business plan for consignment shop

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Consignment Shop

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How to Start a Consignment Shop (with Free Checklist)

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 31, 2022

Investment range

$2,550 - $13,100

Revenue potential

$156,000 - $468,000 p.a.

Time to build

0 – 3 months

Profit potential

$62,000 - $187,000 p.a.

Industry trend

Here are the most crucial considerations when you are starting your consignment shop:

• Location — Choose a location in a busy shopping area, near other popular retail stores, or in a neighborhood with a lot of residential foot traffic.
• Niche — Focus on one niche to reach your target market, such as clothing, luxury goods, vintage and antiques, furniture and home decor, books, electronics and technology, and collectibles.
• Inventory management and tracking — Use inventory software to track stock levels, sales patterns, and reorder times efficiently. This can prevent overstocking or stockouts.
• Licenses and permits — Since consignment shops sell goods on behalf of others, a resale certificate (also known as a seller’s permit) is often necessary.
• Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the leading LLC service providers .
• Legal business aspects — Register for taxes, open a business bank account, and get an EIN .
• Security — Install CCTV cameras both inside and outside the store to monitor activity and deter shoplifting and burglary. An alarm system can provide an added layer of security during non-business hours by alerting local authorities to any unauthorized entry.

Interactive Checklist at your fingertips—begin your consignment shop today!

Step 1: Decide if the Business Is Right for You

Pros and cons.

In a nutshell, consignment shops get paid for selling other people’s stuff. People bring in unwanted shoes and clothing, antiques, and household goods, and the shop sells them for an agreed-upon price and takes a commission, usually about 50%.

Still, starting a consignment shop has pros and cons to consider before deciding if it’s right for you.

• Business model options — Choose a physical or online consignment shop
• Good margins — Pay nothing for inventory until it sells; get half the sale price
• Hot market — Demand for vintage and second-hand clothing is rising
• Delayed opening — Build up inventory before the store opens
• Crowded market — A hot market means lots of competition

Consignment Industry Trends

Industry size and growth.

• Industry size and past growth — The global second-hand clothing industry is worth $197 billion, about $56 billion more than in 2021.(( https://www.thredup.com/resale/#size-and-impact ))
• Growth forecast — The global second-hand clothing industry is projected to reach $350 billion by 2028. 

Trends and Challenges

• Online clothing resale is the fastest-growing market segment, expected to quadruple by 2026.
• In 2021, 244 million US consumers said they were open to buying second-hand clothing.
• A growing number of players in the online consignment store market are creating greater competition.
• Generally only brand name clothing is sold in consignment shops, which means shop owners have to watch out for knock-offs. 

How much does it cost to start a consignment shop business?

Starting an online consignment shop will cost about $2,500. Your costs will be for a website and marketing costs. Starting a brick-and-mortar consignment shop will cost about $13,000.

How much can you earn from a consignment shop business?

Prices for consignment items will vary. Since you’ll be looking for high-end items to sell, these calculations will assume an average item price of $300, of which you’ll get 50%. If you’re running an online consignment store, your profit margin after marketing costs and paying the consignor will be about 40%. 

In your first year or two, you could sell 10 items a week, bringing in $156,000 in annual revenue. This would mean $62,000 in profit, assuming that 40% margin. As your website gets more traffic, sales could climb to 30 items a week. With an annual revenue of $468,000, you’d make an outstanding profit of $187,000.

What barriers to entry are there?

The only barrier to entry for a consignment shop is the competition you’ll face.

Step 2: Hone Your Idea

Now that you know what’s involved in starting a consignment shop, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research consignment shops in your area and online to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the market is missing a consignment store that sells furniture and household items.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as luxury brands or high-end accessories.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine the types of clothing and other products you’ll offer

You’ll need to determine if you want to specialize in clothing or some other type of merchandise. In addition to consignment items, you could also operate in part as a thrift store or online thrift store and sell donated items or items you find at garage sales. You could also have a retail store in your shop where you sell items that you’ve purchased wholesale. 

How much should you charge for consignment items?

Prices will vary based on the item and its retail price. For an online store, after the cost of paying consignors and marketing, you should aim for a profit margin of about 40%.

Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be broad, so you should spread out your marketing to include sites like TikTok, Instagram, and Facebook. 

Where? Choose your consignment shop location

Choosing the right location for your consignment shop is crucial for attracting customers and ensuring its success. Look for a spot in a high-traffic area with good visibility, such as a popular shopping district or a busy downtown area.

Consider accessibility and convenience, ensuring that the location is easily reachable by public transportation and has ample parking. Additionally, assess the local demographics and aim to select a location that caters to a wide range of customers. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Consignment Shop Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “consignment shop,” boosts SEO
• Name should allow for expansion: “Renewed Treasures” over “Sports Gear Consignment Shop”
• A location-based name can help establish a strong connection with your local community and help with the SEO, but might hinder future expansion

Discover over 260 unique consignment shop name ideas here . If you want your business name to include specific keywords, you can also use our consignment shop business name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the US Patent and Trademark Office website to make sure those names are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

Powered by GoDaddy.com

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Consignment Shop Business Plan

Here are the key components of a business plan:

• Executive Summary — A brief overview of your consignment shop business, highlighting key points such as the business concept, goals, and potential for success
• Business Overview — Detailed information about your consignment shop, including its mission, vision, location, legal structure, and any notable achievements or milestones
• Product and Services — Description of the items your consignment shop will accept and sell, emphasizing the quality, uniqueness, and appeal of the products
• Market Analysis — Examination of the target market for your consignment shop, including demographics, trends, and potential growth opportunities
• Competitive Analysis — Evaluation of other consignment shops or similar businesses in the area, identifying strengths and weaknesses to position your shop effectively
• Sales and Marketing — Strategies for promoting your consignment shop, attracting customers, and driving sales, encompassing both online and offline channels
• Management Team — Introduction of key individuals involved in running the consignment shop, highlighting their expertise and roles
• Operations Plan — Details on the day-to-day operations of your consignment shop, covering aspects such as inventory management, staffing, and customer service
• Financial Plan — Projections and analyses of the financial aspects of your consignment shop, including startup costs, revenue forecasts, and break-even analysis
• Appendix — Additional supporting documents, such as resumes of key team members, detailed market research data, and any other supplementary information relevant to the business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to consignment shops. 

If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your consignment shop will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship — The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership — Similar to a sole proprietorship but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) — Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp — Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp — An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online or by mail/fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans — This is the most common method, but getting approved requires a rock-solid business plan and a strong credit history.
• SBA-guaranteed loans — The Small Business Administration can act as a guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants — A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and family — Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding — Websites like Kickstarter and Indiegogo offer increasingly popular low-risk options in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal — Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best bets, other than friends and family, for funding a consignment shop business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Consignment Shop Business Licenses and Permits

Starting a consignment shop business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your consignment shop business as a sole proprietorship. Opening a business bank account is quite simple and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability — The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business property — Provides coverage for your equipment and supplies.
• Equipment breakdown insurance — Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation — Provides compensation to employees injured on the job.
• Property — Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto — Protection for your company-owned vehicle.
• Professional liability — Protects against claims from clients who say they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP) — This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as ConsignPro , resaleworld , or SimpleConsign , to manage your inventory, billing, and payments. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , FreshBooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences of filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

However, people are unlikely to find your website unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Website — Create a compelling website that showcases your latest finds, store events, and customer testimonials.
• Local SEO — Optimize your website to target local search terms related to consignment, thrift shopping, and sustainable fashion to increase online visibility. Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Professional Branding — Ensure your branding captures the eclectic and unique nature of your shop, reflecting a sense of discovery and sustainability.
• Social Media Engagement — Leverage Instagram, Facebook, and Pinterest to share new arrivals, fashion inspirations, and sustainable shopping tips.
• Fashion and Sustainability Blog — Publish content about fashion trends, upcycling tips, and the benefits of consignment shopping.
• In-Store Events — Host events like styling workshops and local artist pop-ups to create engaging shopping experiences.
• Partnerships with Local Designers — Collaborate with local designers or artisans to offer unique products and support local talent.
• Loyalty Rewards Program — Implement a program that provides discounts or special privileges to frequent shoppers.
• Targeted Local Advertising — Advertise in local media and online platforms to reach potential customers in your community.
• Email Marketing — Engage your customer base with newsletters that highlight new inventory, fashion tips, and store events.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your consignment shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your consignment shop business could be:

• Luxury brands at non-luxury prices 
• Top-quality consignment and thrift items shipped fast!
• Sell your unwanted collectibles and make good money

You may not like to network or use personal connections for business gain, but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a consignment shop business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in consignment shops for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in consignment shops. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a consignment shop business include:

• Shop clerks — making sales, customer service
• General manager — inventory management, accounting
• Marketing lead — SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Consignment Shop — Start Making Money!

The consignment market is heating up, with resale clothing and accessories experiencing boom times. Now is the perfect time to open your own consignment shop. If you have a great eye for fashion and a desire to provide customers with great products, you could build a lucrative consignment operation.

You’re done your business homework now, so it’s time to get the word out and launch your successful consignment shop. 

• Common Questions

Is a consignment shop profitable?

Yes, consignment can be a very profitable business. The market for resale clothing is growing rapidly, so demand for the items you sell should be high.

How do consignment shops get paid?

Consignment shops get a percentage of the sale price of the consigned items. The fee ranges from 40% to 60% for clothing and accessory sales. Fees can be higher for items like furniture.

What are the risks of a consignment store?

The main risks are the items being damaged or stolen. Then you could be liable to the owners of the items.

How do I train and manage employees for my consignment shop?

You’ll need to train them on how to value consignment items. Then you’ll need to monitor the transactions they make to ensure that the prices are accurate.

How do I plan for the long-term growth and sustainability of my consignment shop?

You’ll need to create a strategic plan for how to market your shop, and how you’ll handle the business as your sales increase. 

How do I measure the success of my consignment shop?

The bottom line is most important. You need to be able to make enough profit to make a living.

I have recently given a small art gallery several of my handmade quilts for sale. I am curious as to what practices, documentation if any that the gallery should have provided to me to show I submitted these items and what happens if my items are stolen from the store. I feel concerned without anything “in hand” to prove that these things were given to them. Thank you for your advice.

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Consignment Shop Name
• Create a Consignment Shop Business Plan
• Register Your Business
• Register for Taxes
• Fund Your Business
• Apply for Consignment Shop Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Consignment Shop — Start Making Money!

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Consignment Shop Business Plan Template

Written by Dave Lavinsky

Consignment Shop Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their consignment shop companies. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a consignment shop business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Consignment Shop Business Plan?

A business plan provides a snapshot of your consignment shop as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Consignment Shop

If you’re looking to start a consignment shop or grow your existing consignment shop, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your consignment shop to improve your chances of success. Your consignment shop business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Consignment Shop Businesses

With regards to funding, the main sources of funding for a consignment shop are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for consignment shops.

Finish Your Business Plan Today!

How to write a business plan for a consignment shop business.

If you want to start a consignment shop or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your consignment shop business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of consignment shop you are running and the status. For example, are you a startup, do you have a consignment shop that you would like to grow, or are you operating a chain of consignment shops?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overv iew of the consignment shop industry.
• Discuss the type of consignment shop you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of consignment shop you are operating.

For example, you m ight specialize in one of the following types of consignment shops:

• Clothing : this type of consignment store primarily focuses on new or used clothing but some also sell jewelry, shoes, or accessories. General clothing consignment stores stock clothing for women, men, and children and accept both used and new pieces. Niche or boutique stores focus on a particular type of clothing.
• Books: this type of consignment store buys and sells a variety of books. The inventory is hardback and paperback books from any genre. Some stores also carry specialty books, such as cookbooks or textbooks and also offer audio books, writing journals, and stationery supplies.
• Music and Movies: this type of consignment store focuses on films, used and new copies of DVDs, and cassette tapes. They will also focus on music, selling used and new CDs, and records. Hybrid entertainment consignment stores sell both music and movies.
• Furniture: this type of consignment shop carries a wide array of general furniture pieces, or focuses on a niche within the furniture industry. General furniture consignment stores carry used pieces, factory rejects, or unsold items from other furniture stores.

In addition to explaining the type of consignment shop you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of sales with positive reviews, reaching X number of pieces sold, etc.
• Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the consignment shop industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the consignment shop industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your consignment shop business plan:

• How big is the consignment shop industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your consignment shop? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your consignment shop business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals such as young adults, college students, and families.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of consignment shop you operate. Clearly, families would respond to different marketing promotions than young adults, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are othe r consignment shops.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes department stores, big box retailers, and garage/yard sales. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of consignment shop are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide better hours and is your store more visible?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a consignment shop business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type o f consignment shop company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide an online presence, buyback programs, or purchase items not generally sold at your store?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your consignment shop. Document where your shop is situated and mention how the site will impact your success. For example, is your consignment shop located in a busy retail district, a business district, a standalone location, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your consignment shop marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your consignment shop business, including taking daily inventory, customer interaction, purchasing used items and/or placing newly acquired items for sale, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth session, or when you hope to reach $X in revenue. It could also be when you expect to expand your consignment shop to a new city.  

Management Team

To demonstrate your consignment shop’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing consignment shops. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a consignment shop or successfully running a small retail business.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance s heet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you buy and sell 5 items per day, and/or offer in-store coupons ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your consignment shop, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a consignment shop:

• Cost of shop equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your shop location lease or a list of products you plan to buy and sell.  

Writing a business plan for your consignment shop is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the consignment shop industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful consignment shop.

Don’t you wish there was a faster, easier way to finish your Consignment Shop business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s business plan professional services can help you create a winning business.

Other Helpful Business Plan Articles & Templates

Consignment Store Business Plan Template

Written by Dave Lavinsky

Consignment Store Business Plan

You’ve come to the right place to create your Consignment Store business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Consignment Store businesses.

Below is a template to help you create each section of your Consignment Store business plan.

Executive Summary

Business overview.

Casual Consignment is a startup consignment company located in Houston, Texas. The company is founded by Terri Cooper who has experience in both retail clothing sales and consignment sales Now, with the expertise of knowledge and business acumen, Terri has determined she can confidently start and effectively grow a successful consignment company. Terri believes her experience of strategic growth, marketing skills, financial capabilities, and wide and deep knowledge of consignment and retail sales practices will provide everything needed for long-term growth and profitability.

Casual Consignment will provide a comprehensive array of women’s clothing for a wide variety of clients. Casual Consignment will be the popular clothing store for all ages, providing services and products to each client while supporting the strategic goals of the company. Casual Consignment will be the ultimate choice in Houston for clients to ensure that every need of the customer is fully and completely met.

Product Offering

The following are the products and services that Casual Consignment will provide:

• Curated clothing for resale of excellent quality.
• Clothing that has been cleaned and ensured to be of high quality
• A diverse range of clothing, including outerwear, sportswear, women’s casual, young teen, and children’s garments
• Fair and transparent pricing, with original tags secured, if possible and markdowns clearly identified
• Customer values in handbags, jewelry and accessories
• Day to day excellent customer service
• Private rooms to try on clothing, if desired

Customer Focus

Casual Consignment will target the adult women of all ages, teens, and children within the greater Houston region. The consignment store will also target retailers who are seeking to refresh inventories or add to offerings in their establishments.

Management Team

Casual Consignment is owned and operated by Terri Cooper. She recruited a former administrative assistant, Cary Brown, to be her store manager and help oversee the store and take on operational duties. She also recruited Manny Jaurez to be the general maintenance man and assistant in stocking and inventory.

Terri Cooper graduated from Houston Lyons High School in 2007 and began to pursue her concept to open a consignment store. She studied consignment sales at Pine Valley Community College while obtaining her associate of arts degree in business. She also worked for ten years within the consignment retail industry, where she became very well known and respected for finding the most appropriate and suitable clothing for a wide variety of women who needed business clothing or clothing for special occasions. Customers often wait to be assisted by Terri for this reason.

Cary Brown worked alongside Terri Cooper for five years after graduating from Houston Lyons High School. She held the role of retail assistant in an administrative position and also helped customers with questions and suggestions for wardrobe items. She will hold the role of store manager in the new store.

Manny Juarez, the former general maintenance man at the consignment store, will now be the manager and assistant in stocking of consignment items and inventory.

Success Factors

Casual Consignment will be able to achieve success by offering the following competitive advantages:

• Friendly, knowledgeable, and highly-qualified team at Casual Consignment
• Comprehensive and curated selection of clothing for all occasions, including formal and special occasions. Accessories, handbags and jewelry are also included.
• Women’s clothing, young adult fashions, teen clothing, and children’s clothing are all included in inventory.
• Inventory changes regularly on a one-month rotation to refresh customer choices and clothing availability.
• Rigorous cleaning and clothing preparation takes place prior to inventory placement
• Casual Consignment offers the best pricing in town. Their pricing structure is the most cost-effective compared to the competition.

Financial Highlights

Casual Consignment is seeking $200,000 in debt financing to launch its Casual Consignment store. The funding will be dedicated toward securing the store space and purchasing store equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:

• Store space build-out: $20,000
• Store equipment, supplies, and materials: $10,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $10,000
• Working capital: $10,000

The following graph outlines the financial projections for Casual Consignment.

Company Overview

Who is casual consignment.

Casual Consignment is a newly established, full-service clothing consignment store in Houston, Texas. Casual Consignment will be the most stylish, on-trend and affordable choice for customers in Houston and the surrounding communities. Casual Consignment will provide a comprehensive selection of clothing for any customer to view and select for purchase. Their full-service approach includes a comprehensive array of curated clothing styles in excellent condition, reasonable pricing and convenient rooms for trying on clothing.

  Casual Consignment will be the favorite “go to” clothing store for all customers and will offer the best curated selection of clothing under the guidance of Terri Coopear. The team of professionals is highly qualified and experienced in Casual Consignment and are well-trained in assisting customers in every aspect of the buying process. Casual Consignment removes all headaches and issues of clothing shopping and ensures all expectations are well met while delivering the best customer service.

Casual Consignment History

Casual Consignment is owned and operated by Terri Cooper. Ms.Cooper graduated from Houston Lyons High School in 2007 and began to pursue her concept to open a consignment store. She studied consignment sales at Pine Valley Community College while obtaining her associate of arts degree in business. She also worked for ten years within the consignment retail industry, where she became very well known and respected for finding the most appropriate and suitable clothing for a wide variety of women who needed business clothing or clothing for special occasions. Customers often wait to be assisted by Terri for this reason.

Since incorporation, Casual Consignment has achieved the following milestones:

• Registered Casual Consignment, LLC to transact business in the state of Texas.
• Has a contract in place for a 10,000 square foot office at one of the largest retail buildings
• Reached out to numerous contacts to include Casual Consignment while shopping.
• Began recruiting a staff of three and three office personnel to work at Casual Consignment

Desert Sun Consignment Storeing Company Services

The following will be the services Casual Consignment will provide:

Industry Analysis

The clothing consignment industry is expected to grow over the next five years to over $70 billion. The growth will be driven by the desire by consumers to conserve clothing and wear clothing that has been sustained as a practice of reasonable use of the world’s environment. The shift in moving toward resale clothing items over new items will continue to grow as technology enables the advancement of cleaning, repairing and redesigning used clothing to produce wearable clothing that has been refashioned. In addition, software technology will move many of the routine processes to digital systems, relieving staff of the more time-consuming tasks in the retail store.

Costs will likely be reduced as technology becomes known and is used more and more freely. Costs will also be reduced by the recycling of clothing and accessories, to produce an overall savings or the purchase of new items. Costs will be reduced as more clothing stores adopt the recycle and reuse policies and fewer garments are thrown into landfills.

Customer Analysis

Demographic profile of target market.

Casual Consignment will target adult women in Houston, Texas of all ages, as well as teens, and children within the greater region. The consignment store will also target retailers who are seeking to refresh inventories or add to offerings in their establishments.

Customer Segmentation

Casual Consignment will primarily target the following customer profiles:

• Adult women of all ages
• Young adult women and teens
• Children of all age groups
• Clothing retailers looking to refresh or build inventory

Competitive Analysis

Direct and indirect competitors.

Casual Consignment will face competition from other companies with similar business profiles. A description of each competitor company is below.

Clothing On Trend

Established by Manny Buonao in 2001, Clothing On Trend is a clothing store focused on selling to young adult, teen, and pre-teen categories. The clothing sold is imported from Brazil and the pricing is comparable to consignment store pricing. While attractive and casually fun to wear, Clothing On Trend items are made of materials that are not long-lasting and many items much be dry-cleaned with each use.

Manny Buonao worked in a retail clothing shop for twenty years and determined after that time to increase his inventory and build a company focused on the young women demographic. This has been profitable; however, the quality of the clothing remains and issue, as many items are returned for full value.

Everyday Consignment Shop

Everyday Consignment Shop was established in 1998 by Nancy and Tommy Gordon. The store inventory is made up of household items, decor, small furnishings, kitchen assortments, and reconditioned collectibles. Nancy and Tommy Gordon owned a retail store in Houston for over ten years before starting Everyday Consignment, where the inventory was directed to men’s clothing and children’s clothing, along with camping gear and outdoor sporting equipment.

After closing the Everyday Consignment shop, the Gordons opened the Everyday Consignment Shop, offering general household items and special holiday-themed retail items during major holidays. Some items are new and sold as overstocks; however, the bulk of the inventory are items that were preowned and lightly used. All inventory is sorted and inspected for usability and any breakage or signs of wear and tear before being placed into inventory.

24 Hour Stop n Shop

Although the 24 Hour Stop n Shop is primarily attached to a gas station in West Houston, the convenience store has expanded to include a wide variety of consignment items for sale and has proven to be very popular with customers who arrive to purchase gas and stay to peruse the racks of consignment items. Included in the store are household items, decor items, children’s toys, gardening and outdoor items, and kitchen utensils and linens. Some items are sold new as overstocks, while 95% of the items offered are lightly used. Mary and Harry Ragan own the 24 Hour Stop n Shop and have used the store as a means to offload many of their family collectibles and items no longer needed from their former ranch. The Ragans have build a sizable customer base and plan to expand the business to include prepared food items, including snacks and packaged meals, to complement the consignment shop and the convenience store items already in stock.

Competitive Advantage

Casual Consignment will be able to offer the following advantages over their competition:

• Inventory changes regularly on a one-month rotation to refresh customer choices and clothing availability

Marketing Plan

Brand & value proposition.

Casual Consignment will offer the unique value proposition to its clientele:

• Highly-qualified team of skilled employees who offer both excellent prices and assistance in service to customers.
• A comprehensive, curated selection of cleaned clothing for customers
• Affordable pricing on clothing that is sustainable and usable, saving the environment in the process

Promotions Strategy

The promotions strategy for Casual Consignment is as follows:

Word of Mouth/Referrals

Casual Consignment has built up an extensive list of contacts over the years by providing exceptional service and expertise to former clients. The contacts and clients will follow the employees to their new company and help spread the word of Casual Consignment.

Professional Associations and Networking

Retail associations will be joined and networking will be a priority during the first years of business in Houston. There are competitors, both direct and indirect, and the possibility exists for collaboration via associations.

Print Advertising

A direct mail piece will be sent to every Houston household offering a significant discount on clothing purchased during the first 90 days of business. This offer will be made to incentivize new customers to find and continue returning to the Casual Consignment Shop.

Website/SEO Marketing

Casual Consignment will fully utilize their website. The website will be well organized, informative, and list all the product types and services that Casual Consignment provides. The website will also list their contact information and list their holiday special inventory items, along with monthly discounts. The website will engage in SEO marketing tactics so that anytime someone types in the Google or Bing search engine “consignment company” or “clothing resale near me,” Casual Consignment will be listed at the top of the search results.

The pricing of Casual Consignment will be moderate and on par with competitors, so customers feel they receive excellent value when purchasing their services.

Operations Plan

The following will be the operations plan for Casual Consignment. Operation Functions:

• Terri Cooper will be the owner and president of the company. She will oversee all staff and manage client relations. Terri has spent the past year recruiting the following staff:
• Cary Brown will become the store manager and help oversee the store and take on operational duties.Cary Brown worked alongside Terri Cooper for five years after graduating from Houston Lyons High School.
• Manny Jaurez, also a former retail associate, will become the general maintenance man and assistant in stocking and inventory.

Milestones:

Casual Consignment will have the following milestones completed in the next six months.

• 5/1/202X – Finalize contract to lease store space
• 5/15/202X – Finalize personnel and staff employment contracts for Casual Consignment
• 6/1/202X – Finalize contracts for Casual Consignment vendors
• 6/15/202X – Begin networking at industry events
• 6/22/202X – Begin moving into Casual Consignment store
• 7/1/202X – Casual Consignment opens its doors for business

Financial Plan

Key revenue & costs.

The revenue drivers for Casual Consignment are the clothing fees they will charge to customers for their inventory items.

The cost drivers will be the overhead costs required in order to staff Casual Consignment. The expenses will be the payroll cost, rent, utilities, shop supplies, and marketing materials.

Funding Requirements and Use of Funds

Casual Consignment is seeking $200,000 in debt financing to launch its consignment store. The funding will be dedicated toward securing the store space and purchasing equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of Customers Per Month: 400
• Average Revenue per Month: $48,500
• Office Lease per Year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, consignment store business plan faqs, what is a consignment store business plan.

A consignment store business plan is a plan to start and/or grow your consignment store business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Consignment Store business plan using our Consignment Store Business Plan Template here .

What are the Main Types of Consignment Store Businesses?

There are a number of different kinds of consignment store businesses, some examples include: Clothing, Books, Music and Movies, and Furniture.

How Do You Get Funding for Your Consignment Store Business Plan?

Consignment Store businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Consignment Store Business?

Starting a consignment store business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster. 1. Develop A Consignment Store Business Plan - The first step in starting a business is to create a detailed consignment store business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your consignment store business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks, so it’s important to do research and choose wisely so that your consignment store business is in compliance with local laws. 3. Register Your Consignment Store Business - Once you have chosen a legal structure, the next step is to register your consignment store business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 4. Identify Financing Options - It’s likely that you’ll need some capital to start your consignment store business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 7. Acquire Necessary Consignment Store Equipment & Supplies - In order to start your consignment store business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your consignment store business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Related Sectors and Templates

Convenience Store Business Plan Template Thrift Store Business Plan Template Grocery Store Business Plan Template

Starting a Business | How To

How to Start a Consignment Shop in 9 Steps

Published January 12, 2022

Published Jan 12, 2022

WRITTEN BY: Meaghan Brophy

This article is part of a larger series on Starting a Business .

Starting A Business?

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• 1 Choose the Right Type of Consignment Shop
• 2 Create Your Budget
• 3 Create a Business Plan
• 4 Select a Storefront
• 5 Acquire Merchandise
• 6 Design & Outfit Your Store
• 7 Advertise
• 8 Hire & Train Employees
• 9 Plan & Launch Your Grand Opening
• 10 How to Start a Consignment Shop FAQs
• 11 Bottom Line

To start a consignment shop, as with any business , you’ll need a prime storefront and a strategy for acquiring customers and merchandise. It involves choosing a niche, establishing a budget and business plan, finding merchandise and laying out your store, advertising, staffing up, and, finally, opening to the public.

Starting a consignment store can cost up to $10,000, according to a commonly reported figure from Entrepreneur, with average salaries for consignment shop owners ranging from $40,000 to $60,000. Here’s how to start a consignment shop―as a brick-and-mortar store―in nine steps.

1. Choose the Right Type of Consignment Shop

If you’re wondering how to start a consignment shop, the first step is to narrow down exactly what kind of store you want to open . The most successful stores cater to a specific audience and have a specialty or focus area that helps them stand out from other online or offline retail competitors. To make the most money with your new business, choose a product area that is in high demand and/or hard to find, to lure shoppers into your store.

Designer & Luxury Goods

The secondhand luxury and designer goods market was worth an estimated 33 billion euros in 2020 (about $37 billion), a figure expected to continue to rise. These are popular items because shoppers can purchase products that may otherwise be outside their budgets. People looking to get rid of gently worn designer products often opt to sell them to a consignment store rather than donating to get a partial return on their investment.

Popular designer goods to sell include watches, jewelry, sneakers and other footwear, handbags, wallets, jewelry, and apparel.

The apparel resale market will hit $77 billion in the next five years , according to ThredUP.

LXR is an online consignment shop for luxury and designer handbags and accessories. The store focuses exclusively on authentic designer label goods. It also purchases used goods to sell on its site.

Apparel & Footwear

Clothing and shoes are popular secondhand items, even if they’re not expensive designer-label. More than three-quarters of people who’ve never done it would consider selling secondhand clothes. They’re relatively easy to source—more than 95% of the 36 billion tossed clothing items each year could be salvaged—and they’re items for which there will always be demand.

In fact, clothing is the most-purchased secondhand good . And as much as 7% of the average person’s wardrobe consisted of used items in 2019, a figure expected to hit 17% in 2029.

The largest target market for this type of consignment shop are Gen Z women, according to ThredUP. So keep those styles and trends in mind if you’re going after that audience.

Omnia is an excellent secondhand apparel and accessories shop to check out for inspiration. It sells a carefully curated selection of used vintage goods.

Secondhand books are another popular consignment category. In addition to regular paperbacks and hardcover books, some used bookstores deal in rare books, such as antiques and signed copies, or specialty books like cookbooks and textbooks.

Popular websites like ThriftBooks and Better World Books are examples of online retailers that have found success swelling used books. Puerto Rico-based El Coquí Bookstore sells used books in-store only—shoppers have to visit the shop and explore the wide array of books in a variety of languages.

Children’s Wear

Clothing for children and babies is a popular and profitable type of consignment store. Since parents have to purchase clothes for growing children very often, many turn to secondhand stores as an affordable option. Plus, you’ll have a steady supply of parents looking to sell their children’s gently used clothes.

Once Upon A Child is an example of a secondhand shop that sells both children’s clothing and toys. The brand operates several retail shops as well as a full online presence.

Online Consignment Shop

During the past several years, online consignment stores have become very popular, especially for apparel and accessories. Starting an online consignment shop gives you a wider customer base than a local store.

Check out these resources to help you learn how to start selling online:

• How to Start an Online Store
• Best Ecommerce Platforms
• How to Set up Click and Collect

One key thing to remember when starting an online consignment shop is that you’ll need to photograph each item individually. This can be time-consuming, so it’s important to weigh how much time it’ll take you against the opportunity for profit.

Pop-up Consignment Shop

If you’re not ready to commit to a full-time storefront, having a pop-up business is a great way to test products and locations before diving in. If you’re looking to start a consignment business as a part-time venture or side gig, having temporary stores is a good option as well.

Pop-up shops come with less commitment, so they’re a great way to get into retail without all the overhead of running a permanent storefront. This is exactly the approach that Grapevine Events takes with their secondhand goods pop-up shops. As a result, they’re also able to offer higher rates to consignors.

2. Create Your Consignment Shop’s Budget

Once you know what kind of store you want to open, the next step in how to start a consignment shop is setting a budget for your store . To set your budget, first consider your current income and savings. What can you save and set aside for your new business venture? How much outside funding will you be able to get from personal loans, business loans, business credit cards, and so on? Opening a consignment business requires a lot of upfront cash. Once you’re open, it will take time to build your sales volume.

Next, estimate your expenses for opening your store. Include how much you can spend on a storefront, outfitting the inside of your store, signs, and marketing, and your initial product purchase.

Now, estimate your monthly expenses for once you open. Include set bills like rent, phones, internet, payment processing, and so on. Also factor in advertising budgets, employee salaries, merchandise purchase orders, and other store supplies.

The hardest part of setting a budget for a business that is not yet open is predicting your monthly sales volume. This is especially hard for apparel and retail businesses as sales can fluctuate drastically, depending on the season, holiday, weather, economy, and consumer confidence. According to the Retail Owners Institute , used merchandise retailers had an average inventory turnover rate of 4.1 in 2021. That means they sold through and replaced all of their inventory about four times throughout the year.

Keep that number and your total inventory value in mind when estimating your monthly sales. Err on the side of caution, and plan for lower sales when you open, so that you have enough cash flow to cover expenses. Subtract your estimated monthly expenses from your estimated monthly sales, and that will give you an approximate monthly cash flow for when you open.

Pro tip : Retail is an extremely seasonal business. Most retail businesses bring in a ton of money around Christmas and the winter holidays. There are also spikes in revenue around back to school shopping, and spring holidays such as Mother’s Day and Father’s Day. Your monthly sales can vary, so always have extra cash on hand to cover slower months.

3. Create a Business Plan for Your Consignment Shop

Once you figure out what kind of consignment business you’d like to open, you’ll need a solid business plan to piece together all your ideas and form a strategy for making your store profitable. If you’re seeking outside or startup funding such as a bank loan, your business plan will be evaluated during the approval process.

Here are the nine elements found in a typical business plan :

• Executive summary : An introductory paragraph outlining your consignment shop’s purpose, mission, and why it will be successful.
• Business description : Describe what need or market hole your consignment store is filling in the community, who your customers will be, and the talent on your team.
• Market analysis : Write an overall outlook on the consignment and resale industry including trends, what successful competitors are doing, and what your strengths will be.
• Organization and management : Outline who will be running your business and the experience your team members have in retail, consignment, or your store’s area of specialty.
• Product line : Outline what kinds of products you will sell, how you will sell them, and where your supply will come from. Include research on why you’re selecting those products, such as sales trend data.
• Marketing and sales : Describe your general marketing strategy and your plan for attracting and retaining customers.
• Funding requests : If you need outside funding, outline your needs and specify exactly how you will use the funds.
• Financial projections : Detail how your business will become stable and profitable, including a projected financial timeline of at least five years. If you are borrowing funds, include a plan on how you will be able to repay the loan.
• Appendix : Use this space for any supplemental documents, such as logo or branding designs, sketches of what your consignment shop will look like, credit histories, licenses, permits, etc.

When writing a business plan, use the format and software you’re most comfortable with. Many people use a traditional word processor like Microsoft Word or Google Docs. You can also create your business plan in a presentation format using PowerPoint or Google Slides. There are also business plan software programs that offer templates and guide you through the process.

Choose the Best Legal Structure

Choosing a legal structure for your consignment business is important because it dictates how you will collect and report taxes, your level of personal liability, and how you will get paid from your business. There are many types of legal structures, but the three most commonly found in retail are sole proprietorships, limited liability companies (LLCs), and corporations .

• Sole Proprietorship
• Limited Liability Company
• Corporation or C-corp

If you don’t set up a legal structure for your business, this is the default. Operating under a sole proprietorship essentially means you’re doing business as an individual and, therefore, are not separated from your business in any way. Sole proprietorships are popular options for freelancers, business consultants, and other individuals conducting low-risk and low-visibility work by themselves.

With sole proprietorships, your business revenue is considered personal income. This means you will pay sole proprietorship taxes based on your personal income bracket. While you are subject to self-employment taxes, you do not have to pay any corporate taxes, which is a plus.

However, sole proprietorships also come with greater risk because you and your business are one and the same. Your personal assets, such as your house and car, are at risk if there is any kind of lawsuit against your business or if you declare bankruptcy.

LLCs are legal structures for small businesses that protect your personal assets, such as your house and car, in the case of lawsuits or business bankruptcy. This is the most popular legal structure for small retail businesses and the one we recommend if you are planning on maintaining a single consignment storefront.

If you’re the single owner of the LLC , you’ll likely still pay taxes the same way you would as a sole proprietorship but with the benefit of personal assets protection from liability. However, many states have separate LLC taxes, which may make it more expensive than operating as a sole proprietor. It’s always best to check with your local regulations.

To form an LLC, you need to choose an official name and file paperwork to establish your company, whereas a sole proprietorship doesn’t require any paperwork. Luckily, the paperwork isn’t overly extensive and can be filed easily in a few steps using a tool like LegalZoom .

Corporations are the most structured legal form for your consignment business. They have strict tax guidelines. When you create a corporation, it’s a completely new and separate entity in the eyes of the government and the IRS.

Corporations are an ideal structure for consignment businesses that want to expand into multiple storefronts, become a public company, or want to secure a lot of outside funding. Corporations provide you the most personal liability protection out of the three legal structures. However, you will need to pay federal corporate tax on top of personal income tax. Corporations are also expensive to form and require you to keep detailed business records.

Organize Your Finances

No matter which legal structure you choose, getting your finances in order is a crucial step. This involves opening a business checking account to separate your personal and business finances right from the beginning. Having two separate accounts makes it easier to monitor your business’ cash flow and track expenses accurately and will make the process of filing taxes much easier.

Chase is a great banking solution for retailers because it offers small business checking, business credit cards, and merchant services―payment processing―so business owners can manage all their cash flow in one place. Plus, Chase offers competitive rates and great customer service. Contact Chase to learn more about its small business retail solutions.

Learn more about the best small business checking accounts .

4. Select a Storefront

Choosing a storefront is a critical step that needs to be considered carefully. The location you select can all but make or break your business. The decision can seem overwhelming. So, start by narrowing down a geographic location. You’ll be spending long hours at your consignment shop nearly every day when you first open. Think about how far you are realistically willing to commute and choose areas that are accessible from your home easily.

Spend time in each area to become familiar with specific neighborhood demographics and preferences and scope out other local businesses. There are many factors that go into choosing the right location for your business, but it all comes down to picking the location that will attract the most customers.

Choose a storefront that gets a lot of foot traffic for increased sales and visibility.

Determining foot traffic can help you figure out how many walk-in customers you can expect in each location. In addition to staking out your prospective storefront locations, ask other local business owners questions about the traffic, shopper demographics, and neighborhood.

Additionally, consider details such as parking and signage. A Main Street location is ideal, but only if your customers can park near your store easily. Likewise, you’ll want a location that allows for a big storefront sign. Some locations have strict rules about the sizes and types of signage they allow.

Used clothing store Buffalo Exchange has several locations across the US. Many of the stores have been strategically placed in college towns where they have a steady stream of supply and demand from students. (Source: Buffalo Exchange)

5. Acquire Merchandise

Finding merchandise to sell at your consignment shop is trickier than sourcing products for traditional retailers . You’ll want to have a buying strategy in place before you open to ensure a steady stream of products to sell. You’ll probably use a combination of tactics to keep your store stocked.

Popular secondhand product sourcing strategies include:

• Joining the Association of Resale Professionals (NARTS) : This professional organization connects resale buyers with suppliers through its directory.
• Advertising to potential consigners : Advertise in print and online (on social media too!) regularly that you’re purchasing gently used items. Many of your potential shoppers could also be suppliers.
• Purchasing from flea and thrift shops : You can find some great deals on products to sell in your store by searching through flea markets and other thrift stores.
• Finding an off-price supplier : Off-price products aren’t secondhand, but they’re deeply discounted products that are either overstock or slightly damaged. You can find them through trade shows.

6. Design & Outfit Your Consignment Store

After securing a storefront and finding product sources, it’s time to start strategically planning your store layout . Your store layout has a dramatic impact on in-store sales. A well-designed layout will welcome shoppers, make them feel comfortable, and direct them toward specific products.

The first thing you need to decide is what type of floor plan you want. Most retail stores fit into one of three basic layout categories:

• Loop or racetrack : Best for specialty stores, showrooms, and retailers that want to lead shoppers on a specific path throughout the store.
• Grid or straight : This floor plan is exactly what you would expect: straight, angular aisles that are typically found in grocery and box stores. A consignment bookstore may also follow this model.
• Free flow plan : This is a popular plan for boutiques and allows for lots of creativity in the design process. Most apparel or decor consignment shops will follow this model.

Finally, you will need to position your checkout counter. A well-positioned checkout will open up floor space for displaying products and encourage shoppers to move through more of your store. As a rule of thumb, try to position your checkout on the left-hand side of your store.

Shoppers naturally veer toward the right side of a store, so that’s where you want to display your best products. Some department stores and larger mall retailers place their checkout counters at the back of the store. However, for smaller retailers, placing your checkout toward the front makes it easier for staff to attend the register and keep an eye on the entrance.

Select a POS System

Point-of-sale (POS) systems are cloud-based software programs that replace traditional cash registers and offer additional tools such as inventory management, sales reports, and customer data and marketing. Your POS system is the central hub for your business where you process all transactions. Look for a system that has all the features you need, including payment processing, for an affordable rate.

Lightspeed Retail POS simplifies the process of running a retail store. (Source: Lightspeed Retail)

Some of the criteria we use to evaluate the best POS systems include:

• Price : Most POS software programs charge a monthly fee, and some also charge extra for certain features.
• Ease of use : Test out each POS with a free demo or trial to make sure the interface is easy to navigate, and also read user reviews.
• Customer management tools : Almost all POS systems have a customer directory feature but, otherwise, they vary greatly in what loyalty, marketing, and customer feedback features are included.
• Sales reports : Each type of POS solution will have some kind of reporting tools, but some offer more details and features to create custom reports.

For brick-and-mortar stores, we often recommend Lightspeed. It’s a small business POS with big-business functionality such as custom report builders, detailed inventory tracking, a loyalty program, and built-in payment processing. Plus, it has built-in capabilities to handle consignment products. Visit Lightspeed for a 14-day free trial.

Visit Lightspeed

7. Advertise Your Consignment Shop

Before opening your consignment shop, you’ll need to start advertising and marketing your retail shop . Because you’re on a budget, make sure your strategy is effective by choosing a combination of online and offline marketing efforts.

• Social Media
• Search Engine Optimization (SEO)

In order for customers to find your business, you’ll want to have a website. Creating your own website from scratch can be easy with the right tools. There are many easy ways to make a business website for little or no cost. You need a registered domain and a web hosting service.

Olive My Stuff, a consignment shop in Connecticut, has a professional website with information on shopping and consigning.

Create social media accounts on channels like Facebook, Instagram, and TikTok to promote your brand and consignment items. You can even sell your secondhand goods on Facebook as well as sell them on Instagram directly. Run paid social ads targeting people who fit your target market in your local area.

Focusing on your SEO strategy is an excellent way to put your consignment shop in front of people who may not have otherwise heard about you. Local SEO , in particular, can help you increase your visibility for local searches. This is an excellent marketing tactic because users searching for “consignment shop near me” are likely high intent.

• Store Signage
• Window Displays
• Customer Loyalty Program

The storefront signage is the first impression shoppers will get from the in-person experience with your consignment shop. Make sure the sign is easily visible and easy to read, while also being reflective of your brand. You want to stand out enough to make passersby curious about what’s inside, especially if you plan to rely heavily on foot traffic. Check out these business sign ideas for inspiration.

While your signage might make the first impression, your window displays have the potential to make the biggest impact. A well-designed storefront with captivating window displays can lure even the most hesitant shoppers into your consignment store. Here are some resources to help you get started:

• Create a Stunning Store Window Display
• Visual Merchandising Techniques

Once your consignment shop is up and running, loyalty programs are a great way to encourage repeat customers and higher transaction amounts. Simple punch cards can be effective. However, using a loyalty program that’s tied in with your POS system offers deeper insights like who is using the program and how effective it is. Lightspeed  offers a sophisticated loyalty program that you can add onto Lightspeed POS for a monthly fee.

8. Hire & Train Employees

Last but certainly not least, before opening your store to the public you need to bring on a stellar group of employees to serve as the front lines of your business. If you haven’t hired an employee before, navigating the process can be intimidating. Follow a new hire checklist that outlines all of the gritty steps you need to take such as obtaining an employer identification number (EIN), registering for state and local taxes, and so on.

As a consignment store owner, it’s likely you won’t have a dedicated human resources (HR) team member. Using an affordable solution like Homebase can save you plenty of time and stress by simplifying hiring, employee scheduling, time tracking, and payroll.

Visit Homebase

Training Your Employees

You’ll want your consignment store staff ready to provide top-notch customer service from the moment you open your business. Providing great customer service is a skill that requires practice. If you don’t start training your employees before you open, they’ll be practicing their service skills on your customers.

Instead, hold a weeklong training boot camp before you open. In addition to running through customer service scenarios and role-playing, teach employees about store policies and procedures, the items you’re selling, and any other pertinent information.

9. Plan & Launch Your Grand Opening

Hosting a grand opening celebration is a great way to kick off your new business venture while also gaining some press coverage. To have maximum attendance, recruit friends and family, draft a press release for local media and surrounding businesses, make a Facebook event, notify your local Chamber of Commerce, and take an advertisement out in the local paper.

“One mistake a lot of companies make is staying under the radar until launch. If no one knows what you’re doing and when you’re opening, then you have zero chance of making any sales. Start building some excitement at least six weeks before your launch. Get active on social channels. Interact with likely customers and get the conversation started. Build anticipation with enticing photos, and maybe even incentivize purchases in those early days.” ― Deanna Thompson, Blogger, Closet Full of Cash

Plan a grand opening to celebrate the launch of your new business.

How to Start a Consignment Shop Frequently Asked Questions (FAQs)

Opening and running a consignment shop can be a tricky business.

What is a consignment shop?

A consignment shop is a store that sells secondhand items, typically clothing and accessories. Consignment stores purchase gently used goods and resell them at a markup to make a profit.

How does a consignment shop work?

As the owner of the consignment shop, you will purchase secondhand goods from customers, professional suppliers, flea market vendors, and so on, and own those items until they are resold in your store for a higher price.

How much does it cost to open a consignment store?

The exact price can vary a lot depending on your location and local real estate prices. However, opening a consignment store will cost roughly $10,000.

Why do consignment stores fail?

Part of learning how to start a consignment shop is figuring out what not to do. There are many reasons a consignment shop could fail. Common reasons include choosing the wrong storefront location, not having in-demand products, too-small profit margins, and insufficient marketing.

Bottom Line

Consignment shops are a great business idea for making money in 2022. More than 20,000 US-based used merchandise stores have a combined annual revenue of $17.6 billion , according to First Research. And these numbers continue to grow, especially as the world becomes more aware of the environmental challenges consumerism brings.

Starting a consignment shop is an excellent way to promote sustainable consumerism while also making a profit. And with the market growing the way it is, there’s plenty of opportunity for consignment shops of all kinds. There’s never been a better time to start a consignment business of your own.

About the Author

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Meaghan Brophy

Meaghan Brophy is a Retail Expert at Fit Small Business focusing on small business retail and ecommerce content. Meaghan’s 10+ years of retail experience includes working at local book and dance supply stores, handcrafting gifts at an eco-friendly manufacturer, developing private label brands, and managing a team of more than 40 sales and service professionals at a local spa.

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