How to Start a Bead Store

Start a bead store by following these 10 steps:

1. Plan your Bead Store
2. Form your Bead Store into a Legal Entity
3. Register your Bead Store for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Bead Store
6. Get the Necessary Permits & Licenses for your Bead Store
7. Get Bead Store Insurance
8. Define your Bead Store Brand
9. Create your Bead Store Website
10. Set up your Business Phone System

We have put together this simple guide to starting your bead store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Bead Store Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

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
• Insurance

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 inventory restocking. If a website is part of your portfolio, site hosting and management costs will be associated with that, 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 Craft Industry Alliance. 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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your bead store is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

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

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

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.