How to open a TOY STORE

Toy stores operate on a wide spectrum, ranging from general toy stores, all the way down to specialized niche products. They can be operated from a physical, brick-and-mortar location, can be run 100% online, or, more commonly, be a blended fusion of the two. Toys are timeless entities, and the need for them on the market will never dry up. There will always be children who love them, and adults who are children at heart for certain types of toys to enjoy them.

Starting a business in such a sphere, one that will never disappear, seems like a long-term, highly lucrative endeavor, and it certainly can be. However, starting a toy store entails a substantial volume of start-up capital for the mere acquisition of the toy merchandise to be sold.

So how do toy store businesses get off the ground? And more to the point of this post, what is it that one has to do to accomplish doing so successfully? Let’s dive in and learn all about starting a toy store in 10 outlined steps.

How To Open A Toy Store

Everything starts with an idea, and if you have a great one, you have conquered the preliminary step to starting a toy store business. But before you rent a space and register your business with the state, you should know that there is a lot more to opening a toy store than just that. The following 10-step process will take a lot of patience, time, and effort, but if your dream is to own a toy store business, this is the path we recommend you take.

Step 1: Put Together Your Business Plan

Every business venture must start with a solid business plan. This will be the roadmap to the specifics of your business venture which will not only guide your progress, but it will also help in planning for the inevitable unknowns that come with it. Here are some of the questions that your business plan should be able to answer:

• What are the start-up and operation costs involved in starting this type of business?
• Who will be the business’s target audience?
• How much is fair and reasonable to charge customers for the products provided?
• What will the business be called?

Let’s take a closer look into each of these areas, along with some additional details.

What Start-Up Costs Are Involved In Opening A Toy Store?

Among other factors, the location of the toy store will be one of the biggest reflections on its up-front costs. Some locations will be more expensive to rent than others (generally due to their size, as well as their proximity to residential areas and shopping centers). The latter point is particularly important as having a store that is too far away from the desired demographic will attract fewer patrons, reducing the revenue the location will ultimately bring in.

A particular store owner, for example, needed to pay the first month’s rent for $1,877, as well as a security deposit typically collected at the start of a rental agreement, which is an additional $1,877, alongside a $300 up-front deposit for utilities, and $835 in initial operating expenses, taxes, dues for placement in a shopping mall area, etc. That is one month of around $5,000.

The space acquired for the store also required some repairs and customization, as well as additional fixtures. For this, a local contractor was hired, resulting in an additional $8,000 in start-up expenses. This is all before considering the expenses on the merchandise that the store would sell to its clients.

The toy store owner had enough toy-related material stocked away before the start of the business, which allowed her to sell that as her starting inventory, which means that there were no initial expenses there. But for most owners there is no inventory stock to operate with at first, requiring substantial expenditure on products to stock the shelves. Many are purchased from wholesalers for discounted prices, but that doesn’t mean that the costs are low.

This leads to owners trying to save money by importing toys from other countries, such as China, where products are cheaper. Many of these owners are victims of being sold “knock-off” toys which reflect poorly on their service to customers, especially when their business is still in its infancy (it’s not a good first look).

Some other toy store owners pool with other smaller retailers in the sphere, to purchase products at wholesale prices as a group, and split the products, driving down the actual purchase prices for each.

What Are The Operating Expenses Of Running A Toy Store Business?

There is a litany of operating expenses in running a toy store business. They include (but are not limited to):

• Monthly rent is typically upwards of $1,500.
• Utilities including electrical, heat, water, phones, etc. can also be roughly $1,500 per month.
• Business insurance (usually a minimum of $600, but generally more).
• Advertising and marketing costs (a monthly expense of about $1,000).
• Decorative costs, updated signage, etc. ($1,000)
• Employee wages (depends on the rate of pay, number of employees, etc.)

Who Is A Toy Store Busienss’s Primary Target Clientele?

The overwhelming share of the toy purchasing market is for children, particularly young ones, and since their parents are the ones who are buying the toys, these are the primary target audience members of a toy store. Children of a particular age are susceptible to marketing and advertising draws, so they request particular toys be purchased by their parents. Pairing that with the children’s ever-changing/evolving interests and tastes in toys, drives parents to purchase additional products.

While this is true in most situations, particular toy stores are not suited to target young children’s parents. More niche toy stores, for instance, focus more on selling collector’s items or toys that are retro, appealing to those in their 30s or 40s. Other stores focus on particular niches and sell games, along with gaming supplies, specifically to cater to those (like Magic: The Gathering-themed locations). These stores tend to focus on persons in their late teens or their early 20s.

How Does A Toy Store Generate Revenue?

As with any other business, a toy store makes its money by selling toys for more than its purchased price and receiving a profit per unit. The biggest hurdle for smaller toy stores to overcome, of course, is a mass distributor like Walmart and an online phenom like Amazon, because they simply cannot match their prices if they hope to stay above water.

For this reason, smaller toy store owners focus more on their attention on their customers, with a particular focus on personalized service. While bigger stores can offer many things, they usually don’t offer storage or layaway plans, free of charge, while smaller toy businesses do. Some have even offered to deliver the toys to customers’ homes.

How Much Can Customers Be Charged For Products?

Every product has an MSRP (manufacturer-suggested price), so most toy stores stay relatively within the bounds of selling toys for this amount in retail. Some mark the prices up hoping to generate an additional profit. The inherent danger in doing so, however, is that the stores are in perpetual competition with massive online retailers and bigger stores, so if those outlets offer lower prices, the smaller stores will only drive prospective customers looking for a better deal away.

There are some justified methods for selling toys over MSRP too. For instance, toys sold on e-Bay sometimes end up being sold to willing buyers for more than the suggested retail price. Additionally, extremely in-demand toys generally get marked up as well as their demand does not negatively impact sales much.

How Much Can A Toy Store Make In Terms Of Profit?

In recent years, toy industry profits have varied, peaking at about 4.5% in 2015, but returning to the 2.8% much like it was back in 2012. All of this is driven largely by competition with large distributors, as well as online retailers. Opening a store with community ties is also a big factor in generating a stable flow of regular customers. Community stores with strong support drive a lot of customers who want to shop locally to help their businesses thrive.

How Can Toy Store Businesses Be More Profitable?

Gaming tournaments, online sales, and other methods are popular ways to bolster sales from toy stores. Stores that sell games such as Magic: The Gathering can also branch into selling specific cards to customers who are looking to add to their collections. Some of these cards are worth a lot of money, but it is important to do research about their actual worth before being able to sell them for the correct prices.

If a store acquires an excessive amount of particular cards, and it turns out that it is not as high in demand as others, it will just increase expenses without generating much of a profit.

If products need to be maintained, cleaned, handled, or stocked, the more that the small toy store business handles on its own, the greater the profits due to decreasing costs.

What Should The Business Be Named?

One of the most important aspects of a business is choosing the right name. It also happens to be one of the hardest. If you haven’t come up with a name you are sold on yet, you can use a business name generator or a toy store name generator online. If you are listing the business as a sole proprietor, you may want to avoid naming it after yourself.

You will need to register the business name with the state, but before doing so, make sure that the name is not impeding on an existing one or they could cannibalize your business. When running checks for business registration, you will want to check the state business records, state and federal trademarks, social media presence, and whether a suitable web domain is available. In terms of the latter, if you see it is available, register it with expediency before another business does.

Step 2: Set Up A Legal Entity

Business structures include sole proprietorships, partnerships, and corporations, though LLCs are the most popular. Establishing one protects owners from lawsuits in which a person, rather than the business, is held personally liable. LLC costs are not high unless you hire a reputable LLC service, in which case there is a nominal fee.

Step 3: Tax Registrations

Before your business can open its doors, you will need to register for all applicable federal and state taxes. To do so, you will require an EIN which is a number to uniquely identify your business. Obtaining it is really simple and can be found via the EIN guide from various online sources including the official IRS website.

Taxes will vary depending on the business structure selected for your toy store business. An LLC, for instance, will benefit from being taxed as an S corporation. Your business may also be subject to some specific tax laws depending on the state of operation, so make sure you check out your state’s tax guides for pertinent information.

Step 4: Start A Business Bank Account And Open A Credit Card Line

There is a lot on the line for those running a business, so using business banking and credit accounts is vital for protecting one’s personal assets. If your business is sued, and your business accounts are tied up with your personal ones, you become in danger of losing valuable personal assets like your car and your home. By “piercing the corporate veil,” you can wall off your business and your personal funds, keeping them safe.

Your business will also need to build business credit to get lender benefits in the future. Learning how to do so can help open doors for future financing and credit lines. Make sure that these are all open in the name of your business instead of your personal name. This will not only get you higher lines of credit but also better interest rates and other perks. The same goes for getting a credit card specifically for your business. It helps the business build a credit history, while financing business needs out of somewhere that is not your personal account.

An important move in an effort to separate your business and personal financials is to open a separate bank account. Not only does this draw a line between yourself and your business entity, but it also makes accounting easier, and simplifies things at tax time. One of the preferred methods of establishing business credit is through the opening of net-30 accounts with net-30 vendors.

The term “net-30” is essentially a credit arrangement where the user receives particular goods or services, and has 30 days to pay the vendor for them. This allows businesses to quickly obtain inventory when there isn’t enough cash on hand and affords them a month to recoup the money to pay the lender off.

Net-30 accounts also get reported to the major credit bureaus. By having this on record, businesses are better able to maintain a credit history and have more opportunities to secure future loans and lines of credit.

Step 5: Establish Business Accounting

To fully understand your business’s financial performance, it is imperative to keep track of all expenses and income sources. Among the obvious “book-keeping” reasons, it also greatly reduces any headaches at tax time.

Step 6: Securing All Relevant Permits And Licences

Not obtaining all necessary permits and licensing has a negative impact on a business, ranging from hefty fines for the lucky ones to needing to shut down entirely for the less fortunate. The first step is to find out what is necessary for your state. Certain states require particular licensing conditions to operate a toy store. You can check SBA’s listings to find out what type of permits and licenses your state requires.

Toy stores, in particular, may want to acquire resale certificates. These permit retailers to buy products tax-free if they are intended for resale. Additionally, certain regulatory requirements may need to supplement federal and state licensing, based on town, city, or county ordinances. The clerk’s office has that information and if it is still uncertain, then the US Small Business Associations directory has many leads to local business resources.

Certificate of Occupancy

A toy store is a business that is run from a storefront by its nature, which means that it likely requires a Certificate of Occupancy (CO) to confirm that it is consistent with all zoning, building, and government regulations, as do most other businesses operating from a physical location.

Locations for toy stores are either leased, purchased, or built. Those leasing a location need to verify that the landlord from the property already has a CO that applies to toy store businesses. If the space requires major renovations ahead of operations, a CO will need to be secured as well. It is recommended that ahead of renovations, language is included in the leasing agreement regarding the lack of CO being a non-starter, and the tenant would not be liable for any lease payments until such time that the CO is formally issued.

Those planning to build or purchase a location hold the responsibility for obtaining a CO from their local government authority. Inspectors will need to confirm that all zoning codes and building mandates are met for the toy store, to deem the business suitable for CO compliance.

Step 7: Insure The Business

Legal and safe operations of a toy store business require the acquisition of business insurance that will serve to protect the financial well-being of the business if it experiences loss. Different types of risks for different business types offer a range of insurance policies.

Some owners may not be aware of the risk types that could face in their business. In those situations, a good recommended starting point is to acquire General Liability Insurance, a commonly used small business coverage.

Other businesses also look into Worker’s Compensation Insurance which protects the business from financial ruin in the case of an injury to a staff member in the workplace. In case that happens, Workers’ Compensation insures that funds are available to pay for any necessary instances at the workplace.

Step 8: Brand Definition

A business’s brand is its corporate identity. Similar to personal identity, a brand defines not only what it stands for, but also how it distinguishes itself from a host of competing brands. A visual representation of a brand is in the form of a logo. Many business owners do not have an idea or confidence in the design of a powerful and effective business logo. Many online outlets have information for beginner logo design guides to help such businesses to come up with one. (you can use Fiverr or Canva)

Promoting And Marketing A Toy Store

While promoting a toy business is very effective when done through traditional methods (newspaper, television, and radio ads), those do not reach far enough in the modern world. A toy store needs a social media presence, typically in the form of a Facebook page, that will offer customers important business information regarding hours of operation, promotion of new toy products, and current offers and deals.

Another important aspect is to have a separate page specific to the toy store business which provides prospective customers additional information about the business, as well as makes it possible to leave reviews about their experiences and opinion of the toy store. This, in itself, is a form of marketing.

Some toy stores promote and sell their products on Amazon or eBay, tying them with the brand or store name. Not only does this supplement the income from the toy store business itself, but it also works as an advertising mechanism by getting the toy store’s name out into a far more reaching world.

Customer Retention

We already discussed some great ideas that toy store businesses can offer as services, like scheduled home delivery of toys, great for young parents who may not know where to hide Christmas or birthday gifts, for instance. Store events around the holidays or a promoted gaming tournament for popular games like Magic: the Gathering or Pokemon are another great way to draw interested crowds.

To enter the tournaments a store could set requirements such as purchasing two card packs to get in. This will not only ensure interested parties purchase to participate, but they are also more likely than not to purchase more upon attendance.

Video game sales are another great way to attract potential tournament participants in the form of gaming enthusiasts. These can be held on a weekly basis and will attract gamers who are there to have fun but is also a great way to get them to see what products your business is offering.

Discounts on special toys (such as those related to a major franchise, a hot movie of the times, or even characters from anticipated upcoming films), as well as promotions, are a fantastic way to draw customers more traditionally as well.

Step 9: Creating Your Business’s Website

Creating a website for your toy store business is the next logical step after defining your brand. Many owners get discouraged from establishing a website, fearing that they are technologically unequipped to do so, but the truth is that this hasn’t been true since nearly a decade ago. Web building technology has come a very long way and has made building websites incredibly simple, even for entire novices to the craft.

Some business owners delay building their website, but there is a host of reasons why this is a bad idea. For one, these days it is virtually impossible to exist, thrive, or grow as a business without having a website, regardless of your industry or business’s size.

While social media accounts on Facebook and even LinkedIn profiles are a great supplement, they are a far cry from the advantages of your business’s own website. With the ease of crafting websites with various tools like Hostgator’s Website building, no technical expertise is required to get started.

A novice user, after reading some basic guidelines of website building, can craft a tremendously powerful website for their toy store in under 3 hours. Many services offer comprehensive, drag-and-drop website builders including Squarespace, Shopify, WIX, WordPress, and Weebly.

Step 10: Installing A Phone System

Some business owners make the error of seeding their business with their personal phone number, sometimes in the interest of saving costs. However, establishing a phone system dedicated to your business is essential to separate your private and business life. Beyond this, a phone system permits a business to be more automated, promotes legitimacy, and allows customers to find and contact the business easier.

Even better, many companies specialize specifically in the sphere of setting up business phone systems, so everything can be taken care of quickly and easily.

Is Opening A Toy Store The Best Business For You?

It may go without saying, but opening a toy store should be done by people who genuinely love toys. After all, those familiar with toys, such as re-sellers and collectors will have significantly more knowledge about the topic than those who don’t. These same individuals are also far more likely to be familiar with resources that can be leveraged to research the toy market, and could already have networked with other toy enthusiasts that allow them to know exciting toys or trends that are forthcoming.

There is also a massive upside to having community ties to a business. It goes a long way in serving as an advertising medium for a business. This is especially helpful when your business is setting up special events to distinguish itself from competitors. Rich community involvement can help to give your toy store a business push in the face of large retailers.

Finally, being a “people person” is a near-requirement for someone owning this type of business. Not only should the person understand what kids like and want, but also be accommodating parents in catering to kids of varying ages, genders, and backgrounds.

What Is A Typical Day At The Toy Store Like?

Toy store owners start their days quite early. While the store itself may operate during normal business hours, owners need to be there bright and early to assure that everything is clean, organized, sorted, and looking presentable for when the doors open. After the store closes for the day, owners spend a lot of time figuring out financial situations and account balancing, including during especially busy seasons like Christmastime.

During normal operations, a lot of the time is spent helping customers find the toy that is perfect for what they need, and sometimes just the right toy they didn’t realize they needed. Since this is a toy store, many of the visitors will be youngsters who tend to take things off shelves and place them back into different places or leave them on aisle floors. Much of the time during the day is therefore also spent picking up after them and placing the items back in their designated spots.

As toys sell out, they will need to be restocked as well, which will also take up time during most days of operation. It will be important to know how much to stock, what the store can afford to budget for a particular product and keep a finger on the pulse of the toy industry to make sure one is intimately familiar with the hottest trends and anticipated releases.

What Kind Of Skills And Experiences Help To Build A Successful Toy Store Business?

A number of skills are helpful in opening a toy store business:

• Personal experience as a toy enthusiast or collector helps some owners have a competitive edge over others.
• Past toy store work experience can help in understanding the day-to-day activities and business requirements, especially if the role was managerial.
• A degree in Hospitality Management or Business can help with customer service and accounting for the business.

How Much Growth Potential Is In A Toy Store Business?

There is respectable toy store growth potential. Sales increased by 7% from 2014 to 2016 according to research. The toy industry overall, it was also found in the same report, has become a $25 billion industry, just in the United States alone. Therefore, this is a very healthy market to enter, though it is also quite competitive.

What Is The Next Step?

There are a few helpful steps that budding toy store owners should consider, especially if they are new to the business realm.

Business Mentor

Every entrepreneur can benefit from quality mentorship. You can connect with free business resources who have the experience and advice you need to get started. This is especially pivotal during more trying times.

Resources For Businesswomen

Many resources are available for female entrepreneurs that offer a lot of advice on professional and personal success and include securing funding, setting up guides, and events, and obtaining support.

Building A Great Business Team

When it all boils down to its core, a toy store is not unlike most other businesses. Figuring out how many employees to take to cover business hours should be done early on. The team can get bigger as hours and services begin to expand. For instance, during the Christmas season, you may need more employees to deliver “extra” service to please customers.

A dedicated workforce usually consists of employees who are happy working for the business and genuinely love what they do. Their loyalty translates to pleasing customers and securing future customer loyalty.

Frequently asked questions:

Previous

How to start a Car rental business

Next

How to start a BIKE RENTAL BUSINESS

Genie Dollars

Hi, my name is Idammah, and I am the founder of Genie Dollars, a website dedicated to helping people make money online. I have always been interested in finding ways to earn extra income and achieve financial freedom. That's why I started this blog – to share my own experiences and the strategies that have worked for me with others who are looking to do the same. I have personally tried a variety of methods for making money online, including affiliate marketing, POD, and freelance writing. While some methods have been more successful than others, I have learned a lot along the way and am constantly experimenting with new ways to earn an income online. Through my blog, I hope to inspire and educate others who are looking to start their own online businesses or simply want to supplement their income. I believe that with hard work and dedication, anyone can find success in the world of online entrepreneurship. I am excited to share my knowledge and experiences with my readers, and I hope that my blog can be a helpful resource for anyone looking to make money online. Thanks for stopping by!

Related Articles

How to make money with my cargo van

TOP 8 Franchise Business Ideas to Make Profit from

How do cemeteries make money

How to open a small restaurant with no money