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Hardware Store Business Plan

Published Nov.25, 2023

Updated Sep.14, 2024

By: Jakub Babkins

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Table of Content

A hardware store is a retail business that sells tools, materials, and equipment for home improvement, construction, and maintenance projects. Hardware stores can cater to different segments of customers and can also offer services such as installation, repair, and consultation, as we explained in our Hardware Retail Franchise Business Plan .

What is the Business Plan for a Retail Hardware Store?

A business plan for a retail hardware store is a document that outlines the goals, strategies, and financial projections of a store that sells hardware products and supplies to customers. A business plan typically includes the following sections:

Executive summary
Company description
Products and services
Market analysis
Competitive analysis
Marketing and sales strategy
Management and organization
Financial plan

Why Do You Need a Business Plan Sample for a Hardware Shop?

A hardware shop needs a business plan sample to outline its vision, goals, and strategies. It can show how the shop will operate, what products and services it will offer, and how it will reach its target market. A business plan sample, like a Computer Software Business Plan , can also demonstrate the financial viability of the shop and attract funding and support from various stakeholders. A business plan sample is a vital document for any hardware shop owner who wants to start or grow their business.

Here is an example of a retail hardware store business plan sample:

Executive Summary

Ace Hardware is a new hardware store that will be located in San Diego, California. Ace Hardware will operate as a sole proprietorship owned by Alex Hales, an experienced and certified hardware professional.

Ace Hardware will target residential and commercial customers in the San Diego area who are looking for a convenient, reliable, and friendly hardware store. Ace Hardware will focus on the following customer segments:

DIY enthusiasts
Contractors

Ace Hardware will require a total of $500,000 to start and operate the business. Ace Hardware is seeking a $300,000 loan from a reputable bank to finance the startup and operating costs of the business. The loan will be repaid in 5 years with an interest rate of 10%. Ace Hardware will also contribute $200,000 of the owner’s savings as equity.

Company Overview

Ace Hardware is a new hardware store that will be located on Main Street, San Diego, California. The store will occupy a 5,000-square-foot space in a busy and convenient shopping plaza, with ample parking and visibility. The store will be open from 8 a.m. to 8 p.m., seven days a week.

Ace Hardware will be registered as a limited liability company (LLC) in the state of California and will comply with all the relevant federal, state, and local laws and regulations. The store will be owned and operated by Alex Hales, who will also serve as the manager and the chief executive officer (CEO) of the company. Alex Hales will own 100% of the company’s shares and will have complete control over the business decisions and operations.

Industry Analysis

The hardware store industry is a segment of the larger home improvement industry. It includes businesses that sell tools, materials, and equipment for home improvement, construction, and maintenance projects.

Here are some interesting market insights for DIY & Hardware Store in the United States:

The global hardware market size amounts to $121.34 bn in 2023 and is expected to grow to $164.21 bn in 2027. (Source – The Business Research Company )
The revenue generated in the DIY & Hardware Store market in 2023 amounts to $641.80 bn. (Source – Statista )
It is projected that the hardware market will experience an annual growth rate of 2.63% from 2023 to 2028. (Source – Statista )

Customer Analysis

Ace Hardware’s target market is the home improvement market in San Diego, California. This market consists of customers who are looking for products and services for home improvement, construction, and maintenance projects.

According to the US Census Bureau, there were 1,419,845 housing units in San Diego County in 2020, of which 56.4% were owner-occupied and 43.6% were renter-occupied. The median value of owner-occupied housing units was $632,000, and the median monthly rent was $1,647. The median household income was $85,507, and the per capita income was $38,923.

Ace Hardware’s customer segments are:

1. Residential customers

These are homeowners or renters who are looking for products and services for their own home improvement, construction, and maintenance projects.
They have different levels of skills, budgets, and tastes and may seek advice, guidance, and assistance from hardware store staff.
They also value convenience, quality, and variety in their purchases.

Ace Hardware will target residential customers who live or work within a 10-mile radius of the store location and who have a household income of $50,000 or more . Ace Hardware estimates that there are about 500,000 potential residential customers in this segment.

2. Commercial customers

are contractors, builders, landscapers, decorators, and other professionals who are looking for products and services for their clients’ home improvement, construction, and maintenance projects.
They have specific requirements, standards, and deadlines and may seek reliability, efficiency, and flexibility from hardware store staff.
They also value price, quality, and availability in their purchases.

Ace Hardware will target commercial customers who operate within a 20-mile radius of the store location and who have an annual revenue of $100,000 or more . Ace Hardware estimates that there are about 10,000 potential commercial customers in this segment.

Competitive Analysis

ABC Hardware faces competition from other hardware stores in the area, such as:

Home Depot – Home Depot is the largest home improvement retailer in the US, with over 2,300 stores nationwide, including 20 stores in San Diego County. Home Depot offers a wide range of products and services for home improvement, construction, and maintenance projects. Home Depot’s strengths include its large scale, brand recognition, loyal customer base, and online presence. Home Depot’s weaknesses include its high operating costs, low customer service, and generic product selection.
Lowe’s – Lowe’s is the second largest home improvement retailer in the US, with over 1,700 stores nationwide, including 15 stores in San Diego County. Lowe’s offers a similar range of products and services as Home Depot but with a focus on home decoration and design. Lowe’s strengths include its brand recognition, loyal customer base, and online presence. Lowe’s weaknesses include its high operating costs, low customer service, and generic product selection.
Menards – Menards is the third largest home improvement retailer in the US, with over 300 stores in 15 states, including 5 stores in California. Menards offers a similar range of products and services as Home Depot and Lowe’s but with a focus on price and value. Menards’ strengths include its low prices, loyal customer base, and online presence. Menards’ weaknesses include its limited geographic coverage, low customer service, and generic product selection.

ABC Hardware assesses and rates its competitive advantages and disadvantages based on a 1-5 scale rating. ABC Hardware’s competitive advantages and disadvantages are as follows:

Marketing Plan

ABC Hardware’s marketing objectives and goals are to:

Increase the brand awareness and recognition of ABC Hardware in the local market and online platforms
Attract and retain at least 1,000 loyal customers by the end of the first year
Achieve a monthly sales revenue of $100,000 by the end of the first year
Increase the customer engagement and loyalty by 10% by the end of the first year
Generate at least 100 referrals and word-of-mouth per month by the end of the first year

ABC Hardware’s marketing mix is based on the following four Ps:

Product – ABC Hardware offers high-quality tools, materials, and equipment for home improvement, construction, and maintenance projects at affordable prices. ABC Hardware also offers installation, repair, and consultation services to its customers.
Price – ABC Hardware sets its prices based on the cost-plus pricing strategy, which adds a markup percentage to the cost of the products and services. ABC Hardware’s markup percentage is 30%, which covers its overhead and profit margin.
Place – ABC Hardware sells its products and services through its physical store and its online store. The physical store is located in a busy and central area with high foot traffic and visibility. The online store is accessible through its website, which is user-friendly, secure, and responsive.
Promotion – ABC Hardware uses a combination of online and offline channels to promote its brand, products, and services to its target customers.

ABC Hardware’s marketing budget and allocation are based on the following assumptions and estimates:

ABC Hardware allocates 10% of its monthly sales revenue to its marketing budget
ABC Hardware spends 60% of its marketing budget on online channels and 40% on offline channels
ABC Hardware tracks and measures the return on investment (ROI) and cost per acquisition (CPA) of each marketing channel

ABC Hardware’s marketing budget and allocation for the first year are represented in the following chart:

Marketing Dudget Allocation - Year 1 - Hardware Store Business Plan

Operations Plan

ABC Hardware’s operations plan covers the following aspects of its business:

Location – The store location is 123 Main Street, Los Angeles, CA 90001, which is a busy and central area with high foot traffic and visibility. It is close to its target customers, has low rent and utilities costs, and has ample parking space and public transportation access.
Size – The store has a size of 5,000 square feet, which is enough to accommodate its products, services, staff, and customers. ABC Hardware plans to expand its store size to 10,000 square feet by the end of the third year.
Layout – The store is divided into four main sections: tools, materials, equipment, and services. ABC Hardware also has a checkout counter, a customer service desk, a storage room, and a restroom.
Inventory management – ABC Hardware uses a barcode scanner and a point-of-sale (POS) system to record and monitor sales and inventory transactions. ABC Hardware also uses a software program and a database to analyze and forecast inventory levels and trends. Refer to our SaaS Business Plan for a better understanding.
Procurement – ABC Hardware sources its products and services from reliable and reputable suppliers and vendors. ABC Hardware has established long-term and mutually beneficial relationships with its suppliers and vendors.
Barcode scanner
Security camera
Alarm system
Fire extinguisher

Organization and Management

Ace Hardware will have a simple and flat organizational structure, where the owner and manager will have direct and close supervision and communication with the staff. The organizational structure will consist of the following positions:

Owner and Manager – Alex Hales, the owner, manager, and CEO of the store, will oversee all aspects of the business, from planning and budgeting to hiring and reporting. He has a business degree and 10 years of experience in the hardware store industry.
Sales Staff – 10 sales staff will be hired to assist and serve the customers, as well as sell and provide various services on the sales floor. They will have 2 years of experience and a high school diploma and will work in shifts of 5 under the owner and manager.
Cashier Staff – 3 cashier staff will be hired who will process and complete the transactions, as well as perform checkout and customer service tasks. They will have 1 year of experience and a high school diploma and will work in shifts of 2 or 3 under the owner and manager.

Financial Plan

Startup costs.

Ace Hardware will require a total of $500,000 to start and operate the business. The startup costs will include the purchase of inventory, equipment, fixtures, signage, and leasehold improvements, as well as the initial marketing, legal, and administrative expenses. The breakdown of the startup costs is as follows:

Ctartup Cost Breakup - Hardware Store Business Plan

Operating Costs

Ace Hardware will incur monthly operating costs to run and operate the business. The operating costs will include the rent, utilities, payroll, taxes, insurance, and maintenance expenses. The breakdown of the operating costs is as follows:

Operation Cost Breakup - Hardware Store Business Plan

Ace Hardware will generate revenue from the sale of products and services, such as paint, plumbing, electrical, gardening, hardware, lumber, cutting, installation, repair, and delivery. Ace Hardware will use the following assumptions to project its revenue:

Average sale per customer: $50
Average number of customers per day: 100
Average number of days per month: 30
Average revenue per month: $50 x 100 x 30 = $150,000
Average revenue growth rate per year: 10%

Based on these assumptions, Ace Hardware projects to generate $1.2 million in sales revenue in the first year, $1.8 million in the second year, and $2.4 million in the third year.

Break-Even Analysis

Ace Hardware expects to achieve break-even in the first year of operation, where its total revenue will equal its total costs. Ace Hardware will use the following formula to calculate its break-even point:

Break-Even Point = Fixed Costs / (Revenue per Unit – Variable Cost per Unit)

Fixed Costs: $32,000 per month, or $384,000 per year.
Revenue per Unit: $50 per unit.
Variable Cost per Unit: $25, or 50% of the revenue per unit.

Based on these figures, Ace Hardware’s break-even point will be:

Break-Even Point = $384,000 / ($50 – $25) = 15,360 units
Break-Even Point in Sales = 15,360 x $50 = $768,000

This means that Ace Hardware will need to sell 15,360 units or generate $768,000 in sales revenue to cover its costs and break even.

Cash Flow Statement

Income statement, balance sheet, why choose ogscapital for your hardware store business plan.

At OGSCapital, we are the leading provider of business plan services for businesses of all sizes. We have a team of senior business experts with 15+ years of experience in 45 industries who can create customized and unique business plans that meet the highest standards of quality, professionalism, and effectiveness. We also offer comprehensive and in-depth market research, fast and reliable results, a proven track record of success, and access to a wide network of contacts. For reference, check our Computer Repair Business Plan .

Contact us today and get a free consultation from one of our business plan experts. We will help you achieve your business goals and become a market leader.

Frequently Asked Questions

Is a hardware shop profitable.

Hardware shop business is profitable in the US, as it sells essential tools and materials for home improvement and construction projects. The profit margin in hardware stores in the US is estimated to be around 15% to 30%, depending on the type and category of products sold. Check our iPhone Repair Business Plan here.

How do I start a hardware business?

To open a hardware store business, you need to conduct market research, write a hardware business plan, choose a suitable location, obtain the necessary licenses and permits, source your products, hire and train your staff, promote your business, and provide quality products and services.

How do I write a business plan for a hardware store?

A small hardware store business plan is a document that describes the details and objectives of your business and how you plan to achieve them. It should include the sections of executive summary, market analysis, products and services, marketing plan, operational plan, financials, and appendix. Refer to our Web Hosting Business Plan to learn more.

What is the business category of a hardware store?

A hardware store is a type of retail store that sells a variety of tools, materials, and supplies for home improvement, construction, gardening, and other activities. Hardware stores are usually classified under the NAICS Code 444130, SIC Code 5251, and Business Activity Code 444000.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rated document, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Hardware Business Plan Template & Guidebook

Being successful in the hardware industry requires careful planning and a well-crafted business plan that lays out the details of your goals and strategies. Writing a business plan can be a daunting task, but with the #1 Hardware Business Plan Template & Guidebook, you can create a comprehensive plan tailored to your specific needs quickly and easily. Learn how to use this powerful tool to ensure the success of your own hardware business.

Get worry-free services and support to launch your business starting at $0 plus state fees.

How to Start a Profitable Hardware Business [11 Steps]
10+ Best & Profitable Hardware Business Ideas [2023]

How to Write a Hardware Business Plan in 7 Steps:

1. describe the purpose of your hardware business..

The first step to writing your business plan is to describe the purpose of your hardware business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a hardware business:

Our mission is to provide the highest quality hardware products and services to our customers; to foster a safe, welcoming, and inclusive environment where our team can thrive; and to be a leader in thought, innovation, and environmental stewardship in the hardware industry.

2. Products & Services Offered by Your Hardware Business.

The next step is to outline your products and services for your hardware business.

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

What is my business?
What are the products and/or services that I offer?
Why am I offering these particular products and/or services?
How do I differentiate myself from competitors with similar offerings?
How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your hardware business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals.

A good marketing plan for your hardware business includes the following elements:

Target market

Who is your target market?
What do these customers have in common?
How many of them are there?
How can you best reach them with your message or product?

Customer base

Who are your current customers?
Where did they come from (i.e., referrals)?
How can their experience with your hardware business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

How does it work, what features does it have, and what are its benefits?
Can anyone use this product or service regardless of age or gender?
Can anyone visually see themselves using this product or service?
How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

Which companies are competing with yours today (and why)?
Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
What specific advantages does each competitor offer over yours currently?

Marketing channels

Which marketing channel do you intend to leverage to attract new customers?
What is your estimated marketing budget needed?
What is the projected cost to acquire a new customer?
How many of your customers do you instead will return?

Form an LLC in your state!

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations.

In it, you should list:

The equipment and facilities needed
Who will be involved in the business (employees, contractors)
Financial requirements for each step
Milestones & KPIs
Location of your business
Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a hardware business?

Accounting software
Permits to operate a business in the local jurisdiction
Hardware inventory
Point of sale system
Cash register
Tax permits or certificates
Shop tools and supplies
Work tables or benches
Safety equipment and supplies

5. Management & Organization of Your Hardware Business.

The second part of your hardware business plan is to develop a management and organization section.

This section will cover all of the following:

How many employees you need in order to run your hardware business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Hardware Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a hardware business varies based on many different variables, but below are a few different types of startup costs for a hardware business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your hardware business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your hardware business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses.

Here are some steps you can follow to devise a financial plan for your hardware business plan:

Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Hardware Business Plans:

Why do you need a business plan for a hardware business.

A business plan for a hardware business is important to outline the goals and objectives of the business, such as determining the target market, defining product offerings, creating operational plans and setting financial goals. It also provides a roadmap for the future of the business, helping to ensure that decisions are made in line with those plans. Creating a business plan allows potential investors or lenders to assess the viability of the hardware business before committing funds.

Who should you ask for help with your hardware business plan?

You should ask a business consultant, entrepreneur mentor, or relevant industry experts for help with your hardware business plan.

Can you write a hardware business plan yourself?

Writing a business plan for a hardware business is a complex task that requires research, market analysis, and financial planning. Depending on your skill set and knowledge of the industry, you may be able to write your own business plan for a hardware business. If you decide to take on the project yourself, it is important to do thorough research and market analysis to understand the industry, be aware of any potential competition, and understand the key success factors for success in the hardware sector. Additionally, you should also familiarize yourself with writing a basic business plan, as well as use reliable financial projections to create realistic projections for your venture. Ultimately, it is recommended that you at least consult with an experienced business consultant or accountant before finalizing any decisions related to your business plan so that you can rest assured knowing that your plan adheres to best practices.

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