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How to set-up a refrigeration store

The increase in urban population and demands of modern life are factors that contribute to refrigeration market growth. Along with the new consumption behavior, we also notice an expansion in the commercial refrigeration market. The number of establishments like bars, restaurants, bakeries, ice cream parlors, supermarkets, etc is constantly increasing. These places need freezers, beverage displays, counters and other commercial refrigeration equipment. According to a Transparency Market Research study, the global market for commercial refrigeration equipment will grow 60% between 2012 and 2018.

In reviewing the above data, we noticed that they open up opportunities for a broad service market. It’s possible to work as a contractor and learn how to become a contractor) and with the spare parts market for refrigeration equipment.

If you already work in the refrigeration field or have affinity with the issues related to refrigeration, opening a store can be a path to be pursued. The store will sell parts for refrigeration equipment, such as, for example, air conditioners, refrigerators, freezers, beverage exhibitors, commercial counters, among others.

Own Business: make your decision

When thinking about having your own business, you should do it with an entrepreneurial spirit, with a great desire to make it happen and to innovate. But it takes more than just willingness. The success factor is related to good planning.

Therefore, it’s necessary to visualize the market opportunities and threats, analyze the competition as well as set goals.

Lair Francisco Assis Gusmã is the owner of Refrigás, one of the largest home appliance parts stores in the interior of São Paulo, founded in 1989. The entrepreneur says that market analysis helped him to detect the region’s need to have another company that specializes in trading white good, washing machine and refrigerator parts.

While doing this analysis try to answer the following questions:

  • Are there refrigeration stores located in your city?
  • What’s the quality of the parts being sold?
  • How are the prices and payment terms?
  • How is the service and store space?
  • How does the warrantee system along with replacement and delivery lead-time work?

These answers will help better understand the local market, foreseeing possible future difficulties, such as fierce price competition, for example. All possibilities of your business not succeeding are threats that must be taken into account.

Besides the difficulties, you will also be able to foresee growth opportunities in the market and customer needs that are not being met. In Lair’s case, for example, this analysis helped him identify the weaknesses of the competition, which helped him understand how to work differently in the market.

At the end of this analysis, you can weigh up the pros and cons. But, before making your final decision about opening your own business, develop a Business Plan. It’ll bring even more clarifying and decisive answers.  

Developing a Business Plan

The next step is one of the most important: developing a business plan. This is a document that describes the objectives of a business and the steps to be followed to achieve these goals, reducing risks and uncertainties. The market insertion strategy is one of the most important and critical tasks of this planning.

The plan will help bring more detailed information about your business such as a description of the products that you’ll be offering, your customers’ profile, future suppliers, competitors’ characteristics, weak and strong points as well as the differentials of your future undertaking.

For Lair of Refrigás it was no different. He made a plan, doing research with consumers and an analysis of the competition. “That was how I detected a deficiency and many gaps in the regional service of this niche market”, he explains. This step was very important for him to know what the market really needed. With his experience, he also advises to calculate the profitability to be obtained, the return on investment, as well as the pay-back period of the amount invested.

Understand that preparing a Business Plan is the first challenge of this new journey. It will be a task that requires time, dedication, research and commitment. But the benefits are so many that in the end you’ll see that all the effort was worthwhile.

Investment

The Investment will be all the capital required to initiate and continue in business until it can stand on its own. We can separate into:

Fixed Investment

Fixed investment is expenditures for material goods to open your store. In order to calculate this, estimate the value of:

  • furnishings;
  • building;
  • equipment and utensils for the store;
  • vehicles;
  • signs and signboards.
Pre-operational investments:

These are the expenditures incurred before the store opens its doors and starts selling. They may include:

  • Remodeling;
  • Training employees;
  • Registration and legalization expenses;
  • Divulging the new store.
Working Capital

It’s the monetary value needed to support all the company’s costs and expenses during its operation. Working capital will always be necessary, even after your business is a success. These include:

  • Investment in inventory;
  • Cash;
  • Salary payments;
  • Fees;
  • Accountant fees;
  • Rent;
  • Other operating expenses.  

Sales cycle: preparing to open the doors

To start-off your business, it’s important that you understand how the sales cycle works in its entirety. We can separate it into five major steps: purchasing, storage, sales, delivery and after-sales.

1 – Purchasing

Purchasing goods must be done very carefully, especially at the beginning of the activities. Get to know the market well in order to know which products have the best cost-benefit.

Avoid buying large quantities of products that don’t have a quick turnover. They will be invested values that will take time to turn a profit, besides taking up space in your inventory. Previous experience as a contractor will facilitate this step!

2 – Storage

Where will your inventory be located? How will it be organized? How will the input and output flow be controlled? Answers to these questions will make the process easier and guarantee speed at the time of sale. Have a designated space for the inventory that is well organized and provides convenience to the day-to-day.

3 – Sales

This is the business’ main objective. It consists of attending customers and providing the goods they need. Always seek to understand your customer and train yourself to be an excellent salesperson.

4 – Delivering Merchandise

This step consists of arranging delivery of the purchased product, on time and within the pre-agreed conditions. The delivery method will depend on the quantity and volume of goods purchased.

5 – After-sales

In this step we seek customer loyalty, in order to maintain the longevity of the business. Several actions can be carried out, such as satisfaction surveys, maintenance services, special promotions and other forms of services.

After opening the doors

After opening the doors, you can face new challenges. Lair says that initially, due to the total lack of resources, he needed to sell the car he had at the time to then be able to invest in inventory for the company. “Afterwards I faced immense competition that had more experience and market knowledge. A little later on, an electrical blackout occurred where several companies of our segment ended up closing due to lack of sales. To this day, I face the daily struggle to survive in a market with strong competition and extreme volatility”, he reveals. Yet even with all these adversities.

Lair excelled as an entrepreneur and his company, which started with two employees, now serves all western São Paulo, with four stores and 74 employees. To get to this point, Lair had to be very careful and attentive in all decisions he made. “In my company we’re very discerning and, as far as possible, we always try to innovate”, he states.

Therefore, besides having a well structured business plan, on opening your business, develop a good plan to divulge your business. You can invest in traditional media such as printed newspapers, radio, pamphlets. In this regard, investing in Digital Marketing can be a differentiator for your business! Check out our tips on the subject.

Besides this, always seek to be up-to-date with market innovations by reading the segment’s magazines and websites. Join the Club Refrigeration and always receive news about the refrigeration market.

And remember: when taking any step, do it carefully and with planning, always consider the risks and opportunities generated by your decisions.

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