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 furniture 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 furniture store?
Your largest costs for opening a start-up furniture store will be invested in the store front and your display inventory. In order to create the most attractive displays, you need at least 50,000 square feet. You may need a large warehouse in order to deliver furniture in a timely manner to your customers. Your store should be centrally located in order to provide the most convenient service to as many people as possible. Design consultants will garner the highest salaries. Expect to invest between $1 million and $20 million depending on the size and complexity of your furniture store showroom and warehouse.
What are the ongoing expenses for a furniture store?
Payroll will be a significant part of daily expenses for your sales, design, and delivery crews. You will change out your displays twice a year, and that will be a major line item on your annual budget, but some of those pieces can be sold as-is at a later date. You will need to keep some inventory in your warehouse, but most items ship straight from the factory to your customers' homes.
Who is the target market?
Some clients change out their furniture as home fashion changes, ordering a new sofa every few years.Your return clients will generate the most income. At the same time, everybody needs to buy beds, so creating a welcoming environment that appeals to most people is crucial. Colleges and property maintenance companies will purchase large quantities of inexpensive furniture on a regular basis.
How does a furniture store make money?
You will generate income by selling a large quantity of furniture to as many people as possible. You buy the furniture from factories at wholesale prices and sell at a higher price, netting a profit.
How much can you charge customers?
Bargain furniture can be priced starting at $50 for an end table. Custom orders of silk upholstered sofas and mahogany dining sets climb up to $10,000. Mid-line pieces tend to average between $1,000 and $2,000.
How much profit can a furniture store make?
While your furniture store can bring in well over $1 million in annual sales, the furniture industry boasts one of the smallest profit margins in the retail industry. Your profit over wholesale will be about 40%. However, most stores anticipate a 2% net profit after operating expenses and payroll is covered. As the business owner, you may enjoy an annual income of between $150,000 and $300,000.
How can you make your business more profitable?
Pre-fabbed furniture is becoming more popular with Americans. The bookcases, tables, and even pull-out sofas are delivered in a flat-pack box and the customer assembles it themselves. The profit margin on pre-fabbed furniture is much higher and costs considerably less to deliver to a customer, increasing your take home pay.
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 furniture 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 furniture 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 furniture 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 furniture 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 furniture 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 furniture store
In the early days you will need to focus on drawing new customers into your beautiful showroom. You will need to saturate your local market. Get involved in the local Chamber of Commerce, rent out tables at local fairs, and sign up as a supporter for local charity events. Regular marketing will involve promoting seasonal items such as outdoor furniture in the summer, dining sets for the holidays, and office furniture in the fall. You will need to constantly update your ads and sales.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Your first customers will come to visit when they think that you will offer a comfortable and fun shopping experience. It isn't everyday that you buy a bed, so when you do it should be something of an occasion. They will come back for the living room set when they received attentive service, a fair price, timely delivery, and a sense that you valued their business.
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 Furniture Store In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
If you enjoy the ever changing landscape of home design, working with the public, and enjoy the challenge of building a profitable business, a furniture store may be the right option for you.
What happens during a typical day at a furniture store?
If you operate a furniture store, on any given day you might be expected to:
- Ensure all the furniture displays are spotlessly clean and attractive
- Work with customers to find the right piece of furniture that matches their style and budget
- Review new collections of furniture and decide which ones your store will sell during the next season
- Place orders with furniture factories to meet customer orders or to have "in-stock" for immediate delivery
- Provide a welcoming environment for your shoppers which may include snacks, coffee, or extra entertainment
- Design new displays for incoming furniture collections
- Offer in-home consultations for customers seeking to develop a unified design
- Schedule furniture deliveries for customers
What are some skills and experiences that will help you build a successful furniture store?
The successful furniture store business owner will be able to:
- Select and display popular and beautiful pieces of furniture
- Provide a welcoming and exceptional shopping environment
- Deliver excellent customer service on every single sale
- Train a friendly and knowledgeable sales staff ready to support the shopping experience
- Maintain a good profit margin through use of good business skills
- Establish positive relationships with a variety of furniture manufacturers
- Suggest attractive combinations of furniture, carpeting, lighting, and other design elements for a more personalized experience
What is the growth potential for a furniture store?
The most successful furniture stores don't have unique furniture to sell, but create a shopping experience and atmosphere that encourages their shoppers to linger, test, and discover their favorite item among many options. When you build that unforgettable service experience combined with reasonable prices, it is possible to expand your furniture store into a chain.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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 furniture store?
Becoming a popular furniture store relies heavily on your ability to promote its opening as a massive party that happens to feature some great bargains. Make sure to have accounts set up with all your furniture makers such that orders placed will be filled quickly or at least as promised. You will need to do a media blitz using every available outlet to promote your new business. Your opening weeks should include extra sales staff such that no customer walks away without some personalized attention.
How and when to build a team
You will need to start working on building a team as soon as your business plan is accepted by the bank. Your display design team must submit their plans before the building goes up while your marketing team will start promoting your business a good 8-weeks before the doors open. Your sales team will be working with furniture makers six-months ahead of the first orders placed. Your floor sales team will come on board two weeks ahead and delivery can be hired at the last minute.