Start a reusable grocery bag company by following these 10 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 reusable grocery bag company . These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 reusable grocery bag company ?
When considering the costs to open and operate a reusable bag business, you’ll need to consider a few variables ahead of time, such as
- The material the bags are made of
- The graphic designs or printing on the bags
- The size of the bags
- The marketing and advertising dollars you’ll spend in the first two to three years
- Creating an LLC or forming a corporation for your business
- Securing insurance coverage for your business
You will also need to factor in the workers who will construct the bags, the sewing and printing equipment needed, and the shipping and distribution costs. Based on the number of DIY options available online, though, this can be a fairly low overhead business to get started. Equally, the business can operate successfully from a home location, as much of the work can be completed by a few employees to begin. A reasonable estimate would be between $5,000 and 8,000 for initial start-up.
What are the ongoing expenses for a reusable grocery bag company ?
Once your business is regularly manufacturing and selling bags, most ongoing expenses will involve materials, manufacturing labor costs, shipping/distributing, and marketing and advertising. This sort of business could operate for quite a while at a low overhead cost, which helps to maximize profits.
Who is the target market?
Your customer base will consist of consumers who consider themselves conscientious shoppers, wishing to do their part to reduce overall plastic consumption. Many of your customers will range between 20-35 years old, although there are customers across the spectrum who will be intrigued by a stylish bag appearance, as well as a quality, durable product.
How does a reusable grocery bag company make money?
Selling reusable bags makes the majority of the money for this business. Because these bags are available in many forms and locations, you will need to create a brand that is different from other products, both in design and features.
How much can you charge customers?
Most reusable bags are fairly inexpensive, often in the $2-5 range, depending on the material and prints or designs.
How much profit can a reusable grocery bag company make?
If you can partner with grocery or retail chains, they may boost your profits by buying bags in bulk. If you only sell directly to consumers, you may be able to charge more for customizable bags. Overall, a reusable bag business could pull in between $30-50,000 annually.
How can you make your business more profitable?
- Offer unique or custom bag designs. Customers may even be able to upload their images to be printed on their bags.
- Cooperate with other eco-friendly companies or organizations to promote various green solutions.
- Find opportunities to network with organizations engaging in neighborhood clean-up efforts. Or, you can make your bags part of swag takeaways from popular local and regional events. Word of mouth is an excellent method of advertising.
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 Reusable Grocery Bag Company Name Generator
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
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your reusable grocery bag company is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
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?.
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:
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
- 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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported 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 guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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 an art consulting 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.
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.
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.
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How to promote & market a reusable grocery bag company
With more and more customers making the switch to reusable bags, much of your marketing will revolve around showing why your bags are better than the rest. Show off your designs. Develop an ad campaign that appeals to the ecological nature of customers and includes graphs indicating the positive effects of reusable bags. Social media can be an invaluable tool in sharing your company plans and initiatives. This is also where you will tap into individuals in the age range in which these products seem to matter the most.
How to keep customers coming back
Customers, especially the Millennial and younger generations, are often fairly socially active, themselves. Use this to your advantage by positioning your company as a leader in the movement to battle global pollution. Show your audience your business cares and is doing its part to improve the lives of all humans on Earth. In turn, make sure your company stays involved in programs that dedicate time and effort to cleaning up natural spaces and creating awareness as to how we can all make a difference.
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.
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.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Reusable Grocery Bag Company 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?
Are you a creative person with a background in retail? Do you have a desire to help make an impact on the amount of disposable plastic entering landfills daily? Opening and operating a reusable grocery bag business offers a chance to show off both of your flair for design and your ability to promote change in society. Form and function are equally represented in this business model.
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 reusable grocery bag company ?
This business offers owners the opportunity to show the world their artistic and graphic design skills. It is also a nod to social awareness and change. Therefore, most days will consist of producing new bag graphic designs, monitoring ongoing production numbers, and connecting with businesses and organizations who share your visions for plastic reduction. You will also spend time contacting regional and national grocery store chains and retail businesses to offer your bags as alternatives to plastics.
Since this is somewhat of a unique business, you will also need to spend some time marketing and promoting your bags and bag designs to consumers. A dedicated social media presence and use of online marketing techniques will be necessary to inform customers of your products. You may also be spending some time preparing and shipping orders of your reusables to stores and customers, alike.
What are some skills and experiences that will help you build a successful reusable grocery bag company ?
As mentioned previously, there are several outlets for acquiring reusable bags. Unfortunately, many are poorly made and deteriorate or break after a moderate amount of use. Furthermore, the designs are often cheap and represent an advertising campaign more than a reliable, long-lasting product.
Individuals who have experience in graphic, textile, or even clothing design will possibly have greater input on how to construct a longer-lasting, as well as more visually appealing, bag design. The products should cause customers to reach for them, instead of recoil.
Additionally, experience in advertising and marketing, as well as business finance, will give these business owners a leg up on the competition. Knowing how to get your product to stand out from the rest is also a critical factor in overall success.
What is the growth potential for a reusable grocery bag company ?
With more and more customers choosing paper or reusable bags over plastic bags currently, this type of business can become quite lucrative. Features, such as thicker material, zippered tops, extra external pockets, and interesting graphic designs will help propel your reusable bag company among consumers, as well as grocery stores and retail businesses.
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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 reusable grocery bag company ?
Entrepreneurs just starting their business should consider the following advice:
- Conduct thorough market research and create a product equivalent or superior to the better quality competitors’ products.
- Offer different designs to fit different personalities. Some like flashy, others may prefer simple, yet durable.
- Partner with different stores to offer your bags in-store. Many retailers and grocery stores can significantly reduce their costs by eliminating plastic bags. Some charge customers for plastic bags when they don’t have their reusable bags. Reusable bags are a win/win.
- Market to the right crowd. Seek out the socially conscious and aware audience and market heavily through social media and online.
How and when to build a team
With this sort of business, you may be able to get going with only a few team members. You’ll need to be hands-on yourself in order to get up and running. You may only need a couple of extra workers to help with production, at first. As the business grows, though, you can assign more workers to both the fabricating and printing, as well as marketing and advertising. Most small businesses look to remain solvent for at least the first two years before adding too many additional employees.