How does sari sari store began?

How it become profitable?

How profit consistency affect the small sari sari
store?

4 Reasons Why Sari-Sari Many Stores Fail

Retail
Last updated Jun 23, 2019

Setting up a sari-store in the Philippine isn’t as complicated as many other

businesses around. If you have a small vacant space in the backyard, skills in
carpentry and basic arithmetic, and small capital, you can establish your micro
retail facility.

Related: 9 Key Elements on How to Succeed in Your Sari-Sari Store Business

But not long after the store has opened for business, attracted patrons and established
business relationships, product inventory began to dwindle and sooner than later the once
promising sari-sari store closed its business for good. It’s a sad tale of failed attempts at
entrepreneurship that’s too common among aspiring local business folks. Lack of
training, discipline or understanding of basic cash flow principles can doom any business
venture, startup or stable.

Lack of store management skills.

With lack of understanding between earnings, profits and capitalization, the problem with
sari-sari store’s failure to prosperity can be traced to basic money management skills. It is
important to be aware of daily cash flow, especially on a business with little profit
margins. Without such vision from the store manager, it becomes a proverbial ‘naglaho
na parang bula’ on how earnings going nowhere.

It helps to have a well-structured store management system in place:

 Daily inventory of goods

 Tabulation of cash flow — gross earnings, profits
 Identification of most profitable goods
 Identification of most popular goods
 Checklist of items to procure to replenish inventory

Sadly such daily practice might not exist or deemed unnecessary in a small store. Daily
distractions — tending to household chores or kids nearby, engaged in a TV show
installed inside the store to kill boredom, or relentless chat with neighbors to kill time.
Without equipment such as cash register to save time accounting for goods sold for the
day, the manual, labor-intensive accounting has to take place. Many store managers lack
proper education or even basic training to handle the task, putting the future of the
business in jeopardy.

Lack of cooperation among family members.

Family members who were not forewarned about picking items for household
consumption or taking sales money for purposes other than to restock the store are likely
culprits of a shop’s downfall. It’s quite too common that the most accessible money
available is likely at the cash box inside the store. Having it used for daily expenses —
school allowance for children or payment for electricity bill — is so tempting especially
when payday’s still days away. The general lack of concern or awareness about the
business can lead to the wrong way.

Worse, if the money was loaned from the bank or other individuals such as the dreaded
“5-6” scheme to resupply inventory, where loan interest is likely higher than profits. The
owner could embark in a vicious cycle and lead to getting buried in debt. Certainly that’s
not what every store owner wants to end up with.

Lack of money handling skills.

With the basic understanding the difference between gross sales and profits, an owner
may have a better view of what it takes to grow a business. Unfortunately, among those
we talked to, they have vague understanding about it. To many of them, all earnings for
the day are considered profits and can then be spent on paying utility bills, buying
household items or financing school projects.

Although money was spent on legitimate purposes, it was never used to buy fresh
supplies for the sari-sari store. As a result, owner has to find other sources to finance
inventory replenishment. This can come from loans which charge high interest rates.
Because sari-sari stores have low profit margin, such loans are not going to help a lot
especially if profits are not high enough to cover interest repayments.

Relaxed attitude towards credit.

Filipinos in general have kind hearts. Store owners don’t want to play the role of a
heartless neighbors when someone pleads to get a can of milk for her starving baby, to be
paid later. Or a piece of band aid for small wound for a young kid hurt playing in the
backyard. A heart of gold and goodwill gesture gets repaid, so they say. But in business,
once you give credit, it’s sometimes understood as handout. Many relationships, personal
or business, get destroyed over unpaid debts and in many occasions those who owe you
are the ones who have violent tendencies and call you inconsiderate or lack empathy
when you simply wish to remind them of their obligations.

Family members or close relatives are also some of the worst culprits as they assume they
get the preferential treatment when accessing store goods.

Surely there are exceptional cases, but these are breeding grounds for abuse. The next
thing you realize, as a store owner, you’re already chasing half dozen folks for unpaid
grocery items, blacklisting some of them as relationships turned sour.

In conclusion, every business should be run by knowledgeable, dedicated personnel.

Owning a sari-sari store business is not an exception. Once you lack basic entrepreneurial
spirit, or offer half-hearted dedication, plus lack of vision and discipline to run and grow
the business, you are leading your sari-sari store business towards failure.