Promising business idea: opening a furniture store from scratch

Content:

1. Furniture market research
2. Furniture store formats
   1. Own furniture store
   2. Franchise in the furniture business
3. What investments will be required to open a furniture store
4. Organizational structure
5. Step-by-step plan for opening a furniture store
   1. Searching for premises and locations for a furniture store
   2. Repair of a furniture store
   3. Registration of furniture business
   4. Purchasing equipment for a furniture store
   5. Search for furniture suppliers
   6. Creating a furniture store catalog
   7. Hiring and training furniture store personnel
   8. Furniture store advertising

Opening a furniture store, like any other business, contains both prospects and risks. On the one hand, furniture is not a consumer product because it has a long service life, and the market is oversaturated with supply—both large federal companies and local players operate in this niche. On the other hand, consumer behavior is changing: people are starting to update their interiors more often, both to improve their living conditions and to save money during periods of crisis. Therefore, the success of the furniture business depends not so much on the market, but on what you do for it. Let's look at how to open a furniture store from scratch: where to start, and what stages to go through.

Furniture market research

Any business begins with an analysis of the market and competitors - this allows you to identify the most in-demand segment, as well as understand existing risks. First, it is worth assessing the general trends - studying official analytics for the furniture industry, sales dynamics in recent years, identifying the factors that determine the growth and decline of furniture sales.

Currently, general Russian trends in the furniture market include a reduction in the share of import sales and a redistribution of demand towards domestic furniture manufacturers, including in the premium segment. At the same time, the greatest competition is observed in the economy segment. The main growth drivers for the furniture industry are housing construction and the mortgage market. 

After a general analysis, it is necessary to study the furniture market of the region where you are going to work, since it may be influenced by the regional standard of living, traditional customs, and other local factors. 

The furniture market is one of the most competitive, so special attention should be paid to studying companies and stores that are already operating on the market in order to find out what kind of furniture they sell and what their pros and cons are. 

Thus, at the first stage to open a furniture store you need:

• study market trends;
• analyze the demand for furniture in the region;
• determine the level of competition in different segments;
• study consumers and find out what kind of furniture they prefer and what they pay attention to;
• find strong competitors and find out their features: product line, pricing policy, location of retail outlets, etc.

Furniture store formats

There are different formats of furniture stores. 

• Standard furniture store with a large assortment. Requires a fairly large area - from 200 sq. m up to 1000 sq. m or more. Offers a wide range - from 200 product items, including upholstered and cabinet furniture for the living room, bedroom, hallway, kitchen, children's room and office. The main task is to achieve good cross-country ability.
• Furniture hypermarket. This is a retail enterprise that occupies a large area - from 10,000 sq. m, offering a wide choice, both in price and in assortment. The most important advantage of this format is large targeted traffic focused on the purchase of furniture. But opening a hypermarket requires significant investment. 
• Furniture salon with a narrow specialization. It sells a specific type of furniture, offering the widest possible range in its segment.
• Exhibition hall. A small salon with exhibition samples. Suitable for organizations working on order and for those who sell premium furniture. 
• Warehouse store. The format assumes that the entire range of furniture is in stock. The advantages are that you can save on renting retail space by selling directly from the warehouse.

Not only the format is important, but also the location of the furniture store. The business will bring more profit if the store is located in a walk-through, visible place, near a metro or convenient transport interchange, and there is a parking space nearby where you can leave your car without fear of it being towed.

Own furniture store

This business format assumes that the entrepreneur cooperates with different furniture manufacturers. Establishing contact is not as difficult as it seems, because they are also looking for partners to sell products. 

If you have enough funds to invest in the business, you can buy furniture and sell what you have in stock. The second option is to use the dropshipping model, in which a furniture store takes an order and transfers it to the supplier, who, in turn, sends the order to the client.

The first model may turn out to be unprofitable - if the assortment is chosen incorrectly or demand drops, inventory will form in the warehouse. The longer the furniture sits, the more difficult it will be to sell it in the future, as trends are constantly changing. 

Dropshipping does not require large investments, but it also has its disadvantages. First, you need to make a trade markup - this means that you will offer furniture at a higher price than the manufacturer. Secondly, your entire customer base is known to the supplier and he can begin to interact with it directly at any time.

In addition, this format of furniture business involves creating and promoting your own brand, and this requires time and money.

Franchise in the furniture business

The franchise is ideal for those who are new to the furniture retail business. At first glance, its purchase may seem like an unnecessary expense, but considering all the advantages, the costs are more than worth it.

The franchisee buys, first of all, the opportunity to work under a well-known furniture brand, as well as stability and a working set of business tools. As part of the contract for a start-up business, comprehensive support is usually provided: assistance in choosing and setting up a retail outlet, advertising, training for sellers, etc.

What investments will be required to open a furniture store

Costs depend on the size of the furniture business. Most of the funds will be spent on purchasing goods, but you can negotiate the transfer of furniture for sale, and then you can save a lot. 

Money will also be required to rent the premises; in addition, repairs will need to be made before opening. Particular attention must be paid to installing high-quality lighting: buyers should be able to see the smallest details of the product.

Part of the investment will go towards organizing the exhibition. This is quite a difficult task, since in a limited area it will be necessary to place the maximum number of samples and at the same time demonstrate all the advantages and capabilities of the furniture. Therefore, it is better to hire a professional designer to organize the exhibition.

You need to budget for advertising costs: making a sign, announcing the opening of a furniture store, advertising banners, announcements, etc. Part of the money will be used to purchase equipment, a cash register, office equipment and computers.

A separate expense item is personnel costs. You need to determine in advance whether you need an accountant or whether you can perform his functions yourself, how many salespeople will be needed to serve customers, who will deliver the furniture to clients and assemble it.

Organizational structure

To open a business selling furniture, you will need to register an individual entrepreneur or LLC. Each of these formats has its own characteristics:

• IP. An individual entrepreneur is a private person, therefore, if any debts arise related to the business, he will be liable with his own property. Unlike an LLC, an individual entrepreneur is easier and cheaper to register; there is no need to maintain complex accounting records, and instead of tax reports, a declaration is submitted. In addition, lower fines are provided for tax or administrative offenses.
• LLC. When opening a limited liability company, in the event of debts arising, the organization’s property and authorized capital are subject to recovery. For an LLC, registration takes longer; in addition, it is necessary to submit more reports to the tax authorities. 

Step-by-step plan for opening a furniture store

So, after all the preparatory activities and calculations, the time has come to begin specific actions to open a furniture store. They can be divided into 8 stages.

Searching for premises and locations for a furniture store

For a furniture store, you can choose a street retail format - these are retail outlets located on the street, including on the first floors of residential buildings. To do this, you need to analyze transport and pedestrian flows and their impact on sales. It is worth finding out which stores operate along the main highways, and how the flow of customers is distributed between them.

Another option is to open a furniture section in a shopping center. In this case, you will need to evaluate traffic in the shopping center and study competitors.

Repair of a furniture store

If you rented a section in a shopping center, then global repairs will not be required, whereas in a free-standing store you will need to check the condition of the walls, ceiling and flooring and, if necessary, paint and replace them. 

In addition, you will need to develop a design: it must attract customers and keep them in the store. It is advisable to come up with your own corporate style and logo for a furniture store - even in the economy segment, more and more attention is paid to branding, selection of color schemes, zoning, furniture arrangement techniques, although they use inexpensive finishing materials.   

Registration of furniture business

The first thing you need to do when opening a furniture store is to register an individual entrepreneur or LLC. Next, you will need the following set of documents:

• agreement that you rent the premises;
• agreement with housing services;
• permits from the fire service and SES;
• employment contracts with employees.

Purchasing equipment for a furniture store

At this stage, you need to purchase office furniture to organize workspaces in the store, computers, a printer, a cash register, and stationery. To deliver furniture you will need a truck - you can find a used one or lease a new vehicle. It is important to keep the car in working condition so that there are no problems with delivering furniture to customers. 

Search for furniture suppliers

You can search for furniture suppliers via the Internet, including communicating on specialized forums. In addition, it is necessary to monitor information about thematic events: exhibitions, conferences. Here you can contact manufacturers directly, see stands with samples of their products, catalogs and advertising brochures. You can immediately find out the terms of cooperation and exchange contacts.

Creating a furniture store catalog

A catalog is a way to demonstrate products. It is especially important if you decide to sell custom furniture. It can be created not only in printed form, but also placed on the website so that the assortment can be viewed without visiting a furniture store.

Hiring and training furniture store personnel

The level of customer service is the weak point of large furniture players due to their scale. Small local stores in the furniture segment in this case turn out to be more flexible. In a large chain, staff will not be able to spend as much time on consultations as in a small retail outlet, so special attention must be paid to training employees so that they can help the client make the right choice. 

Furniture store advertising

For furniture store advertising to be effective, you need to choose the appropriate channels. These could be:

• advertising on local television;
• outdoor advertising;
• advertisements in transport;
• distribution of advertising brochures;
• promoting a store website on the Internet.

When concluding a franchise agreement, the number of stages in opening a furniture store is significantly reduced, since the franchisor takes on most of the steps.

On favorable terms, you can conclude a franchise agreement with the Russian manufacturer of designer furniture Garda Decor. The company produces a unique range of upholstered furniture and offers franchisees a turnkey business: assistance in finding and designing a retail space, staff training, assortment selection and promotion.