After doing some
research about opening a grocery store/ cash & carry, here I am to share
some of my experiences about what to consider before opening a cash and carry
in Islamabad or any other city of Pakistan.
I saw many cash and carries
that came and then closed their business after a period of just six months. You
must be thinking.. why? That is because they didn’t do proper research of the
cash and carry business. There are some factors that may critically affect this
project, so you must have a look into it before you start
1.
Location
2.
Rent
Rent. Oh my GOD!! This is what
will decide the fate of your business. Also in cities like Islamabad rents are
too high. When you go to a real estate agent they will demand a rent that you definitely
will know is not reasonable. The rule of thumb is to you should insist on a
rent that should be not more than projected daily sale of your business. or you
can do some mathematics to find out if the rent is feasible for you or not
The gross profit margin in grocer is approximately 13%. Based on this
known fact you can calculate things below.
Daily gross Profit = (Projected Sale) * 0.13
Monthly Gross Profit = Daily Sale x 30
Net Profit Monthly = Monthly
Gross Profit – (Rent + Other Expenses)
While other expenses are electricity/telephone bill, HR expenses and
other daily expenses.
After calculating the net monthly profit, See if it is a good Return on
Investment. If yes go for it otherwise find another place.
3.
Customer’s
Life Style
Understanding your proposed customers’ life style will help you select
the range of products you will need to put in your shop. Like in Islamabad you
will see that people of F sectors earn more than people living in G and I
sectors. So in F sectors you have to go for good brands and imported stuff but
in G and I sectors you will have to offer some discounts on the day to day
items.
4.
Product
Range
A diverse product range is always good. But you have to look into your
starting budget too. There are almost 16000 items you can put into your store. But
this requires a lot of money. So you have to decide what items to put into the
store. Also not every item is a running
item. There are lots of items that contribute to dead stocks. Se beware of that
and properly monitor your sale to find out the dead items.
5.
Purchase
You earn in your purchase. So try to purchase products on fewer prices
to maximize your profit.
6.
Customer Care
Customer is the King. You should have a good customer care to make a
customer a returning customer.
7.
Stock Checking
You should make a routine to physically check the stock after some time.
Once in a month is recommended.
8.
Proper
Book Keeping
Accounts are the soul of every business. you should properly keep your
accounts. That will help you find in which direction is your business going. I recommend
you should have a point of sale software from the start. That should be capable
of recording sales, inventory and stocks data.
This article is
written in context of Grocery Shop/cash and carries in Islamabad. But the
factors are common and any other city of the world.
