Just because every item is the same price does not mean running a pound shop is any less fraught or complicated than any other type of retail business. To help make sure your venture is a sound as a pound, David Wilson recommends keeping the following in mind:
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"It’s best not to consider taking a long lease, but instead take a short one or at least one with a break clause because you are not necessarily going to get it right first time. Economic and retail circumstances do change in town centres and you could find yourself in a backwater with a high rent to pay - if you can't get out of the lease you could lose everything.
"For example I had a unit in a shopping mall in Oxford Street, London where you would think it would be easy to take money. It did well at first but after a few setbacks, I was taking less than half of what the shop in rural Cornwall was taking but with four times the rent! Fortunately I had built a break clause into the contract which we exercised before it swallowed all our capital."
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"Cultivate your own suppliers that you can work with which preferably have a good supply of new lines. It’s also worth making a personal contact at the head office who you can go to if there is a problem. And don't buy too much from clearance houses because some lines will sell fine but others, for some unknown reason, won't sell anywhere at any price."
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As a general rule, unless you are a spectacularly confident buyer, you will need to hold five to six weeks' stock overall. This is because, ignoring V.A.T., if you work out you need to take £5000 per week to cover all your expenses and to pay yourself a wage, you will need to have in stock worth six times this amount, £30,000 at retail price, so if you are working on an average 25% profit margin this means you will need to spend £22,500 (£30,000 less 25%) on stock alone before you have even opened the door. Obviously, this figure does not take into account the three months' rent you will have to pay in advance and money for fixtures and fittings."
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"I was once told by a marketing expert that your staff are your best friends. You have to encourage them and reward them as best as you can so they are happy, which will in turn make your customers happy. You also need staff you can trust. It’s so easy for them to spirit away the odd £1 coin but remember - for every pound coin which finds its way into someone’s pocket, you have lost the profit from the next four or five sales."