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How Much Does It Cost to Start a Mattress Store? (Sales Forecast and Breakeven Analysis Included)

How to Start a Mattress Store

If you want to open a mattress store in the United States, then you should be ready to spend between $70,000 and $500,000 or more depending on the size, and type of mattress store you want to start.

Certain factors can influence the overall cost of opening a mattress store. Some of the factors are universal, while some are unique to the city, state, or country where you want to open your mattress store.

A mattress store is a business that specializes in retailing a wide range of mattresses. There are no niche ideas when it comes to a mattress store business because the average mattress store usually sells all or most types of mattresses such as:

Regular mattresses, orthopedic mattresses, innerspring mattresses, memory foam mattresses, latex mattresses, hybrid mattresses, air mattresses, pillows, and bed frames et al.

Estimated Cost Breakdown for Opening a Mattress Store

  1. Lease or Purchase of Retail Space: $50,000 – $150,000
  2. Store Build-Out and Renovation to add things like shelving, display beds, lighting, signage, and checkout areas: $50,000 – $100,000
  3. Initial Inventory Purchase of various types of mattresses, box springs, and bedding accessories: $100,000 – $200,000
  4. Point of Sale System and Technology such as inventory management system, security system: $5,000 – $15,000
  5. Marketing and Advertising for Grand Opening: $20,000 – $40,000
  6. Working Capital to cover initial operating expenses such as utilities, employee salaries, insurance, and rent or mortgage payments: $50,000 – $100,000
  7. Licenses, Permits, and Insurance: $5,000 – $10,000
  8. Miscellaneous and Unexpected Expenses: $20,000 – $35,000

This breakdown suggests a total potential expenditure ranging from $300,000 to $650,000, indicating that a $500,000 budget is within a realistic range to cover startup costs for opening a mattress store.

3-Year Sales Forecast and Breakeven Analysis

If your mattress store startup budget is $500,000 and the average unit selling price is $1,000 per mattress, accounting for a mix of lower and higher-end models. Considering the gross margin is 40%, which is typical in retail for products with significant markup from wholesale to retail.

  1. Annual Sales Growth:
    • Year 1: 500 units
    • Year 2: 10% growth
    • Year 3: 10% growth from Year 2
  2. Fixed Costs (Annual):
    • $150,000, covering rent, utilities, salaries, marketing, and other overheads.
  3. Variable Costs:
    • Included in the calculation of gross margin.

The sales forecast will consider the number of units sold annually, total revenue, cost of goods sold (COGS), and fixed costs to determine net profit. The breakeven point will be calculated based on these figures, identifying when total revenue equals total costs.

3-Year Sales Forecast

  • Year 1:
    • Units Sold: 500
    • Revenue: $500,000
    • Net Profit: $50,000
  • Year 2:
    • Units Sold: 550 (10% growth)
    • Revenue: $550,000
    • Net Profit: $70,000
  • Year 3:
    • Units Sold: 605 (10% growth from Year 2)
    • Revenue: $605,000
    • Net Profit: $92,000

Breakeven Analysis

To breakeven in the first year, your mattress store would need to sell approximately 375 units at an average sale price of $1,000 with a 40% gross margin.

This is below the initial sales projection of 500 units for the first year, indicating that the business model is financially viable under these assumptions. The mattress store is projected to be profitable from the first year, with increasing net profits over the three years.

Factors That Influence the Cost of Opening a Mattress Store

  1. The Cost of Lease or Rent

Interestingly, the size of the store you want to lease, the location of the store, and the additional facility that comes with the lease agreement will determine the amount you will spend.

For example, in the United States, for a space of around 1,500 square feet, you should look towards spending anything from $15,000 to $42,000 per year or $1,250 to $3,500 per month.

  1. The Cost of Registering the Business and Obtaining the Needed Licenses and Permits

As expected, if you are looking to start any business in the United States, you will be required to obtain the needed business licenses and permits such as a:

General business license, health and safety permit, zonal permit, signage permit, resale permit, and operational state facility inspections before you can legally start and operate the business. Different states or cities have different requirements when it comes to starting a mattress store.

  1. The Cost of Start-Up Inventory

As expected, to start a mattress store, you will need to stock up your store with a diverse range of mattresses and bed accessories such as regular mattresses, orthopedic mattresses, innerspring mattresses, memory foam mattresses, latex mattresses, hybrid mattresses, air mattresses, pillows, and bed frames.

It is important to state that having varied stocks in your store will allow you to meet the needs of all customers who walk into your store.

Note that giving an estimate of the initial inventory cost can be challenging, but it is important to stock enough products to attract customers while staying within your budget.

  1. The Cost of Employing Workers

If you want to open a standard mattress store, then you should make plans to employ workers who will work with you. You should plan to hire a store manager, accountant (cashier), administrative assistant, and sales girl or salesboy.

Employee wages such as recruitment fees, training, salaries, and any additional costs like payroll taxes, benefits, and worker’s compensation insurance et al are cost centers you must not overlook.

  1. Operational Expenses

Interestingly, the size of your mattress store, the number of workers you want to employ, and of course the additional services you want to offer in your store will determine the amount you should budget.

Note that your operational expenses are part of your ongoing expenses and they include utilities, maintenance, accounting software, security,

Software systems for inventory management, point-of-sale (POS) systems, customer relationship management (CRM), and other ongoing expenses associated with running a retail business.

  1. Additional Services Offering

Although a mattress store is expected to retail a wide range of mattresses, but standard mattress stores usually offer additional services.

A standard mattress store can conveniently provide various services to cater to the needs of its customers. For instance, a mattress store can offer additional services such as delivering and setting bed spaces for customers.

  1. Insurance Cost

For a mattress store, you are not expected to spend heavily on insurance. On average, a mattress store is not exposed to many risks that will make the quote for insurance high.

But you should have a budget for insurance policy covers such as general liability insurance, property insurance, product liability insurance, business interruption insurance, and workers’ compensation insurance.

For example, in the United States, the average retail store pays a median premium of about $65 per month or $790 per year.

  1. Miscellaneous Expenses

Miscellaneous expenses refer to costs that do not fall into specific categories but are still necessary for the operation of a business. These expenses can vary depending on the nature of the business and individual circumstances.

For a mattress store business, your miscellaneous expenses can cover professional services (such as accounting, legal assistance, and possibly repair services),

Expenses related to shipping products to customers or suppliers and postage for mailing documents or packages, and also costs associated with office supplies, packaging materials, credit card processing fees, internet and phone services, and professional memberships.