Start a halloween costume shop by following these 9 steps:
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 guide to starting your halloween costume shop. 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 halloween costume shop?
The easiest way to open such a business is to become part of a larger franchise. For instance, you can open a business via Spirit Halloween for a deposit of $25,000: this money is intended to be enough to cover a temporary lease as well as decorations and interior design. The advantage of this is that Spirit supplies the costumes for you and takes a percentage of the costumes that are sold, and anything that doesn't sell, you simply ship back at no additional cost. Halloween Express offers a similar arrangement in which you pay $10,000 franchise fee and five percent of your sales. Beyond that, you can expect to pay about $180,000, which covers training they provide, furniture and inventory, marketing, insurance, and other professional fees and insurance. While this can seem like a relatively high initial investment, it's not uncommon for stores to make back many times their investment cost during this busy shopping season.
What are the ongoing expenses for a halloween costume shop?
Your ongoing expenses are really just those of a typical retail business, albeit one that will only be set up for a short time. So, expect to pay for the lease of the store front (which can be anywhere from one thousand to ten thousand dollars for each month) as well as payroll for employees (usually between three thousand and five thousand dollars a month) and possibly utilities (this will vary based on store size, but is usually less than $250 and may be rolled into the initial deposits for your short lease).
Who is the target market?
The retail nature of this job means that the most preferred clients will always be those who know exactly what they want. These are customers with a specific costume vision, and they are likelier to both spend more on the costume and be polite and thorough in their interactions. Beyond the Halloween season itself, your best online customers will be those who are into “cosplay,” as there are sci-fi, fantasy, and anime conventions throughout the year and around the world which encourage visitors to dress as their favorite characters.
How does a halloween costume shop make money?
Not surprisingly, a Halloween costume shop primarily makes money by selling Halloween costumes. Your store may also diversify its offerings by including costume accessories, candy, trick-or-treating baskets, and any other paraphernalia you deem appropriate to the season.
How much can you charge customers?
The average of a child's costume is just under thirty dollars, but the truth is that costume costs can vary based on many factors. This can include the complexity of the costume, how many accessories it has, and whether it is for a licensed property or non-licensed property (there can be a major price difference between “ice wizard” and “Elsa,” for instance). If you are starting as a franchise for another business, the prices for each of the individual costumes and accessories will be set.
How much profit can a halloween costume shop make?
The exact profit you can make varies based on location, town size, and even the costume availability you have. Generally, though, Halloween is a strong market: Americans spend about seven billion dollars on the holiday every year, and American consumers typically spend over seventy dollars each year on costumes, candy, and decorations. Considering that nearly seventy percent of your best demographic (adults 18-40) wear a costume each year, there is great potential for your business to make profit, and some of the franchise opportunities outlined above minimize the loss to you based on things like costumes that remained unsold, meaning you have almost nothing to lose via this venture.
How can you make your business more profitable?
Most of the best ideas for what to do after you've opened your store have already been listed. However, the absolute best thing to do to make your business more profitable is to start planning early. Many of the most successful pop-up Halloween shops start preparations a year ahead of time. This gives you time to find the best locations, negotiate with any franchises, and to research what makes the very best pop-up shops successful. With the right preparation, you can have a profitable two months and then disappear into the night like any other trick-or-treater that is in a hurry to count up what they've managed to get!
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. 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 halloween costume shop is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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 halloween costume shop 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.
Halloween costume shop businesses may also wish to look into applying for a resale certificate, which allows retailers to purchase goods intended for resale without paying sales tax.
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
Certificate of Occupancy
A Halloween costume shop 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 halloween costume shop 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 Halloween costume shop 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.
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.
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 halloween costume shop
Because your retail front will only be open temporarily, it's important to advertise far and wide. To the extent of your budget, you should advertise in newspapers, television, and radio. Because of the highly visual nature of your supplies, online advertising is one of the best things you can do. It's free to set up things like Facebook and Instagram accounts for your videos, and you can use those to showcase customers wearing the costumes you sell and allow them to leave reviews about your store. You may even consider creating a custom hashtag and encouraging your customers and even employees to use it, which generates free publicity and online buzz!
How to keep customers coming back
The good news when it comes to attracting and retaining customers is that your business has a built-in ticking clock. Specifically, the closer it gets to Halloween, the busier you will get, so you should be attracting a solid baseline of customers that will only grow. In order to retain customers, you may consider offering percentages off of their purchases if they bring friends or refer your business via social media. Sideline business opportunities mentioned earlier, such as face painting and Halloween parties, also offer unique ways of advertising your business. If possible, returning to the same storefront or relative location each year will also help build loyalty, as your customers know you will be there when they need a costume each year.
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 Halloween Costume Shop In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Perhaps the biggest requirement for running a Halloween costume shop is a love of Halloween and dressing up. This lets you not only relate to your customers better when you interact, but to also anticipate what their needs will be in terms of what costumes to offer, what accessories (such as makeup and props) to offer, and so on. The business is also good for those who are already experienced with selling things via consignment and/or online via sites like Etsy and eBay, which will allow you to make extra profit during Halloween and continue making profit after.
What happens during a typical day at a halloween costume shop?
The daily activities of a Halloween costume store are more or less akin to the daily activities of a busy retail store. This means time is spent receiving shipments, stocking shelves, making shelves look presentable during downtime, and performing inventory as needed. And, of course, there is a lot of interaction with customers, both on the sales floor and as they checkout. More than other retail stores, you may get questions about “special orders” for things you don't have on stock, and your business will only get busier (and all of the activities above more frenetic) the closer you get to Halloween.
What are some skills and experiences that will help you build a successful halloween costume shop?
Any previous experience you have managing a business or even working in retail can be helpful when you are setting up your Halloween costume shop. Your familiarity with pop culture will also be helpful in gauging which costumes are going to be hottest this year for children and adults alike. Finally, an existing relationship with local businesses may help you find a place with a vacant storefront that is willing to provide a temporary lease to you at an acceptable price.
What is the growth potential for a halloween costume shop?
Unfortunately, the nature of a pop-up, seasonal store is that it doesn't really have any growth potential. While it is possible to sell some of your costumes online throughout the year, the major retail aspect of this business only thrives one or two months out of the year.
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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.
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 halloween costume shop?
More so than most retail businesses, Halloween costume shops thrive via the psychology of “impulse buying.” Thus, it's really important to have an eye-catching storefront and to locate your store in a place that gets a lot of foot traffic (such as a mall that has many teenagers as well as young adults and young parents as shoppers). You may consider offering related services that draw interest, such as face painting. A truly outside the box idea is to help people plan Halloween-themed parties, which lets you make extra money for planning a party and also helps funnel more customers through your shop for costumes.
How and when to build a team
Unlike some business ventures, this will require a team from the very beginning. Again, it's akin to a very busy retail job, and you will ideally be open for the majority of each day for a period of one or two months. Be sure to assemble a good team early on to cover all shifts and to account for the business picking up closer to Halloween itself.