Are you thinking of starting your own consignment store? Running this kind of business can be a profitable experience, but there is much to consider before you begin selling items that belong to others. Bring your ideas into focus by putting together a detailed plan for your future dream.

Start by deciding what kind of items you want to sell.

Your store may be devoted to clothing and fashion accessories, gadgets and technology, or indoor and outdoor décor. People often think of used goods when they think of consignment stores, but you don’t have to be pigeonholed into this mindset; your merchandise may be brand new.

This is especially popular to do in areas where a large artisan community is found. Selling their crafts and handiwork can be lucrative. Successful consignment shops are often in locations that see a significant population of tourists too. Location heavily influences what consignment stores carry.

Location, Location, Location

Where you locate your shop is a big decision to make. While some consignment stores are run from one’s home, others have been chosen with the help of a licensed real estate agent. You will need to find a location that is accessible to customers, has ample salesfloor space, accommodates backstock items, and meets all zoning requirements set forth by the local government.

As you plan, make a list of the items you are going to need for your business to be fully functional. Investing in display cases, tables, and racks may be necessary; however, these things are sometimes provided by the party from which you source your products. To shop comfortably, your customers may require carts or baskets. If you’re selling clothing, don’t forget a changing room and mirrors! Shoppers will want to see information about pricing and sales on tags and related signage.

Strategize Your Store’s Point of Sale

Your store’s point of sale will require its own strategy. This is the place where customers are going to pay for their goods. This operation may require a place for a cash register, a card reader for debit and credit purchases, shopping bags, and a surface for setting down items. This area may have to double as an office space if no other exists. Printers, filing cabinets, and other recordkeeping supplies may need a home here.

Additionally, you’ll need storage for cleaning supplies, basic tools, and other maintenance materials. Don’t forget to create a list of professionals in your area that will be able to help you with utility problems or even lawn care.

Advertising for Your Consignment Shop

Advertising for your consignment shop will be essential, especially at the start! You’ll need to get the word out that you are opening for business. Of course, your shop’s name needs to be visible and eye-catching. You may use local media outlets to reach potential sources for products and customers. A website and an e-mail mailing list can help you attract and retain customers.

While you may be savvy enough to put this together on your own, will you have the time to do so and then manage it as you are spending the time managing the rest of your business? It may make more sense to leave this aspect of your business to a professional.

It’s worth investing in other professional help

Enlist the assistance of a lawyer to help you draft legal agreements required, especially the contracts that are needed between you and the owner of the merchandise you’ll be selling. Equally important is the help you will get from an accountant. This person will help keep you in compliance with tax laws and help you manage income, wages, expenses, and the like. You may benefit from having a mentor in this business venture. Your community’s Better Business Bureau or Chamber of Commerce may have suggestions.

How Much You Can Make

Consignment shop owners can earn a comfortable living from their stores with many earning over $42,000 in a year. So much depends on the store’s location and merchandise though. When you meet with owners who want to sell their goods in your shop, you’ll need to have a contract at the ready. Included in this should be expectations about how long the item can remain at your store and how it is to be returned to the owner, what will happen if it’s damaged while there, and, perhaps most importantly, what percentage you each get from the sale of an item as well as how the owner will be paid following the sale.

The split may be as low as 30/70, with you only keeping 30% of the proceeds; however, if your store becomes a successful, well-known shop, then, by all means, retain a larger portion for yourself. Some consignment shops keep 60% of the sale price.

In Conclusion

Setting margins for a consignment shop requires a close analysis of expenses and profit forecasts. What you keep for the store will have to add up to enough to cover all of your operational costs including wages and certainly the payments you’ll have to make to the owners. Money will be spent on utilities, store supplies, advertising, and payroll. If part of your sales is generated online, there will be shipping costs along with a slew of other potential risks.

Running your own consignment shop your way will have great benefits but be aware of the responsibilities that come with it.