Hardware stores are the backbone of our economy, they have contributed so much into the houses and developments we have today. This is a guide on how to start a hardware business in South Africa.
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Overview
A hardware store caters both to regular citizens and corporate companies, mainly supplying building material. This material is mostly used in construction or repairing of building structures. Hardware stores are in high demand everywhere across the country, this is one business that can thrive in rural areas as well as big cities.
People are always looking to build houses, some looking to develop their rural areas and some looking to build a home in the suburbs. Chances that you will run out of business are really low unless you don’t do well at managing the business.
The barriers to entry are quite high, you need a lot of money to start a hardware business. This is both and advantage and a disadvantage. The advantage being that if you succeed at spotting a location with little competition and good potential, you will have little competition for a long time. People are not going to rush to opening a hardware because they see that it’s working.
The disadvantage being that it’s hard to raise that capital in the first place.
Choose the right location
Competition is very strong in this field, that’s because some people will want to buy from trusted stores like Cashbuild. It’s important that you don’t set up right next to them, unless you are going to offer lower prices, which will be very difficult to do.
When the prices are exactly the same, people will go to the trusted brands, however, you can set up in the same town. Just don’t target the same foot traffic as the big brands. There are many reasons why some people would prefer to buy from you instead of the big brands.
The best place to set up is ideally the one with little competition while having a lot of potential. These places are usually small towns, townships and villages. Make sure that the village is very big, is very far away from the nearest town before setting up shop.
One perfect village I found was Izingolweni, there are some people living in that village and it’s quite far from towns. It’s perfect for setting up a hardware store.
Set up operating premises
You can either build or lease your operating premises, the wiser thing to do would be leasing. Leasing allows you to invest the money that would have been used in construction somewhere else. You also don’t want to go all out only to find out the business isn’t profitable.
The main advantage with building premises is that you can sell them or lease them out if it happens that your business doesn’t become successful. However, leasing is the smarter option when starting out unless you don’t have a choice but to build.
Make sure that the premises are big enough to fit all your stock, hardware stores are usually bigger than other stores.
Register the business
This is something that you should do as soon as you identify the right location. Registering a business only costs R125 in South Africa. Do a little research about the kind of permits you might need to set up shop.
Set up the store
It’s time to set up the actual store, you might need to renovate it just a bit then buying all your stock. This includes buying equipment, you don’t need to buy a lot of equipment for this kind of business. You might need a point of sales system and shelves for your inventory but not much more than that.
Get insurance
Please get insurance, both liability insurance and cover from loss, if it happens that people get injured in your premises; they’ll sue your business. The insurance premiums shouldn’t be more than 10% of the total value of your company.
Market the business
Hardware stores are super localized businesses, your marketing efforts should go towards making sure that a lot of locals know about you. The best way to do that in a cost-effective way is by using billboards and local newspaper. Don’t focus a lot on digital marketing, with the exception of Google AdWords. Most other digital marketing channels won’t bring you a lot of value.
Word of mouth is very important for this business and the best way to get clients from word of mouth is by offering exceptional customer service.
Conclusion
This was a guide on how to start a hardware business in South Africa. Do you have any thoughts or questions? Comment below.
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