Are you interested in starting a gift basket business online? If YES, here is a complete guide to starting a gift basket business from home with little money and no experience.
Okay, so we have provided you an in-depth sample gift basket business plan template. We also took it further by analyzing and drafting a sample gift basket marketing plan backed up by actionable guerrilla marketing ideas for gift basket businesses. In this article, we will be considering all the requirements for starting a gift basket business. So put on your entrepreneurial hat and let’s proceed.
Most gift baskets are usually food gifts, as the food gift sector experienced a growth of 9% between 2007 and 2009. Another sector that grew too was the specialty food gift market, as customers tend to prefer creative products when selecting food gifts, which also included gift baskets. Gift baskets also have started stocking organic and healthy foods, as of 2010, while some gift basket companies have started the organic and healthy line as a niche.
Starting a Gift Basket Business Online With No Money – A Complete Guide
- Industry Overview
According to industry surveys, more than half of all the gift basket businesses have retail outlets. However, due to the flexibility of the gift basket business as regarding the choice in location, more people prefer to start the business from home than to rent out a store for it. Those who rent are often those who have a huge inventory with no space to store these inventories in their homes, and so often opt to lease facilities.
- Interesting Statistics About the Gift Basket Industry
According to a study conducted in 2008 by gift basket industry consultants, Sweet Survival, the United States gift basket industry reached $3.3 billion in sales. This valuation confirmed the resilience of the industry even in economic downturns in satisfying a steady consumer base. The study did not include sales by major retailers and wholesale clubs.
According to an industry statistics carried out in 2001, with the report released in 2002, estimated industry sales were pegged at $3 billion and included a large portion of industry participants that were unaccountable. This means that the 2001 statistics were more reliable than that of the 2008 that didn’t account for unregistered gift basket owners, or those working from home.
The gift basket in the overall gift industry in the United States, maintains the highest ranking, and comprises of more than 3,600 retailers that categorize their businesses mainly as gift basket firms within the country. More gift baskets retailers are in California, New York and Florida, and majority of the firms calculate sales volume at $500,000 or less. Firms that post between $1 million ad $5 million in sales have increased since the 2002 industry survey.
The market trend for the gift basket in the gift industry has consisted majorly of mergers and consolidations, as larger companies continually buy out smaller companies. This is made possible because larger companies have economies of sales that is able to allow them generate better margins.
The market for the gift basket business is also no longer limited to a single customer or to women, especially as women once made up the largest segment of the industry’s market, as both customers as well as recipients. The market has now expanded to include the corporate client.
Starting a Gift Basket Business Online – Market Feasibility and Research
- Demographics and Psychographics
The demographic and psychographic composition of those that patronize the services of a gift basket include; individual – women and men – clients, corporate clients, and government agencies. They also include those who wish to celebrate a loved one or colleague, or businesses who wish to give their out-of-town business clients a parting gift.
List of Niche Ideas within the Gift Basket Industry
The niches in the gift basket business aren’t much, with very few differences differentiating a gift basket business from another most of the services rendered are most often in the same niche. Some of the areas of specialization in the gift basket business include;
- toiletry baskets
- gourmet/food baskets
- wedding and baby shower baskets
- nut/fruit gift baskets
- bath product gift baskets
- candy gift baskets
- floral baskets
- Customized gifts baskets.
One thing about these areas of specialization mentioned is that almost anyone can decide to specialize in all the areas except you started on a very low budget and have no choice than to stick to one or two niches, or even that you prefer to be known for a certain niche instead.
The Level of Competition in the Gift Basket Industry
Starting a gift basket business is not a difficult business neither is it an expensive one to start. Any serious minded entrepreneur who intends to start this business can do so, as it doesn’t have a high start-up capital. Competition in this business is often regional and local and competitors strive amongst themselves to get a share of the market.
However, store front gift basket business usually have a leverage in terms of competition over home based gift basket business, even when it comes to bidding for contracts from businesses and corporate organizations, as well as government agencies.
List Of Well – Known Brands in the Gift Basket Industry
Even though this might be a difficult sector for any business to become well known, this hasn’t stopped some gift basket businesses from rising to the fore and becoming a well known brand. Some of the well known brands in the gift basket business in the United States of America include;
- LeGourmet Gift Baskets
- Original Basket Boutique
- Gift Baskets Connectory
- Boutique Gift Basket
Even though some view gift baskets as a fun hobby, if you intend to fully concentrate on it as a business, you would need to ensure that you carry out a thorough investigation on what you would need to start the business and become successful.
You would also have to consider the challenges you might face from a downturn in the economy to competition from rivals you would meet while going into the business, as well as potential competitors as well. You would also need to ensure that you have strategies that would draw in customers to the business as well as retain them, through effective marketing and promotional activities.
Even though demand for gift baskets are usually in festive seasons such as Christmas, valentine, birthdays, and special occasions, you would need to devise other ways to get existing and potential customers to purchase your gift baskets, so that you could continually be in business all year round; whilst generating revenue and profit for yourself. Starting off, you can decide to keep your overhead costs low by working from home and purchasing the baskets and gift products in wholesale from suppliers and distributors.
Is Gift Basket Business Worth Starting from Scratch or is Buying a Franchise Better?
Starting a business from scratch is usually a good way for any entrepreneur to learn the ropes of the business, which will make the entrepreneur become proficient towards handling certain challenges that the business might face.
Also, the entrepreneur is fully in charge of his or her business, and can take decisions that would change strategies that are not working. Since most gift basket owners are home-based, they most usually start off from the scratch, and work had to ensure that they become well known.
There are few gift basket franchises. However, if you decide to buy a franchise, the advantages that abound is that you will gain from the business structure already in place as well as business advice and tips that would help you run the business better.
Possible Threats and Challenges You Will Face When Starting a Gift Basket Business
As with any business, your gift basket business will face challenges and threats in the course of starting up or while it is being run, and would need you to be proactive in overcoming the challenges that would be thrown at your business. Some of the challenges include a downturn in the economy, and stiff competition from your rivals.
Starting a Gift Basket Business Online With No Money – Legal Matter
- Best Legal Entity to Use for a Gift Basket Business
While starting your own business might be great, making it legal will be greater for you and your gift basket business. The nature of this business however makes it easier for people to run the business on a small scale as well as make the legal structure that of a sole proprietorship. Making your business legal means not worrying about fines, or being on the wrong side of the law; your legal structure is therefore one of the first decisions you have to make as an entrepreneur.
Choosing a legal entity might sound easy but the decision will definitely have a long-term implication, this is why it is best that you consult with experts when you intend to make the decision, as these experts – a certified public accountant and an attorney – will guide you in selecting the legal entity that would be best for you, depending on several factors such as your vision, the level of control you would wish to have, how vulnerable the business is to lawsuits, tax implications, and other such factors as well.
It is noteworthy to know that majority of gift basket business owners use the sole proprietorship as they find it easier to use for running this kind of business. Rarely does anyone use a partnership, corporation, or Limited Liability Company (LLCs).
Catchy Business Name ideas Suitable for a Gift Basket Business
- Thoughtful Services
- Surprise Packages
- For Him and Her Gifts
- Handy Packages
- Organic and Healthy Gifts
The Best Insurance Needed for a Gift Basket Business
Even though you might be running your gift basket business from a traditional brick and mortar official facility or from home, or even be a sole proprietor or any other business structure, you will still need insurance aimed at protecting you as well as your business. Talking to an insurance broker or agent is your best bet at getting the right insurance that will suit your gift basket business especially if you intend to go into related services as well.
Below are some of the basic insurance covers that you should intend purchasing if you are serious about starting your gift basket business in the United States of America;
- General Insurance
- Liability Insurance
- Health Insurance
- Hazard Insurance
Does a Gift Basket Business Need Intellectual Property Protection?
Except you intend to create some of the products in your gift basket in a unique and new way, you certainly do not require an intellectual property protection. Most entrepreneurs usually prefer to just concentrate on running their businesses especially if they are of this nature than worry about the hassles associated with intellectual property. If however, you feel your business name, slogan or logo is worth protecting, you could apply for an intellectual property protection.
Is Professional Certification Needed to Start a Gift Basket Business?
If you decide to run a gift basket business in the United States, you would not be required to own a professional certification, as your business is to put together goods in a basket, wrap it up and ensure that clients like them enough to pay for it.
However, certain goods require that you get a permit before you can put them in your gift baskets. If your gift basket will contain certain foods and liquors, you will need to get a permit from the relevant authorities, as you might get into trouble if you do not.
List of Legal Documents You Need to Run a Gift Basket Business
Listed below are some of the basic legal documents that you would require to run your gift basket business successfully in the United States of America;
- Certification of Incorporation
- Business License
- Business Plan
- Insurance Policy
- Sales Tax ID
- Trademark logo registration (optional)
Writing a Business Plan for Your Gift Basket Business
If you think your gift basket business is so easy that it doesn’t need a plan, then think again. Every business requires a plan especially if your intention is to make profit. Due to the nature of the business, you might not need a comprehensive business plan, but you will need a plan regardless even if it has to be as simplified as possible. Writing a business plan for your gift basket business would require attention to detail and research accuracy just like you would any other business.
The business plan will help you settle important issues such as the type of organization you intend to run and its purpose. The business plan will also help you in overcoming challenges and threats that you might face after you might have started your gift basket business.
Before writing your business plan, you would need to conduct an extensive research by concentrating on gift baskets industry trends. The research will also enable you to identify possible niches and target markets. You would need to investigate your competitors and note how they conduct their businesses, their pricing, and delivery as well as payment methods.
You will also need to garner information from suppliers of gift baskets as well as product wholesalers on the pricing of baskets and products, as this information would be necessary for getting accurate details for your business plan.
You would also need to fully describe your business in your business plan. This means that information describing your company and mission statement is to be contained in this section. Once you have completed your executive summary, it will cover the important components – such as products, services, financial goals and marketing efforts – that are necessary for your business.
Next is completing a market analysis that will provide a detailed analysis of strategies you intend to use in marketing your ideas and goals. This also means that you would have identified your target market and provided strategies on how you intend to get to the demographic that is contained within your target market. Information here also has to include what your Unique Selling Point (USP) is.
Your business plan would need to show management details, such as who the owners are, their duties and qualifications; and the type of organization you intend to run – for example if you intend to run a sole proprietorship or a partnership.
This step is the most important as it includes financial analysis. You are expected to detail how you intend to make money by including how many gift baskets you intend to sell at each milestone. Other financials such as income statements, cash flow statements, and balance sheet, will have to be prepared as well. If this section seems intimidating then seek the help of an accountant who will help put you through.
If you feel that writing a business plan might be too burdensome for you, then you may have to engage the services of a business consultant to help you write a business plan for your gift basket business. However, if you are on a tight budget, you can go online to source for a business plan template. The template will aid you write a business plan for your gift basket business easily.
A Detailed Cost Analysis for Starting a Gift Basket Business
According to feasibility studies, the cost of starting up a gift basket business varies depending on the entrepreneur in question. While some might start the business with very little capital, others might start with a high capital. The aim regardless of how much one uses in starting the business is profit.
This is why it is necessary to carry out a thorough investigation of the business before starting; this will enable you to know how much is necessary for your start-up while eliminating unnecessary expenses. For example, while someone might consider it necessary to lease an office facility before starting the business, you might consider it not so necessary, and decide instead to start from home, which will in essence drive down your start-up costs.
Below are the basic items and requirements you would need to have made if you intend to launch your own gift basket business in the United States of America;
- Incorporation fees $300
- Business license fees $200
- Business Permit (for certain foods and liquor) $500
- Insurance policy $500
- Utility acquisition (Phone, computer, fax, printer) $1,000
- Official Website $500
- Leasing of facility for a year including store equipment (special displays, cash register, display shelving, marking guns, floor gondolas, hooks, pegboard, wall gondolas, showcases) $15,000
- Cost of acquiring baskets (decorative materials, baskets/containers) and gift products $8,000
- Advertising costs $700
- Retail supplies (sales tag, cash register tape) $500
- Cost of acquiring specialty equipment (work tables, crafting tools, heat gun, shrink wrapper, signage and security system) $1,500
- Storage fixtures, shelves and cabinets $300
- Packaging supplies (sealing tape, mailing labels, boxes, cushioned mailers, and packing materials) $700
- Additional expenditure (business cards, signage) $300
Going by the report from the above feasibility study that was carried out, you will need an average of $30,000 to start a small scale gift basket business in the United States of America.
If you are looking to start a medium scale gift basket business in the United States, you would need nothing less than $60,000. And if you want to start a large scale gift basket business in the United States of America, then you should look towards raising well over $120,000 for use as your start – up capital.
- Financing Your Gift Basket Business
Even though a gift basket business might appear simplistic in nature and an easy business to start with; it will fail like any other business if there are no funds to sustain the life of the business. This means that the importance of finance cannot be overemphasized when it comes to starting up a business, and every entrepreneur must give this a huge thought when having a business idea in mind.
One thing that could help you as an entrepreneur get your finance faster is if you have a business plan in place. The business plan, which is a reality based document on how you intend to run your business, will also state how you intend to source for your start-up capital. Also, it will help the investors who you might approach see how serious you are taking your gift basket business idea.
Some of the options available to you in raising money to finance your gift basket start-up business include;
- Raising money from personal savings
- Using your credit card as a source of funding
- Borrowing from close family and friends
- Raising money from investors or partners
- Raising money from crowdfunding sites
Choosing a Suitable Location for your Gift Basket Business
Deciding on the location for your gift basket business is very important, as this could help you safe costs as opposed to spending more. For example, if you decide to operate from home and have a steady stream of customers, you could spend more driving to deliver to clients, than if you had a store in the center of town, where clients could come and pick the gift baskets for themselves.
Another factor that helps in the choosing of a location is your target market. If your target markets are busy executives or college students, you might need to rent a facility close to them, especially as not all sales can come from your gift basket business website.
However, if you decide to work from home, you could partner with stores that are close to your target market, thereby making it a win-win situation for you. This means that you do not necessarily need to break the bank in leasing a facility because you intend to start your gift basket business.
Those that lease facilities apart from the above mentioned reasons, are usually those that want to start off on a medium or large scale gift basket business and would want to employ staff to help in running the business.
Starting a Gift Basket Business With No Money – Technical & Manpower Details
The equipment and items that would be needed to run the gift basket business are usually not something that are considered too expensive; and so you would not need to purchase them as fairly used. Baskets can easily be gotten in a large quantity, while scissors, wraps, and the rest, can be gotten at local stores.
Listed below are some of the equipment that you can use in starting off your gift basket business in the United States;
- Baskets (Varying sizes)
- Shrink Wraps
- Heat Gun
- Crafting tools
- CCTV Cameras
Basically, most people that run this business do so from home and for those that usually opt for a store are those who do not want to commute long distances, or intend to employ more than one staff, or even bid for contracts from corporations and government agencies.
Regarding the number of people that would be needed to run a gift basket business, it varies depending on the scale of the business, as this is a business that one person can effectively run. However, if you are looking to build a structure for your gift basket business, you would need to employ a front desk officer, manager, marketing and sales executive, and security personnel. This is about 4 to 6 people.
The Production Process in Gift Basket Business
The gift basket production process is dependent on what your customers want and what you feel your customers might want.
The processes involved usually range from getting baskets, and items needed to be put into the basket for sale to clients. Other process would include sourcing for special items such as family heirlooms, and other unique gifts that would be used in the gift basket.
Starting a Gift Basket Business Online – The Marketing Plan
- Marketing ideas and Strategies for your Gift Basket Business
Marketing your gift basket business is a way for you to generate revenue for the company. No business can grow without marketing, because not only does marketing being in money; it also generates publicity and promotes the brand for your business. This is why every company takes marketing seriously, even companies that are already well-known brands. While marketing your product, you must ensure that you use all necessary means to get your business the needed awareness.
Most gift basket businesses are usually home based, and therefore requires more marketing strategies, than a regular brick and mortar building where there is already a structure that people can see. This does not however mean that you cannot operate your business and achieve the success you intend, it also does not mean that you cannot bid for jobs at any level, as long as you have a structure on ground. Also, entering into an alliance with regular gift stores or specialty stores will help boost your business profoundly.
Below are some of the marketing ideas and strategies that can be adopted in marketing your gift basket business:
- Visit your corporate clients and introduce your business by giving out a colorful gift basket brochure and price list.
- Exhibit your gift baskets at networking events, as well as business seminars and fairs
- Leave sample gift baskets at target areas such as saloons, fitness centers, and spas
- Place targeted advertisements in your local newspapers and relevant magazines
- Use the internet especially social media platforms to promote your gift basket business
- Build an official and professional website, and engage your customers on that platform
- Use word of mouth referral marketing
- Try door to door marketing
- Make use of affiliates
- List your business on online directories
Factors That Will Help You Get the Right Product Pricing for your Gift Basket business
Getting the right product pricing for your gift basket business is ensuring that your gift basket contain products that are deemed valuable by your customers and yet affordable to them as well. Working from home will help in cutting costs associated with leasing a place for business; also getting most of your products in wholesale is another way to keep down costs for your gift basket business ensuring that you set the right price.
Possible Competitive Strategies for Winning Your Competitors in Gift Basket Industry
Before venturing into any business, you would need to have drafted strategies on how to have a competitive advantage over your competitors. The truth is any entrepreneur that does not prepare for competition is not ready for business, because all businesses have existing competitors and potential competitors who are also looking to have a share of the market. This means that your gift basket business must be packaged in an attractive way that will not only win you new clients but ensure that the clients you get stay on with your business.
One strategy you could use in favorably competing with other gift basket businesses is to ensure that your business creates different themed gift baskets for all kinds of clients – corporate, individual, college student etc. once your clients know that they could get a gift basket for whatever category they belong to from you, then you would not only be creating a brand for your business but improving the bottom line of your business.
Another way you can compete with your competitors is to use your website to your advantage. Get a web professional to help with a website that shows the statistics of what clients search for on your website. This will give you ideas on what kind of baskets to create, thereby getting you more clients, and giving you an edge over your competitors.
Possible Ways to Increase Customer Retention for your Gift Basket Business
Customers love where their needs can be met in a way that is not only convenient to them but also one that will give them a satisfying experience as well. If you treat your customers valueably, then there is nothing that will stop your customers from sticking to your business, even if your rates become a bit higher than that of your competitors. Most customers leave for your competitors if they feel that they are likely to be treated well than what they get from you.
Your aim at retaining your customers must go on even after sales have been made. Continually reaching out to your customers by giving out gift tips and advice, updating them on your different themed basket is another way at retaining customers for your business.
Strategies to Boost your Brand Awareness and create a corporate identity for your Gift Basket Business
Strategies are important if you intend to boost your brand awareness as well as create a corporate identity for your gift basket business. Promoting your business brand has to take all conventional and unconventional routes especially as you would be operating from home and would need all the recognition you can get for your gift basket business.
Listed below are some of the routes that you can use to boost your company’s brand whilst promoting and advertising your business;
- Ensure that you create a referral program that gives clients discounts when they refer someone
- Give free samples to strategic potential clients such as a corporate gift to the president of a big company near you
- Donate gift baskets to charity events for people to bid on, or offer different baskets as a raffle gifts for people at such events
- Create an official website and ensure that your products and prices are indicated on the website
- List your gift basket business in yellow pages
- Advertise your gift basket business in local newspapers, relevant lifestyle magazines, and even local radio stations
- Use the social media platform – Instagram, LinkedIn, Facebook, and Twitter – to gainfully promote your business to existing customers
- Ensure that you distribute your handbills and fliers in target areas, and also pass out your business cards as well.
- Attend business events and seminars and look to engage with businesses that would promote your business
Creating a Suppliers/Distribution Network for your Gift Basket
Every gift basket business depends on suppliers in sourcing for products – organic, specialty, customized or regular – that will be used in the gift basket. While there are regular gifts that can be gotten on short notice, other products can only be gotten on special requests.
This is why it is necessary for your gift basket business to be in good contact with its suppliers and distributors. These suppliers are not only necessary in terms of ensuring you get your supply, but if you have a good relationship with them, you can always get first hand information on when it is best to get your products wholesale, and what products they think you should include so as to help move your gift basket business.
Tips for Running a Gift Basket Business Successfully
Running a gift basket business successfully would require time and planning, but this does not mean you can get right to it, especially if you have clear strategies on how to achieve this success in place. If you are running your gift basket from home, it will mean that you will have lower overheads, but would mean that you might have to work harder than those that operate from a traditional brick and mortar institution.
Your success would be dependent on the type of gift basket you intend to sell. You might decide to go into all areas or specialize in certain niches. Just ensure that your type of gift basket is one that will propel your business forward.
Your target market matters a lot in this business. The wrong target market could see your business failing before it even starts. Also, ensure that the items you place in your gift basket are not too high priced that they do not allow you generate profit as you intend to for your business, also get most of your items in wholesale except for specialty or customized goods.