You’re planning to make a new dish for the first time. You aren’t sure where to start, what ingredients you need, or even whether you need to preheat the oven.
Without a recipe, you have no chance of preparing this delicious meal.
The same principle applies when opening a business. You can’t open a grocery store without a comprehensive business plan.
Like a recipe, a business plan gives you a step-by-step guide to starting and managing your grocery store. It should help you decide where to set up shop, what products to put on your shelves, and how to build your customer base.
In this blog, we’ll explore the essential ingredients for a comprehensive grocery store business plan and warn you against the six most common mistakes new grocers make when crafting theirs. Plus, keep an eye out for our free grocery store business plan checklist!
What To Include in a Grocery Store Business Plan
Unfortunately, the number one mistake grocers make is not writing a business plan at all.
Business owners that make a plan are more than twice as likely to actually open their stores, and 33% more likely to achieve growth! Plus, having a thorough business plan helps you secure funding to cover your grocery store’s startup costs.
Along with these concrete benefits, a grocery store business plan helps you avoid decision fatigue and stay focused on what matters: connecting with shoppers and building a loyal customer base.
But what goes into a grocery store business plan? We’ll share a comprehensive checklist later, but here are the core pillars to include.
- Legal essentials: Will you structure your store as a sole proprietorship or limited liability company (LLC)? What kind of licenses and permits do you need to get started? This section should answer these questions and ensure your business is on the right side of the law.
- A value proposition: This section is one of the most critical parts of your business plan. It should outline what makes your grocery store special and why customers should choose you over the competition.
- Financial planning: How much will it cost to open your grocery store? Where will this money come from? How long will it take to turn a profit? This section should ensure your grocery store is set up for financial success.
- Growth strategies: This section should outline how you plan to grow after your store’s grand opening. Include specific goals and how you plan to achieve them.
These components are just a starting point — which is why we recommend following our grocery store business plan checklist. This free resource includes the must-have legal and financial components, plus grocery-specific topics like perishable inventory management, shrinkage prevention, and more.
6 Pitfalls To Avoid When Writing Your Grocery Store Business Plan
We’ve covered what to include in your grocery store business plan. Now, it’s time to talk about what not to do.
1. Skipping Market Research
Your grocery store business plan should address two critical questions: Who are your customers, and who are your competitors?
Answering them requires market research. This process involves identifying potential customers and sizing up the competition. Here are a few tips to get helpful insights from your market research.
- Check census data: Start with the basics and learn about your neighborhood’s population. How many potential customers live in your area? What is their age range, family status, and income level?
- Make observations: Consider your family, friends, and acquaintances. What are their grocery shopping habits? What types of stores do they rely on for food?
- Conduct a survey: Create an informal survey to ask potential customers about what’s missing from the local grocery scene. Are they satisfied with the options available? Are they looking for great deals or higher-quality products?
- Visit your competitors: Check out all the other grocery stores in your area — from big-box supermarkets to mom-and-pop markets. What are they doing well, and where could they improve?
Following these steps will help you understand the competitive landscape and identify a gap for your grocery store to fill.
2. Creating a Weak Value Proposition
You’ve taken the time to learn about your customers and competition — but don’t stop there. Creating a strong value proposition based on your market research is a can’t-skip step when writing a grocery store business plan.
Let’s say your neighborhood has multiple high-end grocery stores specializing in organic produce, local meats, and artisan cheeses. Your market research revealed that some residents struggle to afford these luxury products and feel like they don’t have access to budget-friendly grocery stores.
In this case, your best bet is to open a grocery store that offers private label staples at an affordable price. This value proposition sets your business apart from existing grocery stores and helps you attract a specific group of customers.
Whatever your value proposition is, it should become the central theme of your business plan, guiding every decision you make — from the products on your shelves to the language you use in your marketing campaigns.
3. Relying on Loose Financial Projections
Vague (or nonexistent) financial projections are another common pitfall when it comes to writing a grocery store business plan.
We get it: Coming up with a realistic estimate for how much you’ll spend and earn is tough, but failing to make a financial plan can lead to serious cash flow problems in the future.
To set your store up for financial success, you need to predict your operating expenses and potential revenue. Here’s what to include when calculating potential costs:
- Paperwork filing fees for setting up your LLC and securing the necessary licenses and permits
- Rent, utilities, and maintenance to keep your store up and running
- Renovations and equipment like shelving, carts, and signage
- Inventory to stock your store’s shelves and coolers
- Wages and benefits to keep your store staffed
- POS software and hardware to process sales transactions, manage inventory, and more
You also need to calculate how much your grocery store will generate in revenue. This means creating a data-driven pricing strategy and estimating your store’s foot traffic and sales volume.
From there, you can pinpoint your store’s breakeven point, which is when you’ll begin turning a profit.
4. Neglecting the Nuances of Perishable Inventory Management
Inventory management is crucial for retail success — but even more so for grocery stores.
Failing to include a grocery-specific inventory management strategy in your business plan can lead to stockouts, frustrated customers, and costly spoilage. Here are a few best practices to include in your inventory plan:
- Thoroughly vet and create strong relationships with vendors to avoid supply chain issues
- Use a first in, first out (FIFO) stocking strategy to ensure near-expiry products are sold before new ones
- Adopt a weight-based approach to selling goods like meats and cheeses to prevent waste and meet customers’ specific needs
- Invest in a grocery POS system with perishable inventory tracking features
Implementing these simple tips will keep your shelves perfectly stocked, customers happy, and bottom line healthy.
Related read: Grocery Store Inventory Management 101
5. Missing a Grocery Store Marketing Plan
“Build it and they will come.” It’s a popular phrase, but not always true.
After all, offering the highest quality products and lowest prices doesn’t matter if you can’t bring customers through the door.
That’s why your grocery store business plan should outline how you plan to attract and retain customers. To earn your first customers, claim your Google Business Profile, plan a grand opening celebration, and offer an exciting promotion during your first days in business.
To keep them coming back, consider launching a customer loyalty program to reward shoppers for choosing your store and encourage them to spend more during each visit.
E-commerce is another unique grocery store marketing strategy to consider. You can expand your reach, make more sales, and stand out from the competition by offering convenient options like pickup and delivery.
6. Treating Your Business Plan as a One-Time Project
Your grocery store marketing plan is more than a roadmap to your grand opening. It’s a living document that can guide your grocery store toward long-term, sustainable growth.
Set aside time to regularly review your business plan and update it to reflect changing market conditions, customer feedback, and new goals.
This practice will help you stay flexible and adaptable, and it also ensures that you’re using your business plan to guide operations and help you make tough decisions.
Crush Your Grocery Store Goals With Our Grocery Recommendation: Markt POS
There’s one last grocery store startup mistake we want to warn you about: not investing in the right POS system.
This powerful tool plays a key role in your store’s operations. It processes sales transactions, monitors inventory levels, manages promotions, and reveals valuable insights about your sales trends and customers’ shopping habits.
Markt POS, our grocery store POS solution, can help you with all these tasks and more.
See how Markt POS can help you turn your grocery store business plan into reality by scheduling your live, personalized demo today!
