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Buying a convenience store

Interview with...

Bruce Nethersole
Age:
39
CV:
Serial entrepreneur, from pubs to safari tours
Business name:
---
Goods/services:
Grocery/convenience store
Location:
Stoke-on-Trent
When bought:
Six months ago
Price paid:
£230,000 plus stock
1

"My wife, two kids and I landed here with a suitcase each," recalls Bruce Nethersole, a serial entrepreneur who emigrated from Zimbabwe because of its turbulent political and economic situation.

"We used to have a 10-bedroom house in Victoria Falls and a five-bedroom one in Bulawayo. Then we had to start all over again."

Bruce had to make some uncomfortable adjustments to his work life as well as his lifestyle. Before buying a convenience store in Stoke-on-Trent in December 2006, he worked for a Derby company helping to develop an international market for diamond blades.

Post offices were too formal for us because of all the rules, though we'd still like to do it one day

Bruce Nethersole, serial entrepreneur

Working for someone else was hard to handle for someone who has run businesses for almost two decades, setting up his first - a company organising safari tours - when he was just 19. Bruce, now 39, has run pubs, restaurants, a butchers', a shop selling African artefacts and various other ventures.

Regulatory burden

After all that, a convenience store might have seemed eminently manageable. However, it was the first UK business he had bought and that posed its own challenges.

"Zimbabwean law is based on English law," says Bruce. "But you have to be more organised here. The process is more rigid and there's more information." "More organised" is ambiguous, denoting greater efficiency but also more red tape.

It was because of the extra regulatory burden that Bruce and his wife opted against buying a post office, something they had initially considered. "Post offices were too formal for us because of all the rules, though we'd still like to do it one day."

Along with red tape, expensive overheads are the other great gripe of British entrepreneurs. But Bruce and his wife, who is English and from Doncaster, would have found any western European country expensive coming from Africa.

"We had a lot of employees before, which didn't cost a lot out in Zimbabwe. Now it's a little bit harder."

Word of mouth is less important to the popularity of a convenience store than it is to other businesses. People use them principally for, well, convenience.

They rely on passing trade and the regular custom of local residents. Bruce understood that location is everything when he bought his business.

Potential

"Our location is residential. In terms of through traffic it's good, as we are next to a busy shortcut which cuts from the A50 to the city centre. If the A50 is blocked up people use this way to get through to the city."

Bruce was commendably thorough in his assessment of the potential for custom. "I sat outside monitoring traffic so I could get an idea of whether there was decent potential in this. I sat out watching the traffic from 5am to 10pm - one, to see how much traffic goes past, and two, to see what trade goes through the door. But mainly to see the potential."

Bruce was satisfied, even though there was a large Tesco supermarket opposite.

But then again, convenience stores thrive in the shadows of supermarkets up and down the country. Indeed, if you want a convenience store in a busy location you're unlikely to be far from one.

Bruce accepts it is difficult to compete on price, "but people do use us more for convenience if they forget one item in their main shop."

A sizeable part of the shop's revenues come from newspapers and magazines, and particularly the delivery of newspapers, a service which Tesco - touch wood - doesn't yet provide.

"We deliver a lot of newspapers, with 19 delivery rounds, so we have quite a good customer base," says Bruce. "The store has a reputation for its huge range of magazines."

Confident he has a good base to build from, Bruce can see plenty of ways to boost custom.

 

"I see a potential in doing food to get passing traffic. You get about 300 cars an hour going past during the day. The trick is to try and stop some of that traffic, and one way to do that is to offer food on a larger scale.

"There's talk of a new development coming up round here, which would also mean a lot of tradesmen stopping here for drinks and food."

Stock

Bruce and his wife are already overhauling the store.

"We are revamping part of the shop as we get time. There used to be a lot of model trains and model cars, which we're replacing with groceries.

"There was already an off-licence here, but we're trying to grow that side of the business." Bruce concedes that "because of Tesco across the way it doesn't get extra busy, but it can increase our turnover."

There is a second part to Bruce's strategy: it's not just about what you sell, but how the shop is laid out, too.

"When we took over it was quite cluttered. We had comments from people saying they didn't know how big it was.

"We had one guy yesterday, he'd been coming in for 15 years and didn't even realise we sold greeting cards. As you come through the front door the newspapers were just on the left, and a lot of the traffic would go to the newspapers and then straight to the till.

"So we put the papers further into the shop to get people looking around more. It has increased sales of other items."

Now Bruce is turning his attention to the exterior.

"The shop's looking better. We need to fix the outside because the inside is almost where we want it now. We want to get some new signwriting and advertising boards to let people know it's changed."

Dead space

Bruce says he was "happy" with the price he paid - £230,000 plus stock - for a store whose untapped potential could be realised with an inexpensive stock change and reorganisation, and maximising the available space in the property.

"It was about 1,100sq ft of shop space. It's quite big, so I think we had a fair deal.

"The shop itself used to be two houses and two shops, which is now broken into a downstairs shop and an upstairs house. Because it was originally two houses there's obviously a kitchen and bathroom either side of the shop, although we now use them as storerooms.

"At some point we'd like to use those areas to open up the shop more and give us more space. I've already put an extension on the front so it is a little bit bigger than the original two shops."

Though the price for the store, which he found through BusinessesForSale.com, was reasonable, Bruce was less enamoured with the settlement for its contents.

"The one problem was the stock value we were given by the previous owner: it was roughly half of what we ended up having to pay when we got the auditors in. So instead of £15k to £17k, as expected, we had to pay £32k.

"That's what threw us out the most, putting us under extra pressure. Now we can't really grow as we expected to.

"If I was going through the process again, I would definitely tie something down on that stock value beforehand, or get the seller to agree to a ceiling."

Long hours

For the moment, Bruce and his wife are working flat out to make a success of the current shop. Does he intend to hire extra staff?

"Definitely. We battle with the hours - we're open 5am till 10pm, seven days a week, so we can't keep that up."

Despite working flat out, Bruce takes care to avoid being bogged down entirely by day-to-day tasks. As well as thinking about what he can do to boost revenues in the here and now, he also keeps one eye on the future.

"The next step for me is to go for more businesses. I wouldn't mind four or five of these. I'm interested in venturing into a lot of things. I want to get involved in property as well."

Now settled in the UK with the shop developing well, and with plans to buy more businesses down the line, does Bruce still miss Zimbabwe?

"Very much so. I was born there, spent my whole life out there. It's a lot different to here, with big, open spaces. We could do what we wanted out there - we had a really good life."

But with inflation now having passed 100,000%, Bruce knows he made the right decision.

Find the right location, one with minimal competition, and it's highly unlikely you'll be short of custom for fags, mags and groceries. You could be forgiven for thinking that at this point it's job done, that there's little else a convenience store owner can do to influence his fortunes.

Not necessarily. Only a few months into ownership, Bruce Nethersole is showing how an overhaul of stock and attending to the science of shop layout can make a real difference to revenues.

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