Do you want to start a gift shop online? If YES, here is a complete guide to starting a gift shop business with NO money and no experience plus a sample gift shop business plan template.
Gift shops are considered as life savers as those who shop at the last minute – either out of habit or due to an uncontrollable circumstance – appreciate a well-stocked gift shop especially if they are looking to buy gifts that are unique or eclectic in nature and not necessarily brand names.
One thing about a gift shop is that it is always customized to the interest of the owner and so if you like collecting unique items; this is the business for you. The good thing about starting a gift shop business is that the inventory is not usually complicated.
A well-stocked gift shop will yield a lucrative margin that can allow the entrepreneur to expand, hire personnel and even be in more than one location. And so while starting a gift shop might not look hard; there are crucial steps that must be followed if you are looking to make your gift shop successful.
The first thing you would need to do when looking to start your gift shop is to conduct a complete market research that will enable you know who your competitors are, how many gift shops exist in the area where you are looking to start the business, the best place to locate your gift shop and the composition of your demographics.
Once you are done with the analysis regarding your business, you will need to decide on the style you want for your gift shop especially as gift shops usually have a specific focus. When selecting your gift products, it is important that you analyze your customer base, this is because where you are located will have a huge effect on the kind of gifts you should display in your gift shop.
If you are located at the airport for instance, you will need to select gifts that will commemorate your customer’s visit to the country or state because lots of tourists come into and leave via the airport. Also, you must consider whether your clientele will be predominantly male or female, money conscious or extravagant, interested in decorative items or gadgets that are functional in nature.
In order to improve on your bottom line especially when it comes to sourcing for inventory, you might need to purchase some of your merchandise from merchants that are doing big closeout sales or gift shops that are going out of business.
If you are looking to sell unique gift items, then it is essential that you avoid cheap inventory wholesalers because not only are their merchandise not unique, they are also often badly made.
It is important to realize that furnishing your gift shop may not be very cost effective, especially if you make your purchases from retailers specializing in previously used commercial merchandise or from stores that are going out of business.
Steps to Starting a Gift Shop Online With No Money
1. Understand the Industry
According to IBISWorld, revenue generated in the gift shop industry which is lumped with card stores is continuing to rise as the amount of discretionary spending among consumers have continued to improve allowing consumers to not only be able to travel more between 2012 and 2017 but also to be able to purchase goods from operators in the industry.
This does not however mean that it has been rosy for the sector as the increase in competition from the e-commerce sector as well as discount retailers have caused small operators in the industry to close. It is however predicted that in five years from 2017, there will continue to be an increase in disposable income levels which will cause an improvement in spending.
The revenue generated by this industry is around $19 billion according to IBISWorld even though annual growth has been very minimal at 0.1 percent through the same time period. There are more than 63,200 gift shop and card stores in the United State employing more than 189,200 people.
It is expected that the industry demand will continue to increase as more Americans and even foreigners are expected to travel and have begun to. However, the industry will be faced with immense competition from discount retailers as discount store chains continue to expand.
The life cycle of the gift shop industry is in maturity, between the period of 2012 to 2022, industry value added (IVA) increased at an annual rate of 0.1 percent, whereas during the same time period the GDP of the united states is expected to expand at a rate of 2.1 percent annually.
Even though it is expected that the revenue of the industry will grow consistently during this period, intensive competition from alternative retailers will have a negative impact on this growth. The industry as a whole grows slightly more slowly than the economy of the country even though its growth mirrors that of the country.
On a global level, the gift shop industry has witnessed an impressive growth over the past decade due to the expansion in the customer base as well as an increase in application for innovative products. The gift shop industry comprises of personal and corporate gifting.
Also, the gift shop industry is not restricted to non-food items only as there has been a revolution with product innovations in the food segment where various product types like fruit baskets, cookies, wine hampers are gifted by individuals during occasions like birthdays and festivals. The changing tastes and lifestyles of consumers regarding their willingness and ability to pay for such services have propelled the industry.
The e-commerce industry is playing a huge role when it comes to the gifting industry and this is expected to drive up the revenue of the industry. Increase in per capita income as well as an increase in exposure when it comes to global trends has driven up demand in the global industry.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who demand the services of a gift shop are males and females of any age and income bracket who prefer to gift out unique and eclectic gifts as opposed to something regular or branded.
Therefore if you are looking to determine the demographics for your gift shop business, you should try and make it as encompassing as possible in order to accommodate as much customers as possible.
3. Decide Which Niche to Concentrate On
Gift shops usually retail a range of gifts and novelty merchandise and souvenirs to their target market. The industry is booming as more people choose to look for gifts that are unique or cannot be easily found in merchandise and discount retail stores.
The fact that a gift shop stocks an array of items means that there are few niche ideas available in this industry for entrepreneurs looking to stand out, which is why it is important that you conduct a thorough research in order to find out existing voids in the industry that are profitable and will command traffic for your target market.
Some of the niche ideas within this particular business that one can specialize in include;
- Souvenirs and novelty items
- Clothes, jewelry and costumes
- Seasonal decorations
- Kitchenware and home furnishings
- Greeting Cards
The Level of Competition in the Industry
The level of competition in the gift shop industry is quite stiff as operators have to compete against each other as well as against e-commerce and discount retailers in order to be able to get a fair share of the market. Operators in this industry who only sold via brick and mortar stores are beginning to combine e-commerce in order to keep a healthy bottom line.
Large scale gift shops are able to thrive better in this industry due to the fact that they often have more inventories that will cater to a large number of customers and can also engage in several niches unlike a small scale gift shop that has to stick to few niches and concentrate on only a small group or customers. However, regardless of the size of the shop, customers visiting a gift shop expect to find something unique.
Therefore, if you are looking to start your gift shop in the United States, you will find yourself competing against discount retail stores, online stores and merchandise stores and so it is in your best interest to be prepared for the number of competition which you are likely to face.
4. Know Your Major Competitors in the Industry
In every industry, there are brands that stand out and the gift shop industry is no different. Major players in the industry are those that have existed for a long time in the industry, who are known for their unique inventory, have quality customer service and offer quality products to their customers.
It is important that you know about the major players in whatever industry you are going into as this will help you focus on how you intend to become a success. Below are some of the well-known gift shop brands in the United States;
- Party City Holdco
- Yankee Candle Company
- Kirkland’s Inc
- Luxotica Group S.P.A
- Disney Stores
- Schurman Retail Group
- Spencer Gifts
The gift shop industry which began as a small industry with gift shops springing up in tourist areas and airports, has now grown to become a multi-million dollar industry due to the fact that people love to keep souvenirs to commemorate what they have done or where they have been to or give gifts that are unique in nature to those who matter to them.
However, majority of gift shops in the United States (78 percent) employ between one to four employees with 75 percent generating less than $200,000 in sales annually.
The gift shop industry experiences surges in sales and decline based on a number of factors; however, the holidays are usually one of the biggest periods for the industry due to the fact that a lot of people spend more during holidays aside from their personal birthdays and special occasions.
According to statistics, majority of Americans celebrate winter holidays and spend an average of $700 on items that include gifts. The industry has experienced steady growth for an extensive period of time, which has had a positive effect on not just the retailers but also manufacturers and suppliers as well as those who are into packaging and accessories.
Gift shop owners have started discovering new ways they can attract and retain the mobile and value-conscious customer. In order therefore to be able to offer a Competitive Advantage, stores have to offer unique gifts that cannot be found in other stores.
Most brick and mortar gift shops have computerized systems as well as an online presence and those without have either have to shut down or try to adapt so as to still remain in existence. With a computerized system, the gift shop owner can keep track of revenue, the movement of the product as well as the customers.
5. Decide Whether to Buy a Franchise or Start from Scratch
One important decision that you will need to make when looking to start your business is whether you should start the business on your own – which is from the scratch – or whether to buy a franchise from a company whose goals and objectives align with yours. While each option has its pros and cons, it however offers no guarantees that your business will succeed as there are a lot of other factors that has to be taken into consideration.
Starting one’s business from scratch offers the entrepreneur the opportunity of controlling how the business can grow and expand. Because starting a business from scratch might seem overwhelming for an entrepreneur, it is usually advised that an entrepreneur has a business plan in place as this will help lessen several challenges that might seem overwhelming for the entrepreneur.
Buying a franchise is usually for entrepreneurs that are looking to hit the ground running and don’t want to be bothered about handling certain aspects of the business while they learn about the business from an experienced entity.
Even though buying a franchise might look like the easy way to start your business, it also involves conducting a thorough research as you will need to be sure of which franchise you should buy depending on your budget, their support system and how their values align with yours so that you do not end up wasting money buying a franchise and getting stuck.
6. Know the Possible Threats and Challenges You Will Face
Regardless of whatever industry you might be looking to start your business, one thing that you cannot overlook are the threats and challenges that you will encounter whilst starting or running the business and therefore be prepared to handle it.
It should be noted that whilst some challenges can be easily handled, not all will be and the entrepreneur should remain calm and focused when such challenges crop up as panicking unnecessarily will not be to the benefit of the entrepreneur or business.
Some of the threats and challenges that you are likely to face when starting a gift shop are; the arrival of a major competitor in the same area where you are operating your business, economic downturn that will see customers buying less gifts and souvenirs, industry trends and changes in the tastes of consumers.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
One of the most important decisions that you will make during the course of starting any business is what legal entity will be appropriate for the business. This is because the legal entity you choose for your business will have an impact on how you are going to achieve your goals and objectives. It is therefore important that you conduct a thorough research about the business you intend to start so that you will have an idea of what those that are running the same business use.
As an entrepreneur looking to start a business in the United States, there are several legal entity options that are available for you to choose from and they are; sole proprietorship, partnership (general or limited), corporation and Limited Liability Company (LLC).
If you aren’t sure of what legal entity will best suit your business, you can check what others running the same business you intend to are using or you can engage the services of a business attorney to help you choose the right legal entity.
Another means you can use in finding the appropriate legal entity for your business is via certain major factors such as ease to set up and manage the legal entity, flexibility of the legal entity, the limit of its liability and also its tax structure.
Most entrepreneurs starting out in this industry are usually on a small scale and looking to run their business from one location only, therefore it is usually easy for them to choose a sole proprietorship as they can easily set up and control their businesses without being involved in so many legalities.
If you are looking to start your business on a large scale or you want to protect your personal assets, then you might need to incorporate by either choosing an LLC or a corporation. Both have similarities but LLCs are usually preferred by entrepreneurs because of its hybrid and flexible nature.
8. Choose a Catchy Business Name
While what name you intend to call your business might not look like something that you should consider a priority; it is actually an important process when starting a business because the name you choose for your business can have an impact on your ability to penetrate the market. The name you should therefore choose for your business should be unique, easily pronounceable and memorable.
Below are some of the catchy Business Name ideas suitable for a gift shop;
- Cara Novelty Shop
- Swanky Gift Shop
- Furs and Mint Souvenir Corp
- Stones Gift Stores
- SG Gift Shop
9. Discuss with an Agent to Know the Best Insurance Policies for You
The fact that you will be dealing with a lot of inventory makes it very important that you insure your inventory so that should any disaster – either manmade or natural – occur, you will not personally have to bear the risk, which is why you must be prepared by ensuring that you secure your investment, yourself, your employees as well as your bottom line.
However, one thing that can be quite challenging when it comes to buying insurance policies are the right insurance policies that will do cover what you intend for it to. Even though your insurance coverage is usually based on the type of business you intend to run and your risk exposure, it is usually best to engage the services of an insurance agent or broker especially if you cannot afford a risk manager.
Some of the basic insurance policies that you should consider purchasing when looking to start your gift shop in the United States include;
- General Liability Insurance
- Commercial Property Insurance
- Casualty Insurance
- Workers’ Compensation Insurance
- Product liability insurance
- Umbrella Policies
- Contents Coverage
- Burglary and Robbery
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Every entrepreneur will have to face the question of what intellectual property is worth protecting and which shouldn’t. The gift shop business deals in retailing of gift items and souvenirs and so entrepreneurs in this industry do not consider applying for an intellectual property protection as a priority.
You can however choose to apply for intellectual property protection on your business name, logo, design and any other concept that you deem important.
11. Get the Necessary Professional Certification
What you will be basically doing in your gift shop is to source for unique gift items and then sell it to interested customers. This is therefore not a business that requires you needing any sort of professional certification before you can start it.
If you however decide to get professional certification in order to be better in certain aspects of your business such as management, financial, marketing and accounting, you can do so but it is usually not considered important when looking to run this business.
12. Get the Necessary Legal Documents You Need to Operate
No matter what business you are looking to start in the United States, having legal documents in place is very necessary if you do not want to get into trouble with the authorities. If you are not sure of what documents you will need when starting your gift shop business, it is best that you visit the city council in your area, ask others running the same business or engage the services of an attorney to help you out.
Some of the legal documents that you would require when looking to run your gift shop include;
- Certificate of Incorporation
- Operating Agreement for LLCs
- Business License and Permit
- Business Plan
- Insurance Policy
- Sales Tax Permit
- Employer Identification Number (EIN)
- Federal Tax Identification Number (TIN)
- Contract Documents
13. Raise the Needed Startup Capital
Financing is very important when starting or running a business and this is the aspect that no entrepreneur can overlook. Sourcing for finance to start a business can usually be very tasking especially depending on the scale of the business you want to start, which is why it is often advised that you have a comprehensive business plan in place as this is the best way you can convince your potential investors of how serious you are about the business.
Another thing that you must have at hand before approaching any investor is your own financial capital no matter how little as this will show your commitment towards the business. Some of the financing options that you can explore when looking to start your gift shop include;
- Generating your startup capital from your personal savings and sale of properties
- Sourcing for soft loans from family members and friends
- Applying for loan from a commercial bank
- Sourcing for startup capital from an external investor
14. Choose a Suitable Location for your Business
The location where you are looking to start your business must be carefully thought out as this will have an impact on the success of your business. Choosing an appropriate location that will be within the hub of your target market is however not easy, so it is essential that you are prepared to do extensive scouting and that you have set aside a budget that will enable you secure the facility you intend to use for your gift shop.
Most gift shops are always located in regions where there are bound to be lots of tourists or in metropolitan cities. If you however cannot be in an area that tourists like to visit, you can choose any part of town that is well populated and has lots of foot traffic because most of the customers that visit gift shops are on foot.
Whatever location you decide on, ensure that your inventory and retail price are tailored to fit in with the general income of the neighborhood you are set in.
If you are however looking to start with a small range of products, you might not need to bother with renting or leasing a facility as you can run a more cost effective business by renting a cart. A cart is not only cheaper, it enables you to also be able to move around as well as gain a large customer base. However, it is best to conduct your research before deciding on this option.
In choosing a facility, you must ensure that the size is in line with what you are looking to sell. If you intend to display a lot of merchandise and you get a very small shop, you might find your shop looking cluttered and therefore unappealing to your intended customers.
Engage the services of a real estate agent when looking for an appropriate facility with which to run your gift shop from.
15. Hire Employees for your Technical and Manpower Needs
It is important that you explore the different aspects of a gift shop business such as your inventory, price setting and payment methods. You should deploy an inventory management system that will enable you to monitor and control your stock.
Even though some of your inventory can be purchased from wholesale companies that are gift specific, there are also other sources that you can look to such as trade fairs, local craft art and unique shops online. It is necessary to obtain inventory from more than one source if you want your shop to appeal to a variety of customers.
You can get a software program that can effectively help you to monitor your stock. When setting your price, it is essential that it is high enough to cover all the costs and expenses that you have incurred as well as ensure that you have a healthy bottom line. Whatever payment methods you will be choosing, ensure that you have the needed equipment at hand.
Invest in shelves and cabinets as it is important that you set up your display in such a strategic way that will attract customers especially as most of your customers will be walking by your gift shop and therefore seeing something unique is a way of getting them to come into your shop. Ensure that the inside of your gift shop is also visually appealing and that items are strategically placed.
Most gift shops usually purchase their inventory on wholesale and then mark up the prices on the inventory. In order for you to be effective in this, it is best that you pay close attention to items which consumers like and which have stayed on the shelves for a long period as a guide to marking up your inventory.
The gift shop is a business that can be run by a single individual and you can only employ more hands if you are looking to expand your shop or run it in more than one location.
The Service Delivery Process of the Business
A gift shop involves the sale of varied gifts and so owners have to constantly source varied places for unique gift items in order to get the inventory that will be used to stock the shop.
Once you have sourced for inventory for your store, you will need to ensure that you offer additional services that will appeal to your customers so as to have a healthy bottom line as most gift shops find it hard to stay afloat financially by selling gift items alone.
Having items that are related to certain seasons are also a great way of running your gift shop as this is bound to attract customers and make them also check out other inventory they didn’t realize that you had.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing is a very important aspect of a business because this is the major way through which the business generates revenue that will sustain and grow it. Asides from revenue generation, it is through marketing that awareness for the business is created amongst the intended target market as well as competitors.
However, for a marketing activity to be effective, the needs of the target market must be well anticipated so that the business can achieve its intended goals and objectives.
Before you can successfully anticipate the needs of your target market, you must engage in a market survey that will enable you know who your target market is, where they are likely to be situated, what they expect from you and what you should expect from them as well. It is only after conducting your market survey that you can craft an overall marketing plan for your gift shop.
One thing that you will need to take into consideration when looking to market your business is where you are located. Location plays a huge role in how successful a marketing campaign is as the more visible you are, the more effective your marketing campaigns will be as customers will be reminded of your store anytime they have to walk by it.
You might need to consider displaying prominent signs outside your shop and around the area which your gift shop is in so that you can get the required attention for your business. There are also a number of online options that you can explore in order to create awareness for your gift shop.
Some of the marketing ideas and strategies for this particular business include;
- Encouraging your loyal customers to help spread the word about your gift shop
- Ensuring that your gift shop is listed in yellow pages and online directories
- Creating a website and ensuring that it has been search engine optimized so that it could rank tops in search engines
- Distribute handbills and fliers in various strategic locations
- Advertise your gift shop in popular online forums
- Use your social media platforms such as Facebook, Twitter and Instagram to creatw awareness for your gift shop
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
The dream of every entrepreneur is to ensure that the business he or she owns amasses a lot of good publicity to enable it achieve its goals and objectives and create a corporate identity for the business. Boosting one’s brand can be consciously or unconsciously done and it is always to the benefit of the business as the more awareness is created for the business, the better chance it has to generate revenue that will help sustain, grow the business and enable it to achieve its core goals and objectives.
The huge benefits that come from boosting awareness for one’s brand is usually why even successful companies do not mind setting aside a certain amount of money every now and then in order that they might engage in activities that will boost awareness for their brand and ensure that their corporate identity is positively communicated to their intended target market.
Before you can however create effective publicity strategies that will enable you stand out and compete fairly against your competitors, it is important that you conduct a thorough survey on your intended demographics as knowing this will ensure that you do not waste money in boosting awareness for your brand in areas that your target market are not likely to visit.
Some of the platforms which you can use to boost awareness and create a corporate identity for your gift shop include;
- Ensure that you create a website to display items from your store
- Distribute handbills and fliers in various strategic locations
- Ensure that you install flexi banners in conspicuous and strategic locations
- Make use of your social media platform such as Facebook page, Twitter and Instagram to boost awareness for your gift shop
- Advertise your gift shop in local newspapers and magazines
- Engage in other community activities in other to boost awareness for your gift shop