How to open a consignment or resale shop in 10 easy steps:
Tens of thousands of consignment, resale, and thrift shopkeepers have used Too Good to be Threw, The Complete Operations Manual, to start thriving businesses. When people ask me for the “short version” of my 200+ page manual, I give them this checklist so they can decide of a resale shop is for them.
1- Determine a desire. Is this truly what you want to do? Consider exploring the field thoroughly before you invest your energy, time, money…and heart…in it. The investment will pay off: either you will start your business ahead of the curve or you will decide that resale shopkeeping is not for you.
2- Know if there’s a need. What shops exist now in your marketplace? What are their strengths and weaknesses? What non-consignment, non-resale venues are there that will compete for your marketplace’s dollars?
How will your shop serve your potential clientele better? What do people in your targeted area want/need, and at what price level? Are there enough future people to make a business profitable?
3- Choose your categories. What will you sell, based on what you discovered in step 2? Be careful to choose what people want to buy, not what you want to sell. Selling your favorite items rather than your audience’s, is one of the surest ways to go bankrupt.
4- Plan for profit. Do a financial plan and be strict with yourself. Estimate expenses high and income low. Include a reasonable amount for self-compensation. (If you can’t squeeze a living out of this, you’re probably not going to be real happy…even if you don’t “need” the money.) Have money ready and willing to be spent. That includes the boring old advice of 6 months’ overhead ready to be tapped if needed, and 6 months’ living expenses. Nothing will make a new shop fail faster than lack of money, except bad decisions made based on lack of money. Don’t strangle your baby. Give your dream a chance to come true.
5- Locate and equip. It’s scary to choose a location and a lease when you’re a brand-new retailer. Choose wisely. The dollar amount is nowhere near as important as the visibility. It’s an old retail adage: your rent + your advertising costs are equal, whichever way you skew it. Cheap rent = less visibility = the need for more advertising. Expensive rent = more visibility = advertising can be somewhat less frequent and expensive. Somewhat, though. Include and SPEND advertising money in your budget.
Oh, and don’t obsess over wallpaper borders until you get your merchant account for credit cards set up. You’re not decorating a home, you’re running a business.
6- Get married to Caesar. Be honest, aboveboard, transparent in all your dealings with suppliers and shoppers. The saying Caesar’s wife must be above suspicion simply means that if one is to be trusted, there must not be a hint of dishonesty or willful deception. A clear, crisp consignment agreement, thorough accounting for others’ possessions, and willingness to make good on your mistakes are necessary.
7- Pay attention to what your clientele wants, needs, and will pay you a healthy profit for. When I was in college, I ran the student-body-owned clothing shop in a small town. It had struggled for years, mostly as a retail lab rather than fulfilling what this isolated village needed. I was able to add several clothing lines that students couldn’t get elsewhere; traffic and profits shot up so much, we opened 2 more stores…in a 3-block-long downtown.
Make NO major, cast-in-iron decisions that you cannot change. The includes calling your shop by its merchandise. Many’s a shopkeeper who regrets calling her shop Kidstuff when she decides to expand her merchandise offerings.
8- Flexibility. You’re a consignment shop, but spending too much time dealing with low-dollar items? Be flexible enough (and fiscally prepared) to decide that buying outright would work better for small-but-pertinent items. If you are a buy-outright secondhand shop and you can’t afford to buy those designer items, take them on consignment to lessen the risk.
There is no Big Momma in the Sky watching to see if you play by your own rules. They are your rules, and you are allowed to change them as needed. You never do layaway, but this is the only buyer interest you’ve had in that cumbersome armoire? Sure, you’d like to sell it out the door, but to refuse to take half the price now and half when he gets paid again and can borrow a truck to move it? Silly shopkeeper. Of course you’ll be glad to do that deal.
9- Invest wisely. Before you spend money, think about how that money will make you money. Your money should serve you, not vice versa. Small amounts saved here and there (making your own coffee versus buying it) can actually be the engine of your success. Conversely, spending on salaries rather than being short-handed and unable to properly serve your customers is an investment in your continuing success.
10- Continue refining and learning. Tactics that worked well for you in Year Two might not be the perfect solution in Year Five. Just as the styles of clothing and decor change and thus your acceptance parameters change, so will your knowledge and desire to fine-tune your company. Take advantage of not only Too Good to be Threw and HowToConsign.com, but also the help available through our Products for the Professional Resaler.