Start a yarn store by following these 10 steps:
- Plan your Yarn Store
- Form your Yarn Store into a Legal Entity
- Register your Yarn Store for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Yarn Store
- Get the Necessary Permits & Licenses for your Yarn Store
- Get Yarn Store Insurance
- Define your Yarn Store Brand
- Create your Yarn Store Website
- Set up your Business Phone System
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 yarn store. 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 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 yarn store?
A yarn store costs about $20,000 to start. This price includes the store’s products, rent, utilities, account services, insurance, shop equipment, social media services, website services, and beginning employees. While $20,000 seems like a lot for a small shop, it will greatly contribute to your store’s marketing. As a local hobby supply store, you’ll need to gain as many customers as possible.
What are the ongoing expenses for a yarn store?
Ongoing expenses are relatively small. Expect to pay about $1 for a yarn skein. Monthly rent is about $2,000 for a small shop. Expect to pay $200 in utilities per month, and expect to pay employees between $8 and $10 per hour of work.
Who is the target market?
A yarn store’s return customers are crafting enthusiasts. The best customers are those who know what they’re looking for. A yarn store retains customers when those customers become part of a store’s “community.” Like small game shops and cafes, yarn stores succeed with the help of community efforts. It isn’t rare to see groups of knitting enthusiasts spend time in a yarn store. These customers will be your most lucrative customers, and they should be prioritized.
How does a yarn store make money?
A yarn store makes money by selling knitting supplies. They can also sell knitting books, guides, and other informative materials. Some yarn stores sell knitting enthusiast gifts, like mugs and t-shirts.
Yarn store owners can make money by growing a community. These communities can be charged for lessons, workshops, events, food, and trips. Yarn stores can also partner with nearby businesses, gaining community insight while striking deals.
How much can you charge customers?
One ball of yarn can be sold at about $3. 100-percent wool yarn skeins, meanwhile, can be charged at about $5. Other supplies, like books, can be sold for between $5 and $20. Keep the prices cheap. Yarn store shoppers will flock to whichever shop has the lowest prices.
How much profit can a yarn store make?
A small yarn supply store owner can expect to make about $25k to $30k per year. A successful shop owner can, however, make a six-figure salary. The success depends on the local economy, community involvement and the store’s product options.
How can you make your business more profitable?
Become as involved with the community as possible. Successful yarn stores don’t only offer products -- they offer experiences. Even a beginning yarn shop should engage its community as much as possible. Talk to local guilds, and host giveaways and trade-ins. Treat customers like family, and make sure every transaction is backed up by trust and a commitment to community.
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 Yarn Store 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 yarn store 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.
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 yarn store. 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.
Certificate of Occupancy
A yarn store 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 yarn store.
- 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 yarn store 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.
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.
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 yarn store
Offer “swap days.” You can market your shop while saving money this way. On swap days, knitters bring in unused yarn, swapping it with other community knitters. The best way to promote your shop is through community events. Because knitting is a hobby, big community involvements can boost store attendance.
As for marketing, you should promote via social media. Facebook, Instagram, and even Twitter are great options. These websites can inform customers of your deals, and they can boost your store’s activity during most hours. Take advantage of special events and holidays. Host “sit ‘n knit” events during sporting events. Also, take part in the World Wide Knit in Public Day. Host special classes, and team up with your area’s local artisans. Host money-saving classes, and connect with the area’s artists, too.
How to keep customers coming back
You’ll attract customers by creating unforgettable events. A knitting supply store might be a go-to craft supply resource, but customers will stay for the environment. Be welcoming, and give customers a reason to hang out inside your shop.
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.
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 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Nextiva
Nextiva 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 Yarn Store 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?
A yarn store should be owned by someone who truly enjoys knitting. Good yarn store owners like supplying knitting supplies at low prices. They also enjoy spreading the knitting craft with others. Normally, yarn store owners host retreats, giveaways, and fun activities for customers.
Yarn store owners should be people-oriented. They need to connect with customers, focus on developing relationships, and enjoy ongoing knitting projects.
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 yarn store?
A yarn store owner needs to stock the supplies needed by knitters. They also need to supply different project outlines, yarn designs, and other tools.
Yarn store owners normally host workshops, too. Others may create guilds or enthusiast groups. Normally, these groups promote a sense of community while boosting store sales. Knitting projects take time to complete, but customers can finish them quickly if a yarn store owner is a good teacher.
From an administrative standpoint, a yarn store owner needs to supply the store’s goods, conduct maintenance, pay the bills, market, and manage workers. Customers need to be pleased, and any guilds need to be taken care of.
What are some skills and experiences that will help you build a successful yarn store?
A successful yarn store owner needs to understand the craft deeply. By understanding the craft, a store owner can attract new buyers, build up its current customer-base, and save money. As with any craft, customers will be attracted to whichever store offers the cheapest, most diverse product options.
What is the growth potential for a yarn store?
Any hobby supply store needs to balance self-sufficiency with growth potential. Because they’re often hole-in-the-wall type stores, they rely on local support to thrive. Larger yarn stores may want to expand their services. By offering general crafting supplies, a growing yarn store can compete in the national market.
For most yarn stores, however, becoming a go-to local choice is normally a goal. Unfortunately, a lot of local yarn store owners are forced out of business. To grow effectively, a yarn store owner needs to appeal to local communities while also having competitive prices. A good marketing strategy goes a long way.
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.
What are some insider tips for jump starting a yarn store?
Prepare for local economy changes. Niche retail stores, like yarn supply stores, can face trouble if they’re unprepared. Build up savings fast, and escalate your shop’s appeal. Once you’ve covered the basic supplies, expand. Start a knitting guild, and give customers a reason to return. Form relationships with current buyers, and try to save money while growing your shop.
Host giveaways, fun activities, and retreats. These activities don’t cost too much money, and you can gain money by attracting new customers.
How and when to build a team
You should hire at least two employees when you open your shop. Employees should be sourced from local guilds, craft enthusiast groups, and hobby-lovers. Successful yarn shops are run by those who deeply understand the craft.