Starting your corner shop empire starts with the very first outlet. But before you can start thinking about the profits rolling in, you’ve got to consider the costs of opening up in the first place.
According to the latest stats, the British convenience store industry was worth £55.9 billion, illustrating just how much of a staple institution it is, and the potential for running a flourishing business.
But how much is it going to cost you to get started? We detail not just the obvious costs but also the hidden ones that most people miss out when making their plans.
Average convenience store startup costs
The costs of starting and running a convenience store have never been higher, as inflation bites. It’s one of the reasons why supermarket convenience stores have hiked their prices by 21% over the last couple of years, putting them on par with their full-sized stores.
But with these types of moves comes opportunity. The exact costs of starting a corner shop largely depend on whether you’re buying vs. renting, where your corner shop is based and how big your outlet is going to be.
Here’s an example of what it could cost you:
- Purchase Costs – £35,000-£40,000
- Lease Costs – £20,000-£30,000 per year
- Refurbishment – £500-£5,000
- Fixtures & Fittings – £500-£1,000
- Initial Stock – £1,000+
- Supplies – £100-£2,000
- Legal/Licensing – £2,000
- Contingency Fund – £10,000
Of course, you can also increase or decrease some of these costs, especially when it comes to your lease costs and your contingency funds. It’s not going to cost as much to open a shop in Burnley as it would in Central London, for example.
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Hidden convenience store startup expenses
Anticipating your expenses is the key to success. Crucially, ensuring they’re current is just as important.
For example, it was estimated that convenience stores would bear £666 million in extra costs due to the budget delivered in late 2024. Get your numbers wrong and you’re at risk of a shortfall from day one.
So, what are some of the costs entrepreneurs often miss?
Professional fees
Buying a building or signing off on a lease entails more than the cost of the ink. You’ll need a solicitor to go through the agreements and give you relevant legal advice to ensure you’re not left in the lurch.
You might also have to go about hiring an accountant to keep an eye on the books, even in the beginning. Some entrepreneurs also hire business advisors to help them get the best possible start to their corner shop.
Insurance
Your insurance policies protect your convenience store from everything from fires and vandalism to shoplifting and liability. Remember, if you’re taking on loans, valid insurance will be part of the conditions of receiving the money.
Before you make your first sale, you’ll need to explore property, employer’s liability and public liability insurance, most as legal requirements. And these policies are just the beginning. Expect to commit to spending at least £1,000, with more comprehensive coverage options costing even more.
Marketing costs
Opening a shop isn’t going to lead to people flocking through the doors during the first week. This goes doubly if you’re starting up in an area with nearby corner shops already running. People tend to be loyal to the shops they always go to, and tempting them away will mean marketing your new store.
Examples of marketing costs include:
- External signage
- Websites
- Business cards
- Leaflets
Why is this a startup cost rather than an ongoing cost? It’s technically both because you should be starting your marketing efforts before you start doing business.
Working capital
Every corner shop has regular, predictable expenses, but it’s a mistake to think that these are your total running costs. Working capital accounts for the fact that it might take some time to build up your customer base and reach your sales targets.
Your costs don’t stop just because you’re not making enough sales in the beginning. Whether it’s rent, electricity bills, or wages, these must be paid from the very first month. Setting aside a dedicated working capital fund gives you that buffer so you’re not worried about keeping the lights on.
Initial stock
Don’t underestimate how much filling your shop with different products will cost. Larger shops might have hundreds of products on the shelves at any one time. Unlike existing shops that just fill and refill as they go, you’ll need to buy everything all at once, and that means you’ll need a substantial sum to start with.
Your costs will be even higher if you’re offering various value-added services, such as freshly made food.
Tips to reduce startup costs for a new convenience store business
Relative to other businesses, convenience stores are one of the more affordable business ideas to proceed with. Nevertheless, if you can’t secure loans to get started or you’re launching in a high-cost area, you’ll need to think about how to trim your startup costs.
Here are some ideas for getting started:
- Rent Instead of Buy – Buying a building gives you more control, but renting out an existing shop space will save you from high purchase and renovation costs. It also gives you an easy out if things don’t go according to plan.
- Choose Your Venue/Location Carefully – Start with a smaller shop in a low-competition zone before trying to carve out a space in a busy high street area. Build up your brand and experience before taking on larger projects.
- Limit Your Product Range – Opt for the products that you know will sell immediately. You can always experiment with other options later. Trying to stock too much will only increase your costs.
- Basic Services – Adding lottery tickets, postal services and fresh food means extra hassle you don’t need when you’re just finding your feet. Stick with the absolute basic products and services first.
Ultimately, it’s about scaling back and being realistic. Later on, you can start negotiating with suppliers for discounts and being more intelligent with how you choose your stock, but initially, it’s about getting off the ground.
Now, it’s time to get started. At Cogogo, we have an array of businesses on the market that enable you to make your business plan a reality. Browse the latest listings for corner shops for sale right now or contact us to learn more.
