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We’ve all heard it before; opening a dollar store is a sure bet. Much of this comes from inexperience experts and authorities who are mainly examining the results of the large dollar, discount retailers. For those who are opening their first store, don’t let this sway you into making a bad decision. Recognize that opening and operating a dollar or discount store requires special retail management skills. Don’t underestimate the need for an entrepreneurial spirit and money to invest. Yet when everything is put into perspective, there are opportunities for success for those who do the right things right. In this article we will focus on some cautions that should be considered and how to properly prepare to handle those potential issues.

First up is the need to realistically project your sales. The retail market is changing. Many long-established retail chains are closing their door forever. Smaller retailers are struggling to maintain profitability. Yet many will advise you to forecast first year earnings as if nothing in the economy has changed. Don’t make that mistake! Go ahead and forecast the best of outcomes. Forecast low start-up costs and high first year earnings. But then temper that with two things. First cut your sales projections much lower, while increasing your projected operational expenses. Second, establish at least a ten-percent safety account for overruns in start-up costs. Temper it by judging sales downward.

With lower sales it will become clear that early on earnings will likely be inadequate to cover monthly expenses. It is important that you go ahead and establish an expense reserve to offset the income shortages during the first year of operation. Many fail to take this step and then find that rather than replenishing merchandise inventory to keep sales growing they must take that money and use it to pay their monthly expenses. Soon inventory levels fall and customers become impatient with the poor selection and lack of core products that they seek to buy.

Soon those customers are shopping at your competitor’s store; lost forever to you. The downward spiral will continue as fewer sales mean even greater shortfalls in profit. More of the money that should go into merchandise replenishment will be spent on monthly bills. Less inventory will mean even lower sales. All the while the entrepreneur is unable to react. What happened to the mighty sales projections? What happened to the anticipated growth of the business?

Are you facing this situation? A few quick steps must be taken to keep this downward spiral from becoming your reality. Start by liquidating old, unsold inventory. That’s right; it is time to liquidate those old turquoise, frog fly swatters that you bought when you first opened the store. None have sold so far, carrying them longer won’t matter.

Survey your customers at the cash register and via small survey tables strategically placed close to the entry of the store. Find out what they need and want and how frequently they use those items. Revamp your operation to focus on those items.

Be sure you maintain a good assortment of consumable products at all times. This includes paper products, household cleaners, as well as health and beauty items. Use food and snack to bring customers back time and again.

To Your dollar store business success!

Are you interested in opening you own dollar store? Check out “A Beginner’s Guide to Opening a Dollar Store at http://www.OpeningADollarStore.com

Bob Hamilton is an entrepreneur, author, writer, business consultant and trainer. http://www.marketingsuccesscenter.com