Do you want to start a dollar store from home? If YES, here is a detailed guide on how to start a dollar store business with no money and no experience.
There are quite a number of business opportunities in the retail industry that an aspiring entrepreneur can start on a small scale and then grow to become a national phenomenon. Most of these businesses sometimes are businesses that require little or no technical skills such that you can pick up the skills easily from books or from online video tutorials at no cost. One of such businesses is to open a dollar retail store in your neighborhood.
Table of Content
- 1 Why Start a Dollar Store?
- 2 Industry Overview
- 3 Market Research and Feasibility Studies
- 4 List of Niche ideas Within the Dollar Store Business That You Can Specialize in
- 5 The Level of Competition in the Dollar Stores Industry
- 6 List of Well – Known Brands in the Industry
- 7 Buying a Franchise vs Starting a Dollar Retail Store Business from Scratch
- 8 Possible Threats and Challenges You Will Face When Starting a Dollar Retail Store Business
- 9 Best legal Entity to Use for a Dollar Store
- 10 Catchy Business Name ideas Suitable for a Dollar Store Business
- 11 Is Professional Certification Needed to Run a Dollar Store?
- 12 List of Legal Documents You Need to Run a Dollar Store Business
- 13 Choosing a Suitable Location for a Dollar Retail Store Business
- 14 Technical and Manpower Details
- 15 The Business Services Process Involved in Dollar Retail Store Business
- 16 Marketing ideas and Strategies
- 17 Possible Competitive Strategies for Winning Competitors
- 18 Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
Why Start a Dollar Store?
It is a fact that a dollar retail store business is profitable because it is normal for the average shopper to visit stores where they can buy stuffs at highly discounted prices. The running cost for this type of business is pretty low and if you are able to secure a strategic high traffic location or a good store in a shopping mall, you can be rest assured to rake in good returns from your dollar retail store especially if it is stocked with products from various manufacturers.
Before launching this type of business, you will need to carry out market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your dollar retail store business, it will not take you long before you break even and start smiling to the bank.
You can start your dollar retail store from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes nationally recognized.
How to Start a Dollar Store Business – A Detailed Guide
A dollar store is part of the Dollar & Variety Stores industry and players in this industry are known to retail general merchandise like apparel, automotive parts, dry goods, hardware, groceries and home furnishings. Dollar and variety stores retail these goods at discounted prices. Please be informed that the Dollar & Variety Stores industry does not include department stores, warehouse clubs or grocery stores.
A dollar store business is a very easy business to start and it is not so capital intensive especially if you choose to start on a small scale in a small community. Getting the right products that people want to buy and good stock keeping records are the secrets of running a retail business like this.
It has been observed that the Dollar and Variety Stores industry has performed strongly over the five years to 2018. While it was uncertain if the industry would remain in high demand following the economic recession, dollar and variety stores have made several changes to their operational strategy to sustain growth rates.
A considerable platform for change within the industry has been the customer base; while the industry has historically targeted exclusively low-income earners, this consumer pool has expanded in recent years to include middle-class shoppers and even some high-income earners.
Going forward, IBISWorld expects the industry to fully transition into a mature industry. A recent report published by IBISWorld shows that the Dollar and Variety Stores industry exhibits a high level of concentration, with the top four players anticipated to account for about 85.0 percent of revenue in 2018.
The report also shows that while the industry is concentrated at the top, the remaining share of the market is mainly composed of small- to medium-size operators catering to localized demand. IBISWorld estimates that 37,771 companies will actively compete for the remaining 15.0 percent of the market in 2018.
Industry concentration has risen over the five years to 2018, particularly amongst the top three players, which have expanded through mergers and acquisitions. For example, in 2015, Family Dollar was bought by Dollar Tree, which nearly doubled the company’s market share and revenue. The Dollar & Variety Stores Industry is a thriving sector of the economy of the United States.
Statistics has it that in the United States of America alone, the Dollar & Variety Stores Industry generates over $73 billion annually from more than 70,532 registered Dollar & Variety Stores scattered all around the United States of America.
The industry is responsible for the employment of over 438,213 people. Big Lots Inc., Dollar General Corporation, and Dollar Tree Stores Inc. are the leaders in the Dollar & Variety Stores Industry. The dollar retail store business will continue to blossom because people will always make use of products retailed by dollar retail stores.
Despite the fact that the industry seems over – saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own dollar retail store in the United States. Some of the factors that encourage entrepreneurs to start their own dollar retail store business could be that the business is thriving and is easy to set up and manage.
If you are contemplating starting your own dollar retail store business in the United States, you should endeavor to carry out a thorough market survey and feasibility studies. Despite the fact that this line of business is a thriving and profitable venture, if you get some key factors wrong before starting out, then you are likely going to struggle to stay afloat.
Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who patronize dollar retail stores cut across all genders; male and female above 18 years with the financial means hence the demographic composition for dollar retail store business is all encompassing.
In essence, your target market can’t be restricted to just a group of people, but all adults who reside in your target location and who have the purchasing power. So, if you are thinking of opening your own dollar retail store business then you should make your target demographics all encompassing.
List of Niche ideas Within the Dollar Store Business That You Can Specialize in
It is important to state that there is no known niche area when it comes to dollar retail store business. Every player in this line of business usually sells a wide range groceries, drugs, children’s toys and beauty cosmetics, soaps, detergents, cleaning supplies and paper related products, men’s and women’s wear, and other textile products et al from top manufacturing brands in the United States and other countries of the world.
On the other hand, it is important to state that some dollar retail stores may decide to build a strong online presence and service the online community.
The Level of Competition in the Dollar Stores Industry
The competition that is found in the dollar stores industry goes beyond competition between dollar and variety retail stores in your location; you will be expected to compete with outlets such as supermarkets, mom and pop shops and pharmaceutical stores that also retail stuffs at discounted prices. So, it will be right to say the competition in the Dollar & Variety Stores industry is tough.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry.
Just ensure you stock your store with wide range of groceries, drugs, children’s toys and beauty cosmetics, soaps, detergents, cleaning supplies and paper related products, men’s and women’s wear, and other textile products et al from different manufacturing companies and you know how to attract and reach out to your target market.
List of Well – Known Brands in the Industry
In the business world, there are always brands that perform better or are better regarded by customers and general public than others. Brands that are the pacesetters automatically become leading brands in the industry, while other brands work their way to the top of the industry they are in.
Here are some of the leading dollar and variety retail stores in the United States of America and in the globe;
- Big Lots Inc.
- Dollar General Corporation
- Dollar Tree Stores Inc.
- 123 Dollar Stores USA
- Dollar Store USA
- H&J Closeouts
- Dollar 1
- Dollar Fanatic
- Axcesso Spot
- Bargain Bunch
- One Dollar Store
- Five Below
- Dollar Shave Club
- Shoppers World (retail chain)
- Bargain Hunt (retail store)
- National Wholesale Liquidators
- Bottom Dollar Food
- 99 Cents Only Stores
When it comes to starting a new business, economic analysis is one of the important factors that should never take for granted. This is because if you get your economic analysis wrong before investing your capital into any business, the likelihood of the business struggling to make headway cannot be ruled out.
The bottom line is that if you want to start your dollar store business, then you should endeavor to carryout detailed economic analysis so as to know the amount to invest in the business, the best supplies to deal with, the running cost and overhead cost of owning a dollar store business and of course pricing and the projection of profits you are expected to generate from the business.
Please note that in order to carry out a thorough economic analysis for your dollar store business, it will profit you to engage the services of business consultants who are known to can come up with tailored economic analysis that will help you to properly structure your business.
Buying a Franchise vs Starting a Dollar Retail Store Business from Scratch
It is a known fact that everyone that wants to start a business will always want to adopt the simplest business model that will guarantee them profits with minimal effort and investment which is why people usually purchase the franchise of successful brands that are into franchising.
If you are looking towards starting a dollar business, you have the options of either purchasing a franchise or starting from the scratch. There are a couple of dollar & variety stores that are into franchising that you can purchase from. The truth is that when it comes to starting dollar stores, entrepreneurs usually prefer to start the business from the scratch because the business has low level entry barrier and it can be started with minimal capital.
As a matter of fact, if you have little capital, you can start the business by operating only an online dollar retail store. So, whether you choose to start your dollar business from the scratch or buy a franchise, the choice is yours, but make sure that whatever choice you make aligns with your business goal, vision and mission.
Possible Threats and Challenges You Will Face When Starting a Dollar Retail Store Business
When starting a business, you will not be immune to threats and challenges because that is the usual hurdle you must overcome in other to grow your business. The truth is that when you start a dollar store business in any part of the United States, you will be confronted with challenges that will come from other players in the industry especially those with active businesses in your location.
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in bad shape, businesses generally usually struggle to maintain their old customers or even welcome new customers. Unfavorable government policies can also hamper the growth of your dollar retail store. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.
Best legal Entity to Use for a Dollar Store
Please note that if you want to start a dollar retail store business, the legal entity you choose will go a long way to determine how big your business can grow.
In general, you can either choose a general partnership, limited liability company, or a sole proprietorship for your dollar retail store. Ordinarily, sole proprietorship should have been the ideal business structure for a small scale dollar retail store especially if you are just starting out with a moderate startup capital in a small neighborhood.
But if your intention is to grow the business and have chains of dollar retail stores across the United States of America and other countries of the world via franchising and opening online store, then choosing sole proprietorship is not an option for you. Limited Liability Company or even a general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your dollar retail store business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities to use for your dollar retail store business with the ability to sell franchise and open chains of dollar retail stores all across the United States of America, you will agree that limited liability company is the most suitable. You can start this type of business as limited liability company and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Please note that upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your dollar retail store business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
Catchy Business Name ideas Suitable for a Dollar Store Business
When it comes to picking a name for your business, you should be innovative because whatever name you choose for your business will go a long way to create a perception of what the business represents in the heart of people. If you are considering starting your own dollar retail store business, here are some catchy names that you can choose from;
- Sparkle® Dollar & Variety Retail Store, Inc.
- Pick 1 Pick 2™ Dollar Retail Store, LLC
- Peak Lane™ Dollar Retail Store, Inc.
- Colorado® Dollar Retail Store, LLC
- Twinkle Stars® Dollar Retail Store, Inc.
- Harness BJ® Dollar Retail Store, Inc.
- Savers Way© Dollar Retail Stores, Inc.
- Grace Macron™ Dollar Retail Store, LLC
- Amie Allen™ Dollar Retail Stores, Inc.
- 6 Baskets® Dollar Retail Store, Inc.
The practice in the United States and in most countries of the world is that you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your dollar retail store business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own dollar retail store business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own dollar retail store business, usually you may not have any need to file for intellectual property protection because the nature of the business makes it possible for you to run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
Is Professional Certification Needed to Run a Dollar Store?
When it comes to a dollar retail store business, you do not need to have any formal training or special certification before you can be allowed to start the business. All you need is informal training that will expose you to retailing. On the other hand, if you come across any form of certification that can aid you to conduct your dollar retail store business, then by all means try and pursue such certification.
List of Legal Documents You Need to Run a Dollar Store Business
The essence of having the necessary documentation before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have if you want to legally run your own dollar retail store business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID / Tax Identification Number
- Business Plan
- Copy of license for the service support facility and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Building License
- Franchise or Trademark License (optional)
Financing Your Dollar Store Business
Starting a dollar and variety retail store business can be cost effective especially if you choose to start on a small scale by running your store in a street corner.
Securing a standard and well – positioned store facility and stocking your store with a wide range of products from different manufacturing brands are part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale, you would need to source for fund to finance the business because it is expensive to start a standard large scale dollar retail store business.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your dollar retail store business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Choosing a Suitable Location for a Dollar Retail Store Business
As regard choosing a location for your dollar retail store, you should be guided by the demand for such products and easy access to wholesale purchasing of products you retail in your store. Of course, if you are able to secure a central location for your dollar retail store, it will help people to easily locate your store.
The truth is that the location you choose to open your dollar retail store business is key to the success of the business, which is why entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.
It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget. If you are new to the dynamics of choosing a location for a business such as dollar retail store, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your dollar retail store.
Technical and Manpower Details
There is no special technology or equipment needed to run this type of business except for Point of Sales (POS) Machines, shelves, and relevant retail and accounting software applications. You will also need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
As regard leasing or outright purchase of a store facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location for the business.
When it comes to hiring employees for a standard dollar retail store business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Store Manager, Sales and Marketing Officers, Accounting Clerk, and Cleaners. On the average, you will need a minimum of 3 to 10 key staff members to run a small – scale but standard dollar retail store business.
The Business Services Process Involved in Dollar Retail Store Business
When it comes to running a store, there are no hard and fast rules about it. Basically, it is the duty of the merchandize manager to help the organization stock goods from different manufacturing brands. They equally source for good purchasing deals that will guarantee them profits, and also ensure that they purchase products that are in demand in their business location.
Once the products are bought, they are properly arranged in the store for customers to see and purchase. On the other hand, they are also expected to deliver orders made by clients if such services are available in the store.
It is important to state that a dollar retail store may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility.
Marketing ideas and Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a dollar store business, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the Dollar Stores industry.
People and organizations will buy goods from your store if they know that they are going to get quality products and of course value for their money.
As a matter of fact, your marketing strategy will center on quality, and pricing, and above all excellent customer service. You should ensure that whenever your customers visit your dollar retail store, they will get quality products and excellent service.
The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers. Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet to market their services or products.
In other words, a larger percentage of your marketing effort will be directed to internet users, and your website will become your number one marketing tool. These are some of the marketing ideas and strategies that you can adopt for your dollar retail store business;
- Introduce your dollar retail store by sending introductory letters alongside your brochure to every adult in the neighborhood where your dollar retail store will be located
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs will know where to go when they need to locate your dollar retail store
- Create a basic website for your business, so as to give your business an online presence
- Directly market your products.
- Join local dollar and variety retail store associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing
One key factor that will help you sell your products at rock bottom prices is to purchase your items directly from the manufacturers in pretty large quantities. The truth is that the higher the quantity of items you purchase directly from the manufacturers, the cheaper you tend to get them.
Another strategy that will help you retail your products at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
Possible Competitive Strategies for Winning Competitors
The availability of a wide range of products from different manufacturing brands in your store, your business process and of course your pricing model are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your products can favorably compete with the some of the best in the industry.
Possible Ways to Increase Customer Retention
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps to attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your products and services delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why clients source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to make available a wide range of products from different manufacturing companies, and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
If you are in business and you are not conscious about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be.
If your intentios of starting a dollar retail store business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of dollar retail stores and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is a dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your dollar retail store;
- Place adverts on both print (newspapers and retail / shopping magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your billboards on strategic locations all around your city or state
- Engage in roadshow from time to time in targeted neighborhoods to create awareness of your dollar retail store
- Distribute your fliers and handbills in target areas
- List your dollar retail store in local directories / yellow pages
- Advertise your dollar retail store in your official website and employ strategies that will help you pull traffic to the site.
- Position our Flexi Banners at strategic positions in the location where your dollar retail store is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.
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