How to Start a Consignment Store


It takes a lot of research and groundwork to kick-start any kind of business. Starting a consignment shop is no different. Do you have a knack for picking out pre-owned quality items that are reusable? Want to turn your hobby into a full-fledged venture? Well, then you might want to start a resale store. However, before you leap, you should look around and confer with other second-hand store entrepreneurs.

If you’re wondering how to start a consignment shop, look no further. Here are some guidelines you should use:

Business Plan

Before you start a resale shop you need to draw up a business plan. This should mention your scale of operations, expected overhead, projected cash flow, future earnings and profits. While devising your business plan, determine at what point you’ll break even. Moreover, don’t be conservative in estimating your initial outlay. Provide for at least twice your current estimate so that you don’t fall short. Make sure that you have enough working capital to tide yourself through the first two years. Most businesses collapse within the first 2-3 years. This is a time when you need a sound financial base. Also, explore your alternatives with respect to finance. Most people start a thrift shop using personal savings and credit cards. Credit cards can be expensive in the long run because if you default, the interest rates are horrible. Banks and financial institutions also grant loans to small businesses. So plan and phase out your initial and subsequent financial requirements.    

Selecting a Location

The location is a primary consideration and one of huge significance. Several aspects need to be considered. Obviously, the first consideration is rent. Most prime locations charge a steep rent. But if you can afford it, you should not compromise on a location which has all the elements necessary to start a consignment shop. Some of these are ample parking space, high traffic from pedestrians and vehicles and proximity to similar or complementary businesses.


Before you start a second hand store, you need to collect considerable stock to fill up your shelves. Decide what items you intend to deal with. Take the middle road when it comes to the quantity of stock to hoard. It should be sizeable enough to grab the interest of shoppers but small enough not to remain unsold for months. Initially, you can collect inventory from relatives, colleagues and friends and gradually build-up to include other consignors.


When you start a resale shop, pricing is an all-important consideration. The standard price for pre-owned items is about 30-45% of the original cost price. Don’t price your products too high or they’ll remain unsold. Decide what percentage to give the consignor. Generally a 45-60% split is acceptable.

Systems and Procedures

Organize your store and establish proper procedures right at the onset. Maintain accounts and keep track of stock from specific consignors. Have an appropriate system for dealing with unsold and obsolete stock. Get a license to start a resale store. Open a bank account as well.

Advertising & Publicity

The best way to advertise is through the internet. Send emails and place ads in free websites. Distribute leaflets and fliers to those in your immediate vicinity. Placing an ad in the newspaper is also a good idea. If possible, offer a great deal to get people in the door – like consigning one item per person for free. You may lose money upfront, but you’ll get a whole crowd of people in your store, and probably add some nice inventory.

You can start a consignment shop by dealing in a single type of items or in a wide variety of items. However, make sure that the goods you stock are quality ones that have been thoroughly examined for flaws. Substandard items will only drive your customers away. Stay vigilant for superior items, price your products reasonably and re-invent your store from time to time. This will ensure that your consignment store business thrives and prospers.

Source by Pamella Neely

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