How to Start a Gift Basket Business
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.
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Learn how to start your own Gift Basket Business and whether it is the right fit for you.
Start a gift basket business by following these 10 steps:
- Plan your Gift Basket Business
- Form your Gift Basket Business into a Legal Entity
- Register your Gift Basket Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Gift Basket Business
- Get the Necessary Permits & Licenses for your Gift Basket Business
- Get Gift Basket Business Insurance
- Define your Gift Basket Business Brand
- Create your Gift Basket Business Website
- Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your gift basket business. 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 are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- 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 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 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.
Who 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.
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.
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.
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 Gift Basket Business 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.
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 gift basket business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
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 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?.
Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
- LLC Taxes
- Sole Proprietorship vs LLC
- LLC vs Corporation
- LLC vs S Corp
- How to Start an S Corp
- S Corp vs C Corp
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Open net 30 accounts
Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.
NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our best net 30 vendors, guide and start building business credit.
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 Divvy 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 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.
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.
Learn more about General Liability Insurance.
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.
Recommended: Learn what business insurance for your Gift Basket Business will cost.
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 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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
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.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
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: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
Start a Gift Basket Business in your State
- District of Columbia
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
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Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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 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 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.
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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:
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.
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.
Get more ideas with our Business Ideas Generator.
Check out our How to Start a Business page.
Sign up at the Business Center to access useful tools for your business.
- Franchise opportunity with the Original Basket Boutique
- Edible Arrangements franchise opportunity
- Gift Basket Association
Real World Examples
- Speciality gift company, Edible Arrangements
- FTD, a large online gift basket/flower delivery shop
- The Produce Station, an Ann Arbor-based gift basket company
- Sample gift basket service business plan