You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your bead store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a bead store?
While it is possible to start out running your bead shop out of your home, this limits the number and type of customers you are able to market to. Entrepreneurs who have realized more rapid success recommend a budget of $100,000 to $248,000, depending upon the specifics of how the business is structured. Smaller shop owners report a budget as low as $50,000, citing location as being the biggest driver of their success.
Factor in the following when determining your start-up budget:
- Building - The size of building you decide to purchase or lease should match your business goals. Make sure it caters to the needs of your target audience and that the area is not already saturated with your product.
- Business/Inventory management system - Many new business owners are tempted to forego this investment, deterred by the price tag. Consider opting for a web-based solution, where customers are charged an affordable monthly fee.
- Inventory - Your initial inventory investment should include a wide selection of beads. Having your shelves stocked with both popular and unique beads will afford you the opportunity to get to know your clientele. Armed with this knowledge, you can then start to add more to your shop’s collection.
- Website - Hosting an eCommerce site will open your business up to a whole new network of potential customers.
- Business tools - Office supplies, furniture for your shop, displays, and organizing bins.
- Marketing materials
There are a number of franchising opportunities in this industry. The average franchise fee is $25,000, but many have found that the education and guidance they received was invaluable. If given the opportunity, purchasing an already established business is also a great strategy.
What are the ongoing expenses for a bead store?
Your primary expenses will be payroll, rent/mortgage payment, and restocking of inventory. If a website is part of your portfolio, there will be site hosting and management costs associated with that, which are typically paid either monthly or annually.
To ensure you remain on top of the latest trends, it is also recommended that you attend conferences and join associations, such as the Association for Creative Industries. This will provide powerful networking and marketing opportunities that might otherwise be out of your reach.
Who is the target market?
Bead shops generally rely on the local population to support their business. With the right online marketing plan, you could reach crafters and bead enthusiasts across the country. Artists who make and sell jewelry, clothing, and costumes should also be included in your marketing strategy.
How does a bead store make money?
Bead shops generate revenue through the sale of their beading inventory. Items can be sold online, out of their home, or in a shop. Many entrepreneurs serve both retail and wholesalers’ needs, while others choose to focus on just one type of customer.
How much can you charge customers?
Bead prices vary, depending upon the type, size, quality, and material. Shop owners recommend going 25-40% higher than an item’s cost. Some report as much as 100% over inventory cost. The key is to remain competitive without undercutting the competition, which only stands to damage the entire industry.
How much profit can a bead store make?
With the right vision, marketing strategy, and hard work, a bead shop has the potential to generate significant profits for new business owners. Your profits are directly tied to the size and type of operation you envision, ranging anywhere from $38,000 to $75,000 or more.
How can you make your business more profitable?
Shop owners reporting the highest profits do not rely solely on the sale of beads. Some are drawn to the artistic side, making and selling their own beads. Additionally, hosting jewelry parties is a very effective strategy. The key is to host a variety of classes/parties that target specific skill levels and projects. Children’s birthday parties is another great revenue generator. Many store owners have also found success selling project kits for novice crafters.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your bead store is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a bead store business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A bead store business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a bead store business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your bead store business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a bead store
Industry leaders have found the most success with a diverse marketing plan. This should include advertisements in magazines that cater to your target audience and event/team sponsorships. Before taking on a sponsorship, make sure you are investing in something that will offer you exposure to potential bead shop patrons. Booths at arts and crafts fairs is also an effective way to boost interest, particularly because these events often have a mix of local and out-of-town guests.
Technology is another great resource for marketing. Social media platforms help reach a broader audience and keep current customers informed regarding new shipments and specials. Ask customers for their email addresses and periodically send out exclusive coupons.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Delivering superior customer service each time someone walks through your doors or places an order online is critical to your business’ success. Many consumers will pay a little higher price to know they are working with someone who cares enough to go the extra mile. Discount cards are also an effective way to bring new customers in and ensure your current ones keep coming back.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Bead Store In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Owning and managing a retail business requires hard work, dedication, and long hours. Entrepreneurs who love the craft and enjoy learning and educating others about various beads will find fulfillment and success in this business venture.
What happens during a typical day at a bead store?
As mentioned, bead shop owners have a variety of opportunities to generate income. The specifics of their days will be defined by how they decide to structure the business.
Day-to-day duties include the following:
- Checking stock, reordering inventory when necessary
- Keeping retail showroom clean and orderly
- Researching new trends, collaborating with regular customers to identify which new styles are relevant to your area
- Marketing to target audience
- Networking and maintaining relationships with bead suppliers
- Maintaining website and fill online orders
- Administrative duties
What are some skills and experiences that will help you build a successful bead store?
Industry leaders urge those first starting out to learn as much as they can about running a business, as well as the art of beading. There are a variety of online tutorials that would provide beneficial education and training. Local craft supply and fabric stores often hold regular workshops, which could expand your knowledge on the various elements of running such a business. Since hands-on experience is the best teacher, working in the industry prior to opening your shop’s door is strongly recommended. Caravan Beads is also a great educational resource. They offer a 2-day seminar, where students learn about everything from pricing to marketing, and even choosing the right POS software.
To realize long-term success, it is also important that you possess a certain level of artistic talent. This, combined with strong interpersonal skills will assist you in interacting with customers and suppliers. Many of your clients will be novice hobbyists who will look to you for education and guidance.
What is the growth potential for a bead store?
According to a Association for Creative Industries survey, crafters spend more $30 billion annually. Approximately 40% of that is earned from the sale of beads. While there is significant room for growth, new business owners are urged to carefully select their store’s location to avoid over saturation.
TRUiC's YouTube Channel
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a bead store?
Leaders in the beading industry offer the following advice:
- Consult with your local chamber of commerce prior to opening your online store to ensure you handle the collection of sales tax properly.
- To ensure a profitable website, make sure you provide great photos and descriptions of your products, and that you clearly define your store policies.
- Joining the Association for Creative Industries offers access to discounts, suppliers, education, and networking opportunities.
- Avoid suppliers that offer “one-stop shopping.” To properly supply your shop, you will need multiple suppliers and a variety of beads. Conduct thorough research on any supplier you are considering.
- Research the population in the area you plan to open up shop. If the area does not have between 150,000 and 250,000 people within a thirty minute drive, consider other, more populated areas.
- Plan on putting a majority of your profits back into inventory for the first two to three years.
How and when to build a team
In this industry, it is important that you always remain passionate about what you do. To avoid burnout, yet still remain open during peak business hours, consider opening your store with at least one employee on staff. As the owner, you will be required to wear many hats. Your business will suffer if important tasks slip through the cracks.