How to Start a Gift Wrapping Business
Are you the person who takes extra time to make gifts look beautiful? Do you love perfect corners and creative bows? You could turn that skill into a gift wrapping business and help other people give stunningly wrapped gifts. You would be doing what you love and making money at the same time.
A gift wrapping business wraps gifts for customers and sells wrapping paper with creative designs and other gift wrapping accessories. Some professional gift wrappers operate inside department stores, while others may be kiosks in a mall or even a retail shop. Customers pay for the paper and the wrapping service.
According to Statista, the gift wrapping products industry size was $15.11 billion in 2018 and is expected to grow to $24.9 billion by 2025. Little information is available about gift wrapping as a personalized service because businesses in this industry tend to be very small and privately owned.
Disposable income is expected to increase, which is expected to increase the gift wrapping products market. Professional gift wrapping services are sensitive to economic fluctuations because when people spend less money during economic downturns, they will turn to DIY.
Trends in gift wrap are minimalistic, simple designs.
Your target market will be people giving gifts who don’t want to take the time to wrap gifts themselves.
Skills, Experience, and Education Useful in Running a Gift Wrapping Business
There are several specific skills that you will need to open a gift wrapping service.
- Experience. You just need experience wrapping gifts so that you’re good at it!
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Gift Wrapping Business
If you’re thinking about starting your own gift wrapping business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the business idea, the next step in starting your gift wrapping business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect gift wrapping business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a gift wrapping business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
A retail location with high foot traffic is essential so that when people are shopping for gifts, your store is visible to them. Some gift wrapping businesses rent kiosk space in a mall or small space in a busy retail store or gift shop.
Given this type of business is really busy between Thanksgiving and Christmas, having a short lease is important in keeping overhead low.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are no special licenses directly for a gift wrapping business, however, there are common local, state, and federal registrations that a gift wrapping business may need, which include a sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Most new gift wrapping businesses either fund the business personally, loans from friends or family, or use credit cards.
Getting a business loan would be difficult due to the low startup cost and lack of collateral. If a bank loan is needed and the loan amount is low, it will likely be a personal loan.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A gift wrapping business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a gift wrapping business include social media marketing like Facebook, Pinterest, and Instagram, and online advertising, as well as business cards, brochures, and flyers. Developing a website can be a significant expense, but it can also give your gift wrapping business greater visibility online.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a gift wrapping business. A couple of these may include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a gift wrapping business will vary based on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need employees to help you run your gift wrapping business, or you may choose to be a one-person show. Make sure that you select people with appropriate experience.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your gift wrapping business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a gift wrapping business?
Here are some of the typical costs you will face when you open a gift wrapping business.
– Kiosk or shop rent deposit $100 – $500
– Gift wrapping supplies (such as ribbon, wrapping paper, scissors, gift tags, gift bags, gift boxes, tissue, etc.) $1,000
How much does a gift wrapping business owner make?
A reasonable price for wrapping a gift ranges from $10 – $50. If you charge $25 and wrap an average of 10 gifts per day (more during the holidays), you would make $91,250 in revenue per year.
Consider that this business tends to be very busy during the holiday season, and much slower throughout the year, so be sure to budget accordingly.
Are there grants to start a gift wrapping business?
It’s extremely rare to find a grant to start a gift wrapping business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a gift wrapping business?
The NAICS code for a gift wrapping business is 561910, which is categorized under Packaging and Labeling Services.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.