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How to Start a Convenience Store in OntarioLast Verified:
2006-06-07
The Canada-Ontario Business Service Centre (COBSC) in collaboration with the Ministry of Government Services (MGS) prepared this guide to provide information on license, permit or registration requirements when considering the establishment of a Convenience in Ontario. Need more information? Click: Canada-Ontario Business Service Centre Some of the organizations listed below are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages. TABLE OF CONTENTS
1. Basics to Getting StartedStarting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Ontario, it is wise to do your research. Ask yourself if you are truly suited for entrepreneurship and understand that significant effort may be required. You should thoroughly enjoy the field you are getting into and you must believe in your service; it may consume much of your time, especially in the start-up phase. There are several issues to consider such as regulations, financing, taxation, managing your business, advertising and much more. For further information: 2. Industry OverviewConvenience stores offer quick and friendly service, handy locations, a variety of merchandise, and extended hours of operation. This publication focuses on starting an independent convenience store. However, many convenience stores are franchise operations. Convenience Store - a small store that is open every day until late evening or 24 hours a day, and specializes in selling basic food items, such as milk and bread, a variety of small dry-goods items, and often including movie rentals. Convenience Store/Gas Station - a convenience store combined with a place for supplying motor vehicles with gasoline, motor oil, water, etc. Franchise - the privilege, often exclusive, of selling the products of a manufacturer or providing a company's service in a given area. For further information: Planning Your BusinessWhat is a Business Plan? Why Do I Need One? For further information: Interactive Business Planner (IBP)The IBP is a computer software program that uses the capabilities of the Internet to assist you in preparing a 3-year business plan for a new or existing business. The IBP will help you write your business plan, provide a format for writing your business plan, and take the information you enter and prepare financial projections for you. For further information: 3. RegulationsExamples of licenses, permits and regulations that could apply to you when starting a convenience store in Ontario may include, but are not limited to: Canadian Food Inspection Agency (CFIA) For further information: Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) For further information: Ontario Ministry of Health and Long-Term Care (MOHLTC) For further information: Video/DVD Rental LicenseBusinesses selling or renting videos directly to the public (including by vending machines) require a Film Exchange Retail Licence. Businesses distributing videos to other retailers require a Distributor's Licence. To obtain an application form, clients should contact the Ministry of Government Services (MGS), Theatres Branch at (416) 314-3626 or toll-free 1-800-268-6024. Municipal RequirementsOne area that all businesses must comply with is that of licenses, permits and regulations. When creating a company, the entrepreneur must contact the municipality involved, along with the provincial government. Each municipal government has the authority to issue its own business licenses within its jurisdiction. Since there is no uniformity throughout the country regarding municipal licenses for businesses, you should consult with the appropriate local officials to determine whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in their municipalities. For further information: Music LicensePerformances of music in public, i.e. offices, stores, etc., require a licence. This licence is necessary whether the music is performed by live or recorded means. For further information: The Smoke-Free Ontario ActAs of May 31, 2006, the Ontario government is prohibiting smoking in all enclosed workplaces and enclosed public places. The legislation will also strengthen measures to ensure only those 19 years of age and older can buy cigarettes and will phase out the display of tobacco products, with a complete ban beginning May 31, 2008. For further information: Related legislation:Health Protection and Promotion Act Food and Drugs Act 4. FinancingThe Canada-Ontario Business Service Centre has created documents, which provide an overview of some of the main financing options for individuals starting and operating a business in Ontario, including programs offered or supported by the government. For further information: Canada Small Business Financing ProgramBusiness Financing Program can assist new and existing small businesses with annual gross revenues not exceeding $5 million (excluding farming and charitable or religious enterprises) in obtaining term loans and capital leases of up to $250 000 to help finance fixed asset needs. For further information : Sources of FinancingSources of Financing is an Internet resource for locating traditional and alternative sources of small business financing. This site provides interactive access to objective information on appropriate forms of public and private sector sources of debt and equity financing. For further information: Sources of Micro-Credit Financing"Micro-credit" can be defined as small loans made to individuals to undertake self-employment or to start small businesses. This type of financing may be provided through a number of different sources including independent non-profit organizations, community economic development programs, commercial financial institutions, etc. For further information: 5. TaxationDealing with Business TaxesAll businesses must be aware of the various taxes that may apply to their product or service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply. For further information: Income Tax InformationBusiness owners must be aware of the requirements of Income tax that may apply to their product or service. There are different tax implications for incorporated and non-incorporated businesses. For information specific to your organization you should consult an accountant or financial professional. For further information: Below are links to publications that cover some of the tax requirements for convenience store owners in Ontario. Convenience Stores The Basics of Retail Sales Tax Snack Foods, Beverages and Candies Overview of Tobacco Tax Application for Vendor Permit Purchase Exemption Certificate (PEC) Discount Coupons Below are links to publications that cover some of the general tax requirements for business owners in Ontario. Ontario Small Business Guide EHT Guide for Employers For further information: Retention/Destruction of Books & Records Voluntary Disclosure 6. Managing Your OperationInsuranceInsurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, you may wish to ask other business owners in your area to recommend one. The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent. Basic insurance:
Marketing/AdvertisingWord-of-mouth advertising and good public relations are often the best ways of promoting your business. Depending on your market and its size, also consider flyers, business cards, brochures, newspapers, radio, TV, the phone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Referrals are also a valuable way of making customers aware of your products or services. A Web site is also a good marketing tool. It should have details to describe the location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else you think may be of interest to potential customers. However, once you launch a Web site, you should update it on a regular basis. Participating in community events is another way of advertising your business. You may also hold events that will promote your business. No matter how you choose to market your business, it is wise to track how your clients became aware of your establishment - this may help determine your future advertising strategies. For more information: The Marketing Basics section of the Online Small Business Workshop covers the basics from developing your customer profile to promoting your business. For more information: The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act, which is administered by Industry Canada, defines which marketing practices are illegal and the process of complaint investigation. For more information: Market ResearchSuccessful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your potential clients and competitors is a critical first step in market investigation and development of a marketing plan. In developing a marketing plan, your primary functions are to understand the needs and desires of your clients, select or develop a service that will meet their needs, develop promotional material that will make them aware and ensure service delivery. For more information: Selecting Professional ServicesThe use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently. For further information: As an entrepreneur, there are four main areas of professional services with which you may consult:
Setting Up a Pay SystemPay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce work force turnover. For further information: Setting the right priceSetting the right price can influence the quantities of various items that consumers will buy, which in turn affects the total revenue and the profit in the store. In the end, the right price for the product is the price that the consumer is willing to pay for it. Hence, correct pricing decisions are a key to successful retail management. For further information: Basic BookkeepingA good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis. Note: All staff working with cash should be trained to recognize counterfeit currency. The legal requirement concerning financial records specify only that there be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available. For example:
For further information: Employing peopleWhat are the rules on working conditions in Ontario? For further information: Related LegislationEmployment Standards Acthttp://www.e-laws.gov.on.ca/DBLaws/Statutes/English/00e41_e.htm Choosing a LocationChoosing a location for your store may be your single most important decision. Do your research and in particular, consider these factors: Population - The Grocery Trade Association states that to sustain a convenience store, between 500 and 1 000 people must live within a 1.6 kilometre radius. If people have to travel more than this distance, they are more likely to go to a supermarket for a major shopping trip. Also check an area's future development plans and projected growth rates. Competition - Although a convenience store's competition is mostly from other convenience stores, it can also come from supermarkets. Study all competitors to see if the local market can support another operation. Traffic - Impulse purchases make up a good percentage of convenience store sales, so high volumes of pedestrian and vehicle traffic passing your store is critical. Try to locate near schools, parks, sporting facilities and other businesses to increase traffic. For further information: Selecting Your InventoryKeep ongoing, accurate inventory records in order to continually monitor the ratio between your stock and actual sales. This helps to minimize lost sales and money tied up in inventory, as well as determine the demand for different products. For example, a convenience store in a resort area will likely stock a more complete line of goods. Wherever your location, you must be able to estimate product demand. The Convenience Store Journal suggests a typical breakdown, however, your own mix will depend on your location and target market needs.
Suppliers
For further information: Packaging and LabellingBusinesses or individuals wishing to buy bulk foods for resale must comply with packaging and labelling regulations. These regulations are administered by the Canadian Food Inspection Agency (CFIA). For further information: Selling Lottery TicketsSelling Ontario Lottery Gaming Corporation (OLGC) tickets
For further information: Selling Break Open tickets - Alcohol and Gaming Commission of Ontario (AGCO) For further information: Selling Tobacco productsIn order to sell tobacco products, retailers are required to have a retail vendor permit by the Retail Sales Tax Branch . Ontario levies a direct tax on every consumer of tobacco products. Tobacco tax is collected by retailers from their customers and is remitted through their supplier. Retailers must ensure that they purchase tobacco products only from a wholesaler who has a valid wholesale dealer’s permit or from an importer who has a registration certificate, issued by the Motor Fuels and Tobacco Tax Branch. If a retailer is operating as an importer of tobacco products, the retailer must have an importer’s registration certificate issued by the Motor Fuels and Tobacco Tax Branch. The stocking or selling of cigarettes that do not bear an Ontario tax mark (yellow tear strip) is prohibited. Unauthorized possession of unmarked cigarettes may result in penalties, fines, imprisonment and forfeiture of the product. For further information: Additional Publications Tobacco Tax Legislation Tobacco Tax Act Retailers of tobacco products must also contact the municipality in which the business will be operating (refer to the Municipal Requirements to Start a Business section of this document). Tobacco Products - Related Regulations The Tobacco Act - Health Canada Cost ControlYou must have procedures for controlling inventory and costs. Ask people in your industry for information about procedures for: Purchasing - Most of the time, purchasing is done over the telephone, by fax, or online. Therefore, often no contract is signed between the purchaser and the supplier; it is essential that you choose your supplier carefully; Receiving - Check all deliveries against the Purchasing and Receiving Form, in three ways: quantity, price and quality (temperature); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences; Budgeting and Projecting - Establish a cash budget and maintain cash flow projections on a continual basis; Storage - Ensure refrigerated and frozen products are quickly placed in a cold storage. Storage temperature for dry goods should be between 10-21oC, frozen goods should be -18o C or less, and refrigerated goods. Rotate your stock to ensure that oldest items are used first before the new stock. Making a profit is the most important objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits you must raise revenues, lower expenses, or both. To make improvements you must know what's really going on financially at all times. For further information: Furnishings and EquipmentThere will be certain equipment and furniture you will need in your place of business which will allow you to perform your services. It is suggested to make a list of the required equipment and its cost to you. An important factor to consider, when choosing equipment, is the after-sales service and repair, and their affordability.
For further information: Personal Information Protection and Electronic Documents Act For further information: 7. AssociationsThere are many associations that may be of use to convenience store owners. Although it is not necessary to join a convenience store association, there can be advantages in becoming a member because they:
Examples of associations include, but are not limited to: Association of Convenience Store Managers (ACSM) Canadian Health Food Association Refreshments Canada (previously the Canadian Soft Drink Association) Ontario Convenience Stores Association NACS OnLine (previously C-Store Central) National Convenience Store Distributors Association (NACDA) Retail Merchants' Association of Canada (Ontario) Inc. For further information: 8. Resources and Web Sites of InterestAdditional resources which may help convenience store owners include, but are not limited to: Winning Retail is a self-assessment and instructional guide for independent retailers. Canadian Grocer Canadian Retailer - Retail Council of Canada Convenience Store Decisions Magazine Convenience Store News You may find books, magazines and other relevant print material at business service organizations in your community that provide COBSC information. Contact the COBSC at 1-800-567-2345 for the location nearest you. StatisticsRetail and Wholesale Sales -Statistics Canada Quarterly Retail Commodity Survey -Statistics Canada Average weekly earnings (including overtime) in the trade, transportation, storage, Web Sites of InterestCanadian Council of Grocery Distributors Canadian Federation of Independent Grocers Canadian Partnership for Consumer Food Safety Education Ontario Convenience Stores Association Index of Food Recall - Canadian Food Inspection Agency Canadian Convenience Store Expo
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