Strategies For Downsizing Your Dollar Store Business
Today’s economic environment is a challenge for every business. Almost daily we read about businesses large and small closing their doors. Retailing has been heavily hit. Those who own a dollar store have not been immune either. Many are faced with decreasing sales at a time when costs are growing. For some survival has required major changes in the way business is done. Actions have included the need to reduce the size of the business. In this article I present strategies for downsizing your dollar store business.
If you are facing the need to reduce the size of your dollar store business, then be sure you focus on every aspect of the operation. If sales are down, money is tight and there is no clear relief options available, then start examining options to reduce the big three costs; rent, labor and merchandise.
Rent reduction could start by meeting with your landlord. Possibly there is a way to reduce rent temporarily or even permanently. With tough times, many landlords will examine this option; especially if you’ve been a solid tenant who has contributed to the overall health and success of the mall or shopping center. Work hard to get some kind of moratorium on rent altogether. The relief this will provide will allow you to begin getting other costs and sales growth for your dollar store business started.
If your landlord is unwilling to discuss rent help, look at other potential options. For example, would you landlord allow you to move into a smaller space with lower rent? Does your lease have an opt-out clause? Is your current lease term almost up? Is there any way you can walk away without penalty and move into a new, lower-cost location? A brief discussion with your attorney may be a wise move as a part of this.
If you own a dollar store business don’t stop with rent reduction. Move on to cost-of-goods-sold (COGS) reduction. While reducing the COGS may seem almost impossible, creativity and effort are richly rewarded in this arena. For example, what if you could reduce your COGS by 5¢ to start? If you are selling $250,000/year that one reduction could mean as much as $12,500 increase to the bottom line of your business over one year. What if you could decrease COGS by 10¢ or even more? This is entirely possible to do; and it can take a losing business and make it profitable. It requires investigation, creativity, and perseverance to accomplish.
Don’t forget the impact of reducing payroll. Look for tasks that can be totally eliminated. Look for tasks that can be done less frequently, or that can become part of another person’s job. Is it time for you to assume more of the day-to-day work being done in your store? If you are not profitable, the answer is YES. Payroll reduction can also be achieved by reducing operating hours. If you own a dollar store business this is a move that must be taken with care. Don’t further reduce sales and customer satisfaction with your business by cutting hours beyond acceptable levels. Study sales per hour before making any decisions. Be sure your lease allows this as well.
Every cost must be scrutinized. Reduce costs and totally eliminate unneeded expenses. Each of these actions will be hard to initiate. Yet the future viability and success of your business requires you to take these steps. Your dollar store business can emerge as a profit generator if these actions are executed properly.
To your dollar store success!
If you are facing the need to reduce the size of your dollar store business, then be sure you focus on every aspect of the operation. If sales are down, money is tight and there is no clear relief options available, then start examining options to reduce the big three costs; rent, labor and merchandise.
Rent reduction could start by meeting with your landlord. Possibly there is a way to reduce rent temporarily or even permanently. With tough times, many landlords will examine this option; especially if you’ve been a solid tenant who has contributed to the overall health and success of the mall or shopping center. Work hard to get some kind of moratorium on rent altogether. The relief this will provide will allow you to begin getting other costs and sales growth for your dollar store business started.
If your landlord is unwilling to discuss rent help, look at other potential options. For example, would you landlord allow you to move into a smaller space with lower rent? Does your lease have an opt-out clause? Is your current lease term almost up? Is there any way you can walk away without penalty and move into a new, lower-cost location? A brief discussion with your attorney may be a wise move as a part of this.
If you own a dollar store business don’t stop with rent reduction. Move on to cost-of-goods-sold (COGS) reduction. While reducing the COGS may seem almost impossible, creativity and effort are richly rewarded in this arena. For example, what if you could reduce your COGS by 5¢ to start? If you are selling $250,000/year that one reduction could mean as much as $12,500 increase to the bottom line of your business over one year. What if you could decrease COGS by 10¢ or even more? This is entirely possible to do; and it can take a losing business and make it profitable. It requires investigation, creativity, and perseverance to accomplish.
Don’t forget the impact of reducing payroll. Look for tasks that can be totally eliminated. Look for tasks that can be done less frequently, or that can become part of another person’s job. Is it time for you to assume more of the day-to-day work being done in your store? If you are not profitable, the answer is YES. Payroll reduction can also be achieved by reducing operating hours. If you own a dollar store business this is a move that must be taken with care. Don’t further reduce sales and customer satisfaction with your business by cutting hours beyond acceptable levels. Study sales per hour before making any decisions. Be sure your lease allows this as well.
Every cost must be scrutinized. Reduce costs and totally eliminate unneeded expenses. Each of these actions will be hard to initiate. Yet the future viability and success of your business requires you to take these steps. Your dollar store business can emerge as a profit generator if these actions are executed properly.
To your dollar store success!
