Most people care about the aesthetics of their home since it’s where they likely spend most of their time. That’s what makes the home décor industry worth nearly $130 billion globally, and it’s still growing. If you have an eye for attractive home décor pieces, a home décor business could be right up your alley.
But the business may not be as easy as it looks. Like any other business, you need to gather valuable insights to help you achieve success. From choosing a relevant niche to sorting out your financials and obtaining the right licenses, you really need a guide to show you the way.
So, in this short guide, we will be showing you all that you need to know to start a profitable home décor business. Just keep reading!
How to Start a Profitable Home Décor Business: A Step-By-Step Guide
#1: Choose a relevant niche
When thinking of starting a home décor business, this is where your journey should start – choosing a relevant niche to venture into. Home décor can include a host of items: lamps, vases, glassware, wall art, furniture, cabinet hardware, floor or wall tile – the list is endless.
Instead of offering a small selection of a variety of items, it’s often a good idea to specialize in one or a few types of items and offer a large selection of those items. That can create word-of-mouth marketing, as people start to see your business as the go-to resource for that type of item.
If you’re going to open your business as a home décor store, check other home décor stores in your area to see what might be missing. Maybe your local market is missing a lamp store or a kitchen décor store.
If you’re going to sell online, start doing some Google searches for various types of items, and see what might be harder to find. The idea is to look for a market gap to fill.
#2: Create a business plan
Now that you’ve figured out what niche to specialize in the industry, the next thing is to create a full business plan. You shouldn’t open your store for business without having a solid business plan for the business.
A business plan serves as the guide that helps you navigate your way through the business. It helps you identify challenges and opportunities early enough and devise a means to avoid or explore them. When writing your business plan, some of the key elements you should have in it include:
- A company overview
- A description of your products and how you will sell them
- An analysis of the market for your products and the competitive landscape
- A sales and marketing plan
- A plan for operating the business on a day-to-day basis
- Your management and personnel plan
- A financial summary that includes your projected costs and sales
By researching all of these areas of your business, you should end up with a solid strategy for how to launch, operate, and grow your home décor business.
#3: Calculate your startup costs
Once you’ve determined your niche and have a solid business plan in place, you’ll need to understand how much it’s going to cost to get started. Again, to start a home décor store, your costs will include rent and inventory, which, all told, could add up to $30,000 or more depending on the size of your store. You’ll also need an operating budget to pay ongoing rent, overhead, and employee wages.
To start an online store, you’ll need a website and inventory unless you go the dropshipping route. If you decide not to do dropshipping, you’ll need to determine how much inventory to buy. You should start small to test the market and see how it goes, and you can expand from that point.
To go the dropshipping route, you don’t need much beyond a website or an online store, business registration and licenses, and a marketing budget.
#4: Form a business entity
If you’re going to be the sole owner of your home décor business and you get started without formally registering a business entity with your state, you’ll be operating as a sole proprietorship. If you have a business partner, you’ll be operating as a general partnership.
In both cases, you, your partner, or partners, and the business will be considered the same entity. That means that you are personally liable for the obligations of the business, and if your business is sued, your personal assets could be at risk.
That’s why many entrepreneurs choose to form a limited liability company (LLC) or corporation. An LLC is less complex, making it the most popular choice. An LLC is a separate entity from its owner or owners, meaning that the owners, called members, are not personally liable for the debts of the business.
An LLC, however, is taxed just like either a partnership or sole proprietorship. That means that profits pass through to the members to be taxed at their personal income tax rates. The LLC is not taxed, which is a great benefit.
Forming an LLC in most states can be done online on the Secretary of State’s website by simply filling out a form that’s usually called the Articles of Organization. A fee is involved that ranges from $40 to $500, depending on the state.
#5: Obtain business licenses and permits
Various business licenses and permits, including sales tax permits, may be required at the state and local levels. Check with your state and local governments for requirements.
Also, don’t forget to apply for an EIN for the business, especially if the business will be operating with more than one owner or plans to have many employees. In that case, you’ll be required by the IRS to have an employer identification number (EIN), which you can obtain on the IRS website for free.
#6: Get business insurance
Every business needs to be protected, so you should speak with a business insurance agent about the types of insurance you may need. You’ll likely at least need general liability insurance.
Don’t let anyone talk you out of this. Regardless of the size you are looking to start out with, you will need to prepare for the rainy days by insuring your business. In a situation where the unexpected happens, it will not necessarily mean the end of your home décor business.
#7: Determine your sales channels
Now you’ll need to determine how you’re going to sell your products. Again, you can choose to open a store, or you can sell online. Starting a store involves significant costs, as you’ll have to rent a store space and stock your store with inventory.
To reduce your startup costs, you can choose an online sales route, either through your own website or a store on an online marketplace like Amazon.
When selling online, you can choose to stock inventory to sell, but a less expensive alternative is dropshipping. With drop shipping, when you receive a customer order, you then place the order with the manufacturer or supplier, who then ships the items directly to your customer.
You can get started for a fraction of the cost of purchasing inventory, but your profit margins will be lower because you’ll pay more to the manufacturer or supplier.
Final Note
Now you’re ready to hit the ground running and put your plan into action. If you need more help, you can check out this complete guide to starting a home décor business. It offers more insights into the home décor market and marketing strategies for your business. Then you’ll be ready to open for business and start making money!