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 fidget toy 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 fidget toy business?
Some of the most successful business owners in this industry started out with less than $1,000 in capital. This business venture can be run from the comfort of your home office, with very little overhead costs. If your plan is to simply sell an already produced item, you could create an e-commerce store through platforms like Shopify. This online platform offers a two-week free trial. Once the trial period is over, your cost is approximately $29 per month.
For product inventory, you could handle this in one of two ways. You could find the most affordable, quality product, and purchase in bulk. Once an order is placed, you would handle the shipment of each order. Or, you could link up with a website like AliExpress. This company lets you search through their inventory and identify the products you wish to sell. You then set the price, based on parameters defined by you. When an order is placed, AliExpress fulfills the order and ships it directly to the customer. Your profit margins are slightly lower, as they absorb all the up-front costs.
If you have a little more capital to invest, you could take this a step further, investing directly in the products you stand behind and wish to sell. While this will create a little more work on the front-end, your profit margins increase significantly.
If you feel you have invented what is sure to be the latest craze in fidget toys, start-up costs will be quite a bit higher. Your first task should be to obtain a patent. While this requires both time and money, the benefits could follow you for years to come. You will then need to identify the manufacturer you wish to produce your product. Again, this will require more work and financial commitment than your first options, but the profits generated from just one successful product could yield you millions over time. Many successful business ventures sprouted from crowd funding and/or GoFundMe campaigns, so do not get discouraged if start-up capital is a roadblock.
What are the ongoing expenses for a fidget toy business?
Until you get into manufacturing a great deal of fidget toys, your ongoing expenses for this business are fairly low. You will need storage space to organize and store the fidget toys offered. Many business owners have found success running such an enterprise out of their home office. You will incur costs associated with product shipment, which, when priced properly, can be absorbed into the cost of the products you sell. To realize significant success, your primary investment should be in targeted marketing campaigns.
Who is the target market?
While these toys are primarily geared towards children, your marketing efforts should target both children and parents. The parents are, ultimately, who have the buying power, so it is important that you appeal to them as much as the kids you are catering to.
How does a fidget toy business make money?
A fidget toy business generates revenue from the sale of each toy. Initially, filling orders will be on a smaller scale, with individuals visiting your website to place their order. However, as your site gains popularity, you will start filling larger orders, distributing directly to retailers.
How much can you charge customers?
There are a number of fidget toys on the market today. Some retail for as low as $10, while others sell for as high as $350.
How much profit can a fidget toy business make?
Your profits are directly tied to your cost per item, the price you set for consumers and the amount you are able to sell, minus overhead costs. The lower your ongoing expenses, the higher your profits will soar. There are a number of entrepreneurs who have seized this fidget trend, yielding over $500,000 in just a years time.
How can you make your business more profitable?
Whether you are most skilled at identifying the latest and greatest in fidget toys, or inventing them yourself, your sales skills can help you launch this business into a six-figure income. The most important thing you can do to maximize profits is identify the best quality merchandise and supply these products to larger enterprises, as well as smaller, local shops. While acting as a middleman, the right sales strategy can launch you to success status in a matter of months.
We could all benefit from the actions of the masterminds behind Fidget360. These high school students came up with their own invention, invested in a 3-D printer, and became an overnight sensation. Within six months, these teenagers sold over $350,000 in merchandise and could be found in major retail stores such as Walmart and Target.
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.
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 fidget toy business 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 fidget toy 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
If manufacturing your own fidget toys, your business will most likely include a factory or warehouse. 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 fidget toy 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 fidget toy 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 fidget toy business
Read any article on the Fidget Spinner product and you will quickly realize how important marketing is and how much power a strong campaign possesses. First, try to identify a few buzz words about the product that are sure to gain media attention. Then, blast this on social media platforms, investing in ads on Facebook and Twitter, to gain further exposure. Ask your readers to share your content and set up contests to encourage additional sharing. In essence, create a “viral loop.” This article offers valuable insight into this powerful marketing strategy.
The viral loop strategy works best for new products. If you are marketing a product that has already gained media attention, you will want to apply some additional marketing techniques. Place your products in online forums and place ads in local, national, and international sources that attract your target audience. Carefully build your ads to ensure buyers understand why your products stand out above the competition.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
In the retail industry, customer retention is reliant on three things - offering quality products, at an affordable price, and delivering strong customer service at all times. If a potential client, whether it be an individual or a prospective retailer, makes an inquiry, answer them as soon as possible. If someone has a complaint or issue, resolve speedily and to their liking. Lost profits on one order is a small sacrifice if it ensures a positive outcome from a potential repeat customer.
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 Fidget Toy Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
While a significant amount of capital isn’t required, this industry does require an entrepreneurial spirit, an inventive mind, and a deep understanding of your target audience. If you possess these qualities, as well as the drive to be your own boss and manage a business in a dynamic industry, opening your own fidget toy business could be the “career change” you have been looking for.
What happens during a typical day at a fidget toy business?
There are many moving parts (pun intended) in managing a business of this genre. The fidget spinner became an overnight sensation, proving to the business community that there is one overriding component contributing to its success - marketing. Therefore, the bulk of your time should be spent mastering your marketing strategy, ensuring each new product successfully reaches its target audience. In your marketing efforts, you will need to conduct thorough research, getting into the minds of your customers. This will not only shed light on how you market to them, it will also assist you in identifying changing trends and what products best fit their needs, both now and moving forward.
Once you have gained this valuable information, your team will need to work on new inventions and coming up with the best strategy for moving these ideas from paper to production and, ultimately, to the marketplace. While you will likely want to distribute these items directly to customers yourself, it would be beneficial if you are able to tap into other sales platforms, both on a national and international level. Fulfilling order requests, addressing questions and concerns, and seeking out new opportunities will be a part of your everyday routine.
What are some skills and experiences that will help you build a successful fidget toy business?
There is no certification required to take on this business venture. However, it does require a specific skill set. To realize long-term success, business owners must possess an entrepreneurial mind and strong marketing skills. To reach your target audience on a larger scale, it would also prove beneficial to understand the art of salesmanship, connecting with individuals of every age. With that in mind, previous sales experience, particularly one that targets this genre of product, would prove to be a plus.
What is the growth potential for a fidget toy business?
As demonstrated by the phenomenon that is the fidget spinner, there is the potential to realize significant profits and experience remarkable growth. For long-term success, however, you will need to either invent a product that is recognized on an educational, therapeutic, and/or occupational level, or continue to produce items that follow the latest in industry trends.
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.
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 fidget toy business?
Since this is a highly competitive market, it’s important that you gain an edge over the opposition. The primary factor driving people to your product is quality and price. Industry leaders recommend “upselling,” which means offering your customers a product that complements or is related to their existing order. Nine times out of ten, offering the right “upsell” will yield you additional revenue.
How and when to build a team
The size of your team depends fully on the magnitude of work you are faced with. If you set yourself up with an online sales site, you should be able to handle order fulfillment and marketing on your own. However, if your plan is to distribute on a larger scale or manufacture and sell your own invention, you will want to enlist the help of others. It is recommended that you seek the professional advise of an attorney or financial advisor, who can guide you through the process and assist you in coming up with a timeline and financial plan.