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SaxBST
855 Valley Road
3rd Floor
Clifton, NJ 07013
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Release Date: Thursday, April 10, 2014
Media Contact: Carin McDonald (201) 796-7788
April 10, 2014 – Non-profit organizations face a myriad of challenges in establishing and maintaining financial sustainability, especially in an uncertain economic climate. Looming federal and state budget cuts, the ambiguous future of fee for service, a decreasing donor base, and struggles to attract a younger generation of supporters are among the obstacles facing many non-profits today. As a result, insufficient cash flows can threaten an organization’s viability and jeopardize its core mission.
But challenge often breeds innovation, and many non-profits increasingly are seeking creative new ways to add flexibility to their fundraising approaches. One option worth considering is opening a thrift store. As with any new business venture, taking this idea from the planning stages and turning it into a smoothly run operation is a multifaceted task that requires time, dedication and money. Expect the store to operate at a deficit in its first year, and generate a return on investment in the second year. While this may sound like a risky endeavor, the initial investment is worth every penny.
Careful planning will give a thrift store its best chance for success. It is imperative to consider the following:
Location
Choose a storefront location on a main thoroughfare with high visibility. Areas with considerable amounts of daily traffic will help generate customers. Ample, convenient parking also is a must. Seek a location with demographics that lie between upper- and lower-income households given the need to operate from donations. This will draw contributions from the area’s affluent population while providing affordable options for consumers on a budget.
Size
Based on the results of various benchmarking studies, the size of the thrift store should fall between 15,000 square feet and 20,000 square feet. This allows ample room to display all saleable items, with enough space left over to prepare incoming merchandise for sale. Limiting the store to a smaller size would be inefficient and cumbersome to both staff and customers.
Cost
Finding the perfect location with the right size building is no easy task. Non-profits likely will not have sufficient funds to afford “prime” retail space. Well-traveled roadways close to key shopping centers will provide affordable options. Look to spend approximately $8 to $12 per square foot. Landlords may be open to reducing rent or providing rent concessions throughout the term of the lease.
Pricing Merchandise
With increased competition among low-cost providers of goods, shoppers will weigh the cost benefits of buying new versus used. Make sure contributed clothing and other items are in good condition, and offered at reasonable and attractive prices. Maintain a steady flow of salable merchandise, and clearance price or discard less desirable items.
Committed Leadership
Without committed leadership, the establishment of a successful thrift store will likely fail. Ideally, the person running the store should be someone who can commit to the job on a full-time basis. Although the chances of finding that person may be rare, it doesn’t mean a non-profit should abandon this business venture. Seek out an individual who is qualified to run the store (paid or unpaid) and seek out a donor(s) who would be willing to support the endeavor over the long term. For those who are hesitant to contribute directly to a non-profit’s mission, a thrift store is a great way for these donors to obtain the desired control over their donated time and money.
Establishing a thrift store demonstrates how passion, commitment and creative thinking can uncover a viable long-term solution to supplement waning financial support. If you are a non-profit or a donor wondering how to best utilize the money you have or wish to give, consider opening or contributing to a thrift store that will support the mission most dear to your heart.
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About Mark Van Grouw: Mark P. Van Grouw is a Supervisor in the accounting and auditing department at SaxBST. Since joining the firm as an intern in January 2008, Van Grouw has been actively involved in the firm’s Not-for-Profit and Real Estate Industry service groups. He holds a B.S. degree in Business Administration with a concentration in Accounting from Montclair State University.