How to Start a Consignment Shop

After 9 years of running a consignment shop with my mother, we have it down to a science! Follow these tips if you have an interest in starting up a consignment or second-hand store and your business will flourish!

Things You'll Need

• Store front/Location
• Marketing Materials
• Display Items, Racks
• Inventory
• Clients
• Proper Paperwork including all licensing and fees

Instructions

1. 

   You will have to do LOTS AND LOTS of research before preparing to open a shop. Figure out what your target audience will include. Think of the type of shop you have in mind, such as ladies, children's, furniture, family-style, or antiques. Visit other similar shops to get full of ideas on how to display, what to accept, how their contract reads, how they receive new consignors, etc. You should do as much research as possible to learn brands, retail costs, and resale costs. Women who are savvy in shopping or have previously worked in retail would be a great person to understand brands, labels, retail costs, etc. There is a ton of information online to be able to research simply. Check out auction sites, such as EBay, to get a good idea of resale costs. Look up designer labels by visiting THEIR web pages and realizing the retail costs of similar items. You may also check with local colleges or community organizations to see if they offer a 2 or 4 hour class about starting a business. With diligence and a little time, you'll soon be a wealth of information to help grow your business!

2. 

   Locate a place to rent or purchase a place, but be prepared when entering the consignment world that all profit you make has to be shared with your consignors. Keep this in mind when you are looking at the price. Don't purchase the most expensive business on the busiest street in town until you get your feet wet for a few years, build your business, and your clientele. Look around for a place that has plenty of space for an affordable amount. Houses that are zoned in commercial or a multi-use zone would be a great find for a consignment shop!

3. 

   Purchase all items you'll need to start your shop. Think not only of the big pieces, such as clothing racks and shelving, but also the little items, like display signs to help the flow of traffic, footies to try on shoes, a place to sit for people who tire of shopping, etc. Find a good consignment software to help run your shop. Check out resaleworld.com for their software and price tags. Check out stores you know may be going out-of-business for cheap display items such as jewelry counters. mannequins, or clothing racks. Also donation stores may have too many, see if you can purchase from them!

4. 

   Build your clientele and your starting stock. Start by offering your services to people you know such as family, friends, and co-workers. Pick up clothing and merchandise that looks great for resale at thrift shops or estate sales to have a stash to being with shop with. Look into doing cheap marketing strategies such as printing up your own flyers, brochures, or business cards. There are plenty of companies that offer cheap products to help promote your business, such as Vistaprint.com! Hand out or post your materials wherever you can!

5. 

   Write out a contract to offer to your potential consignors. Contracts should be well thought-out. A contract in consignment MUST include the length of time you will sell the item, what the split of consignment will be (50/50 or 60/40), if items can be picked up or donated out to a local charity at the end of the consignment period, and when and how the consignor receives payment. These few details are a necessity in order to run a consignment business correctly.

6. MAKE SURE to complete all necessary paperwork for purchase of property, taxes, insurance, licensing, etc. Check with your local city and within your state to find out what you need to do to open your shop. Become involved with a consignment association, or with the local Chamber of Commerce.

7. 

   The great perk in consignment is that all of your inventory will come to you from others! You, of course, can purchase items to resell if you want as well. But remember to really scrutinize about what you accept to put on consignment! If you want to be successful, don't accept junk. Those types of items would be great to donate to a Goodwill or Restore or just to throw out completely. Make sure your items have very little wear or use, no significant condition issues, no odor, and are in good reusable condition. Ask yourself "Would I purchase this?" If so, "For how much?" Your own judgement if you have a good eye for resale is to follow your gut. If you wouldn't purchase it, don't accept it!

8. 

   Make savvy decisions when pricing your items! A good way to do this is to expect to mark an item at 30% - 40% of what the original retail price would have been for each item. Don't price yourself out of business, especially in a secondhand shop. Offer discounts after an item has been there a certain amount of time and clean and inventory your shop frequently. A tidy shop will always be appreciated and revisited.

9. 

   Never stop trying to improve your business image. Travel outside of your local area and scout out different types of consignment stores. Hold a "meet and greet" night at your shop with other similar business owners and agree to network with them. Think outside the box on how to attract more business, and always remember word-of-mouth advertising and referrals are FREE and will pay off! Read my other articles about How to Consign and How to Provide Effective Customer Service in Small Business to maintain your personal success with your shop! Good Luck!

Tips & Warnings

• RESEARCH, RESEARCH, RESEARCH

• Secure A Location

• Purchase Computer Software and Display items

• Build your Clientele

• Price Items Accordingly

• Be Successful!

• Never hesitate to hire an attorney, accountant, interior designer or other to help you in this journey. Be smart and get references before paying out money.

• Complete all paperwork necessary to start a business in your location