Investing in a Sari-sari store

A favorite business of OFWs and their families is the sari-sari store where the capital required is very low.  For just about any amount, and a property that opens up to a street or pathway that is frequented by people, one can open a sari-sari store.  In fact, many stores are just a small room in their home with a barred window that opens out to the street. Because of the numerous sari-sari stores located beside each other, it seems unbelievable that any of them make money.  In fact, a few make money but others end up just selling their inventory to get back their cash.  Some even just use up their inventory for their personal needs so that these do not rot.  Many don’t even know if they make money or not.  They just don’t seem to be running out of cash for their business so everything must be okay.

The required inventory capital can range from PhP10,000 and more.  There may be costs for permits and fees for the barangay depending on the practice in your area plus of course any renovation you may need to convert your place to a store.  A successful Owner said that if you want significant earnings, no less than PhP50,000 inventory capital is needed.  Examining the margins that storeowners add, it seems that 20% is a good average.  Assuming you can turn-over your inventory at least twice in one month, then you can have a gross profit of anywhere from PhP2,000 to PhP10,000 per month.  You can add to your inventory as you become more successful.

To compute your net profit, remember to deduct your allowance for your storekeeper or “Bantay”, your transportation costs to purchase your inventory and your electricity, if you have a refrigerator/freezer.

It seems that the three most important factors for success in a sari-sari store are pricing, customer relations and inventory control to make sure that your earnings are not fictitious. All sari-sari Owners say that they check out the competition in their area to determine their selling price.  If they are all checking each other out, it must be the oldest store in the area that sets the benchmark then.  However, each owner does not necessarily follow the benchmark.  Each has a reason to sell higher or lower than the benchmark.  For example, some owners have a source where they are able to purchase at a much lower price than the regular wholesalers and supermarkets. Others believe that they can price higher because they have a better location or better service.  However, I doubt that this will be a good long-term strategy as purchasing power worsens with the cost of oil and gasoline going up.  People will walk the extra mile to get the best value for their money.

Nobody likes dealing with a grouch.  Foreigners always say that Filipinos are happy and smiley people.  Let’s be happy and smiley to our co-Filipinos too, not only to the foreigners.

It is always good to be in touch with the needs of your customers.  If you know what else they would buy that you don’t yet have available and what price, tell them that you will make sure you have it on the date you are sure you will have it.  Don’t make promises you won’t keep.