Opening your own gift shop can be a terrific business idea. Whether you want to open one online, in person, or through a hybrid model, you can definitely have fun while making money. However, it’s not all rainbows and roses. Before you start this kind of business, you definitely need to think about the pitfalls of opening a gift shop. You also need to consider the equipment you will need to invest in before opening! For example, have you looked into how to code software for barcode scanners? If not, look into your options when it comes to scanning in order to save yourself some time when it comes to stock and payments. This is just one of the things to consider before opening.
Types of Gift Shops You Might Open
If you’re thinking about opening a gift shop, then you’ll want to consider what that really means for you. Some of the different types of gift shops include:
- Souvenir stores
- Gift basket shops
- Niche shops – focusing on specific items such as soaps, candies, etc.
- Gifts for kids
- Gifts for couples
- Handmade items – made by you and/or other artisans
- General gift shops
Gift Shop Business Models
As you consider the benefits and pitfalls of opening a gift shop, you’ll also want to think about the different business models. These include:
- Renting a retail space and opening a gift shop
- Setting up a website and running a gift shop entirely online
- Renting a space in a co-op or consignment shop
- Setting up a pop-up store
- Selling your gift shop items at craft fairs as well as online
Obviously, there are pros and cons to each. For example, a retail store has a high overhead cost. However, if you enjoy interacting with customers in person, then you might prefer that options.
4 Common Pitfalls of Opening a Gift Shop
As you weigh your options, be aware of these four common pitfalls of opening a gift shop:
1. It’s Typically a Seasonal Job
Although you can make money throughout the year, there will be huge ebbs and flows. Obviously, most people shop at gift shops during the Christmas season. If you have a tourist-centered gift shop, then you might do most of your sales in the summer. Be prepared to plan for big swings in income throughout the year.
2. Gift Shops Are a Competitive Industry
According to Starter Story and numerous other sources, competition is one of the biggest pitfalls of opening a gift shop. There are so many in-person and online gift shops out there already. What are you going to do in order to set yourself apart from the others? It’s not impossible to get noticed. However, you do need to plan strategically.
Moreover, you’re going to have to get used to the idea of pivoting. Just because you love a product doesn’t mean that the market will love it. Just because the market for certain gifts was good last year doesn’t mean they’ll sell this year. To stay competitive, you’ll have to stay on top of all of that. Entrepreneur argues that these are among the biggest reasons retail shops fail.
3. Not Everyone Likes Being a Boss
Many people open gift shops because they want to be their own boss. However, if you grow your business, then you’ll ultimately end up the boss of other people as well. Unfortunately, you may discover that you don’t like that part of the job. Hiring and managing people is tough.
And even being your own boss will come with its challenges. You might find that you never “turn off” work. You have to make all of the decisions yourself. It’s a big responsibility. Some people love it but it’s not right for everyone.
4. High Overhead, Low Margins
In other words, you might not find it easy to make a lot of money. Starter Story explains that one of the big pitfalls of opening a gift shop is the high overhead. You have to pay for a retail space and/or website fees. You have to source products. You can’t sell gifts that you don’t have. Therefore, you have to pay for the items upfront and hope that they sell. The markup is rarely very high if you want to have good sales. Therefore, although you can make money opening a gift shop, it’s not easy.
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Kathryn Vercillo is a professional writer with more than a decade of experience writing about healthy living and personal finance. She lives in San Francisco, where she has learned to maximize frugal living tips in order to thrive as a freelancer in one of the nation’s most expensive cities. When she’s not writing, she’s exploring the city on foot with her rescue dog. Learn more about her at www.kathrynvercillo.com. Kathryn also writes about saving money with coupons over at GroceryCouponGuide.com .