How to Run a Successful Consignment Store
Have a passion for the product., Choose your location., Research the market where you would like to start a store., Write a business plan., Calculate your start up costs., Seek financial support., Register your business with state and local...
Step-by-Step Guide
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Step 1: Have a passion for the product.
Consignment stores require more research, bookkeeping and quality control than many retail stores.
You should enjoy studying the product that you choose to consign. -
Step 2: Choose your location.
Picking a place that has a large amount of foot traffic, parking and the right demographic that you want to sell to, will have a huge hand in making your store a success.
Scout out possible locations. , Visit other thrift, pawn, retail and consignment shops in the area to figure out your market.
Take notes of prices, marketing and types of customers that visit these stores.
For example, deduce if a store location will attract young professionals, college students, high school students, families, retirees or another demographic.
This will set how you decorate and stock your consignment store. , Write a document that includes your consignment rate, management plan, financial plan and marketing plan for at least the next 5 years.
You will need this document in order to get funding and follow a successful model.
Ask a friend or family member who is a successful businessperson to look at your business plan.
They can tell you what areas need more planning and whether the current business structure is likely to follow a successful path. , You will need a store and/or lease, cash box or cash register, racks, display cases, display tables, decorations, bookkeeping supplies, price tags, marketing materials, merchandise and money for electricity, phone and possibly a website.
As with any business, it is an excellent idea to have 6 months of living and business expenses saved up before starting.
Since there are many unforeseen problems that can occur with starting any business, you should ensure that you are financially secure before beginning this endeavor. , If you do not have enough money to cover the start up costs, then you should take your business plan to a bank or investor to get a loan.
If you only need a few hundred or a few thousand dollars, you may find a friend or family member that is interested in investing; otherwise you may need to visit a number of banks and credit unions in order to get the best rate. , Read the Uniform Commercial Code (UCC), if you are conducting business in the United States.
You must follow this set of business laws, including filing a UCC-1 form, posting a consignment sign and having the ability to prove to creditors that your items are being consigned. , You will need goods to start with before people bring in their consignments, so go through your own goods, ask friends and family members to consign or buy goods on Craigslist. , Many consignment stores have a set rate of approximately 30 to 60 percent that you will garnish from an item's sale.
In some cases, the lower that you set your rate, the more likely you are to attract more consignments.
Create an agreement that stipulates the amount of time for the consignment, the method of payment, the procedure for theft, sale markdowns and any other important information.
Have the individual seller sign the agreement and take a copy in order to protect yourself.
Consider buying some items outright.
If your business runs on a high quantity of consignments, like a second-hand clothing store, then you might reduce the amount of work you do by buying the product and then marking it up.
This is not a traditional consignment store, but it is a model often used by people who sell antique or second-hand goods. , You can post low-cost "consignments wanted" notices in papers, classifieds, online and on community boards, because individual sellers are often on the lookout for places to sell.
Marketing to customers will require branding your business and creating brand recognition in the community.
Consider using some of the following methods to market your store to customers: grand opening, newspaper advertisements, radio ads, television ads, website, social media campaigns, coupons, college press and a sidewalk sale. -
Step 3: Research the market where you would like to start a store.
-
Step 4: Write a business plan.
-
Step 5: Calculate your start up costs.
-
Step 6: Seek financial support.
-
Step 7: Register your business with state and local governments.
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Step 8: Find initial merchandise.
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Step 9: Set your consignment agreement.
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Step 10: Advertise for consignments and customers.
Detailed Guide
Consignment stores require more research, bookkeeping and quality control than many retail stores.
You should enjoy studying the product that you choose to consign.
Picking a place that has a large amount of foot traffic, parking and the right demographic that you want to sell to, will have a huge hand in making your store a success.
Scout out possible locations. , Visit other thrift, pawn, retail and consignment shops in the area to figure out your market.
Take notes of prices, marketing and types of customers that visit these stores.
For example, deduce if a store location will attract young professionals, college students, high school students, families, retirees or another demographic.
This will set how you decorate and stock your consignment store. , Write a document that includes your consignment rate, management plan, financial plan and marketing plan for at least the next 5 years.
You will need this document in order to get funding and follow a successful model.
Ask a friend or family member who is a successful businessperson to look at your business plan.
They can tell you what areas need more planning and whether the current business structure is likely to follow a successful path. , You will need a store and/or lease, cash box or cash register, racks, display cases, display tables, decorations, bookkeeping supplies, price tags, marketing materials, merchandise and money for electricity, phone and possibly a website.
As with any business, it is an excellent idea to have 6 months of living and business expenses saved up before starting.
Since there are many unforeseen problems that can occur with starting any business, you should ensure that you are financially secure before beginning this endeavor. , If you do not have enough money to cover the start up costs, then you should take your business plan to a bank or investor to get a loan.
If you only need a few hundred or a few thousand dollars, you may find a friend or family member that is interested in investing; otherwise you may need to visit a number of banks and credit unions in order to get the best rate. , Read the Uniform Commercial Code (UCC), if you are conducting business in the United States.
You must follow this set of business laws, including filing a UCC-1 form, posting a consignment sign and having the ability to prove to creditors that your items are being consigned. , You will need goods to start with before people bring in their consignments, so go through your own goods, ask friends and family members to consign or buy goods on Craigslist. , Many consignment stores have a set rate of approximately 30 to 60 percent that you will garnish from an item's sale.
In some cases, the lower that you set your rate, the more likely you are to attract more consignments.
Create an agreement that stipulates the amount of time for the consignment, the method of payment, the procedure for theft, sale markdowns and any other important information.
Have the individual seller sign the agreement and take a copy in order to protect yourself.
Consider buying some items outright.
If your business runs on a high quantity of consignments, like a second-hand clothing store, then you might reduce the amount of work you do by buying the product and then marking it up.
This is not a traditional consignment store, but it is a model often used by people who sell antique or second-hand goods. , You can post low-cost "consignments wanted" notices in papers, classifieds, online and on community boards, because individual sellers are often on the lookout for places to sell.
Marketing to customers will require branding your business and creating brand recognition in the community.
Consider using some of the following methods to market your store to customers: grand opening, newspaper advertisements, radio ads, television ads, website, social media campaigns, coupons, college press and a sidewalk sale.
About the Author
Henry Wright
Creates helpful guides on crafts to inspire and educate readers.
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