How to Start a Hardware Store Business in India

In India, the DIY and hardware business market is expected to grow at an annual rate of 1.98% (CAGR 2024-2028). With the innumerable number of construction projects popping up every day, India is a booming market for starting a hardware shop business. This is because there will always be a demand for hardware outlets and supplies. Despite the growing popularity of online shopping, this industry continues to thrive. In the case of hardware supplies, people prefer a hands-on, in-person shopping experience.

If you are thinking of starting a store of your own, below is a step-by-step hardware business guide to do so. It will walk you through making a comprehensive hardware shop business plan, how to source your products, set up your store, and promote it.

7 Steps to Start a Hardware Store Business in India

1. Determine Your Target Market

To give you a good starting point in creating a hardware store business plan, determine your target market. In a hardware shop business, the 2 most important customer types are professional contractors and local homeowners. Homeowners would require DIY tools and small equipment for day-to-day needs like screws, nails, paint, electrical supplies, etc. Professional contractors would seek more specialised products like industrial-grade tools and construction materials.

Decide which target market you wish to serve and accordingly create a customer profile. What are the product requirements and specifications of your ideal customer and what challenges do they face in acquiring those products? Having this information will be of immense help while planning out your inventory and marketing strategies. The better you know your customers, the more effectively you can serve them.

2. Develop a Business Plan

This step involves 3 things - research, budgeting and making business decisions for a solid hardware store business plan. Learn about your competition, industry trends and prices, and growth potential. Check crucial factors such as your initial operation costs and any legal considerations.

After thorough research, decide on your budget and financial plan. Accordingly, decide on a good location for your hardware shop business. Make a list of profitable and fast-moving hardware tools to sell but know your investment limit. Map out a business strategy, marketing strategy and operational plans. A strategic hardware shop business plan is one of the most important things to tend to before starting your business.

3. Decide Between a Hardware Shop and a Hardware Store Franchise

This is a good time to decide if you want to start an independent hardware business or go for a hardware store franchise. An independent outlet requires you to start everything from scratch. This includes establishing an operational model and supply chain, building a customer base, etc. However, it allows you to enjoy complete freedom in business decisions and enjoy maximum profits.

In a hardware store franchise, you incur higher costs because of ongoing franchise fees. But you can get an established hardware business model, brand recognition and a customer base. Weigh both their pros and cons and decide according to your hardware shop plan.

4. Obtain Necessary Licences and Permits

When your hardware business has all the necessary licences and permits, it helps you avoid fines, legal issues and potential disruptions. It is proof that you haven’t broken any of the government’s trade rules and also builds customer confidence.

You are required to obtain a retail store licence in most states. Each state may have different requirements for a shop and establishment licence. This may include business registration, sales tax permits and health and safety certifications. Check with your local authorities for accurate information and required documentation. Have all your licences and permits in place before the hardware store setup.

5. Source Your Products

To ensure the smooth functioning of your hardware business, it is important to manage your inventory well and source your products reliably. Establish relationships with reliable suppliers, wholesalers and distributors in your locality. Select a supplier who will be able to supply materials as quickly as possible and when required. This helps in inventory management. It is also important to source high-quality products at competitive prices to maintain a profit margin. Cracking the supplier code will help you substantially in your hardware store plan.

6. Set Up Your Hardware Store

The next step is to set up your hardware business in the desired location. Think of the layout, displays, sections for product categories, and necessary shelving and storage units. It is advisable to hire a designer as a well-thought-out hardware store blueprint can greatly influence customer experience. After completing your store setup, you’re good to go and start your business.

7. Promoting Your Hardware Shop Business

You have finished setting up your hardware business but don’t wait for customers to start walking in out of nowhere. Spread the word on your own. Hardware stores mostly cater to local customers so keep this in mind while promoting your business. You can advertise with the help of billboards, flyers and social media. You can also hire a salesperson to visit construction sites and advertise your hardware shop startup.

How a Business Loan Can Help Your Hardware Store Business in India

If you need funds for your hardware business ideas, considering a business loan would be a good idea. Here is why:

• Ample Funds: Depending on your eligibility and creditworthiness, you can get a substantial loan amount. This ensures you have adequate funds for your hardware store.
• Flexibility in Repayment: Business loans often come with flexible repayment plans so that you can fully focus on growing your business without straining cash flow.
• Collateral: Subject to lender policies, you may not pledge any personal or business assets as collateral up to a certain loan amount.
• Minimal Documentation: Business loans require minimal documentation making the application process quick and easy.

Conclusion

With adequate funds, the right business plan, product sourcing and promotion, you can have a solid hardware shop strategy. A business loan will help you have sufficient funds for everything required to set up a hardware store.

SMFG India Credit has collateral-free business loans up to INR 75 lakhs* with flexible repayment tenures between 12 to 48 months. Please note that our eligibility criteria require businesses to have been in operation for a minimum of 3 years. Feel free to get in touch with us to explore the best financing options for your needs or visit your nearest branch.