We have a request from one of our members who has just opened a tuckshop . She is looking for tips on how to successfully run her tuckshop since she is a first timer. In this part 1, we are going to look at strategic issues she needs to consider before plunging head on into the tuckshop business. In part 2, we will cover operational issues for consideration.
Our analysis is going to look at Macro Economic issues, Regulatory Environment and People. First we would like to congratulate her on the journey she has decided to embark upon. ZBIN will do its best to assist by providing business advice and mentorship, checklists and a lot of resources so as to assist her and others in the same boat.
Macro-Economic Issues
It is important to look at the performance of the Economy, for instance we are currently facing liquidity challenges and this has an impact on accessibility of capital and credit, the ability of customers to purchase goods and services. In investment one will however need to look at the long term horizon and see beyond current challenges. Understanding the current macro-economic conditions will help you to plan and make informed decisions. Look at opportunities presented by the imports ban and how it helps local businesses and then plan to take advantage. We recommend having a business plan to help you in the assessment of the macro-economic conditions and the opportunities and risks it poses to business.
Regulatory Environment
You will need all relevant permits in order to address your biggest risk. We have uploaded on our site a shop licence application form for your benefit. Download it from our site or alternatively visit the Harare City Council website www.hararecity.co.zw and check out the resources menu. If you do not have all the required permits then expect a lot of disturbances from Council Inspectors with some asking you to pull down your structure.
People: Competition
You have to do an analysis of the current level of competition. Who are your competitors? What is it that they are doing well? What needs to be improved or what is the gap? You are entering the field because you have identified a gap that needs to be filled. Do not simply dive into the business for the sake of it. You need to identify an opportunity and this becomes your competitive advantage. Is the nearby shopping centre located far away? Are there no current tuckshops in your area? If yes, are the tuckshops offering poor customer service? Or current tuckshops do not stock all food stuffs? A good analysis of the present competition should help inform your decision making. In business you have to compete and the higher the profits, the stiffer the competition. Even after establishment do expect to see more entrants into the field trying to get a piece of the profits.
People: Customers
I was surprised by the number of shoppers during the Easter Holidays, shops such as OK, TM and Choppies registered high sales. A look at their recent financial results do show increased business by retailers. When other business sectors are registered losses or a decline in profits for the retailers profits are on a northward trajectory…it is all good for this sector at least for now. So choosing to open a tuckshop is one of the wisest things one can ever do. Iam also finalising a personal venture of a retail shop and will share my results in the coming months. So when it comes to customers, one need not worry much-there is appetite to buy goods especially food and this is likely to remain in the medium term.
What is going to be crucial is how to manage customers-excellent customer care which is characterised by knowing what customers want, who are the customers, changing in tastes, times customers buy, handling complaints from customers as well as making customers happy. Exceptional customers result in profits…a happy customer means more business and more business is profit. You will need to analyse current customer services from your competition and come up with a plan that provides your tuckshop with a competitive advantage.
People: Suppliers
Your business plan should identify your key suppliers. You need to identify the goods that you would like to trade- goods in demand such as bread, milk and eggs. You need to establish who will be your key suppliers of the goods and establish good relations with them. As a first time operator you need to develop trust and this can only be done if you settle your accounts timeously. You will have to be innovative with procurements and establish close relations with suppliers who import goods but make sure that they are not smuggled goods.
People: Employees
Iam not sure whether you will be the person running the business or you will have to hire someone to run the tuckshop on your behalf. Whoever it is, this person is going to be the face of your tuckshop. This is the person who can make or break your business. It starts with customer service-the smiles to customers, integrity-the honesty even when customers forget change, the proactiveness in responding to customer needs. This person needs to have some training and also reviews because any lapse in concentration can result in loss of business to competitors. In our follow up article we will provide more resources and checklists on the management of this area. In your business plan you should also have included a budget of salaries and benefits for this person because if you do not pay your employees well, chances are high that they make resort to ‘paying themselves from the tuckshop coffers’.
So we have looked at some of the big issues to critically analyse before you plunge into this business. There are more areas we have left out such as the location and appearance of the tuckshop, day to day management or operational issues. We have left out latest trends in tuckshop management. We will cover all of these areas in our next article-the good thing is that there are no tuckshops that are closing in Harare and this confirms our view that the demand for food is high and will remain high in the foreseeable future.
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