Tuesday, November 21, 2023

6 Reasons Why Your Sari-Sari Store Business Failed

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Setting up a sari-sari store in the Philippines isn’t as complicated as many other businesses. 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, and help it thrive.

But not long after the store 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.

Your store location has limited reach.

Poor placement and market penetration are two of the reasons why sari-sari stores fail in the Philippines. Because sari-sari stores frequently rely on foot traffic and local customers, a poor location might result in decreased sales and a limited market reach. Inadequate market research and an inability to meet the target market’s needs can also lead to a limited market reach.

A sari-sari store, for example, located in a remote or inaccessible place, may not have a steady flow of customers, resulting in lower sales and profitability. Similarly, a store that does not provide things in high demand in the local area may not attract many consumers, resulting in decreased sales and profits.

Sari-sari stores, on the other hand, that are located in high-traffic areas, such as near schools or public transportation hubs tend to have better sales and profitability. Furthermore, retailers that offer a wide range of products that appeal to the needs and preferences of the local community are more likely to be successful.

You lack store management skills.

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With a lack of understanding between earnings, profits, and capitalization, the problem with the sari-sari store’s failure to prosper can be traced to basic money management skills. It is important to know daily cash flow, especially in a business with little profit margins. Without such vision from the store manager, it becomes a proverbial ‘naglaho na parang bula’ on how earnings go 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
  • Determining the most popular goods
  • Checklist of items to procure to replenish inventory

Sadly such daily practice might not exist or be 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 chatting with neighbors to kill time.

Manual, labor-intensive accounting must occur without equipment such as a cash register to save time accounting for goods sold for the day. Many store managers lack proper education or even basic training to handle the task, jeopardizing the business’s future.

You lack capital funding and access to credit.

Sari-sari stores in the Philippines fall apart for various reasons, including a lack of funding and bad financial management. Sari-sari establishments are frequently small-scale businesses with limited access to credit and funding, making it difficult to get adequate capital to start or develop the firm.

Furthermore, many sari-sari business owners lack financial management skills, such as keeping accurate records, monitoring spending, and planning the future.

A sari-sari store owner, for example, may need more finance to purchase enough goods to meet client demand. As a result, the store may lose customers to competitors who stock their shelves better. Furthermore, inadequate financial management methods, such as failing to keep track of expenses, might result in unanticipated charges, causing the store to fall behind on obligations or even close down.

You lack cooperation from 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 expected 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 get buried in debt. Certainly, that’s not what every store owner wants to end up with.

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

You lack money-handling skills.

With a basic understanding of gross sales and profits, an owner may better understand what it takes to grow a business. Unfortunately, among those we talked to, they have a vague understanding of it. To many, all daily earnings 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, the owner has to find other sources to finance inventory replenishment. This can come from loans that charge high-interest rates. Because sari-sari stores have low-profit margins, such loans are not going to help a lot, especially if profits are not high enough to cover interest repayments.

You have a relaxed attitude towards credit.

Filipinos in general, have kind hearts. Store owners don’t want to be heartless neighbors when someone pleads to get a can of milk for her starving baby to be paid later. Or a piece of a Band-aid for a 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 a handout. Many relationships, personal or business, gets destroyed over unpaid debts, and in many occasions, those who owe you are the ones who get violent tendencies and call you inconsiderate or lack empathy when you wish to remind them of their obligations.

Family members or close relatives are also some of the worst culprits as they assume they get 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 a dozen folks for unpaid grocery items, blacklisting some of them as relationships turn 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 a lack of vision and discipline to run and grow the business, you are leading the business towards failure.


Managing a sari-sari store isn’t different from other businesses. But perhaps, this is not ingrained in thoughts of many of those who own and manage sari-sari stores. Such mentality should be changed, or else they’ll find their way towards losing the business and shutting down the store.



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