Hardware Store Sample Business Plan
Hardware Store Sample Business Plan
Hardware Store Sample Business Plan
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This business plan outlines the strategy and financial forecast for a hardware store, requiring
a capital investment of R500,000. The objective of this hardware store is to provide a wide
range of quality hardware products to cater to the needs of contractors, construction
companies, and DIY enthusiasts. The store will aim to establish a strong customer base and
achieve a sustainable return on investment.
1.1 Mission
• Location: Tripleweave Hardware is located in Terenure Kempton Park. The foot traffic in
the area is very strong. The area area is full of estates and mostly working class people.
Terenure has easy access points on both of the area's major cross streets. The
closest hardware store to the Terenure area is a fifteen to twenty minute drive.
• Repair/Project Resource Area: The first section customers will find when they enter
is a repair/project resource area that they can use to plan repairs or projects. There
will be a repair/project resource person to answer questions and direct them to the
section of store where the needed products are.
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Clara's Hardware Store
Highlights (Planned)
$1,400,000
$1,200,000
$1,000,000
$800,000 Sales
Gross Margin
$600,000
Net Profit
$400,000
$200,000
$0
2023 2024 2025
The business will make a profit in month six, and will grow steadily each consecutive month.
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Clara's Hardware Store
The start-up cost of Tripleweave Hardware will consist primarily of inventory and display
equipment.
Investors can invest R330 000
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal R1,000
Stationery etc. R1,000
Brochures R1,000
Consultants R0
Insurance R0
Rent R6,000
Start-Up Inventory R100,000
Display Set-Up R50,000
Cash Reserve for Hiring R20,000
Advertising R0
Other R0
Total Start-up Expense R179,000
Funding
Investment
Tripleweave R0
Silent Partner
Other R0
Total Investment R0
Short-term Liabilities
Accounts Payable R0
Current Borrowing R0
Other Short-term Liabilities R0
Subtotal Short-term Liabilities R0
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Clara's Hardware Store
Start-up
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Expenses Assets Investment Loans
3.0 Products
Tripleweave Hardware offers the parts, material, and advice to tackle any home repair and all
things needed by DIY enthusiasts. The primary focus will be to satisfy the seasonal needs of
the area's customers.
In the past ten years, most local hardware stores have closed due to the success of large
hardware mega-stores drawing away local customers. The attraction of the larger stores has
always been price and a large inventory. Customers would rather drive 20 minutes and make
sure they will find what they want rather than drive five minutes and hope the local store will
have it at a low price. Yet these same hardware mega-stores are sterile and not customer-
friendly. Customers can wander the aisles, aimlessly lost, looking for a 20 rand item. And
when they do find the right section, they will most likely select the most popular brand no
matter how large the selection is. What these store offer in price and selection, they
lose in creating a confusing, frustrating maze for their customers.
We believe that a local hardware store can provide a reasonable selection in the most
important product areas, be competitive in pricing, and offer the customer a shopping
environment that will assure repeat business.
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Clara's Hardware Store
In South Africa, the market share of hardware stores caters to three main customer segments -
low-income homeowners, professional technicians, and DIY enthusiasts. Each segment has
distinct characteristics and requirements, which influence their preferences and buying behavior.
Low-Income Homeowners:
Market Share:
Low-income homeowners represent a significant customer base for hardware stores, as they
require affordable and basic supplies for their home maintenance and improvement projects.
Characteristics: This segment primarily consists of individuals or families with limited financial
resources. They are often more focused on cost-effectiveness and seek budget-friendly options for
their projects.
Preferences: Low-income homeowners tend to prioritize basic construction materials, plumbing
fixtures, electrical supplies, and paint. They may also look for financing options, discounts, or
sales to make their purchases more affordable.
Professional Technicians:
Market Share:
DIY Enthusiasts:
Market Share:
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Clara's Hardare Store
The DIY & Hardware Store market in South Africa is projected to grow by -1.60% (2023-2028)
resulting in a market volume of US$5.24bn in 20281.
The home improvement and gardening stores witnessed increased demand from mid- and high-income
groups making permanent changes to their homes during the pandemic.
A hardware store is a very lucrative business to start in South Africa, with huge profits. Hardware
stores cater for both large and small projects3.
Based on these insights, one possible estimate of the market share of Hardware stores for low income
home owners, Professional Technicians and DIY enthusiasts in South Africa is:
Page 6
5.1 Competitive Edge
Tripleweave Hardware's competitive edge is:
Location:The traffic in the area is very strong. The closest hardware store to the area is a twenty
minute drive.
Seasonal Products: Each season has it own unique demand on a homeowner. TWP & Hardware will
focus on this pattern and bring in local customers by marketing these items at competitive prices.
Repair/Project Resource Area: The first section customers will find when they enter the store is a
repair/project resource area that they can use to plan repairs or projects.There will be a
repair/project resource person there to answer their questions and direct them to the section of
store where the needed products are.
In-Store Expertise: Store employees will be knowledgeable in home repairs/projects.In addition,
the repair/project resource area will be used to conduct short trainings and demonstrations in
home repair and home projects.
5.2 Sales Strategy
The sales strategy of the Hardware is simple. First, create a shopping environment that will create
confidence in the customer that he or she will get the needed material, part, or instructions to get
the job done right the first time. Second, make the store easy to navigate,so customer can get in
and out as quickly as possible. Third, know your customer's seasonal hardware needs and offer it
at competitive prices.
The Hardware will hit the ground running once allthe investment is funneled in.
Table: Sales Forecast (Planned)
Sales Forecast
Sales 2024 2025 2026
Hardware R964,000 R1,090,000 R1,240,000
Other R0 R0 R0
Total Sales R964,000 R1,090,000 R1,240,000
R100,000
R90,000
R80,000
R70,000
R60,000
R50,000 Hardware
R40,000 Other
R30,000
R20,000
R10,000
R0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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Clara's Hardware Store
Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of
Clara's Hardware.
• Manager.
• Assistant Manager.
• Office Manager/Accountant.
• Checkers (full time and part time).
• Two Customer Assistants.
• Stockers (full time and part time).
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Clara's Hardware Store
Break-even Analysis:
Monthly Units Break-even 842
Monthly Sales Break-even R50,526
Assumptions:
Average Per-Unit Revenue R60.00
Average Per-Unit Variable Cost R3.00
Estimated Monthly Fixed Cost R48,000
Break-even Analysis
R20,000
R10,000
R0
(R10,000)
(R20,000)
(R30,000)
(R40,000)
(R50,000)
R0 R12,000 R24,000 R36,000 R48,000 R60,000
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Clara's Hardware Store
The following table and chart highlight the projected profit and loss for three years.
R20,000
R15,000
R10,000
R5,000
R0
(R5,000)
(R10,000)
(R15,000)
(R20,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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Clara's Hardware Store
The following table and chart highlight the projected cash flow for three years.
Cash Received
Cash from Operations:
Cash Sales R964,000 R1,090,000 R1,240,000
From Receivables R0 R0 R0
Subtotal Cash from Operations R964,000 R1,090,000 R1,240,000
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Clara's Hardware Store
Cash (Planned)
R250,000
R200,000
R150,000
R0
(R50,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Page 12
Clara's Hardware Store
The following table highlights the projected balance sheet for three years.
Assets
Short-term Assets 2024 2025 2026
Cash R200,885 R269,689 R349,803
Other Short-term Assets R0 R0 R0
Total Short-term Assets R200,885 R269,689 R349,803
Long-term Assets
Long-term Assets R30,000 R30,000 R30,000
Accumulated Depreciation R4,284 R8,569 R12,854
Total Long-term Assets R25,716 R21,431 R17,146
Total Assets R226,601 R291,120 R366,949
7.5 Ratios
Business ratios for the years of this plan are shown below.
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Table: Ratios (Planned)
Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 0.00% 13.07% 13.76% 6.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.83% 54.13% 50.65% 33.80%
Selling, General & Administrative Expenses 45.07% 45.92% 42.83% 21.10%
Advertising Expenses 7.78% 9.17% 8.06% 1.90%
Profit Before Interest and Taxes 9.62% 12.70% 11.77% 1.10%
Main Ratios
Current 4.01 4.90 5.47 2.24
Quick 4.01 4.90 5.47 0.58
Total Debt to Total Assets 75.05% 49.83% 33.79% 57.30%
Pre-tax Return on Net Worth 187.64% 101.94% 63.15% 2.20%
Pre-tax Return on Assets 46.82% 51.14% 41.81% 5.30%
Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 n.a
Collection Days 0 0 0 n.a
Inventory Turnover 0.00 0.00 0.00 n.a
Accounts Payable Turnover 11.29 11.29 11.29 n.a
Total Asset Turnover 4.25 3.74 3.38 n.a
Debt Ratios
Debt to Net Worth 3.01 0.99 0.51 n.a
Short-term Liab. to Liab. 0.29 0.38 0.52 n.a
Liquidity Ratios
Net Working Capital $150,823 $214,631 $285,806 n.a
Interest Coverage 6.93 13.18 19.46 n.a
Additional Ratios
Assets to Sales 0.24 0.27 0.30 n.a
Current Debt/Total Assets 22% 19% 17% n.a
Acid Test 4.01 4.90 5.47 n.a
Sales/Net Worth 17.05 7.46 5.10 n.a
Dividend Payout R0 0.00 0.00 n.a
Page 14
Appendix
Sales Forecast
Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2024 2025 2026
Hardware R50,000 R60,000 R70,000 R75,000 R85,000 R90,000 R100,000 R85,000 R90,000 R85,000 R79,000 R95,000 R964,000 R1,090,000 R1,240,000
Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Total Sales R50,000 R60,000 R70,000 R75,000 R85,000 R90,000 R100,000 R85,000 R90,000 R85,000 R79,000 R95,000 R964,000 R1,090,000 R1,240,000
Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2024 2025 2026
Hardware R25,000 R30,000 R35,000 R37,000 R42,000 R45,000 R50,000 R42,000 R45,000 R42,000 R39,000 R42,000 R474,000 R500,000 R612,000
Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Direct Cost of Sales R25,000 R30,000 R35,000 R37,000 R42,000 R45,000 R50,000 R42,000 R45,000 R42,000 R39,000 R42,000 R474,000 R500,000 R612,000
Page 1
Appendix
Personnel Plan
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Manager R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R72,00 R80,000 R90,000
Assistant Manager 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Office Manager/Bookkeeper R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R36,000 R39,000 R42,000
Checkers R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R32,400 R35,500 R40,000
R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R60,000
Customer Assistants R8,000 R74,000
R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R39,600
Stockers R3,300 R44,000 R48,000
R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other R0 R0 R0
Total Payroll R20,000 R240,000 R265,500 R292,000
Total People 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
Payroll Burden R3,000 R36,000 R39,825 R43,800
Total Payroll Expenditures R23,000 R276,000 R305,325 R335,800
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Appendix
Page 3
Appendix
Pro Forma Cash Flow Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Cash Received
Cash from Operations:
Cash Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
From Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash from Operations $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
Expenditures Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Expenditures from Operations:
Cash Spent on Costs and Expenses $4,280 $5,279 $4,527 $4,466 $5,464 $5,823 $6,122 $5,460 $5,469 $5,107 $5,066 $5,754 $62,818 $69,087 $80,302
Wages, Salaries, Payroll Taxes, etc. $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $276,000 $305,325 $335,800
Payment of Accounts Payable $1,284 $38,823 $47,284 $40,728 $40,493 $49,288 $52,497 $54,896 $49,144 $49,110 $45,952 $45,798 $515,297 $616,784 $713,784
Subtotal Spent on Operations $28,564 $67,101 $74,812 $68,194 $68,958 $78,111 $81,619 $83,356 $77,612 $77,217 $74,018 $74,553 $854,115 $991,196 $1,129,886
Net Cash Flow $18,936 ($9,601) ($7,312) $4,306 $13,542 $9,389 $15,881 ($856) $9,888 $5,283 $2,482 $17,947 $79,885 $68,804 $80,114
Cash Balance $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
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Appendix
Assets
Short-term Assets Starting Balances Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Cash $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Short-term Assets $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
Long-term Assets
Long-term Assets $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000
Accumulated Depreciation $0 $357 $714 $1,071 $1,428 $1,785 $2,142 $2,499 $2,856 $3,213 $3,570 $3,927 $4,284 $4,284 $8,569 $12,854
Total Long-term Assets $30,000 $29,643 $29,286 $28,929 $28,572 $28,215 $27,858 $27,501 $27,144 $26,787 $26,430 $26,073 $25,716 $25,716 $21,431 $17,146
Total Assets $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949
Long-term Liabilities $150,000 $147,500 $145,000 $142,500 $140,000 $137,500 $135,000 $132,500 $130,000 $127,500 $125,000 $122,500 $120,000 $120,000 $90,000 $60,000
Total Liabilities $150,000 $184,739 $190,926 $181,889 $178,854 $185,041 $185,660 $185,758 $177,503 $175,077 $169,433 $166,572 $170,062 $170,062 $145,058 $123,997
Paid-in Capital $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000
Retained Earnings ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($23,461) $66,062
Earnings $0 ($16,160) ($32,306) ($30,937) ($23,954) ($16,956) ($8,543) $6,884 $13,926 $25,882 $36,453 $41,439 $55,539 $55,539 $89,523 $96,891
Total Capital $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952
Total Liabilities and Capital $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949
Net Worth $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952
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