Start a bonsai tree business by following these 9 steps:
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 guide to starting your bonsai tree business. 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 bonsai tree business?
Bonsai amateurs should consider purchasing training DVDs or books, as well as getting some training advice from an expert. A bonsai tree business can be started with a small piece of land or an indoor location for growing the trees. You'll need an initial purchase of seeds or cuttings, pots or homemade benches, etc. You'll need money for tools as well, like aluminum or copper wires for wiring, concave scissors for pruning, and growth hormone chemicals and stimulators. You'll also need a computer, WiFi, etc. An initial expenditure of $2,000 - $4,000 for a nursery of 200 trees is suggested. If all 200 trees become bonsai trees in 3-5 years, you can sell trees at approximately $75, and earn a profit of approximately $15,000.
What are the ongoing expenses for a bonsai tree business?
The continued costs of repurchasing seeds, soil, pots, and other equipment should be about 30% of your average sales. Expenses for your business include location, costs of maintaining a storefront - let's estimate $2000 for renting 1900 square feet monthly. Other significant costs will be salaries for yourself and employees, and online costs for maintaining a website.
Who is the target market?
Corporate customers are great buyers of bonsai trees, which greatly enhances their customer relations. Hobbyists, home gardeners, and people searching for gifts are also great customers to target. Clients who don't expect to put any effort into maintaining bonsai trees are less preferred, as these plants do require some amount of regular care.
How does a bonsai tree business make money?
A bonsai tree business makes money by purchasing bonsai seeds, plugs, pots and growing supplies from wholesale nurseries, growing them, and then selling them at a significant profit locally or online.
How much can you charge customers?
Prices of bonsai trees differ according to their age, beauty, and species. One-year-old trees can be sold for $15-20. Three to five-year-old trees can cost $200 and up, depending on how much work has been put into them. There is a good markup on pots as well. The average price of a 3 year old bonsai tree is $75.
How much profit can a bonsai tree business make?
Bonsai tree prices are high right now, both for untrained 'starter' trees or mature trained trees. A bare-root seedling can be bought for as little as 50 cents. Once it's potted and trained, it can be resold for about $60. Mature plants - 5+ years - can fetch hundreds of dollars. Good profits are also garnered from reselling pots.
How can you make your business more profitable?
Be constantly aware of waste. If an employee is not working out, you'll have to move them along. If you see no increase in business after advertising for 6 months with a local paper, cut the account and move on to another strategy. A great way to supplement your income is to offer classes. There is a demand for beginner, novice, intermediate, and advanced classes. A possible sideline business might be offering other Japanese-themed items for sale.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. 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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your bonsai tree business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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 business permits or licenses may be needed to run a bonsai tree 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 more 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 bonsai tree business may be 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 storefront for your bonsai tree business:
- 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 bonsai retail 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 storefront:
- 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 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.
Learn more about General Liability Insurance.
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.
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 bonsai tree business
Advertising is key, of course, as well as a good marketing strategy. In your community, especially if your shop is in an urban area, organize an exhibition or a contest, and promote it heavily. Have business cards or leaflets ready when you do local events, like attending a home living expo, gardening exposition, or providing rental bonsai trees for marriage ceremonies, etc. Posters and mailings are always helpful. Online stores are essential. Post frequently, and offer contests, sales items, etc.
How to keep customers coming back
Bonsai trees are becoming increasingly popular as holiday gifts. Hold a contest where customers must fill in their names, addresses, birthdays, email address, etc. Then contact that person via email a few weeks before their special day. Offer a coupon good only for the week preceding their birthday. Maintain an attractive and regularly changing storefront display. Offer regular coupons or promotions on your website on a bi-weekly basis. Create a blog and regularly fill it with blog posts, both from you and from customers. Never underestimate the power of the spoken word. Take any opportunity to talk on a local radio show, appear on TV (local television as well), or be interviewed by an online blogger, and make sure that your video appears everywhere. Make YouTube videos. Approach corporate clients. Corporations frequently gift potential clients, and what would be better than to receive a bonsai tree for a gift?
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 Bonsai Tree Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This is a wonderful business for gardeners, tree aficionados, stay-at-home workers, and lovers of miniature objects. Business owners can start off selling starter plants to earn a living while they grow two to five-year-old trained bonsai trees for a larger income. It's a great opportunity for someone who doesn't have a lot of space to work with. This is also a great opportunity for someone to combine their growing skills with their Internet sales skills.
What happens during a typical day at a bonsai tree business?
A bonsai tree business involves growing and training bonsai trees. Trees can be either grown from seeds, or from plugs from a wholesale nursery. Most bonsai tree growers open up a local shop, which requires maintenance, as well as opening up a storefront on eBay, where they can either auction off their trees or sell them at fixed rates. Bonsai tree accessories, especially pots, must also be purchased, cleaned, etc. in preparation for selling.
What are some skills and experiences that will help you build a successful bonsai tree business?
A good bonsai grower will educate themselves on the different bonsai tree species, and know which trees are easier to grow, and what tree species are the best for a given environment (which trees should be grown indoors, or which trees can survive outside, and in what part of the country, etc.) A good grower should have some kind of background in growing plants, have a bit of patience, and also have an artistic streak, which will come in handy with shaping and styling your trees.
A bonsai grower and seller should educate themselves about pruning, wiring, watering, repotting, fertilizer, care, and maintenance of trees. He or she will know their way around long-handled twig shears and concave cutters.
What is the growth potential for a bonsai tree business?
Unlike products that have an expiration date, bonsai trees get increasingly more valuable each year. An investment of a few hundred dollars can turn into a lucrative business in the space of a few years. Bonsai are considered "high-value" trees that increase in popularity each year, especially with urban customers who lack the space to grow full sized trees.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
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.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a bonsai tree business?
Large wholesalers (Walmart, Home Depot, etc.) are the largest buyers of bonsai plants since they run out of stock quickly, and aren't able to produce them fast enough to meet demand. Another huge market for Bonsais are auction websites (eBay, etc.) and online portals. Don't be shy about posting ads for your product with a few good photos included.
How and when to build a team
As your business grows, you may need salespeople for your local storefront. No woman or man is an island, and there will be days when you won't feel up to opening your shop. A delivery person might be another team member. Online sales help can also be part of your team. Hire an employee to manage your blog posts, website, and online sales.