Furniture stores help consumers to express their individual style within their homes. These stores can be unique, follow different themes, and offer a curated selection of products to different audiences. If you have an eye for design, enjoy keeping up with the latest home decor trends, and want to build a business of your own, starting a furniture store might be an ideal option.
Furniture stores sell new and/or used furniture including beds, tables, dressers, couches, and more. Some stores specialize in particular types of furniture, such as high-end designer models or modular furniture. Depending on the type of furniture a store offers, its audience can vary. Most of the time, customers will be homeowners or renters, though college students can be a secondary audience.
Currently, furniture stores face competition from online retailers and big-box chains which can offer furniture at discounted rates because of their higher volume purchases. However, furniture stores also offer the convenience of providing fully assembled pieces that can often be delivered to a customer’s home.
The furniture store industry has undergone recent growth and is spurred by increased consumer spending. From 2013 to 2018, the industry grew by 2.9%, resulting in $65 billion in revenue during 2018, according to research from IBIS World. During that time the number of furniture stores grew to 38,647, employing 227,728 staff. While no one company dominates the market, Inter IKEA Systems BV and Ashley Furniture Industries, Inc. hold the largest shares of the furniture market.
Independent furniture stores face competition from warehouses and super centers (IBIS World). These major retailers have significant store space and are able to offer diverse selections of furniture including tables, chairs, and more. Because these retailers can purchase in such high volume, they are able to offer customers greater discounts than independent retailers can provide. This may prove a threat to the furniture industry.
Furniture purchases are closely linked to disposable income, but in 2019 disposable income is predicted to increase, which could drive furniture sales (IBIS World). A thriving housing market also contributes to furniture sales as new homeowners tend to spend heavily to furnish their new homes.
Who is the target market for your furniture store?
A furniture store’s target market will vary depending on the store’s location, the demographic the store markets to, and the type of furniture that the store stocks. A store in a lower income area that stocks affordable, practical furniture can appeal to the general population, but homeowners, renters, and college students, in particular. Alternatively, a store in a higher end area that stocks designer furniture will appeal to a different market, mainly adult homeowners.
Skills, experience, and education useful in running a furniture store
Anyone can start a furniture store – even with no small business experience – but the following skills and experience can make it easier to successfully get a store up and running.
An eye for design. Being able to spot quality furniture that will be in-demand can help an owner fill a store with products that will draw in customers and sell quickly. Design skills are also necessary in creating attractive window and in-store displays. Pairing furniture together in sets and accessorizing with accents can help to draw customers’ attention to furniture and even drive sales.
Customer service skills. Expect to engage with customers daily. Previous customer service experience is beneficial when owning a furniture store, especially since many purchases are expensive and customers can quickly get upset if a product or delivery doesn’t turn out as planned.
Given the intense pricing competition from warehouse clubs and larger competitors, an emphasis on customer service is critical.
Management skills. Hiring, training, and managing employees takes talent, and it’s a necessary and daily part of owning a furniture store. Previous experience as a manager is valuable in the furniture industry.
Marketing skills. A strong marketing plan is essential to launching a furniture store, but ongoing marketing efforts are important, too. Putting items on sale helps to drive the purchase of some higher-cost pieces, but you need to be able to publicize the sale to get people in the door. Familiarity with email marketing, social media, and even print marketing will be important and can save you money over having to hire a marketing professional.
Business skills. Furniture store owners don’t need a full business degree to start and manage their stores, but business skills are important. An owner of a furniture store should be able to manage inventory, identify appropriate pricing, market the business, and more. While previous business experience will help, owners can also learn many of these skills through business classes and with the help of a business mentor.
Furniture stores stock large amounts of fairly expensive inventory, so they require a significant investment in order to get them started.
The cost to start a furniture store will largely be based on the size of the store and expense of inventory. A smaller operation could get started for around $200,000, while a larger, high-end furniture store could see startup costs reach $5 million and more.
The majority of costs come from:
- Purchase of a location unless leasing
- Renovations to the facility
- Delivery vehicles
Furniture stores require significant working capital to operate. A business needs working capital to purchase inventory, which can be a major cost in furniture stores. If inventory doesn’t move quickly, working capital can be tied up in those products, making it difficult to restock in-demand pieces.
How much can you potentially make owning a furniture store?
Furniture store sales and profits vary, but according to Chron, retail furniture stores experienced a 45% gross profit margin in 2018. This profit margin doesn’t include expenses like a lease, employee salaries, or other items noted above. Furniture stores averaged $185 in sales per square foot of floor space. More efficient stores achieved $210 in sales per square foot, while the top stores reached $371 in sales per square foot.
Sales and profits will vary according to many factors, including a store’s age, location, the type of furniture sold, and the presence of nearby competition.
Steps to Starting a Furniture Store
Step 1. Write your Business plan
After coming up with a business idea, the next step in starting any business should be to write business plan. Not only will a bank require you to have one in order to get funding, but multiple studies have shown that a business plan helps increase the odds of starting a successful business. A well thought out furniture store business plan will serve the entrepreneur as the road map for their business, helping them achieve their business goals.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
It’s generally beneficial for a furniture store location to be in close proximity to higher-traffic locations, close to homeowners.
The lease costs of a furniture store are often higher than typical independent retail businesses simply because of the square footage that a furniture store requires. Additional factors can affect the cost of a lease, including the location of the store. Store space in sought-after active retail spaces will cost more, but it can also increase foot traffic to the business.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
The types of business licenses, permits and registrations that will be required to start a business vary on the activities of the business in addition to where it is located.
No special licensing is required to open a furniture store, but some of the common local, state and federal registrations for a flower shop will usually include a sales tax permit, Employer Identification Number, and Occupancy Permit among others.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a furniture store is another. Fortunately, the cost to start a furniture store can be quite high given the cost to remodel a retail building, delivery vehicles and inventory. Funding for a new start-up can be difficult as banks are typically going to want the borrower to have good credit and be able invest 15-25% of their own money.
Step 6. Get your Marketing Ready
Marketing costs will vary according to the type and volume of marketing. Expect to invest significantly in marketing the furniture store’s grand opening. Afterward, ongoing marketing can help to publicize sales, spread the news about special events, and show off new inventory to draw new customers to the store. Marketing options include social media, print advertising, radio and TV advertising, targeted online ads, direct mail, and more. The prices of each type of marketing vary.
Many existing furniture stores still rely on traditional print marketing, which presents an opportunity to a new business. Developing a functional online store is critical as customers expect a business to have an online presence.
Step 7. Obtain Insurance
A furniture store needs to be covered by a few different types of insurance in order to protect the business against some of the most common risks:
- General liability insurance helps to protect the business if a customer is ever injured while in the store. It can cover expenses like medical bills or legal fees if they occur.
- Commercial property insurance protects the business from losses in inventory or in the cost of the store’s building in case of a fire, storm, or other event.
- Workers comp insurance is mandatory for any furniture store that employs staff. If an employee is ever injured while on the job, this insurance can cover related expenses, such as medical bills.
- Vehicle insurance is necessary to protect a furniture business in case a worker gets into an accident while driving the business’ delivery vehicle.
The cost of a store’s insurance policies will vary according to the value of the inventory, the number of staff employed, the location of a store, and other factors. Desired coverage limits and deductibles also affect policy cost. To get a better idea of what insurance may cost, request quotes from several companies and closely compare the policies to decide which plan is right for your needs.
Step 8. Hiring Employees
You may start out as the only person working in your furniture store, however it’s important at some point to bring on employees as retail hours are typically long and you will need a break or time off if you are sick.
As stores grow in size, they need to be staffed by multiple employees. PayScale states that the average salary for a sales associate is $42,589 and a furniture store managers average salary is $52,381. In addition to budgeting for salary costs, full-time or part-time employees can require additional expenses such as paid time off, health insurance contributions, and workman’s compensation insurance.
Related: Hiring your first employee
Every state has specific requirements and regulations when starting a business. Select your state below to find the guide to starting a business in your state.
Things to consider before starting a furniture store
Starting a furniture store is a big undertaking, especially if you plan to sell new furniture. Opening a used furniture store will cost less than a new retail store, but it also requires a strategic plan in order to constantly acquire new and affordable used furniture. New furniture stores can purchase wholesale furniture from a variety of retailers, but the costs can be significant especially when the business is just starting up.
When it comes to selling furniture, an understanding of current and evolving home furnishing trends will help to keep fresh and interesting inventory in the store. It’s difficult to run a sizable furniture store entirely on your own, so plan on hiring at least some part-time staff to assist with moving, assembling, and delivering furniture.
Because furniture takes up so much space, a store needs to be much larger than your typical independent retail store in order to offer a large amount of inventory. While a lease on a larger space will cost more, maximizing your store space can help you to make the most of every inch in the store, offering as much inventory as possible in order to drive sales. If you can find a quality that makes your store unique and sets it apart from competitors, you can leverage this unique quality to draw attention to your store and position it to be a success.