How to Start a Convenience Store in Ontario

TABLE OF CONTENTS

1. Introduction
2. Basics To Getting Started
3. Regulations
4. Taxation
5. Financing
6. Managing Your Operation
7. Associations
8. Next Steps

1. INTRODUCTION

A convenience store (sometimes called a variety store, corner store, or dépanneur) is usually a small store or shop that sells items such as snack foods, lottery tickets, tobacco products, newspapers and magazines. Many convenience stores also combine their services with a gas station, movie rentals, or a fast food outlet. 

This guide focuses on operating an independent store. For more information about buying a franchise, visit The Canadian Franchise Association website or call them at 1-800-665-4232.

2. BASICS TO GETTING STARTED

Before starting a business in Ontario, there are several issues to consider, such as regulations, financing, and taxation. Read our start-up guide to learn the basics.

Read online:
Business Start-Up Guide

3. REGULATIONS

Your business may need licences and permits from the federal, provincial, and municipal levels of government.

In addition to the information you will find in this guide, you can use BizPaL—an online search tool—to find licences and regulations that may affect your business. You can also contact the Business Info Line to speak to someone about starting your business.

Use online:
BizPaL

Contact us through the Business Info Line:
1-888-745-8888

Some common licences, permits and regulations that may apply to starting your convenience store include:

Food Safety/Labelling

• Canadian Food Inspection Agency (CFIA)
  The CFIA website has information about food safety and labelling regulations.
  
  Contact the CFIA:
  1-800-442-2342
  Retail Food

• Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA)
  The OMAFRA website has information on food safety and your legal responsibilities if you are planning on selling prepared and non-prepared foods.
  
  Contact OMAFRA:
  1-888-466-2372
  Regulations for the Food Industry

• The Ministry of Health and Long-Term Care
  The Ministry of Health and Long-Term Care publications on Food Safety cover everything from food preparation to information about food borne diseases. The website also has additional information on health issues, locations of Public Health Units, and publications on water safety.
  
  Contact the Ministry of Health and Long-Term Care:
  1-866-532-3161
  Food Safety

Selling Lottery Tickets

• Selling Ontario Lottery and Gaming Corporation (OLG) Products
  If you plan on selling lottery products on behalf of the Ontario Lottery and Gaming Corporation (OLG), you must be registered with the AGCO.
  
  Contact AGCO:
  1-800-522-2876
  Lottery Retailer

• Selling Break Open tickets
  A licence is required from the Alcohol and Gaming Commission of Ontario (AGCO) in order to sell Break Open tickets.
  
  Contact AGCO:
  1-800-522-2876
  AGCO - Break Open Ticket

Selling Tobacco Products

• Tobacco Retail Dealer's Permit
  In order to sell tobacco products, you are required to have a Tobacco Retail Dealer's Permit. If you plan on importing tobacco products, you will also need an importer's registration certificate.
  
  Stocking or selling cigarettes that do not have 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.
  
  Contact the Ministry of Revenue:
  1-866-ONT-TAXS (1-866-668-8297)
  Tobacco Retail Dealer's Permit
  If You Sell Tobacco - What Retailers Need To Know About Ontario's Tobacco Tax Rules

• Smoke-Free Ontario
  The Smoke-Free Ontario regulations prohibit smoking in all enclosed workplaces and public places. Learn how the Smoke-Free Ontario Act will apply to your business.
  
  Read online:
  How the Act Affects You: Retailers
   
• Tobacco Sales
  The manufacture, sale, labelling and promotion of tobacco products is regulated in Canada. Find out what regulations will affect your business if you sell tobacco products.
  
  Read Online:
  Tobacco: Federal Regulations

If you sell tobacco products, you should also contact the municipality where the business will be operating for any local licences or permits you may need.

Contact AMO:
1-877-426-6527
AMO - Ontario Municipal Home Pages

Video/Music Licenses

When your business rents, sells, or distributes videos, you are responsible for obtaining the right licence(s) to provide that service.

• Video/Film Licensing
  Businesses selling or renting videos directly to the public (including through vending machines) require a Film Exchange Retail Licence. If you are distributing videos to other retailers you will also need a Distributor's Licence.
  
  Contact the Ministry of Government Services:
  1-800-268-6024
  Theatres Regulation Unit

When your business uses recorded music, you are responsible for obtaining the right licence(s) for that use. The Copyright Board of Canada works with individual copyright collective societies who provide music licensing. Contact the following two organizations for more information.

• Society of Composers, Authors and Music Publishers of Canada (SOCAN) - Music Licence
  SOCAN is a not-for-profit organization that represents the performance rights of music creators and music publishers. They can help you learn about your obligations and obtaining the required license(s).
  
  Contact SOCAN:
  1-800-557-6226
  Society of Composers, Authors and Music Publishers of Canada (SOCAN)
   
• Re:Sound Music Licensing Company
  Re:Sound is the Canadian not-for-profit organization that represents the performance rights of artists and record companies, and provides the legally required license(s) for businesses. You can get help determining what licence(s) will be required, what the licensing process will be and how much it will cost.
  
  Contact Re:Sound:
  1-877-309-5770
  Re:Sound

If you have legal questions, contact a lawyer who deals with business regulations. The Law Society of Upper Canada's Lawyer Referral Service may be able to assist you in finding a lawyer, based on your needs.

Contact the Law Society of Upper Canada:
1-800-268-8326
Law Society of Upper Canada's Lawyer Referral Service  

4. TAXATION

Depending on your location and the type of products or services being offered, federal, provincial and/or municipal business taxes may apply.

Read online:
Taxation Guide

If you sell goods and services in Ontario, you may need a business number to charge, collect and remit the Harmonized Sales Tax (HST). Most businesses that make less than $30,000 in any 12 month period are not be required to register for HST; however, you can register voluntarily and claim input tax credits. Speak with the Canada Revenue Agency (CRA) for more information.

Contact CRA:
1-800-959-5525
Canada Revenue Agency – Business
Information on Registering Your GST/HST Account 
Business Number (BN) Registration

Additional Tax requirements for convenience store owners in Ontario

• Overview of Tobacco Tax
  In addition to general information, you can find information on specific registrations, reporting, remitting and record-keeping requirements for Ontario's tobacco tax.
  
  Contact the Ministry of Revenue:
  1-866-ONT-TAXS (1-866-668-8297)
  Tobacco Tax

5. FINANCING

There are many different ways to finance your business. Canada Business can help you find government financing that is available for starting a business.

Search online:
Find Government Grants, Loans and Financing

Contact the Business Info Line:
1-888-745-8888

6. MANAGING YOUR OPERATION

The success of any business starts by setting goals and managing the ups and downs of daily operations. Here are some key factors to consider when starting a convenience store:

Insurance

Having the correct business insurance can provide peace of mind. Contact an insurance agent to discuss your business insurance options, or to develop a plan that is right for your business.

You may also wish to contact your local chamber of commerce or industry association, as some organizations offer members lower rates on their business insurance.

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:

• Fire insurance (extended coverage on buildings and contents)
• Liability insurance
• Burglary protection (theft coverage)
• Dishonesty insurance (covers thefts by employees)

Read online:
Insurance for your Small Business

Marketing/Advertising

Marketing can help you determine the value of your product or service and communicate that information to customers. Depending on your market and its size, you can consider using flyers, business cards, brochures, newspapers, radio, TV, the phone book or the Internet. Keep in mind, a satisfied customer or a positive referral is often the best form of advertising.

Read online: 
Developing a Marketing Plan
Marketing and Sales

When preparing your marketing and/or advertising material, there are regulations to follow. When you promote a product or service, your customers need to have enough information to make informed choices. You can get more information on advertising requirements from the Competition Bureau.

Contact the Competition Bureau:
1-800-348-5358
Misleading Advertising and Labelling

Setting the Right Price

Setting the right price is important in ensuring the success of your business. Here are a few questions you may want to consider:

• What is the current price for your range of services in the industry?
• What is your competition charging?
• What is the total cost of running your business?
• What is the minimum acceptable profit you need to generate from your business?

When determining your fees, make sure you include the cost of your labour, the overhead, and the expenses that will be incurred.

In the end, the right price for the service is the price that the consumer is willing to pay. Correct pricing decisions are often key to successful business management.

Read online:
Pricing

Negotiations

Negotiating is part of doing business. You negotiate with suppliers, distributors and customers. Good negotiations can lead to prosperity, while bad negotiations can damage your business profitability. Before you start your business you may want to learn about negotiating.

Read online:
Negotiations

Professional Services

The use of business support services can be essential to the success of a small business. Professionals can provide knowledge and expertise to ensure your business is operating efficiently.

As an entrepreneur, there are several types of professional business services you can consult:

• Lawyers
• Real estate agents
• Insurance brokers
• Bookkeepers
• Accountants

Choosing a Location

For most businesses, choosing an appropriate location is critical. Your ideal location will depend on your business needs, zoning restrictions, and where your customers and competitors are. Taxes, noise and the local business environment are also important factors to consider when reviewing your options.

Do your research and consider these factors:

• Population - It is important to choose a location with a large enough population nearby to support your business. If people have to travel a longer distance, they are more likely to go to a major supermarket for a shopping trip. It is also a good idea to look into an area's future development plans and projected population growth.

• Competition - Although a convenience store's competition is mostly from other convenience stores, it can also come from supermarkets. Check the local market you're considering to see if it 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.

Read online:
Choosing and Setting up a Location

Furnishings and Equipment

Your business will need equipment and furniture, and it's important to decide what you need and how much you want to spend.  Some common ways to save money on furnishings and equipment are:

• Buying used equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be a convenience store that is closing or a second-hand equipment store. Keep in mind the cost of maintenance and repair in the overall costs when buying used equipment.

• Leasing equipment - Another alternative is to lease equipment to help keep start-up costs down. If you choose to lease equipment remember to include interest in your overall cost.

Selecting Your Inventory

Keeping accurate records will help you keep track of your inventory, as well as to determine the demand for different products. Your mix of products will depend on your location and target market needs.

Remember to keep your customer in mind when selecting products. For example, a convenience store in a resort area would stock a different line of goods than a local corner shop.

Read online:
Inventory Management

Suppliers

The supplies you rely on to run your business need to be managed efficiently. The following are some of the most common types of suppliers:

• General line wholesalers - Cooperatives of independent store owners purchase in groups to gain volume discounts. Approximately 25% of Canadian grocery stores belong to such cooperatives which give advice in merchandising, management and finance.

• Specialty wholesalers - Bakeries, delis and produce suppliers may offer lower prices than general line wholesalers. They may also stock shelves and help you estimate demand.

• Service merchandisers - Non-food items, such as health/beauty aids, house wares and magazines are sold by service merchandisers. They can also deliver, stock shelves, price items and help estimate demand.

Read online:
Finding and Managing Suppliers

Cost Control

You 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; 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 cold storage. Storage temperature for dry goods should be between 10-21°C, frozen goods should be -18°C or less, and refrigerated goods should be stored at 4°C. Rotate your stock to ensure that oldest items are used first before the new stock.

• Setting the right price - Setting 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. Making correct pricing decisions is the key to successful retail management.

Read online:
Prices and Price Indexes

7. ASSOCIATIONS

There are many associations that may be of interest to a convenience store business. It is not necessary to join an association, but some of the advantages include:

• Promoting and exchanging marketing and promotional ideas among members
• Establishing and encouraging high standards of quality and professionalism

An example of an association for a convenience store is:

• Retail Council of Canada (RCC)
  The RCC is a not-for-profit, industry-funded association representing more than 43,000 store fronts of all retail formats across Canada, including department, specialty, discount, and independent stores, and online merchants. They provide resources for training, host events, and act as an advocacy group on behalf on Canadian retail merchants.
  
  Contact the Retail Council of Canada:
  1-888-373-8245
  Retail Council of Canada

8. NEXT STEPS

For other information that relates to starting your business, you can read the following guides:

• Business Planning
• Market Research and Statistics
• Starting Your Business
• Grants and Financing
• Taxation Guide
• Employment Regulations Guide: Hiring

Statistics: Retail Sales (Statistics Canada)

• Retail Trade
• Quarterly Retail Commodity Survey

Websites of Interest

• Canadian Federation of Independent Grocers
• Canadian Partnership for Consumer Food Safety Education
• Food Recalls and Allergy Alerts

You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Canada Business Ontario (CBO) community partner, contact us through the Business Info Line at 1-888-745-8888.

Need more information?

Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you

DISCLAIMERS

Information contained in this document is of a general nature only and is not intended to constitute advice for any specific situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Some of the organizations listed above 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.