How to Start a Dollar Store

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Our guide on starting a dollar store covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a dollar store owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start a dollar store by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your dollar store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your dollar store is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4: Open a business bank account

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8: Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

A dollar store is a type of general store that limits its prices. It can sell anything from discounted household goods to party supplies. While the name suggest that nothing can be sold for over a dollar, some stores will make exceptions for certain products while keeping the vast majority of stock at a lower price.

Who is this business right for?

Owners should want to provide budget-conscious shoppers with a safe, spacious, and convenient place to shop. The dollar store can be a community resource that plays a vital role in maintaining a community and helping it thrive.

What happens during a typical day at a dollar store?

The duties of the owner and staff are all tied in with the daily operation of the store. Stocking, selling, managing employees, ordering inventory, and marketing are all tasks that will need attention on a regular basis. Owners should also consistently be looking for new opportunities and avenues to find additional stock at the right prices.

What is the target market?

The target market is anyone who appreciates a good deal. In certain communities, this may mean catering to those at the lower end of the income spectrum. However, the market is open to people of all earning brackets.

How does a dollar store make money?

Dollar stores charge a mark-up on the items they sell. They will typically get inventory by buying large quantities of stock at wholesale prices. By buying products at a deep discount, owners can afford to sell them for a dollar and still make a profit.

What is the growth potential for a dollar store?

Dollar stores are big businesses in many parts of the US. Many people need a store near them where they can buy necessities and luxury items that they wouldn’t have the opportunity to buy at a conventional store.

What are some skills and experiences that will help you build a successful dollar store?

Dollar store owners should have some experience either managing or owning a related store (e.g., convenience store, general store, etc.) Having a general business degree may help, but is by no means required. Owners should be organized, good with people, and able to keep up with the needs of a diverse customer base.

What are the costs involved in opening a dollar store?

Independent store costs depend on location, inventory, and advertising budget. While it would be difficult, it's theoretically possible to get started with as little as a few thousand dollars if opening in a less desirable section of town. Franchises can cost up to $267,000 or more for a 10,000 square foot store. These start-up costs cover everything from stock to marketing supplies, plus they give an owner a comprehensive plan on how to manage their business.

There are also DIY franchise packages that can be purchased for under $30,000 if the owner is willing to do the majority of the work on their own. If financing, make sure you get a loan that can stretch to include the cost of merchandise.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting a dollar store?

Dollar stores are like a more practical type of convenience store, which means the location of the store needs to be easily accessible to your customers. If there isn’t enough traffic in the area, it can lead to a store’s swift downfall.               

The next step is ensure you have the right relationships with wholesalers and liquidators. Not only is this a good way to get quality merchandise, it’s also usually the only way to get new merchandise on a regular basis. The more items you get into the store, the more you’ll entice people to stop by just for fun. Most people who shop at a dollar store are open to buying more than just the bare necessities, and new merchandise is a good way to inspire them to try new products.

Finally, make sure that the store is always clean and that you’re stocking things that your demographic can actually use. Customers need to see the value of shopping at your store over the other types of discount stores in their area. The more you can do this, the more you’ll get the word-of-mouth you need to convert more people into regular customers.

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Growing Your Business

How to promote & market a dollar store

Paper flyers, banners, and modest digital advertising are all ways to let the community know about a new dollar store. The ideal customer is someone who likes a good bargain, so they may not appreciate a store that’s spending money on fancy advertising campaigns. You can even throw a party using items exclusively from your store to attract and excite potential customers.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

Customers don’t necessarily expect to be given the 5-star treatment when they’re in a dollar store, but that doesn’t mean they don’t deserve it. Customer service should be friendly and efficient, the store should be clean and well-stocked, and items should be easy to find. The more owners can keep a balance between maintaining order without sacrificing their selection, the more likely it is that customers will want to frequent their location.

How and when to build a team

Most dollar stores function best when they’re open from morning to night seven days a week, so owners should hire a team right away. Look for employees who are responsible enough to handle different types of customers so there’s less chance of theft or disturbances (which can be a common occurrence in discount retail stores.)

Legal Considerations

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a dollar store business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.


Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
A smiling man sits at a computer and learns about corporate veils


To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Certificate of Occupancy

A dollar store business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a dollar store business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your dollar store business will be in compliance and able to obtain a CO.

Earning Potential

How much can you charge customers?

Some owners set their prices at $1 or less while others will make exceptions for higher ticket items. If choosing to make certain items more than $1, be sure to do so sparingly. Your base clientele will not appreciate having to hunt for prices when they’re in a dollar store.

Dollar stores aren't always the least expensive place to shop when compared to other types of discount stores. Many owners will sell off-brand items at odd sizes as a way to make it look as though customers are getting a better deal than they are.

What are the ongoing expenses for a dollar store?

Dollar store businesses have to account for the costs of their location (rent, permits, etc.), as well as the cost of merchandise, advertising, and employee salaries. They’ll also need commercial insurance to protect against liability claims, natural disasters, and criminal activity.

How much profit can a dollar store make?

Dollar stores may make up to $.80 profit on items they sell, though the average is about $.35 for each item. This means a dollar store would have to sell 200,000 items a year to make around $70,000 in profit.

How can you make your business more profitable?

Selling certain items at big losses is a good way to attract people into the store, so they have the opportunity to pick up other items at a much larger profit. Running promotions or contests can help to attract new clientele too. Dollar store owners can also consider branching out as a franchise or potentially opening more conventional convenience stores in addition to their original venture.

Next Steps

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