How to Start a Furniture Store

Start a furniture store by following these 10 steps:

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

We have put together this simple guide to starting your furniture 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 Furniture 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 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.

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 furniture 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 furniture store business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

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

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?

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.