Building materials shop: profitability, assortment, starting purchase

Project Summary
The project involves the organization of a building materials store in a city with a population of 50-500 thousand people. The store area is about 200 m2, of which 150 m2 are retail space. On the adjacent plot it is planned to build a half-closed warehouse of 50 m2.

The object is located in the perspective of the construction of multi-storey residential buildings, handed over under the scheme “Stroyvariant”. The assortment of the store is aimed at the sale of materials for the rough finishing of apartments and households.

In the business plan of the project it is planned to gradually increase sales by assortment groups, associated with the expansion of the contractual base of product buyers. Taking into account the seasonal nature of sales of the main products of the store. The first and second quarter of the year are “high season”, when sales are at their maximum, the third and fourth quarter of the year are low season, characterized by a slight decrease in sales volumes from the base. This is due to the fact that the use of building materials is usually maximum in the second quarter, and, often, materials for construction and repair are purchased in advance, in the first and second quarter, then gradually spent in the third and fourth.

The base sales volume (the maximum revenue for the analyzed period, falling on the 6th quarter of the project) for this store is calculated at the level of 900 thousand rubles per month.

The largest weight in the revenue structure is occupied by the volume of building mixes sold (810 thousand rubles per quarter) and paint (675 thousand rubles per quarter).

For two years, the project will provide a net profit of 1.9 million rubles.

The project is profitable throughout the analyzed period. The average monthly profit is at the level of 60, 5 to 107.3 thousand rubles per month.

Brief description of the project
The project involves the organization of a building materials store in a city with a population of 50-500 thousand people. The store area is about 200 m2, of which 150 m2 are retail space. On the adjacent plot it is planned to build a half-closed warehouse of 50 m2.

The retail building materials market is to a small extent susceptible to economic crises. Building your own house or repair is an integral part of the life of any family. Therefore, it is worth paying attention to this business segment, as it provides quite decent profit indicators and the stability of its receipt.

As you know, when choosing a place for an outlet there are three most important criteria: location, location and again location. Therefore, if a small store cannot compete in price with large hypermarkets, then providing a personal approach to customers and reducing the logistics shoulder, a small store can take quite a comfortable niche.

An object of such a format is best located at the site of the promising construction of multi-storey residential buildings, which are handed over under the “stroyvariant” scheme. Often, such areas coexist with arrays of private residential households, which are regular consumers of building materials. And this is ideal for the location of a new building materials store. The range of the store in our proposed version focuses on the sale of materials for draft and finishing of apartments and households.

Another important aspect of the project is active work with small wholesale consumers of building materials – small construction organizations and foremen. As a rule, with the right set of work with them, they can acquire a large share of the sales of the store. The scheme of work with them is known, and we will not dwell on it in detail. It is based on the payment of a certain (usually from 5% to 15%) percent of the purchased products. Of course, such payments are desirable to carry out officially, for example, as agency fees. Since even private supervisors for the most part use the organizational form of IP, the legal conduct of such agency payments does not cause problems.

Next, we define which organizational and legal form to choose for opening a store of building materials.

Many of those who decide to go into business for the first time, or want to legalize an existing business, cannot decide which legal form to choose for a new enterprise. Each type of business organization has its advantages and disadvantages both during the registration period and at the activity stage. For small businesses it is better to choose from the forms of organization as an individual enterprise and a limited liability company.

We list the main factors that are important for the store building materials.

The main advantages of individual entrepreneurs (individual entrepreneur) in relation to the building materials store include:
relative ease of registration;
You do not need to pay tax on property used in the enterprise;
accounting is reduced to filling the book, which allows you to do without being included in the accountant’s staff.