Does Starting a Dollar Store Really cost that Much?

Feb 9
10:19

2012

Bob B. Hamilton

Bob B. Hamilton

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Dollar store items sell for only around a dollar each indeed but the reality is you must set up an entire store capable of holding tens of thousands or even hundreds of thousands of items – depending on the size of your store.

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One of the shocking realities for those who are thinking about starting a dollar store is the amount of cash required to open the doors for the first time.  While it is true dollar store items sell for only around a dollar each,Does Starting a Dollar Store Really cost that Much? Articles the reality is you must set up an entire store capable of holding tens of thousands or even hundreds of thousands of items – depending on the size of your store.  And on top of the dollar store items you will have in-stock, there are many other costs required just to get to the point of holding your grand opening event. 

These include the lease payments.  And of course the leasehold improvements you will handle must also be added into the equation.  Add in all of the store fixtures and displays, equipment and store supplies as well.  

There will be carrying costs as you cover day-to-day overhead while building sales.  Finally there will come a time when profits actually cover costs.  However that day will likely not come in the first months of operation.

Just a few of those day to day costs include payroll, rent, insurance, utilities, merchandise replenishment, advertising and marketing, pre-purchase of dollar store items for upcoming holidays and sales events.  Then there is a need for an emergency fund to cover the unexpected.  You cannot afford to gamble that an unanticipated event will not happen.  You must be prepared for the worst, and have a fund waiting just in-case the worst does occur.

The simple reality is you must clearly understand all dollar store costs.  This includes everything associated with starting a dollar store, and then operating your dollar store during those early months as sales grow to reach breakeven levels and you can cover expenses.

The bottom line is starting a dollar store does take funding.  Make sure you forecast the required funding needs and then put that funding in-place before committing to move forward by signing a lease or any other major obligation.  Only after you have the cash available should you move ahead.  And do not risk everything by assuming you can start with a little less money than you forecast and you will make up for it from early profits.  Those early profits likely will not flow exactly as expected.  So you could end up scrambling to purchase replenishment dollar store items just to keep the must-have items available to your shoppers.