How to Start a Convenience Store in Ontario

Table of Contents

Introduction
Getting Started
Regulations
Taxation
Financing
Managing Your Operation
Associations
Next Steps

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.

Getting Started

When you start a business there are several things to consider before you can sell your product or service. Most businesses in Ontario need to complete a minimum of three basic steps:

• Find out what licences and regulations apply to your type of business
• Choose a business structure and register or incorporate
• Determine if you will need to collect and remit HST

Our business start-up guide will give you more information on these steps and other basic requirements for starting a business in Ontario.

Read online:
Business Start-Up Guide

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:
Permits and Licences Wizard

Contact 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 and Labelling

Your local health unit is the main contact for information on food safety. Local health authorities are responsible for carrying out food service inspections.

You should contact your local health authority and arrange an inspection of the premises/equipment/and processes to make sure your business is complying with provincial and federal legislation.

The following link provides a list of contact information for local health authorities that perform inspections on restaurants and food businesses in Ontario.

Read online:
Local Public Health Contacts

In addition to contacting your local health unit, if you are involved in the production, service or processing of food products, you will need to comply with safety standards and labelling regulations from the Canadian Food Inspection Agency (CFIA) and the Ontario Ministry of Agriculture and Rural Affairs (OMAFRA).

Contact CFIA:
1-800-442-2342
Regulated products and sectors

Contact OMAFRA:
1-877-424-1300
Regulations for the food industry

Lottery Tickets

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

Find out what your responsibilities are for marketing, packaging or displaying tobacco products. You must also follow the regulations that apply to smoking in public places like offices, shops, or bars and restaurants.

Contact your local Public Health Unit: 
Public Health Unit Locations 
Smoke-Free Ontario – How the Act Affects You

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 that you may need.

Contact AMO:
1-877-426-6527
Association of Municipalities of Ontario

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

Music Licence

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.

Legal Questions

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

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 collect and remit the Harmonized Sales Tax (HST). Most businesses that make less than $30,000 in any 12 month period are not required to charge 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

Additional Tax requirements for convenience store owners in Ontario

Financing

Canada Business can help you find government financing options for your business. There are programs that apply to businesses across Canada, and others that apply only to businesses in Ontario. Use the Canada Business financing search tool or browse by type of financing.

You can also access Canada Business information through the ONe-Source online financing wizard. The wizard guides you through 3 easy steps to create a personalized list of results for Ontario business financing programs.

Search online:
Canada Business: Government Grants and Financing
ONe-Source Ontario Business Financing Guide

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

The Ontario Business Program Guide (OBPG)

You can find Ontario-specific assistance for your business including advice, financing options, tax incentive programs and more using the Ontario government’s free online directory of support programs for business.

The OBPG provides:

• An at-a-glance directory designed for quick and easy scanning
• Programs and services for Ontario businesses
• Basic information on programs as well as links you can follow for more detailed information

Search Online:
Ontario Business Program Guide

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 and 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 is 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 businesses that are closing or second-hand equipment stores. 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.

Read online:
Prices and Price Indexes

Associations

There are many associations that may be of interest to you. 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:

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

Additional resources that may be of interest to you include:

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.