how to start a novelty business

how to start a novelty business

A novelty store sells unusual items that appeal to a whimsical and fun audience. Items can range from gag gifts to adult-friendly items. Often, these stores will also sell toys or trinkets that inspire nostalgia in their target customer, which can be a delicate force that inspires loyalty and love to a particular establishment.

There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your novelty store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

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A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

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The target market can literally be anyone — novelty items are often given as gifts. So even if a person isn’t interested in cute memorabilia or silly gags, they probably know someone who is.

Owners charge a mark-up on their products, based on the wholesale cost of the item and store expenses. The baseline mark-up is typically 50%, though this number will depend on both demand and total business expenses.

People will routinely pay up to 50% more than what an item sells at wholesale. Going to other novelty stores will give you an idea of what you can charge for each product you sell, but be responsive to customer feedback if they feel your prices are too high. An in-demand, exclusive item in your store may sell at 75 – 100% more than what it cost to make.

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Most retail stores operate at a profit margin of between 25 – 50%. So if you sell $100, 000 worth of merchandise, your profits would be somewhere between $25, 000 and $50, 000 after all of the dust has settled. However, it should be noted that this number will vary significantly based on location and demand.

If you choose to make more personal items, consider catering to high-end customers who have very specific tastes. You could set up a side business that is strictly by-appointment only. Novelty stores may also choose to either franchise their business once it grows in popularity, or establish smaller kiosks in malls or other public areas. Holding frequent events and gatherings may be a good way to generate profits by charging a small entrance fee or a major mark-up on snacks or amenities.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Novelty Store Name Generator

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If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your novelty store is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

How To Start A Novelty Business

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

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Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

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Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.

NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

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Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Certain state permits and licenses may be needed to operate anovelty store business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

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Anovelty store business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

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There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

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Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

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If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

If your products are novel, you’ll want your marketing campaign to be as well. Throw a wacky party or stage a fun scavenger hunt with desirable prizes. Make your social media be more about fun than about selling and work on charming everyone you come into contact with — whether it’s online, printed materials, or in-person.

People will come back if you’re offering a wide selection of merchandise that’s updated based on the consumer demand. They’ll begin to form an attachment if they have consistently pleasant (and memorable) experiences whenever they visit your store.

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Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

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While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.

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Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

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