Don't want to inflame this thread again too much but often I get asked about start up costs of a pound shop or discount store.The following rough figures are for a bricks and mortar retail shop ,not an online store.
I have run a retail high street store for a number of years and find that most of my sales come from regular repeat sales...week after week the same lines keep selling.
Unfortunately these lines are not available at anything like the margins quoted earlier.Some branded toiletry lines we work on as little as 18% profit.
This means that on a £1 line we may only make 15p profit.
I admit that on some "job" lines you can make higher margins and also if you can take containers direct from China you could make huge margins but it is very hit and miss.Those great margins can soon be diminished by those bad lines that don't sell at any price.Continuity could be a problem.
IF YOU WERE TO USE THIS EXAMPLE AND ASSUMING YOU
WORKED ON A LOW PROFIT MARGIN OF 25% (AND NEEDED A MINIMUM OF £15000 TO LIVE ON) AND EMPLOYED A COUPLE OF PART TIMERS.
YOUR TOTAL YEARLY COSTS:
rent £12000
rates £5000
drawings £15000
wages £10000
electric £1500
tel £600
insurance £1000
motor £2000
bank charges £1500
repairs £1400
------------
total costs = £50,000
THEREFORE YOU WOULD NEED TO TAKE:
50000 (total yearly costs)
DIVIDED BY 25 (percent
profit)
MULTIPLIED BY 100
= £200,000
PLUS VAT @17.5%
=£235000 PER YEAR.
(£4519 inc vat per week).
£750 per day over 6 days
This is assuming you are using cash to start up....if
you have to borrow money and have to pay back a loan
this will need to be added in to your costs....meaning
you will have to take more to cover the repayments.
If I can find something I wrote once with regard to setting up an online £1 shop I will post it....but basically to make a reasonable living you would have to be continually wrapping and posting goods all day long !
Found the piece I previously wrote to someone who had the idea of an online £1 store :
.............The internet is right for some items and not others.
Maybe if you spent £1000s on a good shopping site and
£1000s more promoting it ,it may pay off....but it
would be a huge gamble.
The problem is that the margins are too tight and it
it is difficult to find items that are good value and
yet light-weight for posting......the most popular
items that we retail in our high street store for £1
would probably cost more in postage than the item
itself and this tends to put people off.
However as a business plan , just work the maths
out....assuming no premises and you just wanted to pay
yourself a minimum living wage of say £15000 per year at an
average 25% margin you would need to sell:
225 items per day (including vat)....(assuming a 6 day
week....)
assuming an 8 hour day that is approx 30 items an
hour....
If you paid someone else to help , this would go up to
60 items an hour....
with all this activity you need storage , so now we
are up to :
120 items per hour .........2 items every minute !
I don't know if you could physically do it as well as
reordering and receiving stock and dealing with the
administration.
For instance over the last 2 days I have received 4
emails and replied 4 times to a lady who ended up
buying 1 x tube of Moisturiser Cream at a total
delivered cost of £1.50 !!!!....................
...............Sorry if I sound pessimistic and I know there are
people that do well on the internet...but they are
usually selling more expensive and more profitable
items.
Linear Mode
March 2010
