How a small store makes money
A store buys a pack of biscuits for 8 coins and sells it for 10. The 2 coins left over pay for the shelf, the light bulb and the shopkeeper's time. Lots of small sales add up.
- A neighbourhood store earns a small gross profit on each item: selling price minus what you paid for it.
- Gross profit must cover your operating costs (rent, electricity, permits, bags, spoiled stock, your own pay) before anything is left as net profit.
- Neighbourhood stores win on convenience: being close, being open when people need something, and selling small sizes people can afford today.
- Stock turnover matters: an item that sells every day earns its small profit many times a month; an item that sits for months ties up your cash and may expire.
- Real example: 7-Eleven traces its start to 1927 in Dallas, Texas, when a Southland Ice Company employee began selling ice, eggs, milk and bread from ice house storefronts. In 1946 the name became 7-Eleven to reflect new opening hours of 7 a.m. to 11 p.m. The lesson: it started by selling everyday items where people already were.
- Pick one item a neighbourhood store sells, such as a soft drink.
- Write the price you pay for it and the price you sell it for. The difference is gross profit.
- List your monthly operating costs: rent, electricity, permits, bags, spoiled stock and your own pay.
- Estimate how many items you sell in a month and multiply by the gross profit.
- Subtract the operating costs. What is left is net profit.
- Mark which items sell every day and which sit for months.
- Check: you can explain why a fast seller with a small profit can beat a slow seller with a big profit.
Videos by other creators on YouTube, for reference. They are not made by or affiliated with The Future Market.
Read the video script
[Host behind a small store counter] "This store makes about two coins on a pack of biscuits. That's it."
[Text on screen: Gross profit − operating costs = net profit] "Those small profits must pay for rent, power, spoiled stock and your time first."
[Text on screen: 1927, Dallas: ice, eggs, milk, bread] "7-Eleven traces its start to 1927, when an ice company worker in Dallas began selling eggs, milk and bread."
[Host] "Small, everyday items, sold close to home, over and over. That's the game."
Write down 10 items you think your neighbours buy every day. For each, guess the buying cost and a selling price, and calculate the gross profit per piece.
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I'm learning "Neighbourhood Store Business (sari-sari, corner & convenience stores)" on The Future Market. Lesson 1: "How a small store makes money". What the lesson teaches: - A neighbourhood store earns a small gross profit on each item: selling price minus what you paid for it. - Gross profit must cover your operating costs (rent, electricity, permits, bags, spoiled stock, your own pay) before anything is left as net profit. - Neighbourhood stores win on convenience: being close, being open when people need something, and selling small sizes people can afford today. - Stock turnover matters: an item that sells every day earns its small profit many times a month; an item that sits for months ties up your cash and may expire. - Real example: 7-Eleven traces its start to 1927 in Dallas, Texas, when a Southland Ice Company employee began selling ice, eggs, milk and bread from ice house storefronts. In 1946 the name became 7-Eleven to reflect new opening hours of 7 a.m. to 11 p.m. The lesson: it started by selling everyday items where people already were. The exercise I'm working on: Write down 10 items you think your neighbours buy every day. For each, guess the buying cost and a selling price, and calculate the gross profit per piece. I'm stuck. Please: 1. Explain the main idea in plain, simple words with one everyday example. 2. Walk me through the exercise one small step at a time. Ask me what I've done so far before giving the next step. 3. Don't just give me the final answer. Help me do it myself, and check my work when I share it.
I'm a parent helping my child (about 8 years old) with a lesson called "How a small store makes money" from the course "Neighbourhood Store Business (sari-sari, corner & convenience stores)". Here's what the lesson says: A store buys a pack of biscuits for 8 coins and sells it for 10. The 2 coins left over pay for the shelf, the light bulb and the shopkeeper's time. Lots of small sales add up. The activity: Write down 10 items you think your neighbours buy every day. For each, guess the buying cost and a selling price, and calculate the gross profit per piece. Please explain this so an 8-year-old understands: short sentences, a fun everyday example, and no hard words. Then give me 3 simple questions I can ask my child to check they understood, and a way to do the activity together, one tiny step at a time.
Sources
- Wikipedia, 7-Eleven (History section): en.wikipedia.org/wiki/7-Eleven
Location, customers and what to stock
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Startup costs and buying stock
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Pricing: markup and margin
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Cash, credit and daily records
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Age-restricted products, safety and trust
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Rules where you live
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Final project
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Quiz
What is the difference between gross profit and net profit?
Gross profit is sales minus the cost of goods; net profit is what is left after operating costs too.
What does FIFO mean?
First in, first out: sell older stock before newer stock.
If an item costs 10 and you want a 20% margin, what is the price?
10 ÷ 0.80 = 12.50.
An item costs ₱20 and sells for ₱24. What are the markup and margin?
Markup 20%, margin about 16.7%.
Name two rules for giving customer credit safely.
Set a limit per customer and write every item, amount and date in a credit book (also: agree a payment day).
Why check your local minimum age before selling tobacco?
It differs by country and place (for example 21 in the USA, 19 in Ontario, 18 in the UK and the Philippines).
Who should you ask for ID before selling tobacco?
Anyone who may be under the legal age (in Ontario, anyone who appears to be under 25).
How can a very small business find simplified registration or tax options?
Ask your country's trade or tax office (for example the BMBE in the Philippines, with total assets up to ₱3 million excluding land).
Many countries require sales tax registration only above a threshold. How do you find yours?
Ask your tax agency or an accountant (for example UK VAT: over £90,000 of taxable turnover).
Final exam
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Certificate
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