STARTING A SPAZA SHOP OR A TUCKSHOP

Maybe someone is contemplating starting a spaza shop business. I hope this might help. If one is in South Africa, local authorities are very accommodating of small businesses, you can open a shop from the boundary wall of your house in the township and trade without much hinderance from authorities. From 2011 to 2012 during the US$ era we operated a tuckshop at our house in Zimre Park just outside Harare, Zimbabwe. Though it was very profitable unfortunately we had so many problems with our local authority. My wife and I we alternated visiting Zimbabwe frequently to manage the tuckshop.

CUSTOMER SERVICE

I was fortunate that my uncle and my cousins have been in retail industry for many years. I learnt that you need to listen to the customers. You stock products that customers prefer and not what you like. If you listen to your customers you see the stock flying off the shelf and increasing your profits. It’s alway important to treat customers with respect. I remember in the 80s during school holidays whenever I went to our village in Murehwa we would visit the store at the neighboring white commercial farm Paradise Farm which is in Virginia, Macheke to sell vegetables to farm workers and to crush our maize at the grinding mill owned by the farmer because that was the nearest place with electricity. We would visit the farm store to buy cool drinks etc. The store keeper was always rude to us. In 2001 during land reform, I took over that shop and ran it until 2003. All in all I operated 4 shops in Macheke former commercial farming areas until early 2008.

FINANCE

Starting a tuckshop you don’t need a lot of capital, you can start by buying stock that can last you say three days and once it’s finished you can go and replenish the stock. With the profit you get, you can reinvest into the business and eventually you can buy more stock that can last longer and a variety of stock. You need to build a shop that is strong and use part of your boundary wall as part of the shop. As a precaution, you only put a very few stock items on display in the tuckshop and lock away the rest safely in the main house.

In urban areas bakeries can deliver bread to your shop early in the morning and later in the afternoon they will come and collect their money. In practice they will be giving your short term finance. In our tuckshop in Zimre Park, three major bakeries in Harare competed delivering bread to us, obviously you have to listen to your customers as to which brand they preferred. You can also get short term finances from other small businesses eg people keeping layer chicken can supply you with eggs periodically on short term credit.

COSTS CONTAINMENT

For me this was the biggest issue, managing your costs in business is the one thing that is entirely within your control. Like any business, you need to lower your costs as much as possible and one skill, I learnt is to know prices very well, you must make it a point to keep abreast of pricing. When you buy your stock, you need to look for the lowest prices possible. I was never loyal to one wholesaler. At times I would buy stock in major supermarkets because at times because they would have the lowest prices. Because the lower the price you obtain the stock, the higher is your profit. It can also allow you to manage your competition better. I ran general dealer shops in rural areas in Zimbabwe from 2001 to 2008. For years it was a norm that bread in rural areas would be more expensive in rural areas. I managed to buy bread at a bakery at Makoni, Chitungwiza and sell it in Macheke and Mutoko at the same price that it was being sold in urban areas. During Christmas Day of 2004, we made two trips to supply almost 100 dozens of bread and still made a profit on bread alone.

The round trip from Harare to my shop was 300kms. At that time I had not read for my accounting degree but I was able to realise that I needed to open more than one shop along the way so that I could lower my distribution costs. By 2005 I had 10 shops along the way. I ended up going to the shops three times a week because my costs were much lower. My goal was always to sell my stock at the same price as shops in Harare. By 2006 I was traveling to as far as Gaborone, Botswana, Musina and Johannesburg monthly to buy stock.

INSURANCE
With the high levels of crime in South Africa it is essential to get insurance for your business. The major risks involves the handling of cash, handling cigarettes and airtime vouchers. With the high incidents of service delivery protests and other community protests you definitely need that cover provided by SASRIA, you need to talk to your insurance broker around a suitable cover for you. You should also consider buying a swiping machine after consulting with your bank to minimize the risks that come with handling cash. Also on airtime you can also an electronic airtime dispensing machine to manage the theft risk as well. Don’t forget to insure these machines as well.

EXPANSION
By operating a retail shop it can allow you to expand into other related businesses eg opening Spathlo business etc.

I welcome any comments, questions or suggestions🙏🏿