Do you want to know how much money furniture stores make yearly? If YES, here are 9 factors that determine the income & profit margin for furniture stores. Whenever any entrepreneur wants to start a new business, one of the first questions that they usually ask or rather one of the first info they try to get is how profitable the business is.

This narrative also applies to entrepreneurs who are looking towards starting a furniture store business. They would want to know how much they are likely going to make daily, weekly, monthly and annually from their furniture store and of course, the profit margin they should be expecting from their investment.

The truth is that there is no one-mold-fits-all when it comes to how much a used furniture store is expected to make. There are some factors that we are going to look into before giving an estimate of how much an average furniture store makes.

9 Factors That Determine How Much Furniture Stores Make Yearly

1. The Size of the Furniture Store

One cannot conveniently state the amount a furniture store is expected to make yearly if you do not know the size of the furniture store. As a matter of fact, the amount a small road – side furniture store is expected to make annually will be different from the amount a standard furniture store franchise with several outlets will make annually even if they operate in same location.

Of course, the amount invested in a small road side furniture store is different from the amount invested in a large furniture store with world – class production workshop.

2. The Location of the Furniture Store

When it comes to setting up a new business, location plays a major role which is why feasibility studies and market survey are essential before settling for a location. Usually, if your furniture store is located in an area with good human and vehicular traffic, and you have quality furniture from different brands, you may not have to struggle to get people to visit your shop and make purchase.

Please note that, the amount a furniture store that is located in a low traffic area will make yearly will be far lower when compared to the amount a furniture store that is located in a high – traffic area will make.

So, if you want to make it big with your furniture store business, then you must be ready to rent a store in a high traffic area. Please note that you are going to be paying more to rent a store in a high-traffic area as against the rent you are expected to pay in a low-traffic area.

3. The Brands of Furniture Retailed in The Shop

Another important factor that will determine how much a furniture store is expected to make yearly is the brand and types of furniture retailed in the store. Ideally, a furniture store mainly retails household (living room, dining room and bedroom furniture, upholstered, coffee tables, sofa tables, end tables, sofas, love seats, chairs, bookshelves, ottomans, display cabinets, consoles and TV stands and otherwise), outdoor and office furniture.

4. Other Related Products and Services Offered by the Store

Aside from retailing a wide range of furniture, retailing other complimentary products such as home office goods, mirrors, lamps, recliners, rugs and flower vase et al will surely boost the amount you are expected to make from your furniture store. So also, if you offer additional services such as furniture upscaling and also your own furniture making workshop, it will position you to earn more money.

5. The Management Style of the Furniture Store

Another key factor that will determine the amount a furniture store is expected to make yearly is the management style of the store. Trust me, the results you will get when you have a good manager will be far greater than what an average or bad manager will get; definitely their results will be obvious and different even if you give the managers same conditions to work and same products to retail.

6. The Business Model of the Furniture Store

There are different Business models that a furniture store can adopt and these business model offers different results. For example, the amount a furniture store that also runs an online store with deliveries nationwide make yearly will be different from the amount a strictly brick and mortar furniture store will make yearly.

The amount a furniture store that also operates franchise will make yearly will be far different from the amount a strictly one location walk-in store will make. This goes to show that the amount a furniture store will make yearly is dependent on the business model of the store.

7. The Advertising and Marketing Strategies Adopted by the Furniture Store

Another key factor that will determine the amount a furniture store can make yearly is the advertising and marketing strategies adopted by the store. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings.

The results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a furniture store that is engaging in aggressive advertising and marketing to make same amount yearly with a furniture store that is passive with its advertising.

8. The Source of The Furniture That are Sold in the Store

The bottom line is that if a furniture store has a production workshop that make quality furniture that is displayed and retailed in their store, they are going to make more money than a furniture store that only retail furniture without owning their own furniture making workshop.

9. The Number of Years the Business is in Existence

In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is properly managed.

This is because you would have over the years won loyal customers. For example, in your first fiscal year (FY1) you might make two hundred thousand dollars ($250,000), in your second fiscal year (FY2) you might make three hundred thousand dollars ($300,000) and in your third fiscal year (FY3) you might make five hundred and fifty thousand dollars ($550,000). Interestingly, most businesses including furniture store usually breakeven from the third year of operations.

Estimated Profit Margin for a Furniture Store

Please note that in the United States of America and according to data from The Retail Owners Institute, the gross profit margin for retail furniture stores has actually risen slightly from 43.8 percent in 2014 to 45 percent in 2018. Please note that that in the furniture retailing industry, furniture markups ranges between 200 to 400 percent.

As a matter of fact, no industry manipulates the meaningless MSRP (Manufacturer’s Suggested Retail Price) quite like the furniture industry. Salespeople usually receive a 15 to 20 percent commission if they sell an item at the inflated MSRP.

In order to maximize profits, most furniture stores, especially chain stores, are not going to negotiate a discount of more than 20 or 25 percent on any non-clearance item (and some stores where you buy the entire room for one price will not negotiate at all). Whether you shop at huge furniture chains or a small local store, the markups are insane. Many of the items are made overseas, shipped in and marked up by as much as 80 percent. That leaves a lot of room for discounts.

Solomon. O'Chucks