One of the most popular stores in the United States is a dollar store. While not everything in every dollar store actually costs a dollar, most items sold are discounted significantly. These stores typically specialize in party supplies, concessionary snacks, household items, and various other small purchases that can be sold at low prices. Many individuals and families of modest means are able to save a lot of money by shopping for various supplies at dollar stores.
If you are seriously considering starting a dollar store, we have a 10-step guide that will help you get on your way. If you have the perfect idea for a dollar store business, you might be wondering what you need to do to make it a reality. There is more to it than just registering it with the state. Let’s go through an essential checklist of what you need to put together a well-thought-out business plan, and start a legally sound and properly registered dollar store.
HOW TO START A DOLLAR STORE
Step 1: Planning Before Acting
Any entrepreneurship, irrespective of its nature, needs a clear plan to be successful. Mapping out specifics for a business venture will allow for a roadmap to get it off the ground, and operational, and highlight some unknowns. Some important points to consider include figuring out start-up costs, operational expenses, the target market, the business’s title, and how much to charge customers for the products or services offered. We have done the legwork, and have put together all of the information.
Dollar Store Start-Up Costs
There is a multitude of factors that go into how much it would cost to start a dollar store including, but not limited to its location, inventory supply, and a budget for marketing. Theoretically, a dollar store can be started up for just a few thousand, though this would mean that its location was not in a desirable place.
A 10,000-foot store that is part of a franchise could cost as much as $267,000 to get off the ground, with that number in start-up costs covering everything from inventory to advertising tools. The advantage of franchise ownership is that a comprehensive plan is provided to the new owner to help them manage the business.
DIY franchise packages could be acquired for less than $30,000, assuming the majority of the work is done by the owner. Most owners will need a loan to get this venture moving forward, in which case it is advised that a financing plan include the cost of merchandise is acquired as well..
Dollar Store Operational Costs
Among operational costs of a particular location, owners need to consider various operating permits and rent, in addition to staff salaries, merchandise, and advertising. Businesses also need to secure insurance from everything ranging from liability claims to theft, as well as destructive acts of nature.
Dollar Store Target Market
The target market for dollar stores is for people who love deals and bargains. Many communities have dollar stores that service low-income citizens, but that certainly does not mean that this is the sole clientele category for dollar stores. Many people of higher earning brackets who are trying to save enjoy deals they get at the dollar store.
Dollar Store Profits
Dollar stores acquire their inventory by purchasing large quantities from wholesalers at bulk prices. These products are then marked up when making sales. Since the products are purchased at a significantly discounted price, marking up still results in the product being sold for a dollar (or something close to that amount even if it is over that threshold).
How Much Can A Dollar Store Charge Customers?
Pricing ranges at the dollar store can vary. Some sell exclusively for a dollar (or less) while others mark certain higher ticket items at higher price points, though the latter should be done sparingly as it takes away from the idea of getting bargain deals. Selling far too many items over the $1 price point is likely to alienate customers who feel that your “dollar store” namesake is just an empty moniker.
It is important to keep in mind that just because prices are around a dollar, that doesn’t make dollar stores the least expensive place to shop, especially by comparison to other discount retailers. After all, some owners will sell products at questionable sizes and lacking known brand names to give the illusion that customers are getting a better deal than they are led to believe.
Dollar Store Profit Potential
The average profit per item at a dollar store is about $0.35, though some items can garner as much as $0.80. Considering those numbers, a dollar store hoping to make about $70,000 in profit would need to sell about 200,000 items annually.
How To Increase A Dollar Store’s Profit Margins
A curious, though highly potent strategy, is to attract customers to the store by offering to sell an item at an excessively discounted price. While this does result in losses in terms of that item financially, customers who come for the discounted item often pick up other items while they are there. That means that sacrificing one or a handful of losses can make great profit gains in other respects.
The way a business increases its profit margins is by attracting additional customers. Using contests or promotions is a good way to go about that. Some owners, who are in a place where they can afford to do this, often branch out their franchise to other locations, and in some cases, open more traditional convenience stores in addition to their dollar store venture.
Naming A Dollar Store Business
Choosing the best name for a dollar store business is both challenging and extremely vital to the business’s success. If you don’t have a name in mind, there are business naming and dollar store name generator tools online that can be used. When running such a business as a sole proprietor, make sure to not name the business after yourself.
When it is time to register your business’s name, it is highly recommended that state business records are checked, along with federal and state trademarks of businesses with the same (or too similar) names. It is also advised to check for any social media presence that may negatively impact your business by mistaken confusion from clients, as well as the availability of application domains. If you have a name in mind and want to lock down a domain, make sure to not wait so that you are not beaten to securing one by another owner with the same idea.
Step 2: Cover All Legal Grounds
You need to decide what type of business structure your business will operate in. While sole proprietorships, partnerships, and corporations are all available options, establishing a limited liability company (LLC) is the most popular route because it protects you from losing personal finances if your dollar store business incurs liability suits.
An LLC is not expensive to register yourself, but if you are willing to pay a small fee, everything can be taken care of by some great LLC services that specialize in this practice. You should consider selecting a registered agent for the LLC. Most LLC packages include registered agent services as part of a first-year entry perk.
Step 3: Setup Tax Registrations
Before opening a business, you will need to make sure all of your state and federal tax paperwork is in order. To register for taxes, you will need an EIN which can be acquired easily and at no cost. You can check out various EIN guides or look up an existing EIN in various places, including the official IRS website.
Taxes For Small Businesses
You could have a variety of options in terms of taxation depending on the business structure you select for your business. LLCs, for instance, often benefit from being taxed as an S corporation. Some state taxes apply specifically to particular business types. You can find a lot of online documentation about various state sales taxes and franchise taxes.
Step 4: Start A Business Bank Account And Open A Credit Card
When operating a business, you never want to tie to business’s funds to your personal ones. To safeguard your personal assets like your home, vehicle, and other valuables in case of a lawsuit against your business, you should ‘pierce the corporate veil’ by opening a business bank account that will serve funds exclusively for your company’s assets, walling off your personal finances. Doing so also helps make things easier at tax time.
Net-30 accounts, a popular choice among vendors which allows a credit arrangement where the vendor has 30 days to pay back vendors for goods or services purchased when there isn’t enough cash on hand, are the most popular form of business credit. Aside from helping build vendor relationships, net-30 accounts are reported to various business credit bureaus, allowing your business to build credit and qualify for additional credit lines later in your operations.
Speaking of credit lines, it is important to also divide your credit card spending for your business from your personal ones. This makes sure that all of the business expenses are in a single place while allowing your company to build a solid credit history when you need more capital for future investments.
Step 5: Business Accounting Setup
All of the expenses your business incurs, as well as all of its income sources, should be accurately kept to help you at tax time, but also to give you an idea of the financial health and performance of your business regularly.
Step 6: Secure All Necessary Licences And Permits
There is an inherent danger in not securing all of the proper permits and licensing as it can lead to substantial fines for violations of regulation, and sometimes lead to the need to close the doors of your business altogether. These permits and licenses will vary by state, with some requiring particular ones for dollar stores.
You can refer to the SBA guide for permits and state licenses for information. Local ordinances may also apply. Those can be determined by checking with the clerk’s office in your town, city, or county, as well as from the US Small Business Associations directory.
Since dollar stores are run from a physical location, they will generally require a CO (or Certificate of Occupancy) which confirms that the business is adhering to all zoning and building codes, as well as all of the government-mandated regulations.
Those leasing the location of the business can generally look to their landlord to obtain a dollar store-applicable CO. If your dollar store business requires renovations to the property, language in the lease agreement about the lease payments will be necessary to ensure that a new CO is mandatory before lease payments start.
Those who are purchasing a location bear the responsibility for obtaining a valid CO from the local government offices which includes a review of all zoning requirements and business codes.
Step 7: Insure Your Business
To permit safe and legal operations, your dollar store business needs to also be insured. Business insurance comes into play when a company suffers losses, as a safeguard from bad financial situations. The insurance policies offered to businesses depend on the nature of the business and the risks involved in running it.
Those who are unsure about the nature of liabilities can start with General Liability insurance, which is the most common form of insurance coverage utilized for the needs of a small business.
It is also important to consider Worker’s Compensation insurance for businesses with employees, to avoid financial hardship in the event that there is a liability lawsuit. In fact, most states mandate that businesses carry this as a condition of lawful operation.
Step 8: Defining Your Brand
A brand is a business’s corporate identity. It is reflective of what the business stands for, and how it is perceived by the public and helps to stand out among a sea of competitors. A brand’s representation is in the form of a logo. However, if you are not confident about crafting one, there are many great design guides for business logos available online.(you can use Fiverr or Canva)
Promotion And Marketing Of A Dollar Store
Communities find out about new dollar stores in the area through a variety of traditional advertising mediums including banners, paper flyers, and digital ads. The marketing should be geared toward consumers who like great bargains on products. Needless to say, advertising in a way that is too fancy might run contradictory to a theme of a bargain store and might turn clientele off. You could, however, promote your dollar store by throwing a party with only accessories from your store used to appeal to prospective clients.
How A Dollar Store Can Retain Customers
Customers do not walk into dollar stores with an expectation of a royal treatment, but it sure can’t hurt. The store should be organized in an efficient manner, well-stocked, with easily identifiable sections that make items easy to locate. The store should offer efficient, friendly customer service, and the selection of products should be diverse, while laid out in an intuitive, orderly manner.
Step 9: Set Up A Website For Your Dollar Store Business
Once the brand and your logo are designed, you will need to create a website for your business. Many hesitate about creating a website, feeling that it is simply out of the capability scope, but with how far website-building tools have come in the last decade, there is no excuse not to have a website, even for the most low-tech person.
When it comes to building a website, delaying putting one up is detrimental to a business. No matter the industry, scope, or size of a business, a business website is essential. And no, LinkedIn business profiles or Facebook pages are not a sufficient substitute, merely a supplement. Using one of the popular website builders like GoDaddy, Shopify, WIX, Weebly, Squarespace, or WordPress, and consulting some website building guides, anyone can have a great business website built in under 3 hours.
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Step 10: Phone System Set Up
Some owners make the error of having their business phone numbers and their personal numbers be the same. This becomes a real burden on one’s personal and business life. By setting up a separate phone system, you can keep the two separate. Additionally, having a dedicated phone system for a business makes it more legitimate and makes contacting you easier for prospective customers.
There are entire services that will set up a phone system for your business readily available for entrepreneurs, including those opening a dollar store.
Is The Dollar Store Business Right For You?
If you are an owner seeking to provide shoppers in your community a budget-conscious alternative in a spacious, convenient, safe place, you might be an ideal owner for a dollar store. Dollar stores often play an important part in helping to maintain and thrive a community.
What Is A Typical Business Day At A Dollar Store?
Daily dollar store operations include a number of duties for the owner and staff. These include managing employees, conducting sales, stocking, inventory orders, and marketing the business. Additionally, owners should be researching additional products they can add to their inventory that can be acquired at great prices.
What Skills Are Needed To Operate A Dollar Store Successfully?
Prior experience in owning or managing a related store type is a significant plus for dollar store owners. It helps if the owner also has a general business degree, though it isn’t a requirement. Owners should be personable, professional, organized, and able to accommodate a diverse customer base.
How Much Growth Potential Is There In A Dollar Store?
Dollar stores are immensely popular places of business all across the US since they offer customers the ability to purchase particular luxury and necessity items that they would not be able to afford or acquire at a conventional retailer.
What Is The Next Step?
If you still feel you are ready and able to enter the dollar store industry, what is the next step in the process?
Business Mentorship
Key to any owner’s business success is the ability to obtain some experience guidance, such as in the form of a business mentor. Use local community resources to connect with other owners and learn all that you can about running a business, even if it isn’t specifically a dollar store. These networking connections also allow you to have a support system in place for when your business faces hardships in the future.
Resources For Women In Business
Resources specifically dedicated to female entrepreneurs are available and aimed at helping aspiring businesswomen succeed on a professional and personal level. Some of the aspects addressed in these resources included support, business guides, funding, and events. Check out the great Women in Business series from Startup Savant for more information.
Are There Any Insider Tips For Starting A Dollar Store?
The first consideration is the location of the store. This is vital because without easy accessibility for customers to the store, the location simply won’t generate enough traffic to keep the dollar store business afloat.
Another important aspect is the relationships built and established between the store’s management and wholesalers (or liquidators). These sources permit the dollar store not only to get quality merchandise but also allow for a partnership that allows this to happen regularly. Keeping up the diversity of items in your store means that more prospective customers will show up at the store just to see what you have, and that means more potential that they make additional purchases.
After all, most people who come to a dollar store rarely show up with only the intent of specific necessities. They are generally open to buying additional merchandise, which means that offering more choices is a great way to inspire them to do so.
Another important aspect is that the things that are generally acquired by your community’s demographics should always be in stock. The store should be clean and intuitive in its layout as well. These things will make your dollar store a more appealing place for your customers to shop at rather than patroning other local discount stores. The more satisfied customers you have, the more they will tell others about your business, driving new customers and business into your store.
Building A Business Team
Customers will need budget-friendly prices every day of the week, so a dollar store that is available from the morning to the evening every day of the week succeeds more so than those that are not. To accommodate such hours, it is important to build out a team of employees who are prompt, flexible, responsible, and easy-going enough to make this schedule happen. Your team should also be friendly to reduce the chance of incidents including disturbance and theft, an unfortunate but far too common occurrence, especially in the discount retail sphere.
Frequently asked questions:
does the dollar store sell spray paint?
Yes, some dollar stores sell spray paint. However, it may vary by location and store chain. It’s best to check with your local dollar store to see if they carry spray paint in stock.
is dollar land store legit?
Dollar Land Store is not a commonly recognized retail chain, and there is limited information available online about its legitimacy. It is possible that it is a small, independent store or an online retailer. As with any new or lesser-known retailer, it is recommended to exercise caution and research the company before making a purchase to ensure its legitimacy and reliability.
does dollar tree take apple pay in store?
the best way to determine if Dollar Tree accepts Apple Pay in-store is to check with the store directly or visit their website for payment options.