How To Start A Consignment Store

You need to be fully loaded on two things before commencing any kind of business: courage of convictions and adequate knowledge about what you're venturing into. Starting a consignment shop may seem like an excellent idea. After all, you don't have to incur costs to accumulate stock. But there are other challenges that remain hidden until you start running and operating your store. They say half knowledge is a crime and rightly so. Before you start a consignment shop, do your research and consult with other consignment store owners to gain an understanding of the fundamentals of running a resale store.

Location
To start a resale shop, the first thing you need to look into is the location. The importance of the location cannot be stressed enough. You need one that gets a high volume of traffic from pedestrians and vehicles. Besides, parking should be easily available and preferably free of charge. The type of business that your neighbors in the immediate vicinity are running is also a key consideration. For example, if you start a secondhand shop that sells clothes, it helps if you're located close to a laundry, hotel or even a thrift shop. These businesses may unintentionally end up sending a lot of business your way. Prime location is a relative concept since one man's meat maybe another's poison. Rent is going to be one of your core expenses. It shouldn't be so exorbitant that you'll end up in debt. On the other hand, since it's probably your only bulk expense you can afford to splurge a little extra if you get an amazing location from your standpoint.

Merchandise
The next thing you need to do before you start a resale store is collect merchandise from consignors. For this, you need to decide what items you will and will not deal with. Initially, you can shop around and collect merchandise yourself from friends, relatives, flea markets, garage sales and even far-away second-hand stores. Later on you can approach other consignors.

Policies and Procedures
Before you start a thrift shop, fix your pricing policy. On an average you can sell at about 30-40% of the retail price of previously owned articles. Other things that you need to give due attention to are length of the consignment period, percentage to be given to the consignor, modes of payment by customers and how to dispose off stock that has expired. There should be an appropriate procedure in place for collection of consignor's articles, sales, payment to consignor's and keeping track of inventory.

Other Formalities
As with any other business, you'll have to formulate a business strategy that involves estimation of costs, revenues and profits. The name that you pick should be catchy and spark interest in your consignment store. You'll also have to make arrangements to get a license and open a bank account.

Advertising
If you start a consignment shop in a prime area, you need not go overboard with the advertising. However, if your store is located in an area that does not get much pedestrian traffic, you'll have to draw attention through bulk mailers, pamphlets and fliers. You could also place an advertisement in your local newspaper.

When faced with the question of how to start a consignment shop you need to take all these things into consideration. The amount of finance you need depends on the extent of your scale of operations. At the onset, you may have to dip into your own savings but at a later stage if you want to propel yourself forward you could consider borrowing from banks and financial institutions that provide loans to small businesses. An important thing to bear in mind is that when calculating your initial investment always account for double of what you've estimated. Moreover, make sure you have enough for running costs to sustain yourself at least for two years. After all, it's better to be safe than sorry.

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