How to Start an Educational Toy Store

An educational toy store (or instructive toy store) sells toys and games that are meant to stimulate and challenge the player’s creativity and intelligence. The market for educational toys is huge. Every age level can benefit from educational or instructive toys, stores typically have different sections for infants/toddlers, children, and adults. These toys have been known to decrease stress, increase happiness, and even potentially fight debilitating diseases like dementia and Alzheimer’s.

Learn how to start your own Educational Toy Store and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services.

Start an educational toy store by following these 10 steps:

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

We have put together this simple guide to starting your educational toy 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:

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 Educational Toy 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.

Want some help naming your educational toy store?

Business Name Generator

What are the costs involved in opening an educational toy store?

What you spend depends on where you are, and how you choose to sell your toys. If you choose to start a franchise, such as Learning Express Toys, then your investment will be considerable. The high-end estimate of the initial costs you’ll need is $384,000. The low end estimate is $194,500. If you choose to develop your own toys and sell them online, then you will only spend the cost of the materials to build them, plus any advertising costs you may have.

What are the ongoing expenses for an educational toy store?

Toy stores may face the following expenses over the years:

  • Cost of materials to develop toys
  • Wholesale costs of other toy makers
  • Market research to determine where toys are headed
  • Employee wages
  • Office supplies (including computers, etc.)
  • Mortgage/rent in a physical store
  • Shipping costs for an online business

Who is the target market?

The best client will be one who wants a fun way to challenge themselves, or who wants to promote learning to their child in a stress-free way.

How does an educational toy store make money?

Money is made by charging a premium on all toys purchased. Regardless of whether or not an owner makes their own toys or sells the toys of others, the profit margin will need to be determined for each item based on supply and demand.

How much can you charge customers?

People are willing to pay money to strengthen their mind — up to $1,200 depending on the toy. However, the market does face somewhat stiff competition from educational apps for smartphones, so it’s important to set your margin at a reasonable rate based on market demand. If you develop a particularly popular game though that no one else has a version of, you can potentially set your own profit margin at whatever you want it to be.

How much profit can an educational toy store make?

Profits may be slim for the first year or so. If you franchise a toy store at the low end of the business model, you would need to make around $16,000 a month in sales simply to break even. Anything after this can be used as profit or reinvested into the company. Depending on the demand in your area, you could stand to make between $15,000 to $30,000 in profit a month.

How can you make your business more profitable?

If you develop your own popular toys, you can profit by offering your toys to other toy shops. You may also be hired by a large toy maker to design and create additional products for their line.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

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 educational toy store is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

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.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

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 through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

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.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

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.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

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 an educational toy store. 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.

Certificate of Occupancy

An educational toy store 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 educational toy store.
    • 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 educational toy store 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.

FInd out what types of insurance your Educational Toy Store needs and how much it will cost you by reading our guide Business Insurance for Educational Toy Store.

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.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market an educational toy store

Most educational toy stores don’t need large billboards or television ads. The best way to market will likely be optimizing your search engine visibility. You’ll need to have a great website that is easy to navigate, and easy to find when people search for educational toy in their area. In addition, because so many people already shop online, you may not necessarily need a store location. Store locations are best for people who want to capitalize on heavy traffic, such as an extremely busy mall or shopping plaza.

How to keep customers coming back

The best way to attract customers is to show them just how fun it can be to play these games! People aren’t looking for a toy that they’ll only play for a few days and then put away. Owners need to find games that stay fresh year after year. The games will need to be difficult enough to be challenging in a variety of ways, but not so difficult as to frustrate the user. This is a hard combination to hit, but one that will keep customers coming back again and again.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

This business is great for someone who understands and is passionate about educational toys. Every potential customer has a different skill set they want to exercise when buying these toys. For example, a more verbal person will gravitate towards certain games over others. You will also need people skills to work with customers and employees on a regular basis.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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What happens during a typical day at an educational toy store?

A typical owner’s agenda may look include the following:

  • Researching available educational toys
  • Developing a line of toys to sell
  • Selling to customers
  • Managing employees
  • Preparing sales reports
  • Maintaining a physical store
  • Marketing to different types of people

What are some skills and experiences that will help you build a successful educational toy store?

An owner should have a good idea of how the brain works, so they can market their toys to the people who need them the most. Also, an owner should have a good understanding of what holds people’s interests. A 12-year-old who is struggling with numbers may not want to play anything that even resembles a math problem, so a toy maker or distributor will need to look for toys that address the deficiency without upsetting the recipient.

What is the growth potential for an educational toy store?

Growth is partially determined by the amount of people in any given city. In some places across the country, there may be little use for educational toys. People may think they’re too expensive, or not interesting enough to play. In other parts of the country though, the market may be oversaturated in certain major cities. Owners may want to sell online to reduce overhead and to reach a wider audience.

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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.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

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:

  • Funding
  • Events
  • Guides
  • Support

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 an educational toy store?

The best thing you can do is be passionate about what you do by working to bring value into the lives of those who play the games and use the toys. Sell toys online, in a store, or both. There are so many fun ways for people to pass the time that also make them smarter!

Find out what websites your ideal customers are on (e.g., educational or news sites), and consider marketing your business on those pages. Choosing to franchise instead may also be a good idea if you’re looking for a tested business model that works. You also get the benefit of a trusted, recognizable name from the first day you open. If you don’t have very much experience as an entrepreneur, this will may be a good option for you.  

How and when to build a team

Unless you have a large store with a constant stream of customers, you likely only need a few employees (or none at all.) This is not necessarily the most demanding job, so you can likely hire college students or even high school students to assist you. However, employees should have the people and sales skills to show and tell customers the best games for them.

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