Owning and operating a dollar store can be a very rewarding endeavor. Yet as with all other businesses, there is another side to the coin. That side includes the many challenges which are a part of owning and operating your own business. One of the worst things faced by those who are operating a dollar store is having something which is totally unexpected suddenly significating business performance. This becomes even more difficult when there simply is not enough cash available to handle the issue at-hand.
All of a sudden the lack of cash becomes the issue, and the real core issue continues to slow (Sometimes quickly!) Simmer and grow into a full blown business risking proposition. One of the preventative measures that operating a dollar store can take is to maintain a crisis reserve of money just for these times. In this article I present 5 examples of potential unexpected challenges requiring emergency funding from your crisis reserve of money can help you handle.
1. Decreasing dollar store sales. A sudden drop in sales for one day or even a weekend probably is not something to be immediately concerned about; especially when sales return to normal and remain so. Yet if sales remain low, and even continue to deteriorate further, action needs to be taken. Aggressive marketing and promotion is not cheap. Yet without sales returning to prior levels, or even growing higher, there is a great deal of jeopardy.
2. Unexpected expenses leaving no money for replenishment merchandise. One way those who are operating as dollar store can generate one-time cash is by selling down store inventory. Yet without inventory, there will be no further sales. Developing, generating and then having suppliers go through their processes including shipping merchandise to your store takes time and money. Your store is in jeopardy if the inventory grows too low and the time required to recover merchandise inventory is too long.
3. Unexpected dollar store sales growth. Solid higher sales level is a wonderful problem to have. Yet there are costs which must be handled to support this upside. Failing to respond may not only mean sales deteriorate to previous levels, but they may even go lower. Higher sales mean an instant need for a higher inventory of merchandise to keep up with sales. Higher sales also drive the need for more quickly receiving replacement merchandise so the shelves are always full and ready to meet the extra sales demand. Payroll is also likely to see an upswing to handle the extra customers.
4. Unexpected hardware problems or breakdown. Imagine your POS system suddenly crashing with no easy fix available. Or otherwise your forklift blows an engine. The long list of possible significant expenses could take a page to cover. Most of these are critical to some level in maintaining the ongoing operation of your store. Fixing or replacing takes cash – now.
5. Improper expense forecasting – under-capitalization. Do not start a dollar store without adequate capitalization. Yet even the best-laid plans can end up with underestimates about the amount required to complete a start-up. Imagine operating a business which has a delayed opening and watching the expenses mount all because you can not cover those last few critical costs. Equally as bad would be opening the door and finding you are out of money and there is a need to quickly pay thousands of dollars for a bill you thought was not going to be your responsibility. You might be able to delay payment for a short period of time. Yet your new business will somehow need to cover this even as your dollar store sales are just starting to occur. The better option for those opening and operating a dollar store is to make sure there is a cash reserve waiting.
