Starting a furniture business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful furniture business.
Importantly, a critical step in starting a furniture business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Furniture Business:
- Choose the Name for Your Furniture Business
- Develop Your Furniture Business Plan
- Choose the Legal Structure for Your Furniture Business
- Secure Startup Funding for Your Furniture Business (If Needed)
- Secure a Location for Your Business
- Register Your Furniture Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Furniture Business
- Buy or Lease the Right Furniture Business Equipment
- Develop Your Furniture Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Furniture Business
- Open for Business
1. Choose the Name for Your Furniture Business
The first step to starting a furniture business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your furniture business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your furniture business.
2. Develop Your Furniture Business Plan
One of the most important steps in starting a furniture business is to develop your business plan. The process of creating your plan ensures that you fully understand your local market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own store.
- Company Overview – this section tells the reader about the history of your furniture business and what type of furniture business you operate. For example, are you a furniture manufacturer, furniture retailer, furniture designer, custom furniture maker, furniture restoration business, or an upholstery business?
- Industry Analysis – here you will document key information about the furniture industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your furniture business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your furniture business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Furniture Business
Next you need to choose a legal structure for your own furniture store and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the furniture business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start a furniture business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a furniture business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a furniture business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your furniture business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Furniture Business (If Needed)
In developing your furniture business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a furniture business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a furniture business that they believe has high potential for growth.
5. Secure a Location for Your Business
A good location for a furniture store is a commercial area that many people frequent. Situate the business in a place that is easy to find with plenty of parking. It is also essential to consider the cost of running the company from the chosen location. Keep your budget in mind and stick with something you know you’ll be able to afford.
6. Register Your Furniture Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your furniture business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your furniture business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
Before starting a furniture business, you’ll need to obtain the required licenses and permits. The most important license is a business license, which allows you to legally operate the business. You may also need a permit to sell furniture, which is issued by your state. Other permits and licenses may be required depending on your state and the type of furniture business you plan to operate.
10. Get Business Insurance for Your Furniture Business
The type of insurance you need to operate a furniture business depends on the specific type of furniture business.
Some business insurance policies you should consider for your furniture business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Furniture Business Equipment
You will need a few pieces of essential equipment to run your furniture business. If your operations include making or refurbishing furniture, you’ll need a saw, drill, hammer, and screwdriver. You may also want to invest in a power tool such as a jigsaw or a lathe. If you plan to deliver furniture, you’ll need a van to transport the furniture. You may also need office essentials such as a phone to take orders and a computer with internet access.
12. Develop Your Furniture Business Marketing Materials
Marketing materials will be required to attract and retain customers to your furniture business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your furniture business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional furniture business website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your furniture business.
13. Purchase and Setup the Software Needed to Run Your Furniture Business
The software you need to run a furniture business can vary depending on the type of business. However, some of the most essential software for any furniture business would likely include a computer-aided design (CAD) program for designing furniture, a woodworking program for creating prototypes, and a marketing program for advertising your products.
14. Open for Business
You are now ready to open your furniture business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Furniture Store Business FAQs
Is it hard to start a furniture business?
No, it is easy to start a furniture business. There are many resources available to help you get started, and there are also many companies that offer support and advice to new furniture store owners.
How can I start a furniture business with no experience?
The best way to start a furniture store business with no experience is to do some research and get educated on the industry. Join some industry associations, read trade magazines, and attend trade shows. There are also many online resources with information on how to start a furniture business.
What type of furniture business is most profitable?
The most profitable furniture businesses are those that offer a unique product. This could be something like custom-made furniture, or furniture made from unusual materials. Businesses that offer a unique product that is not available at major retailers are likely to be more successful.
How much does it cost to start a furniture business?
To open a furniture store, it will cost you around $10,000-$50,000. This includes the cost of setting up your business, buying furniture, and marketing your new company. If you purchase a facility, costs will be higher.
What are the ongoing expenses for a furniture business?
One of the main ongoing expenses for a furniture business is inventory. Furniture businesses typically have to keep a large stock on hand to meet customer demand. Other regular expenses may include things like rent, employee salaries, and marketing costs.
If you plan to start an online furniture store, then you'll also need to factor in the cost of shipping and packaging supplies. Shipping furniture can be expensive, so you'll need to make sure that your prices are high enough to cover these costs.
Another important expense to consider when you sell furniture online is the cost of online marketing. While traditional marketing methods like print ads and television commercials can be expensive, there are many online marketing strategies that are relatively affordable. You'll need to invest in some type of online marketing in order to reach your target audience.
How does a furniture business make money?
When you open a furniture store, you make money by selling furniture. They may also make money by renting furniture, or by selling furniture parts or materials to other businesses. Furniture businesses may also make money through online furniture stores, or by selling other products related to furniture, such as home decor items. Another way a furniture business can make money is by providing services such as furniture assembly, delivery, or repair.
Is owning a furniture business profitable?
Yes, owning a furniture business can be profitable. Furniture is a necessity in most homes and businesses, so there is always a demand for it. Additionally, furniture is often a large purchase, so people are willing to pay more for high-quality pieces. This means there is great opportunity for profit in the furniture business. Selling furniture online can be one of the most profitable ways to sell furniture because it gives you a wider audience than brick-and-mortar locations, so you can reach more potential customers.
Why do furniture businesses fail?
There are many reasons furniture businesses can fail. One of the most common reasons is that the business owner does not have the necessary knowledge or experience. Other reasons include financial instability, lack of demand for the product, and poor marketing and advertising campaigns.