Just 3 Steps to Start a Profitable Furniture Business
Everyone needs new furniture at some point in their life, whether it is for a new house or business, a new member of the family, or simply due to a change in taste and décor.
If you have a passion for making furniture or an appreciation and eye for buying it, you may be considering capitalizing on that demand and getting into the furniture business for yourself. But with all of the established retailers already out there, how do you go about setting yourself up for success in the furniture market?
If you are interested in learning how to start a furniture business, let us walk you through the basics.
Step 1: Do Your Research
What Does a Furniture Business Do?
A furniture business sells furniture for business and/or personal use to their customers. There are a few different ways of running a furniture business, such as:
- Making and selling your own furniture
- Buying new furniture from suppliers and selling it in a furniture store
- Buying/taking used furniture and reselling it in a store
If you are buying or making the furniture yourself, you may want to concentrate your efforts on selling to either the contract sector or the domestic sector. Each tends to specialize in different types of furniture.
The contract sector involves customers who buy a large amount of furniture items at a time to furnish something like a hotel, office building, or restaurant, for example. If this is who you want to cater to, your business should concentrate on supplying large numbers of the following types of products:
- Beds, including frames and headboards
- Sofas
- Chairs, including folding and stacking chairs
- Wardrobes, dressers
- Tables
- Computer desks and chairs for offices
- Mirrors, lamps, etc.
The domestic sector is primarily made up of customers who want to furnish their homes, so you don’t necessarily need to have large numbers of the exact same kinds of products. Instead, you may choose to focus on a niche that you are particularly passionate about or that you know is in demand, such as:
- Creating hand-crafted furniture pieces through woodworking or other traditional methods
- Offer custom services, where you design and execute items based on a customer’s wants and needs
- Provide baby furniture and accessories
- Produce upscale office furniture
- Create stylish furniture pieces for young professionals, etc.
Whether you decide to concentrate on the contract or domestic sector, make sure you do your research to see what kinds of products are currently in demand in each industry, especially in the area where you will be operating your furniture business. If you can find a gap in the furniture market that you can fulfill, it will certainly help set you up for success in this industry.
Do I Need Any Licenses or Permits to Open a Furniture Business?
To operate legally, you will almost certainly need a business license. You may also require a sales tax permit and an occupancy permit, though the requirements for each can vary greatly between states and even counties.
You may require even more licenses and/or permits depending on where you live and the exact nature of your furniture business, so get in touch with your county clerk office, SBA (Small Business Association), and/or other local government officials to find out exactly what is necessary for your situation.
What Are Some Skills and Experiences That Will Help You Build a Successful Furniture Business?
If you plan to make your own furniture to sell, you should certainly be skilled with your tools and materials. It may even be worth it to take a class to finetune your skills or learn new ones.
Whether you are making furniture yourself or buying it from other suppliers, it is also helpful to have an eye for furniture design. Spotting or creating furniture that is trending and in-demand can sell quickly and cause customers to flock to your shop. This type of skill is also important when putting together furniture displays, as these can show customers how pieces can fit together to create a certain look. If done correctly, you may get people wanting not just one piece but everything in the display to recreate that look at their home or business!
Customer service skills are also essential in the furniture business, especially if you are trying to compete with big-box stores and retailers who may be able to sell similar furniture at cheaper prices.
When interacting with customers, you should be able to maintain a friendly yet professional demeanor, answer any questions they may have, quickly and efficiently solve any problems, and leave them feeling happy and satisfied with any purchases. If you can make it more of a friendly, personal experience for your customers than the big retailers, it may be enough to keep them coming back to you for all of their furniture needs.
Finally, you should have some business, management, and marketing skills. You don’t have to go to business school to get these, but it would certainly be helpful if you had run or at least worked at a furniture business before, especially if it was a startup.
This kind of experience would get you familiar with all that it takes to run a successful furniture business, so if you don’t have this experience, then try and at least talk to someone who has this firsthand knowledge. They may be able to tell you things about the business that you may not have considered otherwise.
Step 2: Figure Out Your Costs
What Are the Startup Costs for a Furniture Business?
The startup cost for a furniture business can vary greatly depending on a number of factors. For example, if you are planning on making your own furniture on a small scale, you could perhaps get away with running your business out of your house or garage and selling furniture that way, provided you have the room. On the other hand, if you already have the equipment and room you need, your main cost will be your supplies for making furniture, such as wood and nails.
If you are planning on operating a furniture shop with products on display, you will need to lease or buy a brick-and-mortar store. You may be able to get a small operation going for a couple hundred thousand dollars, but if you are looking for more of a large, high-end showroom, then it could cost you millions.
You will then also need to purchase the furniture for your store, which can be quite costly depending on the size of your store and the amount of inventory you want to have on hand. If you plan to sell used furniture, this doesn’t necessarily have to cost a lot, though you will have to find a way to constantly find sellable items.
A third option that has been growing in popularity is to sell your furniture online, which you could do no matter the size of your business. You will likely need to invest in a warehouse if you plan to have a lot of inventory for your online furniture store, but this option means you can skip out on investing in a physical store. When first starting out, you can get a domain name and web hosting service for relatively cheap, or you could open up a store on something like Shopify or Etsy.
Finally, you will need to consider whether or not you will be offering delivery for your products. If you are, you will need to make sure you have vehicle(s) capable of handling the job.
What Are the Ongoing Expenses for a Furniture Business?
After you have bought any equipment, store, and website that you need for your furniture company, then your main ongoing expenses are going to be your inventory. For those making their own furniture, this means their raw materials, and for those who are buying from others, this means the products from their suppliers.
If you are planning on offering delivery, you will also have to pay for gas, wages for driver(s), and any necessary maintenance on your vehicle(s). Those with a store are also likely to have expenses like rent, utilities, and employee wages unless you plan to work alone.
Step 3: Make a Profit
How Much is the Furniture Industry Worth?
The furniture market was worth about 545.78 billion USD in 2020.
What is the Growth Potential for the Furniture Industry?
The furniture market is expected to grow at a CAGR of 5.4% from 2021-2027, bringing its worth up to around 789.38 billion USD by 2027.
How Do You Market a Furniture Business?
When marketing a business, the first step is always to consider your target audience. If you are looking to concentrate on supplying furniture to the contract sector, you will be marketing toward businesses. If you want to focus on the domestic sector, you will be marketing more toward homeowners or renters.
Your website will be a great place to let people know more about your business, and you can always get more traffic by linking it to your business’s social media accounts. Social media can be a powerful way to advertise to your target audience, so make sure your business has an active social media presence and engage with current and potential customers. You can post about new products and sales and answer any questions customers may have about your business or furniture in general.
While advertising online is a great way to reach your target audience, don’t forget about marketing in the real world. Print off some business cards, brochures, print ads, etc. and get out there and talk to people! Reach out to local designers and architects, set up a table at trade shows and fairs, and join your local Chamber of Commerce. You never know where you will find a new lead or customer.
How Much Should I Charge for Furniture?
Since there are so many different kinds of furniture out there of varying quality and material, it is hard to give even a range of prices to charge for furniture. Generally, though, note that the furniture industry tends to have a small profit margin, with profit over wholesale being somewhere around 40%.
Therefore, when pricing your furniture, make sure you are charging enough to cover your production costs, overhead, etc., while maintaining some profit.
Any Other Tips for Jump Starting a Furniture Business?
Absolutely! Here are some more ideas to jump-start your furniture business:
- Consider offering prefab furniture. This is the kind of furniture that comes in a flat box and customers have to put it together themselves. The profit margin on prefab furniture tends to be higher than average and costs less to deliver to customers.
- Do some PR and try reaching out to your local newspaper, radio, and TV station. A really great time to do this would be when you are first opening your business. If you have some extra money on hand, go all out on your opening day. Throw a party in your store (if you have one) and give out free drinks and stickers or other inexpensive merchandise emblazoned with your company name.
- If you have a website, have a professional photographer take pictures of your products. And if you don’t have interior design skills yourself, consider getting a designer to stage your furniture for the shoot.
- Be sure to check out our other posts for more ways to start your side hustle!
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