Opening A Dollar Store – Reduce Cost-Of-Good-Sold

Are you an entrepreneur who is opening a dollar store? Then never lose sight of the importance of cost reduction to the success of your business. Cost reduction should take place from the day you start your planning. One of the most important areas for focus is the Cost-Of-Goods-Sold.

Cost-of-Goods-Sold which includes product, freight, shortages, product returns and damaged merchandise costs is a major expense for all retailers. If you are opening a dollar store, especially a true $1.00 price point store, this is even truer. You can reasonably expect C-O-G-S to run as high as 60% of sales when you first open your store.

It is important that the entrepreneur establish a set of monthly targets that decrease C-O-G-S over time. After all, even a 1¢ reduction in C-O-G-S for a store with $500,000 in annual sales can be $5,000 in reduction for the year. For those who are opening a dollar store that 1¢ reduction could mean the difference between profit and loss during the first year of operation.

Cost-Of-Goods-Sold reduction can be achieved through many sources. This includes changing ordering patterns. For example orders might be submitted less frequently to achieve larger quantities which can result in lower freight costs. Orders might be focused on wholesale suppliers that offer monthly discount programs. When you are opening a dollar store other cost reduction ideas will become apparent.

Cost-Of-Goods-Sold reductions can also be found by investing the time to find new, lower cost suppliers. For example the owner/manager might identify new lower-cost suppliers for core products. Local suppliers may be able to provide some core products which could virtually eliminate freight costs.

Cost-Of-Goods-Sold reductions can also be achieved by the creative owner who is opening a dollar store. For example, possibly other local businesses would be willing to split orders with you. Larger orders could mean lower per-item costs and lower freight. Another effective method is to split freight with other local companies. There can be substantial discounts when entire truck loads are transported to one location. Both you and the other company could benefit from that freight cost reduction. If you are opening a dollar store seek closeout buying opportunities with existing suppliers.

Cost reduction, especially in the Cost-Of-Goods-Sold, is an ongoing challenge when opening a dollar store. The successful entrepreneur continually focuses on driving cost out of everything associated with the business. After all, less cost can mean more profit.

To Your Dollar Store Success!