As is always my tradition, I like to sit down and reflect upon my business goals for the upcoming year. I set my budgets (both personal and professional) and I contemplate what it is that I want to achieve with the new year.
There are 2 questions that people ask me over and over and over. One of those questions is just how much does it cost to start a seasonal consignment sale?
There is no hard and fast number I can give you. If you buy into a franchise, some will recommend that you invest around $30,000 to start a consignment sale. I started my sale for $2000. Most of our new sales are investing between $2500-$4500 on their businesses. Some sales I know have invested $20,000. Your start up costs are going to vary depending on what you have to leverage.
Like most new businesses, you are going to have start up costs. But some of those costs can be leveraged in time. What are you willing to invest? Your time... or your money? If you have more time than money, you can start a consignment sale with a lower investment. If you have more money than time, then your start up investment is going to be significantly higher as you pay to outsource parts of your business plan.
A good rule of thumb is to look at how much your rent is going to be and double it to get your start up costs. This will put you in the ball park for a starting amount and give you a good starting baseline. And remember, the more thrifty you are the less you have to invest. Just because you can buy all new racks and equipment, doesn't mean you should. Leverage some of your time to find deals on used equipment or build your own.
The ability to leverage your time is going to be a key factor in determining your start up costs. Make wise decisions and you'll be off to a great start when you start a consignment sale of your own.
Too many times when I working with existing sales, they don't have an answer when I say "What's your budget?"
Budget? Yes, the dreaded "B" word. You MUST have a budget, or like too many sales I counsel, you will end up trying to figure out where your money went.
Last night I had a budget meeting with my husband. He said "what is your break down of operating expenses for Consignamania?" X, X, X, X, and X I told him... right off the top of my head. "And what is your break down of operating costs for your consignment sale?" X, X, X, X and X. Great, now we can plan our budget according to what we know our expenses are going to be.
But I have found that not many sales actually have a plan. And when the sale is done, they can't figure out where the money went. This happens a lot in partnerships. Lack of communication or being on the same page can really stress a partnership, so make sure that you are on the same page with all of your partners.
What types of things should be included in your budget? Anything that costs you money! Everything from your venue rental, to equipment, to the pretty little "fluff" like coordinating t-shirts and aprons. But you have to be realistic. Many times when I work with existing sales, after doing an evaluation of their business, I usually end up asking "how did you end up here? Your numbers are way off." Well, we thought we should have this, and this, and this. I understand that, but you are comparing yourself to much larger sales. They have more equipment, polished,professional websites and coordinating signs, banners, aprons and t-shirts, because they have been in business a long time. They have built their brand and have added new things each season, as the budget and funds allow. They didn't start by spending tons of money. They worked within their budget. Your money is gone because you didn't have a plan for it!
Owning a successful sale is going to require you to have a written budget. And not only are you going to have to have a written budget, but you are going to have to follow and adhere to your budget as well. Too many times, I have had to say, "While I really want to do this, it's not in the budget this time. It will have to wait." I could go out and buy 10 new Z-racks today. It's on my wish list. But my budget only allows for $X per sale for equipment upgrades, and I really need more flatbed carts. So instead, I borrow Z-racks from friends until I have A. an urgent need and B. the money set aside in the budget.
For those who are in the process of starting a consignment sale , now is the time to head up the budget. For those of you who own existing sales, it's never too late to start a budget. Get your finances under control and your sale will become much more financially rewarding in the end.
It never ceases to amaze me to find out how much (or how little) someone is willing to spend on starting a consignment sale business . I know of sales who have started for less than a couple hundred dollars and I know of sales who has spent 5 figures to start a consignment sale. So how much does an average consignment sale invest in their start up?
An average sale starts up with an average budget of $2000-$5000. If you are starting in your 2 car garage, it's going to be significantly less. If you start by renting your local convention center, your start up budget is going to be significantly more. But on average, a start up budget is a couple of thousand dollars.
It is important to have a budget. Knowing what you are going to spend your money on and sticking to your plan is key. I have heard of several sales who significantly over spend their budget, but what's worse is that they don't know where the money went, and before you know it, they have spent so much money, they could have opened a brick and mortar store for what they invested.
You need to be smart. You should never spend more money than you have and more importantly, you should know where every dollar went. But with a solid plan and a practical budget, you should be able to succeed with your consignment sale venture.