Investing your savings in a sari-sari store

I received an email from Girlie who wants to put up a small sari-sari store with her savings of less than PhP5,000.

Sari sari stores are a favorite business of us Filipinos because 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.

What will make a sari-sari store successful?

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.

From my talks with sari-sari store owners, you should have an inventory capital range of 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.

It seems that in the case of Girlie, having a sari-sari store with less than PhP5,000 will not really give her enough income for her regular needs. Maybe Girlie has a regular job because she was able to save PhP5,000 and she just wants to have more income.

Girlie is probably still young and willing to take the risk. Having a sari-sari store is a risky business especially since there is so much competition. I am especially partial to mutual funds for those who can take the risk. There are funds that accept a minimum of PhP5,000 as an initial investment and you can add PhP1,000 at a time thereafter.

However, if PhP5,000 is all the savings that you have, you should understand that there is also some risk in mutual funds. I personally believe though that there is less risk in investing in a well-managed mutual fund versus a sari-sari store. Just be sure to leave your money long enough, say two years at least. This way, it will be more secure.

source: good news pilipinas
Francisco J. Colayco is an entrepreneur, a venture developer and financial advisor. He is the Chairman of the Colayco Foundation for Education and the Author of Four Publications, Three of which are Bestsellers: “Wealth Within Your Reach” (Awarded 2004 National Book of the Year, Business and Economics by The Manila Critics Circle), “Making Your Money Work” (Nominated 2005 National Book of the Year, Business and Economics by The Manila Critics Circle), “Pera Palaguin Workbook? and just off the press, ?Money For Kids.

He is available for talks, seminars, and workshops. Learn more about his advocacy at www.colaycofoundation.com or email info@colaycofoundation.com. The books are available in the Philippines at National Bookstores, PowerBooks, 0917-8537333, 02-6314446 and www.colaycofoundation.com, in Hong Kong at Shop 367 Worldwide Plaza 19, Des Voeux Road, Hong Kong and in Japan at Global Growth Management Inc. (GGM) 9-1, Suite 201, Hirakawa-cho, 1chome, Chiyoda-ku, Tokyo 102-0093, Japan Tel: +81-3-3264-0441 Fax: +81-3-3264-6960 Cell: +81-90-2423-7065 E-mail: ito@ggm.co.jp. In other areas, please contact info@colaycofoundation.com or the publisher of this article.

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