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How Much Does It Cost to Start a Bin Store? (Sales Forecast and Breakeven Analysis Included)

You can start a bin store business with as little as $50,000 or even lower. To start a standard bin store business with a massive retail store or warehouse, you must be ready to spend over $350,000 to get the business up and running.

When it comes to starting a bin store business, there is no fixed amount you should have in mind because certain factors can determine the exact cost or an estimate of what it will cost you to start a bin store business.

A bin store business is a retail outlet that specializes in selling excess inventory or returned items that a company has been unable to sell. It is easier for a bin store business to start at any capacity, as long as they have a retail outlet where it can sell its goods.

Estimated Cost Breakdown for Opening a Bin Store

  • Store Rent or Lease (Lease deposit and first few months’ rent): $20,000 – $50,000
  • Renovations and store setup (shelving, bins, signage, checkout counters): $30,000 – $60,000
  • Initial inventory purchase (overstock, liquidation goods): $50,000 – $100,000
  • Delivery vehicle (if needed for transporting inventory): $20,000 – $40,000
  • POS system, computers, security cameras: $10,000 – $20,000
  • Initial marketing campaign (social media, local advertising): $5,000 – $15,000
  • Business licenses, permits, and initial insurance costs: $5,000 – $10,000
  • Cash reserve for unexpected expenses, future inventory purchases, and operational costs: $60,000 – $105,000

Total Estimated Startup Cost: $200,000 – $350,000

Sources of Income for a Bin Store

  1. Sale of Overstock and Liquidation Goods
  2. Sale of Returned Goods
  3. Special Sales and Events
  4. Online Sales
  5. Membership Fees
  6. Additional Services such as delivery, custom orders, or a fee-based section where customers can access higher-value items.

Sales Forecast and Breakeven Analysis for a Bin Store

Year 1

  • Initial Capital: $350,000
  • Revenue Streams: Sale of goods from overstock, returns, shelf-pulls, and liquidation.
  • Year 1 Revenue: $200,000 (conservative estimate as the business is growing its customer base).
  • Year 1 Operating Costs (excluding initial capital): $150,000 (includes rent, utilities, salaries, marketing, insurance, etc.).
  • Net Profit (Year 1): Revenue – Operating Costs = $50,000.

Year 2

  • Growth Rate: 25% (improved marketing and customer base growth).
  • Year 2 Revenue: $250,000.
  • Year 2 Operating Costs: $175,000 (increased due to scaling up operations).
  • Net Profit (Year 2): $75,000.

Year 3

  • Growth Rate: 20% (stable growth as the business establishes itself).
  • Year 3 Revenue: $300,000.
  • Year 3 Operating Costs: $200,000 (further expansion and possibly higher costs).
  • Net Profit (Year 3): $100,000.

Breakeven Point

Cumulative Net Profit (3 Years) = Year 1 Net + Year 2 Net + Year 3 Net 

Breakeven Point = When Cumulative Net Profit ≥ Initial Capital

Over the first three years, the cumulative net profit of the bin store is $225,000. Given an initial capital investment of $350,000, the store does not reach the break-even point within the first three years based on these analysis above.

To reach or surpass the break-even point, your bin store may need to explore ways to increase revenue or reduce costs. Strategies could include optimizing inventory acquisition costs, enhancing marketing efforts to boost sales, or expanding the product range to attract a broader customer base.

Factors That Determine the Cost of Opening a Bin Store

  1. Your Inventory (The Type of Goods or Products You Want to Retail)

A bin store business buys massive truckloads of returned items from merchants or through liquidation companies and they retail such items to retailers at affordable and giveaway prices. This goes to show that a bin store business can choose to sell any, or all of these items:

Clothing, shoes, accessories (e.g., belts, hats), electronics, toys, home décor, kitchenware, small appliances, tools, beauty products, stationery, books, sporting goods,

Pet supplies, gardening supplies, health and wellness products, bedding and linens, seasonal decorations, office supplies, and party supplies et al.

In essence, a bin store business that specializes in books and stationery likely spends far less than a bin store business that specializes in buying and retailing electronics, toys, home décor, kitchenware, and small appliances.

  1. The Size of Your Warehouse or Store Facility

By law, before you can get approval to start retailing anything in a public facility, you should be able to at least secure a warehouse or store facility.

The cost of leasing a well-positioned warehouse or store facility in a high-traffic area is going to be a significant portion of your budget.

For example, in the United States of America, to rent a warehouse or store that is in a “good spot” in a popular shopping area might be $25 per square foot, while a warehouse or a store facility in a hidden location could be $10 or $11. It means that for 2,000 square feet of retail space, you are expected to pay about $30,000 per year ($2,500/month).

  1. Your Working Capital

One good thing about the bin store business is that there is no cap on the number of items you can buy and retail. It means that anyone who wants to start a bin store business may decide to start with about $10,000 working or trading capital and retail his or her goods from a garage.

At the same time, you can start a bin store business with a working or trading capital of over $100,000. With that, they will be able to buy massive truckloads of returned items from merchants or through liquidation companies.

In essence, the amount you want to set aside as your trading or working capital will determine how much you should budget if you want to start a bin store business.

  1. The Cost of Marketing and Promoting the Business

No matter how cheap the items you are retailing from your bin stores are, people ordinarily will not know what you are retailing and why they should buy from you.

That is where marketing and promotion of your bin store comes in. If you are good with marketing and promotion, trust me, you will always run out of stock.

Interestingly, you can run a budget-friendly promotion (on social media) and still make massive sales whenever you have new arrivals (items). You can use your WhatsApp status and still attract customers who are looking for heavily discounted goods.

  1. The Cost of Hiring and Training Your Employees

The fact that you cannot start and solely operate a standard bin store business means that you should make provisions in your budget for hiring and training your employees.

You should make plans for competent people to occupy the roles of Store Manager, Sales Associate, Inventory Manager, Purchasing Manager, Marketing Coordinator, Administrative Assistant, and Maintenance Technician.

It will cost you a significant portion of your startup capital to recruit and train all the employees who can occupy all the roles listed above.

  1. Business Registration Cost

You can start a small-scale bin store business by purchasing items from a third-party dealer. With that, you don’t have to register the business.

But, if you want to operate a standard bin store business with the capacity to buy massive truckloads of returned items from merchants or through liquidation companies, then you must register your business and obtain the needed business license and permits.

Although the cost of registering a business in the United States of America ranges from $600 to $1400 depending on the state, you are still going to spend money to obtain other licenses and permits.

  1. Your Operational Cost, and Contingency

You cannot operate a bin store business without having a budget for operation and contingency. Under your operational cost and contingency, you should be able to budget for:

Fueling your trucks and utility vehicles, servicing and maintenance, utilities, inventory purchase, insurance, maintenance, unexpected costs,

Unplanned vehicle downtime, legal fees (if facing any legal issues), accidents and collision repairs, and medical expenses (if injuries occur) and a reserve fund for emergencies or fluctuations in revenue, et al.