1.0 Executive Summary
The purpose of this business plan is to secure $750,000 of capital for the development of a dollar store based in Sampson County, North Carolina. Dollar Store LLC (“the Company”) is begin developed to provide access to a wide range of every day necessities at a very low cost.
Operations
The location will offer a wide range of products that include personal consumables, packaged food, toiletries, toys, and other products at a very low cost. Although the business will market itself as a dollar store, certain products will have a pricing point of up to five dollars.
In order to ensure that the business can provide its inventory on a cost-effective basis, the Company will work with numerous product liquidators that are seeking divest a wide range of inventory that were not sold through traditional retail stores. Management has already begun the process of working with liquidators that will supply the initial inventory of the business.
The third section of this dollar store business plan will document the operations of the business.
The Financing
As noted above, the Company is currently seeking $750,000 a capital for the development of the dollar store’s operations. These funds will be principally used for the build out of the location, furniture, fixtures, and equipment as well as working capital.
Moving forward, the Company could easily secure ongoing rounds of capital in order to further expand its ability to acquire large scale inventories. This document assumes that the Company will use its retained earnings to finance its ongoing growth.
The Future
After the fifth year of operation, the Company may develop additional dollar store locations within North Carolina. As the economy is undergoing a number of changes, there is an immense demand for access to low-cost goods.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The dollar store startup capital will be allocated as follows:
2.2 Management and Investor Equity
The Founder is the 100% owner of Dollar Store LLC.
2.3 Exit Strategies
There would be a strong demand for this type of enterprise in any economic climate. These businesses thrive especially during times of economic recession. As such, management feels that the Company could receive a sales premium of three times EBITDA. However, there are no longer ranging plans to diverse this business.
3.0 Operations
As noted in the executive summary, the dollar store will provide a wide range of inventory specifically at a low pricing point. While the vast majority of these products will be sold out of price of $1.00, certain inventories will have a pricing point of five dollars. For certain items, this may exceed this higher in pricing point. Ultimately, the goal of the businesses to provide a wide range of products at a very affordable price.
The Company will work with a wide range of product liquidators and wholesalers in order to receive preferential pricing. One of the key components of being able to provide products at a low cost will come from the bulk purchases that will be made. Management has already begun to establish extensive relationships with companies that operate in a distribution capacity for life essential products.
4.0 Overview of the Organization
4.1 Registered Name
Dollar Store LLC. The Company is registered as a limited liability company in the State of North Carolina.
4.2 Commencement of Operations
Management intends to commence operations in the first quarter of next year.
4.3 Mission Statement
To provide a wide range of life essential products at an affordable price.
4.4 Vision Statement
To operate as a preeminent dollar store within North Carolina.
4.5 Organizational Objectives
• Properly establish a marketing campaign that showcases the wide range of dollar store inventories to the general public.
• Continue to expand the number of relationships with the Company has with product liquidators.
• Maintain an expansive online presence that uses search engine optimization to drive visibility.
• Provide gainful employment opportunities for the Company staff.
• Operate as a community minded enterprise by donating goods to local food banks and charities.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the dollar store business plan will focus on the current economic climate, the dollar store industry, the competition, and a customer profile.
As a result of changing trade policies over the past year, there has been a significant degree of volatility introduced to the market. The Federal Reserve is taking appropriate measures to ensure that the economy continues to grow on a quarterly basis.
However, any issues with the economy will not impact the Company’s’s ability to generate revenue. The demand for low-cost goods remains strong, even during challenging, economic climates. Even during positive economic climates, these businesses thrive given that lower income people seek cost-effective solutions for making everyday purchases.
5.2 Industry Analysis
As of this year, dollar stores and product liquidation, focused retailers generate $121 billion of revenue. This industry is expected to continue to grow at a growth rate that is similar to that the economy as a whole.
5.3 Customer Profile
Any individual that earns less than $75,000 is expected to become an ongoing customer of the store. While this is the primary target demographic, it is expected that wealthier people will also come to the store from time to time.
5.4 Competitive Analysis
The Company will face a moderate degree of competition as it establishes its operations in Sampson County. However, given the demand for low-cost goods the business will be able to thrive within this market. The Company will offer a number of low-cost inventories that are not commonly found at dollar stores.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Dollar Store will have sustainable operations as a result of the following:
• Significant and ongoing demand for low-cost life essential products.
• The business will highly controllable operating cost is a function of revenue.
• Limited competition among dollar stores that operate near the plan location.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion of Company’s inventory.
• Development of additional dollar store locations.
• Extend a scope of the Company’s marketing operations.
7.0 Marketing Plan
7.1 Marketing Objectives
• Engage in a proper grant opening period to familiarize people with the dollar store’s operations.
• Use multiple forms of online marketing to showcase specific in inventory that have been acquired.
• Establish referral relationships with area realtors for people that have moved the area.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $2.2 million.
• Gross profits will reach $1.1 million.
Year 2
• Through greater marketing efforts, revenue will reach $2.4 million.
• Gross profits will reach $1.2 million.
Years 3-5
• By the fifth year of operation, total revenue will reach $3.03 million.
• Gross profits will reach $1.5 million.
7.4 Marketing Strategies
The Company will Use a number of marketing strategies that will drive traffic to the location. Foremost, the Company is sourcing a highly visible retail location that will be able to properly house all low-cost inventory offered by the business. This location will feature significant exterior signage.
During the development phase, the Company will launch its online marketing operations. The Company’s proprietary website will undergo significant search engine optimization so that when dollar stores are searched for in the Sampson County area, the business will be found quickly. The Company will update its website on a daily basis with new products that are available at the location.
Similar to the Company website, the business will establish its presence on social media during the development phase. This will include ongoing images of the buildout and the inventory that are carried at the location.
The Company will also operate as a community minded enterprise by providing discounted inventories for members of the military as well as not for-profit organizations within the target market range.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The Dollar Store will have a compounded annual growth rate of 7%.
• Management will contribute $250,000 towards the venture.
• The Company will secure a $750,000 business loan.
9.2 Financial Highlights
• The Company will achieve contribution margins and 50% of all product sales.
• The Company’s operations are highly stable.
9.3 Sensitivity Analysis
These businesses thrive during economic recession as consumer seeks lower cost products. The Company will have highly controllable operating cost, which will allow to cost-effectively provide its goods to the general public. The business will also have a number of relationships with liquidators in place in order to ensure that inventory can be sourced cost-effectively.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• The Company is operating a population dense market.
• The business will carry inventory that are not commonly found among other dollar stores.
• The Company will be able to scale operations via the development of additional locations.
Weaknesses
• Moderately high cost related to facility cost.
• Ongoing competition for more established discount retailers.
Opportunities
• Continue to expansion the Company’s inventory acquisition operations.
• Launch of additional dollar store locations.
• Organic growth through increased marketing.
Threats
• Inflation could cause the cost of revenue to increase significantly.
Appendix B – Risk Analysis
Development Risk – Low
The primary matter that needs to be addressed to securing the funding salt in this document. Management has already begun to source the location for the dollar store’s operations.
Financing Risk – Low/Moderate
The $750,000 of capital be principally used for inventory acquisitions and dollar store build out. These risks are offset by the highly predictable revenue that we produced from operations.
Marketing Risk – Low
The Company will use the marketing strategies discussed earlier. A significant focus of these operations will be to employ marketing messages that showcase the affordable nature of the products offered.
Management Risk – Low
The founder is a highly experienced retail entrepreneur that has extensive experience with product with liquidation businesses. He will be able to bring the operation to the Company to profitability quickly.
Valuation Risk – Low
The valuation risk is offset by:
• Strong demand in any economic climate for access to low-cost everyday goods.
• The business will be able to scale operations at well.
Exit Risk – Low
In the event that the business has to be sold, Management will coordinate with numerous business sales specialist that have worked with retail businesses in the past. This is not expected to occur for a significant period of the time.