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 step 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 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 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 very important. 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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your yarn store is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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 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
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 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.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
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.
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 Yarn Store In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
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.
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.
TRUiC's YouTube Channel
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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 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.