subject: Maintain Absolute Power over your Dollar Store Costs [print this page] Maintain Absolute Power over your Dollar Store Costs
One for the biggest challenges faced by every new business is reaching profitability. Those who start a dollar store share in that struggle. Achieving and maintaining profits means you must drive sales ever-higher. At the same time dollar store costs must be controlled. Every possible dollar must be driven out of all costs associated with the business. If not, dollar store profits will remain elusive. For more on this important topic - read on. In this article I focus on 4 of the highest leverage actions to retain the power over costs, cashflow and profits.
#1) Maintain a cash reserve to carry your business during the slow times.
Maintaining a reserve is a critical step every business must take. A cash reserve serves to cover expenses until those who start a dollar store achieve dollar store profits. A cash reserve also provides needed funding for business growth. Finally a reserve can make all the difference when the unexpected hits.
#2) Be a pessimist when money is involved.
Never make the assumption that you will be able to beat the odds and your store will outperform all others. In fact plan for exactly the opposite. Place extra funding into your cash reserve. Expect extra effort will be required to achieve the sales growth required to achieve profits. Become the eternal cost-cutter in anticipation of not making a profit at current levels of costs.
#3) Never carry a debt load that cannot be covered by your current profits.
In fact, your debt load should be comfortably covered by current sales, costs and profits. Never place your business in jeopardy by adding debt that assumes higher profits. A better strategy is to build a reserve for future expenditures and make the investment once you have the cash in-hand to cover it.
#4) Maintain tight control over expenditures.
It does not matter what the level of sales or profits, stay in control of your costs. Those who start a dollar store must continually look for opportunities to wisely cut cost.
If you must draw on your cash safety reserve make replenishment of that fund your number one priority. Don't stop repaying this loan to yourself until reserves are back to the targeted level. Also examine the reason you needed to use the reserve fund and make changes to eliminate a repeat of the problem or situation in the future.
