How to Start a Party Favor Business

Starting a party favor business requires a specific strategy and market position.

Party favors are popular all over the U.S. for all kinds of events throughout the year. In addition to balloons, decorations and other standard items that can be used at different kinds of events, specialized party favors include those for social engagements ranging from baby showers, bridal showers or weddings to birthdays, graduations or bar mitzvahs, at noted by vendor Favor Warehouse. To maximum your chances of success with a new business, follow a few simple guidelines in developing your plan.

Instructions

1. Decide on a business model. You could open a retail party favor store, you could serve as a wholesaler or distributor to existing party favor retailers within your area, or you could concentrate on an online sales strategy, without a brick-and-mortar location except for storage and shipping. Each offers unique advantages and disadvantages. A successful retail store can earn solid profits and create a stable income, but start-up costs can be prohibitive because of the costs of commercial space, insurance, inventory and advertising.

2. Research your local market and test your assumptions. For example, if you decide to become a wholesaler or distributor, analyze existing businesses to determine how you will compete. If you're planning a retail store, visit every retail party favor store within 25 miles of your proposed location to see what they sell, how much they charge and how much business they generate.

3. Define your intended market advantage. It's not enough to open a party favor business and hope customers will buy from you instead of your competition. You must create clear, compelling reasons to do business with you. For example, you could elect to become the high-volume, low-price leader in the market, or you could decide to focus on more high-end events, such as weddings and bar mitzvahs, rather than children's birthday parties. You could also choose to have the largest inventory in your area. Pick a niche then create a specific business plan that spells out your precise strategy and sales tactics.

4. Find suppliers. You can buy from wholesalers or distributors, or directly from manufacturers. Although all such pricing is at a wholesale level, you will get the best net price by buying direct from manufacturers. Find a range of general party favor manufacturers and suppliers at resources such as Global Sources. For specialized products such as wedding favors, use a resource such as EC Plaza Global. For the lowest possible prices, buy direct from China. Match your supplier selection to your strategic plan. If you intend to be the low-price leader, you must find the wholesalers, distributors and manufacturers of the least expensive products on the market and negotiate the best possible deal.

5. Find a home. Whether you're opening a retail business or becoming a distributor, you'll need commercial space to rent. However, the costs will vary greatly depending on whether your retail store is in a high-traffic retail district or in an industrial part of town. If you rent retail space, the cost of building it out to your specifications will usually be included in the per-square-foot rate you pay for rent. If you're opening a retail store, make sure that every square foot is used effectively. If you don't have that expertise, hire a retail consultant to help you.

6. Build your opening inventory. Focus on products that sell every day, as opposed to those that sit on shelves for longer periods. Those increase your overall inventory costs because you have to carry them longer to make a sale. Pay particular attention to the demographics of your community. For example, if you have a large Jewish population, you might want to concentrate on bar mitzvah-related favors. If your area has an unusually high marriage rate, target the wedding market.

7. Create a sales plan. It's not enough to open a new store or wholesale operation. You must also have a professional sales operation. If you start a retail store with floor sales clerks, you'll still need an outside sales operation to call on local organizations to supply their party needs over the course of the year. If you're a wholesaler, you'll need salespeople with the skills necessary to sell to retailers.

References

• Favor Warehouse
• Global Sources: Party Favor Manufacturers & Suppliers
• EC Plaza Global: Wedding Party Favors