Writing a business plan for a diy and hardware store can be an intimidating task, especially for those just starting.
This in-depth guide is designed to help entrepreneurs like you understand how to create a comprehensive business plan so that you can approach the exercise with method and confidence.
We'll cover: why writing a diy and hardware store business plan is so important - both when starting up, and when running and growing the business - what information you need to include in your plan, how it should be structured, and what tools you can use to get the job done efficiently.
Let's get started!
Why write a business plan for a diy and hardware store?
Having a clear understanding of why you want to write a business plan for your diy and hardware store will make it simpler for you to grasp the rationale behind its structure and content. So before delving into the plan's actual details, let's take a moment to remind ourselves of the primary reasons why you'd want to create a diy and hardware store business plan.
To have a clear roadmap to grow the business
Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.
In this dynamic context, it's essential to have a clear roadmap for your diy and hardware store. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.
That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.
To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your diy and hardware store to be in the next three to five years.
Once you have a clear destination for your diy and hardware store, you'll focus on three key areas:
- Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
- Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
- Risks: you'll identify and address potential risks you might encounter along the way.
By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.
To maintain visibility on future cash flows
Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your diy and hardware store's future cash flows is critical.
How do I do that? That's simple: you need an up-to-date financial forecast.
The good news is that your diy and hardware store business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.
To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.
Monitoring your diy and hardware store's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).
To secure financing
A detailed business plan becomes a crucial tool when seeking financing from banks or investors for your diy and hardware store.
Investing and lending to small businesses are very risky activities given how fragile they are. Therefore, financiers have to take extra precautions before putting their capital at risk.
At a minimum, financiers will want to ensure that you have a clear roadmap and a solid understanding of your future cash flows (like we just explained above). But they will also want to ensure that your business plan fits the risk/reward profile they seek.
This will off-course vary from bank to bank and investor to investor, but as a rule of thumb. Banks will want to see a conservative financial management style (low risk), and they will use the information in your business plan to assess your borrowing capacity — the level of debt they think your business can comfortably handle — and your ability to repay the loan. This evaluation will determine whether they'll provide credit to your diy and hardware store and the terms of the agreement.
Whereas investors will carefully analyze your business plan to gauge the potential return on their investment. Their focus lies on evidence indicating your diy and hardware store's potential for high growth, profitability, and consistent cash flow generation over time.
Now that you recognize the importance of creating a business plan for your diy and hardware store, let's explore what information is required to create a compelling plan.
Information needed to create a business plan for a diy and hardware store
You need the right data in order to project sales, investments and costs accurately in the financial forecast of your diy and hardware store business plan.
Below, we'll cover three key pieces of information you should gather before drafting your business plan.
Carrying out market research for a diy and hardware store
As you consider writing your business plan for a diy and hardware store, conducting market research becomes a vital step to ensure accurate and realistic financial projections.
Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.
Through this research, you may uncover trends that could influence your diy and hardware store.
You might find that customers may be seeking out DIY and hardware products that are environmentally friendly. Additionally, customers might be looking for convenience when it comes to their DIY and hardware purchases, such as products that are easy to install or use.
Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.
By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your diy and hardware store.
Developing the marketing plan for a diy and hardware store
Before delving into your diy and hardware store business plan, it's imperative to budget for sales and marketing expenses.
To achieve this, a comprehensive sales and marketing plan is essential. This plan should provide an accurate projection of the necessary actions to acquire and retain customers.
Additionally, it will outline the required workforce to carry out these initiatives and the corresponding budget for promotions, advertising, and other marketing endeavours.
By budgeting accordingly, you can ensure that the right resources are allocated to these vital activities, aligning them with the sales and growth objectives outlined in your business plan.
The staffing and equipment needs of a diy and hardware store
Whether you are at the beginning stages of your diy and hardware store or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.
To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.
A diy and hardware store might incur staffing costs such as salaries for employees, benefits, and payroll taxes. They may also need to purchase equipment such as point-of-sale systems, computers, and payment processing systems. Additionally, they may need to purchase inventory such as tools, hardware, and other supplies.
To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.
Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your diy and hardware store.
What goes into your diy and hardware store's financial forecast?
The financial forecast of your diy and hardware store's business plan will enable you to assess the growth, profitability, funding requirements, and cash generation potential of your business in the coming years.
The four key outputs of a financial forecast for a diy and hardware store are:
- The profit and loss (P&L) statement,
- The projected balance sheet,
- The cash flow forecast,
- And the sources and uses table.
Let's look at each of these in a bit more detail.
The projected P&L statement
The projected P&L statement for a diy and hardware store shows how much revenue and profit your business is expected to make in the future.
A healthy diy and hardware store's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for a startup will look different than for an established diy and hardware store.
The projected balance sheet of your diy and hardware store
The balance sheet for a diy and hardware store is a financial document that provides a snapshot of your business’s financial health at a given point in time.
It shows three main components: assets, liabilities and equity:
- Assets: are resources owned by the business, such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: are debts owed to creditors and other entities, such as accounts payable (money owed to suppliers) and loans.
- Equity: includes the sums invested by the shareholders or business owners and the cumulative profits and losses of the business to date (called retained earnings). It is a proxy for the value of the owner's stake in the business.
Examining the balance sheet is important for lenders, investors, or other stakeholders who are interested in assessing your diy and hardware store's liquidity and solvency:
- Liquidity: assesses whether or not your business has sufficient cash and short-term assets to honour its liabilities due over the next 12 months. It is a short-term focus.
- Solvency: assesses whether or not your business has the capacity to repay its debt over the medium-term.
Looking at the balance sheet can also provide insights into your diy and hardware store's investment and financing policies.
In particular, stakeholders can compare the value of equity to the value of the outstanding financial debt to assess how the business is funded and what level of financial risk has been taken by the owners (financial debt is riskier because it has to be repaid, while equity doesn't need to be repaid).
The projected cash flow statement
A cash flow forecast for a diy and hardware store shows how much cash the business is projected to generate or consume.
The cash flow statement is divided into 3 main areas:
- The operating cash flow shows how much cash is generated or consumed by the operations (running the business)
- The investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.)
- The financing cash flow shows how much cash is raised or distributed to investors and lenders
Looking at the cash flow forecast helps you to ensure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.
It is also a best practice to include a monthly cash flow statement in the appendices of your diy and hardware store business plan so that the readers can view the impact of seasonality on your business cash position and generation.
The initial financing plan
The initial financing plan - also called a sources and uses table - is an important tool when starting a diy and hardware store.
It shows where the money needed to set up the business will come from (sources) and how it will be allocated (uses).
Having this table helps understand what costs are involved in setting up the diy and hardware store, how the risks are distributed between the shareholders and the lenders, and what will be the starting cash position (which needs to be sufficient to sustain operations until the business breaks even).
Now that the financial forecast of a diy and hardware store business plan is understood, let's focus on what goes into the written part of the plan.
The written part of a diy and hardware store business plan
The written part of a diy and hardware store business plan plays a key role: it lays out the plan of action you intend to execute to seize the commercial opportunity you've identified on the market and provides the context needed for the reader to decide if they believe your plan to be achievable and your financial forecast to be realistic.
The written part of a diy and hardware store business plan is composed of 7 main sections:
- The executive summary
- The presentation of the company
- The products and services
- The market analysis
- The strategy
- The operations
- The financial plan
Let's go through the content of each section in more detail!
1. The executive summary
In your diy and hardware store's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.
When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.
Following that, provide an overview of the addressable market for your diy and hardware store, current trends, and potential growth opportunities.
Next, include a summary of key financial figures like projected revenues, profits, and cash flows.
Finally, in the "ask" section, detail any funding requirements you may have.
2. The presentation of the company
In your diy and hardware store business plan, the second section should focus on the structure and ownership, location, and management team of your company.
In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.
Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.
When describing the location of your diy and hardware store, you could highlight its accessibility to potential customers. You might point out that it is located in a busy area, with easy access to major roads and highways. You could also emphasize the potential for growth and development in the surrounding area. Additionally, you may note the potential for increased foot traffic due to the presence of other businesses in the vicinity. In addition, you could highlight the benefits of its location such as nearby parking, easy access to public transportation, and its proximity to other local businesses. Ultimately, you could emphasize the potential for your diy and hardware store to become a successful venture in the area.
Finally, you should introduce your management team. Describe each member's role, background, and experience.
Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.
3. The products and services section
The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers.
For example, your diy and hardware store could offer customer service for specialized projects, such as installation services for products like ceiling fans and window treatments. It could also provide a range of materials for do-it-yourself projects, like paint, tools, and lumber. Finally, the store could offer a variety of home improvement classes, such as basic carpentry, electrical work, and plumbing. These services and products could help customers complete their projects with the right materials and knowledge, providing them with a finished product that meets their needs and expectations.
When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.
4. The market analysis
When outlining your market analysis in the diy and hardware store business plan, it's essential to include comprehensive details about customers' demographics and segmentation, target market, competition, barriers to entry, and relevant regulations.
The primary aim of this section is to give the reader an understanding of the market size and appeal while demonstrating your expertise in the industry.
To begin, delve into the demographics and segmentation subsection, providing an overview of the addressable market for your diy and hardware store, key marketplace trends, and introducing various customer segments and their preferences in terms of purchasing habits and budgets.
Next, shift your focus to the target market subsection, where you can zoom in on the specific customer segments your diy and hardware store targets. Explain how your products and services are tailored to meet the unique needs of these customers.
For example, your target market might include homeowners who are passionate about DIY projects. These homeowners are looking for high-quality tools and materials to complete their projects. They typically have a budget to invest in the necessary equipment, and they want to buy from a trusted supplier.
In the competition subsection, introduce your main competitors and explain what sets your diy and hardware store apart from them.
Finally, round off your market analysis by providing an overview of the main regulations that apply to your diy and hardware store.
5. The strategy section
When writing the strategy section of a business plan for your diy and hardware store, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.
The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.
The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.
The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers.
The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.
The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.
Your DIY and hardware store faces a variety of risks. For example, you could encounter financial losses due to stock theft or shoplifting. Such occurrences may lead to a decrease in profits, making it difficult to stay in business. Additionally, your store could also be at risk of property damage. Natural disasters like floods, hurricanes, or earthquakes could lead to significant losses if your store’s building or its contents are damaged. It is important to remain vigilant and take steps to mitigate these potential risks.
6. The operations section
In your business plan, it's also essential to provide a detailed overview of the operations of your diy and hardware store.
Start by covering your team, highlighting key roles and your recruitment plan to support the expected growth. Outline the qualifications and experience required for each role and your intended recruitment methods, whether through job boards, referrals, or headhunters.
Next, clearly state your diy and hardware store's operating hours, allowing the reader to assess staffing levels adequately. Additionally, mention any plans for varying opening times during peak seasons and how you'll handle customer queries outside normal operating hours.
Then, shift your focus to the key assets and intellectual property (IP) necessary for your business. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, make sure to include them in this section.
You may have key assets such as the physical location of the store, and any products that you sell. Additionally, you could have intellectual property such as any logos, slogans, or designs that you have created. These might be used to create brand recognition and loyalty among your customers.
Lastly, include a list of suppliers you plan to work with, detailing their services and main commercial terms, such as price, payment terms, and contract duration. Investors are interested in understanding why you've chosen specific suppliers, which may be due to higher-quality products or established relationships from previous ventures.
7. The presentation of the financial plan
The financial plan section is where we will include the financial forecast we talked about earlier in this guide.
Now that you have a clear idea of the content of a diy and hardware store business plan, let's look at some of the tools you can use to create yours.
What tool should I use to write my diy and hardware store's business plan?
In this section, we will be reviewing the two main options for writing a diy and hardware store business plan efficiently:
- Using specialized software,
- Outsourcing the drafting to the business plan writer.
Using an online business plan software for your diy and hardware store's business plan
Using online business planning software is the most efficient and modern way to write a diy and hardware store business plan.
There are several advantages to using specialized software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can access a library of dozens of complete business plan samples and templates for inspiration
- You get a professional business plan, formatted and ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.
Hiring a business plan writer to write your diy and hardware store's business plan
Outsourcing your diy and hardware store business plan to a business plan writer can also be a viable option.
Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.
However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.
From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).
You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.
The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.
For these reasons, outsourcing the diy and hardware store business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.
Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.
Why not create your diy and hardware store's business plan using Word or Excel?
I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your diy and hardware store business plan. Let me explain why.
Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.
Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.
And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.
Now, let's talk about the written part of your diy and hardware store business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.
Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.
- A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
- Having an up-to-date business plan is the only way to keep visibility on your diy and hardware store's future cash flows.
- Using business plan software is the modern way of writing and maintaining business plans.
We hope that this practical guide gave you insights on how to write the business plan for your diy and hardware store. Do not hesitate to get in touch with our team if you still have questions.
Also on The Business Plan Shop
Know someone who owns or wants to start a diy and hardware store? Share this article with them!