How to open a consignment or resale shop in 10 easy steps:
Tens of thousands of consignment, resale, and thrift shopkeepers have used Too Good to be Threw, The Complete Operations Manual, to start thriving businesses. When people ask me for the “short version” of my 200+ page manual, I give them this checklist so they can decide of a resale shop is for them.
1- Determine a desire. Is this truly what you want to do? Consider exploring the field thoroughly before you
invest your energy, time, money…and heart…in it. The investment will pay off: either you will start your business ahead of the curve or you will decide that resale shopkeeping is not for you.
2- Know if there’s a need. What shops exist now in your marketplace? What are their strengths and weaknesses? What non-consignment, non-resale venues are there that will compete for your marketplace’s dollars?
How will your shop serve your potential clientele better? What do people in your targeted area want/need, and at what price level? Are there enough future people to make a business profitable?
3- Choose your categories. What will you sell, based on what you discovered in step 2? Be careful to choose what people want to buy, not what you want to sell. Selling your favorite items rather than your audience’s, is one of the surest ways to go bankrupt.
4- Plan for profit. Do a financial plan and be strict with yourself. Estimate expenses high and income low. Include a reasonable amount for self-compensation. (If you can’t squeeze a living out of this, you’re probably not going to be real happy…even if you don’t “need” the money.) Have money ready and willing to be spent. That includes the boring old advice of 6 months’ overhead ready to be tapped if needed, and 6 months’ living expenses. Nothing will make a new shop fail faster than lack of money, except bad decisions made based on lack of money. Don’t strangle your baby. Give your dream a chance to come true.
5- Locate and equip. It’s scary to choose a location and a lease when you’re a brand-new retailer. Choose wisely. The dollar amount is nowhere near as important as the visibility. It’s an old retail adage: your rent + your advertising costs are equal, whichever way you skew it. Cheap rent = less visibility = the need for more advertising. Expensive rent = more visibility = advertising can be somewhat less frequent and expensive. Somewhat, though. Include and SPEND advertising money in your budget.
Oh, and don’t obsess over wallpaper borders until you get your merchant account for credit cards set up. You’re not decorating a home, you’re running a business.
6- Get married to Caesar. Be honest, aboveboard, transparent in all your dealings with suppliers and shoppers. The saying Caesar’s wife must be above suspicion simply means that if one is to be trusted, there must not be a hint of dishonesty or willful deception. A clear, crisp consignment agreement, thorough accounting for others’ possessions, and willingness to make good on your mistakes are necessary.
7- Pay attention to what your clientele wants, needs, and will pay you a healthy profit for. When I was in college, I ran the student-body-owned clothing shop in a small town. It had struggled for years, mostly as a retail lab rather than fulfilling what this isolated village needed. I was able to add several clothing lines that students couldn’t get elsewhere; traffic and profits shot up so much, we opened 2 more stores…in a 3-block-long downtown.
Make NO major, cast-in-iron decisions that you cannot change. The includes calling your shop by its merchandise. Many’s a shopkeeper who regrets calling her shop Kidstuff when she decides to expand her merchandise offerings.
8- Flexibility. You’re a consignment shop, but spending too much time dealing with low-dollar items? Be flexible enough (and fiscally prepared) to decide that buying outright would work better for small-but-pertinent items. If you are a buy-outright secondhand shop and you can’t afford to buy those designer items, take them on consignment to lessen the risk.
There is no Big Momma in the Sky watching to see if you play by your own rules. They are your rules, and you are allowed to change them as needed. You never do layaway, but this is the only buyer interest you’ve had in that cumbersome armoire? Sure, you’d like to sell it out the door, but to refuse to take half the price now and half when he gets paid again and can borrow a truck to move it? Silly shopkeeper. Of course you’ll be glad to do that deal.
9- Invest wisely. Before you spend money, think about how that money will make you money. Your money should serve you, not vice versa. Small amounts saved here and there (making your own coffee versus buying it) can actually be the engine of your success. Conversely, spending on salaries rather than being short-handed and unable to properly serve your customers is an investment in your continuing success.
10- Continue refining and learning. Tactics that worked well for you in Year Two might not be the perfect solution in Year Five. Just as the styles of clothing and decor change and thus your acceptance parameters change, so will your knowledge and desire to fine-tune your company. Take advantage of not only Too Good to be Threw and HowToConsign.com, but also the help available through our Products for the Professional Resaler.
Auntie Kate The Resale Expert 
Hello,
Is there a percentage that i need to follow if I want to purchase clothing or vintage from sellers in a consignment shop, and also is there a program or sitee to determine these buybacks and determine replica items?
thinking about opening a resale shop. how do I base the pricing on a resale items, is there a software I can use
Hi Tracey, Pricing is so subjective, that I have devoted an entire page on Too Good to be Threw to information about it: http://tgtbt.com/pricing/ (based on my workshop at Conference) and an entire, resale-specific Product for the Professional Resaler on the topic: http://tgtbt.com/shop.htm#25
And alas, no, you can’t rely upon some software to price your items. Why not? Because much of the perceived value (take a look at my blog posts re perceived value) derives from the special circumstances of the shop. For example, the same item in a large, well-trafficked, established, clean, friendly and respected shop can command a higher price than the item in a newly-opened tiny shop in a small village that no one knows about.
Of course, for general guidance about pricing and the 1001 other aspects of running a resale shop, there is Too Good to be Threw, The Complete Operations Manual for Resale & Consignment Shops
How much do you thing it take to open a consighment shop?
Well Beta, that dollar amount varies from place to place and by size, decor, fixturing and equipment and more! But the absolute first thing you must do, before even DREAMING of opening your own shop, is have 6 months’ minimum business expenses and 6 months’ personal expenses ready and waiting to be used.
Now I know a lot of people who market operations manuals will not point this basic truth out to a client for fear the person won’t buy their book… but I HATE to see folks start a consignment or resale shop, put their heart and soul and money into it, then fail, simply because they didn’t have enough of a bankroll to give themselves time to succeed!
Now, how MUCH 6 months’ business expenses IS: Take nice HIGH figures (the rent on the location you covet, for example) so you err on the generous side. While you’re figuring this, add in the one-time opening expenses: getting the place in shape, equipping it with at least the basics (you can always add or upgrade as you grow), advertising and promotion.
For more details, of course, there is always Too Good to be Threw, The Complete Operations Manual for Resale & Consignment Shops.
Has anyone tried opening or know of a consignment/eBay shop in a mall? Is that the right kind of traffic for selling on eBay/Craigs List and getting stuff on consignment?
Dear Auntie Kate
I am very passionate about pregnancy and childbirth. I am researching opening a maternity resale shop but, starting online to eliminate overhead costs. Start slow build inventory because, although I am passionate funds are limited. Hopefully, it will grow and do very well without huge risk. How do you observe the online market to be in this economy?What are your thoughts on Maternity resale? Do people want to spend less for the nine months and still look stylish? Do they want affordable or high end? Do you recommend gently used regular maternity wear or high end?Thanks
Hi Wifey, Great topics for not the blog, but our discussion board called Sharing. At this moment (June 28 29011), we’re remodeling it so it’s not available, but make a note to check back, and join us there!
WOW !!!Thanks so much for the info….just found a location…it is a bit smaller than what I was looking for….but a great location!!! I appreciate your ongoing support!!!! megg(peace by piece works)
Best wishes, Megg. Have we seen you over on our Professional Resalers’ discussion board on TGtbT.com ? Come join us… and come read the years of store-to-store discussions there too! http://www.tgtbt.com/w-agora/index.php?site=tgtbt&bn=
I’m going out of business, what I would do if I had it to do again. Read what Auntie Katie has to say! You need to have 6 months if not longer of cash saved for a rainy day, because you will have them. Also be careful of your landlord and what you pay in rent. My mistake is I had a great location that came with so many CAM fees (common area fees). So in the middle of the year they will tell you they under estimated charges and will send you a bill for $1000.00 or more and you have 30 days to pay.
I felt when I opened I did what I had to I did have 3 months savings, well as soon as the extra charges came in that money was gone. In the beginning it is hard to save money.
So what I have learned is beware of your lease. Spend the money for a layer to read your lease. If you can rent from individuals rather than corporations that is would you should do.
Have a back up monies.
Don’t just think that it is a bad economy and Consignments will do great. In a 60 mile radius I counted 10 shops and different kinds going out of business via Craig’s list Business section.
So please do a lot of research before you assume, one of the most famous saying I have heard from people is ” You would think in this economy consignment would do great”, well right now they are not (at least in my area of the world).
When you can go to Macys and buy dress, pants and top for $33.00 a consignment shop can not compete with that. You also have the internet, e-bay, Craig’s list, and Mom groups who have gotten into the resale business.
I wish anyone starting a business right now much Luck.
Please do research and ask lots of questions, and when you see another consignment going out of business ask questions, but don’t assume that they just didn’t know how to run a business. It may be that it is not time to open consignment shops. I believe that when the economy starts to pick up and the stores stop giving away merchandise and people are back to work, that is the time to open your store.
I’m sure their are people who would disagree with me and that is fine but after being is my store for 3 years and watching what has happened I don’t want to see this happen to anyone else.
I wish you all luck.
Denise
Thank you Denise, for your candid comments, and I wish you well in whatever you are planning to do next.
I think it’s true in every type of business, in all economies: if you don’t have a cushion for unexpected expenses or slow seasons, all your hard work of starting a shop will go down the drain. And that is a cryin ‘ shame!
Your remark about the low, low prices for new goods now is certainly something to keep in mind. I’ve seen a lot of incredible buys in “real” stores, for sure, and this needs to be addressed in any other shop…such as a resale or consignment shop without a doubt.
But don’t forget, there is so much MORE you can offer than the department stores and mall stores and discounters can. Making it more rewarding, more fun, more convenient, more homey to shop with you. Who ever gets anything but the bare minimum of service in a new store nowadays? Price is certainly very important, but it’s NOT the only consideration when deciding where to shop.
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I’m interested in opening a resale shop for formal wear and I have been researching. This may sound ridiculous but i’m not looking for a long-term business opp. i love my teaching job but want to provide this service seasonally. Is this even a possibility? What suggestions do you have?
There are a number of seasonal sales held around the country. Many are franchises and most are childrenswear, but you can learn a lot from their web sites. There are also a number of organizations who do promwear seasonal sales and/or giveaways. One name that comes to mind is the Cinderella Project. Even the charity-driven events will be interesting for you to examine.
I am sure that a few hours with our good friend Mr. Google will provide you with all sorts of starting points! I’ll be interested to follow your progress; do join us at Sharing, our resalers’ discussion board at http://www.TGtbT.com !
i luv the tips,, but im smart enough to know my basics..,,, wat i want to know what kind of paper work is the government going to ask me for,,,and taxes and this of that nature.. if those are stupid questions ,, please feel free to email me at edgar1diplomat@yahoo.com and answer either with personal experiences or web sites that will show me some knoledg on the subject.. thanxx
Hi Edgar, If you need to know the legalities/ tax implications of a business, here’s 3 basic tips:
1- My Links Page at http://www.TGtbT.com has the info re Firstgov, a site where you can drill down to your location and find all you need to know (assuming you are in the US);
2- Your local librarian will be thrilled to help you sort it all out. Then there’s the “small business” division of your state govt (they might be called something else and it might require a few phone calls, but you probably have found them in Step 1 above);
3- Your local bookstore probably has a whole series on “Starting a Business in…” [fill in the name of your state.]
Hope that helps!
Hi, I am thinking about opening a children consignment shop. I was thinking about starting small and opening it in one of the permanent ministore shops at my local flee market being the rental is only 200 a month. Do you think it will be as successful as an actual store? Also, what is the best way to come by the childrens clothes? Thanks in advance.
Well, Drue, it WILL be an “actual” store. There are many ways to do retail, and this is certainly a real one! And of course you can be as successful as an “actual” store, although of course it will be on a scale that suits a smaller space and limited opening hours.
As for obtaining merchandise to sell, see our ideas for opening stock on Too Good to be Threw’s Start-a-Shop Page.
Hi Kate
New to the business. Don’t know where to start? Any suggesstions? When is the convention and where?
Welcome Wendy! (My favorite name, as seen in The Picker Who Perished! )
Start, by all means, on my web site, and don’t miss the Start-a-Shop Page
Then explore the Professional Shops who can be found on HowToConsign.com
And of course, the blog’s got lots to offer, as does “the resale bible”, Too Good to be Threw The Complete Operations Manual for Resale & Consignment Shops and our dozens of other Products for the Professional Resaler.
Search the TGtbT Sharing discussion board for just about anything you want a variety of viewpoints, from experienced to newbie, brilliant to well-not-so-brilliant.
Our industry association is NARTS.org
Look forward to hearing of your progress, Wendy!
Hi – I was hoping for help selecting the best software to start a children’s resale shop.
Thanks!
Welcome, Carol,
The best software for starting a children’s resale shop?
None.
That’s right. I recommend that you NOT start with software for many reasons. They’re completely covered in my manual, Too Good to be Threw The Complete Operations Manual for Resale & Consignment Shops, but the short version is:
* As a beginner there’s no way for you to evaluate which will work for your situation
* As a new shopkeeper, you NEED to do it manually so you CAN choose what works for you later on..
* As a newbie, you need to PAY ATTENTION TO PEOPLE rather than electrons, to build your business.
* And finally, the cost, energy, attention you’ll spend on software is BETTER SPENT on your business in the beginning. Software doesn’t run your business, you do.
Of COURSE you will eventually use software to track your inventory. “Eventually” means anywhere from 6 months to a year or more, depending on (dare I say it again?) your particular situation. Almost every shopkeeper I have known who ignored my suggestion that they wait a while has found out they chose the wrong one for their particular business.
There are links on my page at TGtbT.com/links.htm to the major software vendors and they all offer trial versions of some sort so you can be educating yourself in your shop’s off-hours. You’re welcome to read all the messages on this topic on our discussion board called Sharing. Good luck with your new shop, and I do hope that you will take my advice from the Manual!
I am considering getting into business with a resale shop. I would like to start with used furniture and focus on the “cottage” and “chic” looks. I am curious if you have websites you recommend for women with no credit to start up a business. Doesn’t the government help with small businesses? I appreciate any recommendation.
Sincerely,
Sheryl
Southwest Florida native
Hi Sheryl, There’s SCOREs of information about SCORE on the SBA (Small Business Administration) sites to help you plan and start your own business, but first, before you start looking for that, you will need to have at LEAST 6 months’ personal living expenses readily available, and also start-up costs and 6 months’ business expenses. Don’t be dismayed: it’s doable!
I am more concerned, though, with “no credit”…and with your expectation that the government helps with small business. Why ask your fellow taxpayers to bankroll you? First, show some belief in yourself, by setting aside as much money as you can to start your own business.
In the meanwhile, DO contact SCORE (which stands for Service Corps of Retired Executives http://www.score.org/index.html ) to see what some one-on-one counseling with a volunteer businessperson can help you with, and to see what local business courses are offered to help you. I started with my “6 months’ living expenses” being friends and family and my “6 months’ business expenses” being (to be truthful) about 3-4 months’ worth. Every free class offered, I attended. Start-up expenses were less than $1000 because I begged, borrowed or scavenged EVERYTHING, even using scrap paper for price tags until I could see some profit from my business. But it was money I had available to spend…AND to risk in case I failed.
Read http://www.pueblo.gsa.gov/cic_text/smbuss/entrepreneur/being.htm which is chockful of info and resources.
Auntie Kate,
Thank you so much for your pearls of wisdom. I am exploring with a partner the possibility of a re-sale/consignment shop in St. Louis Missouri. I am a realtor and I know that good second hand furniture for the young graduate and newly married couple is hard to find. My partner and I are working to determine our specialty – either furniture, high end clothing for men, women and children or all of the above.
We do have a number of moderate to low income families we would like to serve as well.
When I found your website, I found a gold mine. Thank you so much and keep up the hard work for us who are learning our way.
Welcome Hugh! Bop on over to our Sharing Discussion Board and tell us all about operating in Ireland! http://www.tgtbt.com/w-agora/index.php?site=tgtbt&bn=
thanks for some great tips, i am currently in the prosses of setting up a second store in ireland, will keep you posted, thanks again hugh.
Seems lately many that come in want to have what we have, a “flourishing” consigingment shop.
While the blood sweat and tears never show on the outside and the comment is always “it can’t be that hard to do”
We smile and tell them we love it (cuz we do) and no, it it not hard… we are constantly learning and getting better… (knowing full well all we have done to get to this point)
We direct them to TGTBT… even though we stumbled upon TGTBT, we save them the step by giving them directions.
We rarely hear back about their new adventure so Kate, you must be doing something right on your site!
“The few, the strong, the consignment shop keeper”
As usual Kate…Pearls of wisdom dropped from above….