Startup Costs and Considerations for Hardware Store
- Startup costs for a hardware store range from $85,000 to $120,000. Costs include inventory, space rental, and preparation.
- You could sharply reduce initial costs by starting an online hardware store before opening a physical location.
- Rent for your hardware store depends on location. Costs vary by region and area.
- Opening a hardware business requires a business plan, management skills, licensing, a venue, accounting system, and employees.
Profitability and Challenges in Hardware Business
- Although a well-performing hardware store makes an average net profit of 10% on its daily sales, 80% of those who venture into this business close in less than 2 years due to losses and cash-flow problems.
- Competition is fierce with hardware stores having minimal barriers to entry.
- The future of this business looks very lucrative and profitable if done in the right way.
Location and Insurance for Hardware Business
- Choosing the best location for your new hardware store is a crucial step.
- Do some research before making your final decision to maintain consistency in quality.
- Start with general liability insurance to cover most risks small businesses face.
- Insure your employees with Workers’ Compensation Insurance.
No business is cheap to open these days. The cost of financing a new hardware shop will likely be in the hundreds of thousands of dollars. Some lucky entrepreneurs may have the means to front this cost alone, but most small business owners need to seek outside investments and loans. You’ll need to analyze how much your rent, brick and mortar retail equipment, and initial inventory will cost to attract more investment. Look to influential business owners in the area for potential contributions.