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Many occasions call for a gift, but people often struggle to find the right present. Even those who have an idea of what to get sometimes don’t have time to go shopping.
Gift basket services make purchasing and giving gifts easy. They provide both standard and customizable baskets that are appropriate for many different occasions. Many also make the actual giving of the gift simple by providing shipping or delivery options.
Who is this business right for?
Anyone who likes giving presents and is creative may be well-suited to run a gift basket service. A gift basket service can be started as a part-time business and, by shipping baskets, be coordinated around other obligations.
What happens during a typical day at a gift basket business?
A gift basket service owner spends most of their time helping customers select or assemble gift baskets, assembling baskets, and shipping or delivering baskets. Other tasks include administrative duties, such as managing the business’ finances and placing orders for additional products to include in baskets.
What is the target market?
A gift basket service makes money by charging customers for gift baskets. Most gift basket services offer several different baskets.
How does a gift basket business make money?
Gift basket services have two ideal customer types. First, affluent individuals who have demanding jobs will sometimes order gift baskets for holidays and special occasions, because they have discretionary income to spend on gifts but little time to spend finding them. Second, companies often order gift baskets for events and as client gifts. Large companies that order gift baskets often need them on a somewhat regular basis, which can provide a regular source of revenue for a gift basket service.
What is the growth potential for a gift basket business?
A gift basket service can be a solo operation or a national chain. Many large gift basket services either operate through a franchise structure or sell exclusively online.
What are some skills and experiences that will help you build a successful gift basket business?
Putting together a gift basket requires both an appreciation for what people like and an eye for presenting it nicely. Learning how to create a beautiful gift basket doesn’t require formal coursework. There are lots of YouTube, Pinterest articles, and blogs that have free tips and ideas.
Rachael Ray has a video that’s a good place to start. Shirley Frazier has also published two informative books on the topic: How to Start a Home-Based Gift Basket Business and Gift Basket Design Book. For business owners who want to complete a formal training program, the Gift Basket Association offers a certification program.
What are the costs involved in opening a gift basket business?
A gift basket service can be started with very little capital. If necessary, all startup costs can be kept to $1,000 or less. Obtaining licenses and purchasing initial supplies to make baskets are the two primary costs. Some necessary supplies include baskets (in various sizes), crinkle paper, cellophane, ribbon, tags and products to put in the baskets. Many different products can be put in gift baskets. Local products, gourmet foods and candies are some popular items to include. To avoid paying rent, business owners can assemble baskets in their own home. If offering delivery, business owners also need a vehicle for making deliveries.
What are the steps to start a gift basket business?
Once you're ready to start your gift basket business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your gift basket business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your gift basket business keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- 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.
- 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.
- Establish a 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. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I 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.
How to promote & market a gift basket business
One fo the best ways to market a gift basket service by making sales calls. Going into apartment management offices, professionals’ offices and the headquarters of large companies with a business card and sample basket is a great way to showcase baskets and find consistent customers.
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How to keep customers coming back
A gift basket service can set itself apart by offering uniquely themed baskets that others don’t have. Locally themed baskets or occupation-specific baskets, for example, aren’t offered by all gift basket services. Even if creating unique baskets increases costs a little, many customers will be willing to pay a little more for a basket that’s memorable.
How and when to build a team
Many gift basket service owners run their company themselves. Owners who do hire employees often hire a delivery driver first, so they can focus on marketing the business rather than delivering baskets. A brick-and-mortar gift basket service may need employees to help take care of customers as well. These employees can be hired as a business grows.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a gift basket service. 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.
Gift basket service business owners may also wish to look into applying for a resale certificate, which allows retailers to purchase goods intended for resale without paying sales tax.
In addition, certain local licensing or regulatory requirements may apply. 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.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
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.
How much can you charge customers?
Gift baskets average between $45 and $50. It’s wise to offer less and more expensive baskets, though, to attract customers who have different budgets.
What are the ongoing expenses for a gift basket business?
The ongoing expenses associated with a gift basket services are any annual licensing fees, supplies for gift baskets and any employees’ salaries.
How much profit can a gift basket business make?
A gift basket service’s profit depends on how many baskets it sells each day. A business that averages 5 gift baskets a day averaging $45 to $50 each will have a daily revenue between $225 and $250, or an annual revenue of $82,125 to $91,250. Even a part-time business that sells only a few baskets a day can bring in a decent revenue.
How can you make your business more profitable?
Gift basket services can increase their revenue in two ways. They can charge delivery fees for customers who want baskets delivered. They can also sell products in baskets as standalone gifts. Many items that go well in gift baskets also make great standalone presents. Businesses that are successful may consider opening another location in a different city. This can greatly increase revenue, but it also significantly increases operating expenses. Businesses with multiple locations must pay rent for at least one of their locations.