business ideas: Specialized Knife Store Business Plan

* The calculations use the average data for the World

1. Summary of the project

The purpose of the project is the opening of a specialized store for the retail sale of household, tourist, cutting and other types of knives and accessories for them and profit. In the store planned for opening, knives that are not related to cold steel will be presented, and their sale will not be subject to licensing.

The essence of the idea is to create a multi-brand format retail outlet, where knives from both domestic and foreign manufacturers will be presented. In view of the narrow specialization of the store, the main emphasis will be placed on the breadth of the assortment. In the store you can find both inexpensive Chinese-made knives for any occasion, as well as expensive collection knives. In addition to the sale of knives and accessories, the store will provide services for professional sharpening of knives. The target audience of the project will be men over the age of 23: hunters, fishers, tourists, survivors, and “knife-hunters” of all stripes.

Investments in the opening of the store - 1, 785, 000 rubles. Own funds will be used to launch the project. The stage of preparation for the start of sales will be 3 months, including repair and equipment of the premises, staff recruitment, and the formation of the starting assortment. This business plan is relevant for cities with a population of more than 500 thousand people.

Key financial indicators of the project
Discount rate, %	17
Net present value (NPV), rub.	2 312 964
Project net profit, rub.	50, 000 - 200, 000
Return on sales, %	5.71
Payback period (PP), months	24
Discount payback period (DPP), months	29th
Profitability Index (PI)%	1.3

2. Description of the industry and company

The history of the knife in Russia is rooted in the deep past. Situated between East and West, combining many peoples and climatic zones on the same territory, Russia has seen thousands of knives with various design features. In Russia, there were both national knives, for example, a field, waist, and side knives, as well as a large number of knives of other nations. The development of new territories or the establishment of close ties with them, contributed to the emergence of new types of knives. With the conquest of the Caucasus, a fashion for Caucasian weapons began, hunting daggers and folding knives came from Europe. The most famous centers for the production of knives were Zlatoust, Tula, Vorsma, Fiskars. In Soviet times, knife culture experienced a tremendous decline. The production of knives curtailed in the 30s of the last century. In the USSR, strict laws were in place that limited the carrying of cold steel, as a result of which the industry was completely degraded. Only insignificant shops of consumer goods remained at enterprises engaged in the production of metal products. Only in 1992 did the adopted law “On Weapons” soften the possibilities of acquiring high-quality cold steel. In the absence of domestic production, a flood of cheap Chinese products poured into the country, as well as modern folding knives made in America and Europe. A breakthrough in the world market of knives in terms of innovation and design is associated with the activities of the American company Spyderco, which has patents for a hole in the blade, a clip holder and a serrated sharpening of the blade. Gradually, the domestic knife industry began to revive. Products not inferior in quality to foreign firms are now produced in various cities and regions of the country (in Kizlyar, Moscow, Zlatoust, Nizhny Novgorod region, Tula, Izhevsk, Uglich, Volgograd, etc.).

The purpose of this project is to open a specialized store for the retail sale of household, tourist, cutting and other types of knives and accessories for them and profit. In the store planned for opening, knives that are not related to cold steel will be presented, and their sale will not be subject to licensing.

The store will be a small outlet in a multi-brand format, where knives from both domestic and foreign manufacturers will be presented. In view of the narrow specialization of the store, the main emphasis will be placed on the breadth of the assortment. In the store you can find both inexpensive Chinese-made knives for any occasion, as well as expensive collection knives. In addition to the sale of knives and accessories, the store will provide services for professional sharpening of knives. The target audience of the project will be men over the age of 23: hunters, fishers, tourists, survivors, and “knife-hunters” of all stripes. Since knives are small-sized goods, an area of 30 square meters will be sufficient for the store meters.

Activity will be registered as an individual entrepreneur. The taxation system is simplified (“income minus expenses 15%”). The store manager will be an individual entrepreneur, under whose supervision there will be sales personnel (sales consultants).

3.Description of goods

The assortment of the store is planned to include domestic and foreign products, including knives made of steel, damask steel, damask steel, forged steel, ceramic knives. The product matrix will be based on knives of three categories: cheap Chinese-made knives, which are in great demand, as well as domestic and branded knives of the lower, middle and premium segments. Also in the store it will be possible to purchase accessories and items for knife care and sharpening (for more details, see Table 3). In the process of development, the assortment can be expanded to include other products (pneumatics, crossbows, etc.). In addition, store customers will be able to use the services of sharpening, regrinding and finishing knives.

Table 1. List of goods

No.	Name	Description		Cost, rub.
Chinese knives
one	Clumsy knives		Machete, throwing knives, carving knives, souvenir knives, tourist knives	150-2000
2	Folding knives		Trinket knives, card knives, tourist knives	120-1900
3	Flip knives		Knives with automatic blade extraction (tourist knives)	150-700
four	Butterfly knives		Knives with dynamic blade extraction (tourist knives)	250-600
Russian knives
five	Clumsy knives		Designer knives, daggers, throwing knives, hunting knives, carving knives, fishing knives, souvenir knives, tourist knives, machetes,	250-40000
6	Folding knives		Tourist knives	1500-5000
7	Butterfly knives		Knives with automatic blade removal	1000-1500
eight	Kitchen knives		Universal kitchen, cook knives, pchek, fillet knives	200-8500
Brand knives
9	Brand knives		Folding, awkward, folding knives of foreign brands	400-26000
ten	Brand machetes		Machete foreign brands	2200-5500
eleven	Kukri		Kukri knives	5000-11000
12	Kitchen knives		Kitchen universal knives, potato peeling knives	150-6800
Other types of knives and other products
13	Collectible copyright products		Checkers, sabers, daggers, scimitars	3500-35000
14	Multifunction knives		Multi-tools, multi-function knives, survival knives	200-17000
15	Knife Sets		Sets of hunting knives, sets of kitchen knives	600-20000
sixteen	Penknives		Penknives, blades	100-200
17	Garden knives		Garden knives	150-300
18	Tactical pens		Tactical pens	600-1200
nineteen	Travel Devices		Spoons, forks, openers, tourist axes	200-1300
Accessories and tools for knife care
20	Sheath		Cases, cases	150-2000
21	Pendants		Pendants on a belt	400-1000
22	Knife Stands		Stands for collection knives, kitchen knives, saber stands	200-5500
23	Greases, wipes		Greases, wipes for knives	300-950
24	Sharpening objects		Sharpeners, grindstones, grinders, sharpening kits, musat, sharpening oil	50-5800
Other
25	Magazines, literature		Knife magazines and literature	150-350

All products presented in the store will be in free sale in accordance with the legislation of the Russian Federation, without requiring a license for both sale and purchase. Upon purchase, customers will be issued with certificates of conformity or the so-called information sheets confirming that the goods are not subject to licensing and are not cold steel. The signs by which knives are not cold steel but belong to other categories are described in the Law on Weapons No. 150-ФЗ, as well as in the following GOSTs: GOST R 51501-99 Touristic and special sports knives; GOST R 51644-2000 Cutting and skinning knives; GOST R 51215-98 Cold weapons. Terms and Definitions; GOST R 51500-99 Hunting knives and daggers. General specifications; GOST R 51548-2000 Knives for survival, GOST R 51715-2001 Decorative and souvenir products similar in appearance to cold and throwing weapons.

4. Sales and marketing

The target audience of the store will be mainly the male population of the city. Based on the analysis of group members on social networks of specialized knife stores, it was found that the proportion of female buyers does not exceed 10-15%. If we talk about the male contingent of buyers, then such products are most in demand among men aged 23 to 40 years (about 60% of buyers), the remaining 40% are accounted for under 23 years old, or people over 40 years old. Basically, buyers of such stores are:

- fishermen;

- hunters;

- military;

- tourists, travelers and outdoor enthusiasts;

- the survivors.

In addition to specialized stores of this format, knife products are presented in a narrower assortment in the departments of tourist, hunting, fishing stores, as well as in souvenir and home goods stores, when it comes to selling kitchen knives. E-shops, which are successful due to the absence of real estate costs and employee wages, also create more competition.

Customer requirements for knives vary depending on the specific types of knives and their areas of application. In general terms, the most successful among active consumers are knives that combine two qualities: practicality in use and stylish appearance. Several basic criteria can influence the choice of a product, including the type and quality of steel, Rockwell hardness, blade shape, brand and country of manufacture, affordable cost, convenience and design of the handle, durability and warranty from the manufacturer.

It is worth noting the fact that, unlike the 90s, the buyer has become more demanding. The horizons of customers have expanded, while more and more of them know exactly which knife they need. The modern buyer was given the opportunity to purchase an individual product that is suitable for him in terms of characteristics and external performance. At the same time, a new type of knife appeared - Every Day Carry, that is, a knife for every day - an urban-type knife that can be used and demonstrated in public places without fear. They are non-aggressive in design, comfortable to wear and use. In recent years, the so-called survival knives, designed for multifunctional use in extreme wildlife conditions, have also become popular. Using them, you can cut branches to make a fire, cook, clean animal skins, build a home, and more.

In connection with the above trends, the store plans to present a variety of modern products to make purchases that meet the individual needs of the buyer. Creating a stationary specialized store will be most appropriate in a city with a population of more than 500 thousand people, which has a large number of potential solvent customers. The level of demand for knives can be judged on the basis of the number of requests in electronic search engines (see Table 2-3).

Tab. 2 The number of Internet queries related to the purchase of knives in the cities of Russia *

No.	City	Request "buy a knife"	Total requests related to the purchase of knives **
All Russia		251, 216	489 933
one	Moscow	61 645	119 522
2	St. Petersburg	23, 548	47, 090
3	Yekaterinburg	6 763	11 975
four	Rostov-on-Don	5, 629	10 983
five	Nizhny Novgorod	5, 699	10 581
6	Novosibirsk	5, 603	10 130
7	Voronezh	4 185	8 085
eight	Krasnodar	3 663	6 827
9	Chelyabinsk	3 039	5 613
ten	Krasnoyarsk	3 013	5 576
eleven	Samara	2 995	5, 435
12	Volgograd	2, 442	5, 402
13	Permian	2 620	5, 293
14	Saratov	2, 252	4, 400
15	Kemerovo	2, 034	3 989
sixteen	Ufa	2, 055	3 948
17	Tula	2 006	3 842
18	Kazan	1 992	3 715
nineteen	Tyumen	1, 769	3 383
20	Stavropol	1, 676	3 381

* Based on Yandex Wordstat statistics on 08/18/2019

** the amount includes the requests "buy a knife", "knives price", "knife store", "online knife store", "buy a knife in Moscow", "buy a folding knife", "buy a butterfly knife", "buy a knife store ", " Buy knives online ", " buy a hunting knife ", " buy a bayonet knife ", " where to buy a knife ", " buy knives in an online store ", " buy a knife in St. Petersburg ", " buy kitchen knives ", " throwing knives buy ", " buy a set of knives ", " sell knives ", " buy a knife kizlyar ", " buy a knife price ", " buy a knife kerambit ", " buy a folding knife ", " buy a damask knife ", " buy a knife manually ", "not buy expensive knives ", " buy a knife inexpensively ", " buy Japanese knives ", " buy survival knives ".

Tab. 3 The most popular Internet queries with the word "knife" according to Yandex

No.	Request	Number of Inquiries
one	buy a knife	318 461
2	folding knives	61 835
3	jackknife	61 891
four	knives Price	50 313
five	Hunter knives	47 112
6	knife shop	42 010
7	knives reviews	34 089
eight	kitchen knives	33 509
9	knife set	30 347
ten	best knives	24, 733
eleven	online knife shop	23, 897
12	knives in Moscow	22, 761
13	buy a knife in Moscow	16, 370
14	buy a folding knife	13 168
15	folding knives to buy	13 167
sixteen	steel for knives	12 695
17	butterfly to buy a knife	11 943
18	damask knives	11 538
nineteen	buy a knife store	11 115
20	combat knives	10 388
21	knives buy online	10 373
22	flick knife	9 768
23	buy a hunting knife	9, 710
24	knives on the internet	9 321
25	bayonet to buy a knife	8 530
26	where to buy a knife	8 469
27	buy knives in the online store	8 038
28	Damascus knives	7 580
29th	buy a knife in spb	7, 414
thirty	knife sharpener to buy	6 903
31	buy kitchen knives	6, 849
32	survival knives	6, 320
33	knife blades	5, 495
34	buy throwing knives	5, 527
35	buy a set of knives	5, 386
36	sale of knives	5 208
37	buy a knife kizlyar	4 645
38	buy karambit knife	4, 629
39	buy a knife sharpener	4, 474
40	buy knife price	4, 260
41	buy a meat grinder knife	3, 438
42	buy a folding knife	3, 429
43	buy blades for knives	3 311
44	buy knives for the machine	3 302
45	buy a damask knife	3, 262
46	buy a knife	3 220
47	buy cheap knives	2 960
48	buy a knife cheap	2 960
49	buy japanese knives	2, 789
50	buy survival knives	2664

* based on data from the Yandex Wordstat service on April 14, 2016

The main channel for promoting the market is planned to use the Internet. An own site will be created for the store, on which a product catalog with the main characteristics of the goods will be presented. For customers will be able to order online and free delivery in the city. Orders to other cities will be sent by mail or transport companies. The service will be based on a customer-oriented approach. The store will be presented in popular social networks, where information about new arrivals, promotions and discounts will be published, customer advice will be provided in the form of a question-answer. To expand the sales market, the store management plans to actively cooperate with city hunting societies, clubs of fishermen, tourists, etc.

5. Production plan

The knife store will be open in the central area of the city, in a room with a separate entrance in a multi-story building. Schedule of the store: daily, from 9:00 to 19:00.

To open a store, an area of 30 square meters will be rented. meters. The rent will be 1 thousand rubles. per sq. meter. The room will need to be repaired at the rate of 10 thousand rubles. per sq. m. You will also need the necessary commercial equipment (for more details, see Table 4).

Table 4. Equipment costs

No.	Name	price, rub.	Quantity, pcs.	Cost, rub.
one	Showcase	9, 000	eight	72, 000
2	Rack	6, 000	four	24, 000
2	Lighting equipment	5, 000	one	5, 000
3	Signboard	20, 000	one	20, 000
four	Cash machine	18, 000	one	18, 000
five	Cashless terminal	25, 000	one	25, 000
6	Grinding equipment	16, 000	one	16, 000
7	Computer and office equipment	90, 000	one	90, 000
eight	Other	20, 000	one	20, 000
Total:				290, 000

For the store to work, two sales assistants working in shift mode will be required. At the initial stage, work as one of the sellers will be undertaken by the entrepreneur himself. The main requirements for sellers are the ability to understand knives well, to know the theory well, to distinguish types of steel, to be well-versed in domestic and foreign trademarks (payroll taxes - see Table 5).

Table 5. Staffing and payroll

No.	Position	Number of people	PHOT, RUB
one	Shop assistant	30, 000	30, 000
Total:			30, 000
Deductions:			9, 000
Total deductions:			39, 000

Sample calculations of the store’s revenue and profits are given in Appendix 1. In addition to salaries and deductions to the Pension Fund, expenditure items will include rent, expenses related to the purchase of goods from suppliers, site maintenance and bookkeeping, utilities, services security and stuff.

6. Organizational plan

The stage of preparation for the start of sales will take 3 months, which will be needed for real estate operations (conclusion of a lease, repair and equipment), assortment formation, hiring staff, website development and launch, and so on. Responsibilities for the management of full-time and non-staff employees will be undertaken by the entrepreneur. It will be the work of establishing contacts with suppliers, strategic planning, marketing activities, as well as the responsibilities of the seller consultant in the initial period of work. Sales consultants will be responsible for receiving, displaying, selling goods, maintaining sales records and advising clients. Responsibilities not related to making a profit, such as accounting, website maintenance, will be transferred to third-party organizations.

7.Financial plan

The size of the initial investment will amount to 1, 785, 000 rubles. Items of investment costs are presented in Table. 6. The indicators for the planned revenue, net profit and costs are shown in Appendix 1.

Table 6. Investment costs

No.	Cost item	Amount, rub.
Real Estate Investments
one	Room repair	300, 000
Room equipment
2	Equipment purchase	290, 000
Intangible assets
3	Website creation	80, 000
four	Other expenses (transportation costs, registration, telephone calls)	15, 000
Current assets
five	Current assets	200, 000
6	Starting Commodity Filling	900, 000
Total:		1, 785, 000

8. Evaluation of project effectiveness

The calculations made allow us to confirm the profitability of the project. In Tab. 7 shows the performance indicators of the store.

Table 7. Project performance indicators

No.	Indicator	Value
one	Discount rate, %	17
2	Net present value (NPV), rub.	2 312 964
3	Project net profit, rub.	50, 000 - 230, 000
four	Return on sales, %	5.71
five	Payback period (PP), months	24
6	Discount payback period (DPP), months	29th
7	Profitability Index (PI)%	1.3

9. Risks and warranties

The project to open a specialized knife store has an average level of risk. Основная опасность данного вида бизнеса связана с узостью целевой аудитории, в связи, с чем магазину для рентабельности необходимо тесно работать с покупателями, предлагая им не только качественную продукцию, но и дальнейший сервис (заточка ножей). Кроме того, нестабильность спроса может быть непосредственно связана с самой продукцией: качественный нож способен служить хозяину годами, до тех пор, пока он не придет за второй покупкой. В связи с этим, руководство магазина будет постоянно заинтересовано в расширении каналов сбыта продукции.

Таблица 8. Оценка рисков проекта и мероприятия по предотвращению их наступления или их последствий

No.	Risk	Probability of occurrence	Severity of consequences	Prevention measures
one	Demand volatility	average	high	Более активная работа с клиентом в социальных сетях, предоставление сезонных скидок, рекламные акции, расширение партнерской сети
2	Проблемы с правоохранительными органами (например, привлечение к уголовной ответственности за незаконный сбыт холодного оружия)	low	high	Наличие соответствующих документов на товары, которые не относятся к холодному оружию (сертификаты, информационные листки)
3	Проблемы с растаможкой продукции	average	average	Закладывание в бюджет издержек на таможенную очистку, заказ небольшими партиями, заказ товара, не относящегося к холодному оружию
four	Чрезвычайная ситуация, стихийное бедствие, вооруженный конфликт и прочее	low	high	Наличие пожарно-охранной сигнализации, страхование
five	Rent increase	low	average	Заключение долгосрочного договора аренды с фиксированным уровнем платежа в рублях