A consignment shop is a great way to start a lucrative buisness with potential for growth.
Starting a consignment shop is a great idea right now. With the economy so low, people are turning to resale boutiques and shops more than ever before. Set up correctly, these shops benefit the person interested in cleaning out a closet, shop owners and customers as well. Read on to learn the basics of start a consignment shop, on commission.
Instructions
1. Obtain a space for your consignment shop. Consider the cost of renting or leasing a building, lights, water, and telephone. Determine how much money must be made per month to clear shop costs. Although there is great potential for growth, you need to know overhead cost for a consignment store early on.
2. Buy a business license. This includes a city and state license. Although it does cost to obtain licenses for a consignment store, it also benefits you, the store owner. When you purchase a business license, a tax number is given to you. Anything your business needs for the office, cleaning, open house, etc. is bought tax free when presenting the tax number. This alone is worth the money spent on business license.
3. Set up your consignment shop. Determine what to sell in your store. Many consignment stores limit sales to furniture, appliances, clothing, baby items, etc. Determine what, if any, restrictions you are going to have.
One you determine what to take for consignment shop sales, set up shelves, racks, and counters.
4. Determine your commission. A consignment shop works off of a percentage of sales. What percent of every dollar made is yours? What percent do you expect to pay someone bringing in merchandise? Store owners usually make at least 10% more than the seller, such as 60%/40%, where you keep sixty cents of every dollar made, and a seller makes forty.
Once you determine the figure you are comfortable with, draw up a Terms and Conditions document stating the agreement. Have sellers sign one before taking their items. This can also save you legally, because it's a contract between you and a seller.
5. Advertise your consignment store. Let people know you are taking consignments through word of mouth, newspapers, and fliers. Start taking items as early as possible, up until a few days prior to the Grand Opening. The more merchandise you have, the more likely people will return to see what all new you have, later on.
6. Assign each seller in the consignment shop an id number. Give each seller a unique number that he is known by in the store. Write this number and the seller' s name on an individual sheet in your record-keeping book. All transactions of items from that person are recorded on this sheet.
When you price items, include the seller id number on the tag.
7. Price merchandise as it comes in. This saves time and also saves you from pricing so many items at one time. As you determine a price for merchandise, keep in mind that a consignment shop is more expensive than a yard sale, but cheaper than brand new items.
8. Organize for sales. Prepare your books to record: the price, seller id, and description. At the end of each day, record items in your records and determine the amount you and each seller make. If you do this daily, it takes less than 30 minutes.
9. Open your doors for sales. Have a Grand Opening with a ribbon cutting ceremony. Invite several prominent people. A consignment shop, just like any other business, take time to grow and expand. Use the first few weeks of business to get everything the way it needs to be.
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