How to open a convenience store: a step-by-step guide

On this page

1. Step 1: Decide what kind of store you are opening
2. Step 2: Choose the location
3. Step 3: Write a simple plan and line up the money
4. Step 4: Form the business and register it
5. Step 5: Get your licenses and permits
6. Step 6: Set up suppliers and distributors
7. Step 7: Build the pricebook
8. Step 8: Choose the register and back office
9. Step 9: Set up lottery, tobacco and alcohol
10. Step 10: Hire and train your staff
11. Step 11: Check everything before opening day
12. Step 12: Run your first month
13. Where Advantage fits

Opening a convenience store is a long list of small jobs. Few of them are hard on their own. What trips people up is the order. Some licenses take months. Some suppliers want a tax number before they will open an account. The register cannot be set up until you know what you will sell and at what price.

This guide puts the work in order for an independent owner opening one store. If you also plan to sell fuel, read our guide on how to start a gas station next.

One warning applies to every step. Licenses, permits, taxes and age rules are set by your state, county and city, and they differ from place to place. Treat each license named here as a reminder to ask, not as a statement of the law where you are. Have an accountant and an attorney who know your state review your plans.

Step 1: Decide what kind of store you are opening

Before you look at property, write down what the store will sell and how it will run. These choices decide your licenses, your space and your suppliers. Answer each of these in writing:

• Will you sell beer and wine, tobacco and vape products, or lottery tickets? Each needs its own license, and some locations cannot get an alcohol license at all.
• Will you serve coffee, hot food or anything prepared on site? Food brings health permits and inspections.
• Will you accept SNAP benefits?
• What hours will you keep, and will you sell fuel now or later?

If you are buying an existing store

A store that is already open comes with sales, customers and equipment. It also comes with the last owner’s problems. Before you sign, ask the seller for:

1. Register reports for at least the last 12 months. A summary the seller typed up is not enough.
2. Vendor invoices for the same months, so you can check sales against purchases.
3. A copy of every license and permit. Ask each issuing office whether it transfers, because some licenses stay with the holder and you may need to apply in your own name.
4. The lease, and the landlord’s written consent to transfer it to you.

If the seller cannot back up the sales with register reports and invoices, treat the sales figure as a guess.

Step 2: Choose the location

You can change almost anything about a store after it opens except where it is. Visit each site at different times, including early morning, late evening and a weekend, and count cars and customers yourself.

On each visit:

• Count cars passing and cars turning in. Note whether drivers can get in and out without a hard left across traffic.
• Check that drivers can see the sign in time to turn in, and that there is parking for your busiest hour plus room for delivery trucks.
• Look at the neighbors. Some places limit tobacco or alcohol sales near schools or churches, so check before you count on those sales.
• List the competing stores within a short drive, with their hours and their prices on a few common items. Note what none of them sell.
• Ask the city or county planning office whether a convenience store is allowed at the address, and whether there are limits on hours, signs or alcohol.

If you lease, have an attorney review the lease before you sign. Look at the length and renewal options, who pays property taxes, insurance and repairs, and whether the permitted use covers everything you plan to sell. Ask for rent to start only after your licenses are approved.

Step 3: Write a simple plan and line up the money

Lenders will ask for a business plan, and you need one for yourself anyway. It can be short. It has to show what it costs to open, what it costs to run each month, and how much you need to sell to cover it.

One-time costs include deposits, build-out, equipment, the register and back office, opening inventory, signs, fees, and working capital for the first few months. Monthly costs include rent, payroll, utilities, insurance, card fees, software, maintenance and loan payments. Get real quotes for every line instead of borrowing numbers from someone else’s store.

Work out your break-even

Here is the math with made-up numbers, only to show how it works. Say your monthly costs, not counting the goods you sell, come to $30,000. Say that across the store you keep 30 cents of every sales dollar after paying for the product. That is a 30% gross margin. Divide the costs by the margin: $30,000 divided by 0.30 is $100,000. In this example, the store must sell $100,000 a month just to break even.

Run the same math with your own quotes and your own margin plan. If the answer looks out of reach for the location, you want to know now, not six months after opening.

Where the money can come from

• Your own savings. Lenders will ask how much of your own money is going in.
• Bank loans, including loans backed by the U.S. Small Business Administration.
• Seller financing, if you are buying a store.
• Supplier programs. Beverage and snack companies sometimes provide coolers or racks in exchange for space or purchase commitments. Read the terms, because they can limit what goes in that space.

Step 4: Form the business and register it

Do these in order, because later steps ask for numbers from earlier ones:

1. Choose a business structure, such as an LLC or a corporation, with advice from your accountant and attorney.
2. Register the business with your state, usually through the secretary of state.
3. Get an Employer Identification Number (EIN) from the IRS. You need it to hire, to bank and to open supplier accounts.
4. Open a business bank account, and keep store money apart from personal money from day one.
5. Register with your state revenue department to collect sales tax. Ask how groceries, prepared food and tobacco are taxed, because the rules can differ by item.
6. Buy insurance before you take over the building, including liquor liability if you will sell alcohol.

Step 5: Get your licenses and permits

The table lists permits a convenience store commonly needs and the office that usually handles each. It is a starting point, not a complete list. Requirements, fees and timelines change from state to state and city to city. Call each office, ask what applies at your address and how long approval takes, and start the slow ones first.

Permit or registration	Where to ask
Local business license	City or county licensing office
Building, occupancy and sign permits	City or county building and planning departments
Fire inspection	Local fire marshal
Food or health permit	Local or state health department
Tobacco and vape license	State licensing or revenue agency, sometimes the city or county too
Beer and wine license	State alcohol control board, often with a local approval step
Lottery retailer license	Your state lottery
SNAP authorization	USDA Food and Nutrition Service
Scales and measuring devices	State or county weights and measures office

Federal alcohol rules come from the Alcohol and Tobacco Tax and Trade Bureau (TTB), but your state alcohol board is the first call for a retail license. If you plan to sell money orders or cash checks, ask the provider and your state’s financial regulator what that takes. Keep every approval in one folder, and put every renewal date on a calendar.

Step 6: Set up suppliers and distributors

A convenience store usually buys from three kinds of suppliers:

• A full-line convenience distributor for candy, snacks, tobacco, grocery and general merchandise, usually delivered on a set day each week.
• Direct store delivery vendors, who bring products like beer, soft drinks, chips, bread and milk on their own trucks.
• A wholesale club or cash and carry warehouse for gaps between deliveries. Enter those receipts like any other invoice, or your costs will be wrong.

Open accounts as soon as you have your tax registrations, because it takes time. Ask each distributor about minimum orders, delivery days and order cutoff times, payment terms for a new store, and how credits work for damaged product or product past its date. Ask whether they can send invoices and item files (barcodes, descriptions, pack sizes and costs) electronically.

Receiving

Set a receiving routine before the first truck arrives, and train everyone who might sign for a delivery:

1. Check every delivery against the invoice before the driver leaves. Count cases, and look for damage and dates.
2. Write any shortage or damage on the invoice, and have the driver sign it.
3. Follow up on each credit until it shows up on a later invoice.
4. Compare invoice costs with what you agreed to pay, and update prices before new costs reach the shelf.

Step 7: Build the pricebook

The pricebook is the list of everything you sell, as your register sees it. Each item has a barcode, a name, a department, a price, a cost, and settings for tax and age checks. If an item is wrong in the pricebook, it rings up wrong at the counter, and every report built on those sales is wrong too.

1. Set up departments first, and keep them few and clear. Your reports can only be as clear as your departments.
2. Load items from your distributors’ item files instead of typing them, and check that each barcode appears only once.
3. Set tax rules with guidance from your state revenue department or your accountant.
4. Flag age-restricted items, such as tobacco, vape and alcohol, so the register prompts the cashier to check ID.
5. Price each item from its cost and the margin you want for its department. Then compare your best sellers against nearby stores.
6. Before opening, scan a sample of items from every shelf and cooler door, and check the price, department and tax on the receipt.

Margin and markup are different numbers

Markup is profit as a share of cost. Margin is profit as a share of price. Mixing them up leads to prices that are too low.

With made-up numbers: an item costs $1.00 and sells for $1.50. The profit is $0.50, so the markup is 50% (half of $1.00) and the margin is 33% (a third of $1.50). If you want a 33% margin and add 33% to the cost, you charge $1.33 and earn about 25%. To price for a target margin, divide the cost by one minus the margin. For a 33% margin, $1.00 divided by 0.67 is about $1.49.

After opening, give the pricebook one owner. Change prices when invoice costs change, not months later. Watch for sales rung up under a department key instead of a barcode, which usually means an item is missing, and add those items.

Step 8: Choose the register and back office

The register, or POS (point of sale), rings up sales and takes payments. The back office is where you manage the pricebook, close shifts, enter invoices and read reports. Sometimes one company provides both, and sometimes the back office connects to a register from another company. Choose them together, and confirm at least that:

• The register handles everything you sell, including age checks, lottery, SNAP if you accept it, and fuel if you might add it.
• The back office reads sales from your exact register model on its own.
• A price change made in the back office reaches the register, and you can tell when it has.
• The shift report shows cash, cards, lottery, paid-outs and over or short in one place.

Our buyer’s checklist for a convenience store POS and back office has the full list of questions. For card processing, get the pricing, the contract length and any early termination fee in writing, and confirm the processor works with your register.

Step 9: Set up lottery, tobacco and alcohol

Each of these needs its own license and its own controls. A mistake with any of them can lead to fines or the loss of the license.

Lottery

Each state lottery runs its own retailer program, and not every state has a lottery. Apply early, because approval can take time. Expect questions about who owns the business, and expect to name a bank account the lottery can draw from. Once you are approved, the general pattern looks like this, though the details vary by state:

• You sell draw games from a lottery terminal, and instant (scratch) tickets that arrive in packs.
• The lottery collects what you owe, after prizes you paid and your commission, from your bank account on a set schedule.
• You keep packs locked up until you activate them, and you activate a pack only when it goes on display.
• You count instant tickets at every shift change. A short count found the same day is easy to trace. A week later, it is not.

Tobacco and vape

Ask your state, and your city or county, which licenses you need for cigarettes, other tobacco and vape products. Federal law sets a minimum age to buy them, and the FDA runs compliance checks at stores. Your state may add its own rules, including limits on flavored products. Set a clear ID policy and train every cashier on it.

Tobacco makers also run retailer programs that can pay for display space, promotions or sharing your sales data (called scan data). Read each contract before you sign. These programs depend on accurate, item-level sales records from your register.

Beer and wine

Alcohol licenses come from your state alcohol control board, often with a local approval step. Some states limit how many licenses they issue, and some towns and counties do not allow alcohol sales at all. Licensing can include public notice periods and hearings, so apply early.

Step 10: Hire and train your staff

Start with the schedule, then count people. If the store is open from 6 a.m. to midnight, that is 18 hours a day, or 126 hours a week, with at least one person at the register the whole time. Add hours for shift change overlap and your busiest times, and plan who covers when someone calls out.

When hiring, call references and run background checks where the law allows. Learn the rules on minimum wage, overtime, breaks and workers under 18 from your state labor department and the U.S. Department of Labor. Set up payroll and workers’ compensation before anyone works a shift.

Write your training down so every new hire gets the same version. Cover at least:

1. Register basics, including voids, refunds and what needs a manager.
2. ID checks, and how to refuse a sale politely.
3. Selling lottery and counting tickets at shift change.
4. Cash handling: drawer limits, safe drops and closing a shift.
5. Receiving deliveries, cleaning, and food safety if you serve food.
6. What to do in a robbery: comply, stay calm and do not chase anyone.

Give every cashier their own register login. With shared logins, you cannot tell who rang a void or opened the drawer.

Step 11: Check everything before opening day

Do not open until each line is done:

• Coolers and freezers holding temperature for several days.
• Cameras recording the register, the door and the stockroom.
• Register, scanners and card terminal tested with real test sales, refunds and voids.
• Pricebook spot-checked shelf by shelf.
• Licenses issued and posted, and inspections passed.
• Staff trained and scheduled for the first two weeks.
• A contact list by the register for register support, the card processor, the alarm company and refrigeration repair.

Consider a soft opening. A few quiet days before any grand opening give staff and systems a real test while traffic is light.

Step 12: Run your first month

The routines you set in the first month tend to become the way the store runs, so start them on day one.

• After every shift, count the drawer, record over or short with the cashier’s name, count lottery tickets, and look over voids and refunds.
• Every day, check deliveries against invoices and make the bank deposit.
• Every week, review sales by department and your best and slowest sellers, reconcile lottery against the lottery’s statement, and change prices where invoice costs moved.
• At month end, go over a profit and loss statement with your accountant, file sales tax on time, and compare the month to your plan.

Where Advantage fits

Advantage is back office software for independent convenience stores and gas stations. It reads sales from Verifone Commander and Gilbarco Passport registers throughout the day, sends price changes, new items and mix-and-match deals to the register, and shows which changes the register confirmed. Shifts close at the store with a guided checklist, and the Day and Shift Reports for those shifts are on the web and on the iPhone and Android app. See what works with Advantage.