition within the target market area. In the event at the convenience store is associated with a gas station, then we also take a look at the number of other entities that operate in a similar capacity as these are normally grouped together as a result of zoning regulations. Once we have completed the market research in this regard, we then move into analyzing the target market area. This includes an overview of the population size, population density, median household income, as well as relevant economic metrics. For each market that we examine, we take the approach of looking at how inflation, GDP, prevailing interest rates, and changes in consumer spending trends can have an impact on the regional area. This is incredibly important as it allows us to create a sensitivity analysis specific for the market to in order to analyze different potential scenarios.
Using the market research we have completed, we then move into the development of the convenience store financial plan. Here, we create a five-year prop and loss statement, common size, income statement, balance sheet, breakeven analysis, business ratios page, as well as other tables that showcase the ongoing operations of the business. We create separate tables for human resources expenditures in order to showcase the number of personnel that are required to operate the convenience store on a day-to-day basis.
Once this is completed, we then move into the convenience store operations plan. Here, we discuss these types of products that are offered, ancillary revenue centers, relationships with inventory providers, as well as human resources protocols. We also discuss the hours of operation in the segment of the document as well.
Fourth, we developed the convenience store marketing plan. For this type of business, this is a relatively straightforward endeavor as most convenience stores seek to acquire highly visible retail locations that are on well traffic roads and streets. To a more limited extent, we discuss the use of online marketing strategies in order to ensure that the business can be found with relevant searches are conducted for convenience stores within the target market area. We also discuss the use of social media as it means of creating promotions to sell a greater amount of inventory was also contributing to the efficacy of the business’ SEO campaigns.
Now that the foundation and base of the convenience store business plan is completed, we then move into the development of the secondary chapters. In each plan that we develop, we always include a SWOT analysis. This provides a clear overview of the strengths, opportunities, weaknesses, threats their faced by convenience store enterprises. As it relates to strengths, these businesses are typically able to remain profitable given that they provide life essentials that are relatively low cost. As it relates to weaknesses, these businesses are highly commoditized, and there are always a number of competitors in any city of your town. For opportunities, these businesses can simply increase the types of inventories that are carried at the locations while also establishing additional facilities in the years to come. As a release threats, outside of competitive matters, these businesses are relatively insulated enterprises.
From here, we also discuss the risk that are associated with the development and ongoing expansion of the convenience store. This includes addressing the development risk which heavily focuses on implementing a proper marketing campaign in order to create brand name awareness during the pre-launch timeframe. We also discuss ongoing issues with the economy, as this can have a modest impact on revenue generation.
Now that the entirety of the business plan has been completed, we move into developing the final chapter, which is the convenience store executive summary. Here, we provide a complete overview of the business in regards to where will be located, its startup budget, information about the founder, as well as other attributes of the business that are pertinent and need to be made immediately visible.