This is a guest post by Austin Storm, the original mastermind behind ConsignCloud. He owns The Storm Cellar, an independent consignment and local goods store in Moscow, Idaho.
I could not have started my store if it was a traditional retail store. When my wife and I decided to start the store we had about $8,000 – for everything! The first month’s rent plus the security deposit and deposit for the utility company took over 1/4, and we spent most of the rest on remodeling our space. When we started we wanted to stay lean, look for ways to save money while still communicating our aesthetic vision (staying true to our brand).
The consignment model is an ideal small business to start on a budget because it doesn’t take a lot of capital. A new retail store of 1,500 square feet might have to buy $25,000 in inventory. That is a lot of capital to be tied up in the business, for the lifetime of the business! With consignment you pay your consignors for the items you’ve sold after they’ve sold, so you don’t have to pay for any of your inventory up front. Your consignors share in the ‘risk’ of the business.
This sharing is not a downside, but instead increases consignor ownership in the business. You and your consignors will succeed or fail together. If you aren’t able to sell their items, they won’t entrust you with their best things. You will have a long relationship with your consignors, as they come in to drop off items, pick up money, shop, or pick up things that haven’t sold.
As you start your business, take a look at all your financial resources. Considering the goal of your store. What are you willing to invest in this project? How much are you willing to lose?
You will feel overwhelmed as you look at your to-do list, but take your time. The more time you have before starting, the easier it will be to find deals on fixtures, hangers, cash registers – any store supplies you might need. Scrounge online for the best deals – Craigslist is particularly good for fixtures, as major cities will usually have one or two stores that resell fixtures.
Starting a consignment store on a budget, then, is not impossible – it takes good organization skills and lots of careful tracking of your money to make sure you’re spending it in the right places.