Cash Flow Management for Replenishment Inventory In Your Dollar Store Business

One of the challenges that every business owner faces is cash flow management. It is ensuring there is enough money to pay all of your bills while still growing your business. It is ensuring that you make and retain enough profit to pay yourself as well. Yet in high volume low margin business such as when opening a dollar store, cash flow management is a never-ending challenge.

As sales grow it become imperative that cash be available to support advanced replenishment purchases of the highest-volume products so they can remain in stock at all times. After all, these are also the products that draw customers to your location when opening a dollar store.

Often the highest-volume products are also the lowest-profit products. That means that more and more cash is tied up in products that generate a very small percentage of the overall profit for your store. Before opening a dollar store that reality must be accepted. Plans and budgets must be developed that support continued replenishment of these items.

There are strategies that can be used to help relieve some of the problem. For example a business owner can make frequent smaller orders of these items. With good timing there will be another order arriving just as the last of the existing resale inventory is sold. This just-in-time approach requires attention to detail and excellent management of all steps of the replenishment channel. However it can be successfully accomplished by those who are opening a dollar store.

A safer and less time consuming approach would be to allocate funds to meet the required levels of purchasing of replenishment inventory. During pre-startup planning activities before opening a dollar store funds should be invested in these items. Future sourcing of funds to meet future needs should also be considered in this preplanning stage.

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