Key Takeaways:
- Starting a sari-sari store business requires careful planning and understanding of what your local market wants. Creating a business plan, setting a budget, picking the right location, and choosing the goods to sell are all important first steps.
- To run a sari-sari store business legally, you must get the right business permits and sign up with the Bureau of Internal Revenue (BIR). Even small companies have to pay taxes.
- The success and image of a sari-sari store can be greatly improved by putting customer service first, learning about your customer's buying habits, and hiring trustworthy and skilled storekeepers.
- Effective financial management is important for a sari-sari shop's long-term success and growth. This includes setting competitive prices that still make money, keeping accurate business records, and limiting customer credit.
You know you're in the Philippines when you must navigate through a maze of sari-sari stores just to reach your destination. It's like a real-life version of Pac-Man, but you're dodging sachets of shampoo and snack foods instead of eating pellets.
But kidding aside, the sari-sari store is more than just a ubiquitous presence in the Philippines - it's a testament to the ingenuity and resourcefulness of Filipino entrepreneurs, who have turned these humble mom-and-pop shops into a cornerstone of local commerce and community life.
Opening a small retail store business is more than just starting a small business venture.
It's also about joining a community and carrying on a long-standing tradition.
These one-stop shops are common in every neighborhood. They sell everything from snacks to things you need for your home.
If you want to start this small retail outlet, you're getting into a business that will still be useful even as shops and online shopping become more popular.
This article will tell you everything you need to know about starting a sari-sari store.
It might seem hard to start a sari store business, but with the right help, your business can do well in this market that never goes away.
What is a Sari-sari Store?
A sari-sari store is a mini store in the Philippines close to where people live.
The name of these shops comes from the Tagalog word "sari-sari," which means "variety," and they live up to their name by selling a wide range of goods.
A sari-sari shop has a little bit of everything, from food and drinks to toiletries and things you need around the house. Most of the time, these shops are run out of a tiny room in the store owner's house.
This makes them an important part of the community. People go there to buy something quickly and easily without going far.
Pros and Cons of Running a Sari Sari Store Business
Pros:
- It's easy to get started. The sari-sari shop is a simple business idea that doesn't cost much and can be set up in just a few days. It's a great opportunity for people who want to learn more about business and maybe open a bigger store in the near future.
- Save money on rent and wages. Operating a store in your home or getting the help of family members can save you money on employee wages and rent.
- It helps people connect with each other in the neighborhood. Families in their area go to the neighborhood sari-sari store for most of their everyday needs. This lets you build longer-lasting relationships with your neighbors.
Cons:
- There are a lot of rivals. Due to how easy it is to start a sari-sari business, there can be a lot of competition from other shops, convenience stores, and grocery stores. The growth of your business needs to find ways to keep customers.
- Sari-sari stores' main selling point is convenience, so they keep their profit margins low to stay in business. Since they don't sell things in large quantities, they need repeat customers to keep making money.
- Reputation for making and/or selling low-quality goods. People often think that sari-sari shops sell low-quality items. This may be the case because some store owners don't keep track of their inventory well. For example, they might leave products in the sun or air or forget to take things that have already gone bad off the shelves. But this problem can be lessened with careful handling and inventory control.
Here’s Your Beginner’s Guide on how to Start a Sari-Sari Store
Planning
Develop a business plan
A good plan is the foundation of every business that does well. To open a sari-sari store, you should create a business plan first. This includes the following:
- Finding your target market
- Figuring out how much money you could make
- Making both short-term and long-term goals
Think about what makes your store different. What will make your sari stand out?
Business capital
Next, look at how much money your business has.
This should be enough for the first few months of inventory, store setup, and running costs.
Don't forget that it's important to start with a reasonable budget that balances your goals with what you can afford right now.
If you don't have much money to start the business, stock up on things that sell quickly.
As your store grows and makes more money, you can offer a broader range of products.
Location and Store Design
Find Location
One of the important factors, if you want to start a sari-sari business, is its location.
Where you put the store is very important. Make sure that it is easy for target customers to find.
The best place would be near a school, a church, or a neighborhood with many people walking by.
Remember that one of the best things about a sari-sari is that it must be easy to find.
Design your store and choose a store name.
When designing a sari-sari store, you should make it simple and useful. Your store should be neat, well-lit, and easy to find things in.
Make sure that your goods or products are easy for customers to see.
Choose a name for the store that is catchy, easy to remember, and shows the spirit of a sari-sari store.
For more information, please read our guide on sari-sari store name ideas. We also have a name generator on that page to help you brainstorm!
The name of your store is the first thing people see, so make sure it's good.
Product Management
Identify the products you will sell
Start by figuring out what items people want in your area. These are usually food, home items, and personal care items. Your choice should be based on what your customers need right now.
Read more about popular sari-sari store products here.
Find legitimate suppliers
It's important to find reliable suppliers for your goods. They should give you competitive prices without lowering the quality of their products.
Building good relationships with your suppliers can also lead to better deals and terms, which benefits your business too.
Make Sure to Have Enough Stocks Always
It's important to ensure that your sari store always has the necessary items. An empty shelf could result in a missed sales opportunity, so it's important to check on your stock regularly and restock when you need to.
Maintain the quality of your goods.
Make sure the products you sell are of good quality. Check the expiration dates and store things correctly to keep them in good shape. Remove dust and dirt form canned goods and bottles.
Remember that your business can't succeed without the trust of your customers.
Offer Unique Products to Sell
To make your sari-sari shop stand out, you might want to offer unique products that suit your customers' interests. This could include things made in your area or that are hard to find and may not be sold in bigger shops.
Seasonal Items
Offer things that are appropriate for the season or holiday. Whether you sell fireworks for New Year's, chocolates for Valentine's Day, or school supplies for back-to-school, these things can help you make more money all year.
Personnel
Hire the right storekeeper (optional).
The storekeeper is an important part of a sari-sari store, whether you run it yourself, a family member. or hire someone else.
This person must be trustworthy, dependable, and focused on customers' needs. They should know the basics of managing goods while handling cash responsibly.
Keep in mind that the person you hire to run your store is the face of your business to your customers. This means that their behavior can greatly impact how the community sees your store.
Pricing
Set prices for the products
Setting the right item price is key to making your sari-sari store successful. Your expenses need to be competitive and make you money.
You need to consider how much it will cost to buy the things from your supplier, how much it will cost to run your business, and the average market price in your area.
Remember that small retail stores often sell things in smaller amounts, called "tingi," so your prices should consider this.
Lastly, it's important to keep prices the same, but you should also be open to change based on market trends and changes in provider costs.
Legal Compliance
Business Permits
A sari-sari store must follow the rules just like any other business. Get the business permit as well as additional licenses you need from the government in your area.
This includes a Barangay Clearance, a Mayor's Permit, plus other necessary local paperwork. Getting these licenses ensures your business runs legally and shows your customers that you are a real business.
Keep up with any changes to local rules or requirements to avoid fines and keep things running smoothly with your business.
Registration of Small Businesses in the BIR
You need local permits to register your sari-sari business with the Bureau of Internal Revenue (BIR). This is required for tax reasons.
The BIR will give you a Certificate of Registration and legal receipts you'll use daily. Remember that paying your taxes properly and on time is part of running a legitimate business.
It also brings in money to the country, which is used to pay for public services and infrastructure. So make sure you know your tax responsibilities, and talk to a tax expert or the BIR if you have questions.
Customer Service
Provide quality customer service
One key to a successful sari store is delivering quality customer service. Every time customers come into your store, they should feel welcome and important.
Please pay attention to what they want, talk to them in a friendly way, and handle any problems or complaints promptly and professionally.
Giving your regular customers personalized service, like remembering what their favorite goods are or letting them know about important events in their lives, can also make a big difference to your business.
Remember that in a sari-sari store, you're not just selling things; you're also building relationships with your customers, and good customer service is the foundation of those relationships.
Financial Management
Start low
It's best to start small when opening a sari-sari store. This means putting most of your attention on a small number of high-demand goods. As your sari makes more money, you can slowly add more things.
Low sales, low volume
This principle says you shouldn't keep much of an item in stock if it's not selling well. This can reduce costs and help you make the most of your space for things that is more popular and sell quickly. This approach can help sari-sari store owners optimize inventory management and profitability.
Say no to credits
It's common for sari-sari shops to give loyal customers credit, but keeping track of this carefully is important. Too much praise can make it hard to get money when needed. Remember that your shop is a business, not a bank.
Accounting in business
It is very important to keep accurate and update cash records. This will help you track how well your store is doing, keep track of your stock, and make smart choices about where to invest in the future.
Get only 10% of profits for the day.
One smart way to handle your money is to use only 10% of your daily profits for yourself and put the rest back into the business. This will help your business grow in the long run.
Customer’s buying habits
Understanding your customers' buying habits is key to being a great retailer. In a sari-sari store, this could mean knowing which items are often bought together, what times certain items sell the most, or what customers like.
Pay attention to these patterns, and change your stock as well as your service to fit. For example, if you see that people often buy coffee and sugar together in the morning, ensure you have plenty of both during that time.
By making your products fit how your customers usually buy, you can boost sales and make your customers happier.
Is Sari-sari Store Considered a Small Medium-size Business (SMB)?
Yes, this kind of business is a Small, Medium-sized Business (SMB) in the Philippines. SMBs are businesses with a small to medium number of employees and a low sales volume.
Even though a sari-sari store might be small in size as well as the number of workers, it is very important to the local economy.
As a SMB, a sari-sari shop can help the local economy by creating jobs, making life easier for the community, in addition to boosting economic activity in the area.
A sari-sari store is not exempted from Business Tax.
Not all sari-sari stores are exempt from business tax. If the business qualifies as a Marginal Income Earner (MIE) or generates less than Php 100,000 in annual income, it is not subject to income tax (RMC No. 7-2014).
The activities of MIEs should focus primarily on subsistence or livelihood. Examples of MIEs include agricultural growers or producers, direct sellers to ultimate consumers, small sari-sari stores, small carinderias or turo-turo, and drivers or operators of a single-unit tricycle.
It's important to note that MIEs are not subject to value-added tax (VAT) and other percentage taxes.
However, sari-sari stores that do not qualify as MIEs are still subject to either percentage tax or value-added tax, depending on their Certificate of Registration (COR). You have several options to minimize the tax burden on your sari-sari store.
Register your sari-sari store business as a Barangay Micro Business Enterprise (BMBE) or opt for 8% gross sales or receipts tax. Alternatively, you may pay a 1% tax under the CREATE Law.
It's crucial to consult with a tax professional or the Bureau of Internal Revenue (BIR) about the business.
Tax Rate for Sari Sari Store Business
Under the TRAIN tax law, people whose yearly income is less than Php 250,000 do not have to pay income tax. So, owners of sari-sari stores whose incomes are below this level will also not have to pay income tax.
Depending on their circumstances, sari-sari shops may still have to pay a percentage tax (3% of total gross sales) or a value-added tax.
Consider registering your sari-sari shop as a Barangay Micro-Business Enterprise (BMBE) so that you can pay less or no individual income tax. This registration can help you pay less tax and still run your sari-sari shop in accordance with Philippine tax rules.
Talk to a tax expert or the Bureau of Internal Revenue (BIR) to ensure you fully understand your unique tax obligations together with choosing the best tax strategy for your sari-sari store business.
Final Thoughts
Sari-sari stores may help the community and make money. It may also boost the economy.
You must be diligent, plan well, and know your target audience.
Be adaptable, attentive to clients' wants and buying habits, and up-to-date on local legislation and tax laws.
Your small retail outlet can last if you manage your money and treat customers well.
If you're wondering how to start a sari-sari store business, analyze the market, get the permits and licenses you need, build a sound business strategy, get to know your suppliers, and provide exceptional customer service.
These recommendations will help you develop a successful sari-sari store business that benefits you and others.
Sari-sari stores are more than one-stop shops. It's a community staple and a monument to Filipino entrepreneurship!
