How to Start a Greeting Card Business

Overview

How to Start a Greeting Card Business

There’s something so touching about receiving a greeting card in the mail, but finding that perfect card to send to that special someone can be tough. If you’re creative and a talented designer, you could create that exact card you’ve been searching for – and then you could sell it to others who are also looking for the perfect card. Starting a greeting card business can be a rewarding venture, and because you can do it part-time and with a relatively small investment, it’s an accessible business option, too.

Business Overview

Greeting card businesses design and create greeting cards that consumers buy in stores or online. These businesses often offer lines of cards for various occasions, including birthdays, holidays, condolences, and more. A greeting card business may design cards and then send them off to a printer to be printed, but some companies handle the entire process, designing and then hand making each card individually.

A business may sell its cards in multiple ways. Some businesses only wholesale cards, selling them to retailers and gift shops who then sell them to consumers. Some businesses do a combination of wholesale and direct-to-consumer sales. A business may sell online through its website, or it might rely on sites like Etsy and Amazon to help drive sales. Some handmade cards may also sell well at craft fairs and other events.

While it’s entirely possible to run a business entirely out of your home and handmake your own cards, outsourcing the actual card creation to a printer can quickly increase your volume. The Business Barn recommends that if you do outsource to a printer, you choose that company carefully. Look for a supplier who is willing to negotiate on printing runs not to have to buy more cards than you really need. This is particularly important when you’re just starting out and are working with limited funds. Put time into building a good relationship with your printer, which will be important if you ever need a last-minute change to your order.

Industry Summary

Greeting cards may be a long-standing tradition, but the industry is still alive and well. Southern Living reports that United States consumers buy seven billion greeting cards each year, with sales reaching as high as $7.5 billion. This market is largely female-driven, with women accounting for four out of every five card purchases. Ninety percent of households who buy greeting cards buy approximately 30 cards each year. More than half of the cards sold are birthday cards, while cards that are sold during holidays like Christmas, Mother’s Day, Father’s Day, Valentine’s Day, and others are also popular times to buy cards. Outside of seasonal cards, wedding, anniversary, graduation, and get well cards are also big sellers.

IBIS World reports significant growth in the online greeting card industry. From 2014 to 2019, the industry experienced a 9.3% annualized growth. By 2019, the industry reached $714 million in income, with 1,680 businesses employing 3,032 staff. That growth was due in part to the consumer shift toward online shopping. Online greeting cards are affordable and convenient, and their popularity is predicted to continue in the coming years.

Industry Trends

The greeting card industry is evolving, and new trends continue to emerge. One of those trends comes from millennial purchasing habits. NPR notes that millennials are increasingly buying fancy specialty cards, and they tend to prefer cards with personal touches. Millennials frequently buy cards for birthdays, anniversaries, holidays, and to congratulate friends for educational accomplishments. Millennials are also sending online digital cards, as well as creating personalized cards from photo-printing companies like Shutterfly.

Millennials are also using their entrepreneurial spirit to enter the greeting card industry. Many millennials are starting up companies that create cards with unique features like pop-up 3D images, animated cartoons, LED lights, hand-painted art, and more. These cards are more expensive, leading to the next trend: Rather than buying large boxes of cards to send to 50 friends, millennials are spending more per card and are buying fewer cards.

Target Market

Generally speaking, the majority of greeting card buyers are women, and millennials also frequently buy cards. A greeting card business’s niche may further define its target market. Elaborate, unique, and highly personalized greeting cards with higher price points may appeal to millennials, while more traditional cards with a lower price point may appeal to a broader audience.

Skills, experience, and education useful in running a greeting card business

Starting a greeting card business doesn’t require a business degree, but certain skills and experiences can increase the chances of that business becoming a success.

Creativity. Creativity is a major asset in this industry and can help a business owner design new and exciting cards to help the business stand out from the competition.

Design skills. Experience as a graphic designer is valuable when creating business cards. Awareness of design aesthetics and color usage will help a designer to create artwork that looks great.

Writing talents. Creating greeting cards isn’t only about design. A card designer also needs to be a skilled wordsmith to come up with just the right words and messaging for each sentiment.

An eye for detail. Attention to detail is a must, from ensuring cards look their best to filling orders and managing inventory.

Networking talents. If a business owner wants to sell their cards in stores, then networking and negotiation skills can help them build connections and relationships with store owners.

Awareness of trends. A business owner who’s aware of what’s selling and in-demand at the moment can ensure that the business’ cards fulfill this demand, increasing their chances of selling.

Customer service skills. Strong customer service skills will help a business owner to create positive customer experiences to encourage repeat business.

Checklist for Starting a Greeting Card Business

Starting a greeting card business can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.

Step 1: Write a Business Plan

After coming up with the business idea, the next step in starting your business should be to write a business plan.  Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

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 greeting card 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 to minimize liability risk 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

It’s possible to start a greeting card business out of your home to save on rent costs. As that business expands, it may be time to rent a space for storage and production. Rental costs will depend on factors like the size of the space, location, and any amenities that are available.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

A greeting card business owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.

Some of the general business registrations a greeting card business may need will include a local business license, sales tax permit, and Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: 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 7: Get your Marketing Plan in Place

Marketing a greeting card business can be a challenge. Many smaller businesses sell their cards online on sites like Etsy, and standing out from the competition can be difficult. Keyword research and description and store optimization can help with this. Creating a website that supports online purchases can be a wise investment, too, and this can also allow a business to sell digital cards. Other marketing techniques include social media marketing, email marketing, and online advertising. A loyalty program can also help to encourage repeat customers.

Related: Low-cost ideas to market a new business

One important marketing task is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.

Step 8: Get Business Insurance

There are several types of insurance to consider when starting a greeting card business. A couple of these include:
– Commercial property insurance can protect the business against losses that can result if its shop and inventory are ever damaged or destroyed by a fire or other event. This may be worth looking at if you are operating out of your home, as most home policies wouldn’t cover damages from business activity, such as a fire or water damaging inventory.
– Worker’s compensation insurance is only needed if the business hires staff. It helps cover expenses like medical bills and legal fees that a shop might face if an employee were ever hurt while working.

The cost to insure a greeting card business will depend on factors like the business’ size, location, and value of its equipment and inventory. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, look beyond how the premiums compare and instead focus on other elements, too, like plan exclusions, coverage limitations, and deductibles.

Related: Common types of insurance a business may need

Step 9: Hire Employees

A greeting card company owner may be able to manage the business entirely on their own for years. If the business grows and the owner wants to expand it, bringing on another designer could help. According to ZipRecruiter, greeting card designers earn an average of $37,992 per year, though salaries can range from $18,500 to $95,500.

In addition to salary expenses, a business’ budget also needs to include funds for other employee-related costs like workman’s comp insurance, unemployment insurance and paid time off.
Some businesses don’t require full-time people, so freelancers that are only paid when work is needed such as designing a new card will help reduce costs.

Related: Hiring your first employee

Step 10: Set up an Accounting System

Setting up an accounting system for your greeting card 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.

Related: Setting up the accounting for your business

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 greeting card business?

Greeting card businesses have a relatively low barrier to entry, and they’re highly affordable to start. It’s possible to start a small business for as little as $3,000. Plus, because business owners can manage these businesses on a part-time basis initially, they can maintain other employment as this business builds momentum and grows.

Some common startup costs for a greeting card business include:
– Printing supplies and equipment (if handling the production)
– Inventory of cardstock and inks (if handling the production)
– Computer and design software
– Shipping materials

How much can a greeting card business owner make?

A greeting card business’s profits will depend on many factors, including its profit margins, how it sells its cards, and the number of years that the business has been in operation. Business owners can increase their business’ profits by carefully studying the market and offering cards that are in demand. Exploring various sales methods, including online and in local stores, can also help increase sales and potentially increase profits.

To increase profits, consider selling add-on products like specialized envelopes and nice pens.

If you plan to wholesale your cards, Emily McDowell & Friends recommends that you choose your prices carefully. She notes that most stores want to be able to achieve a 50% markup in their sales. Keep in mind that you’ll still need to be able to make a profit off of the cards that you wholesale, so do a careful cost analysis to determine what price point you need to be at. If you also sell directly to customers, your retail price needs to be high enough that you can cut it in half when wholesaling. Many card businesses require a minimum wholesale order of 100, though you can set your minimums at the amount that makes sense for you.

Are there grants to start a greeting card business?

It’s extremely rare to find a grant to start a greeting card 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 greeting card business?

The NAICS code for a greeting card publisher is 511191.

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.

Related: What is a NAICS code?

Resources:
Greeting Card Association

Subscribe Now to the 60-day Startup Challenge!

Subscribe Now to the 60-day Startup Challenge!