Starting a Gift Basket Service

Industry notes

Creating gift baskets for customers looking for that 'perfect gift' is one of the fastest growing types of businesses in North America. You can be as creative as your desire; the more creative you are, the more you will prosper.  This is a gift option available that personalizes any occasion for anyone. Gift baskets have become the 'problem solver' regarding gift giving in businesses for people who are sick, being promoted, or employees who have reached a milestone in their career.

Before Starting

Before starting any business which involves imagination, you should keep in mind:

• Marketing is one of the keys to success in your business - are you ready for the challenge?
• Remember that your business is only as good as the product you market.
• Understand the basics of managing, bookkeeping, purchasing and advertising.
• Consider working for a business in this market before starting your own gift basket service to ensure you are familiar with all of the aspects of this business.

Location

In order to run a successful gift basket business, you must have an area for creating products which has enough room, security, and safety for you to work in. Consider your home as a place of business. Consider registering your business name and complete all other requirements to begin your business. Many of your customers will contact you by phone, and a separate business line may be useful in gaining a professional appearance. By choosing your own home you will be able to:

• Start with a small amount of capital.
• Work flexible hours and operate your business on either a part-time or full-time basis.
• Save on expenses and increase the hours of operation.
  If you are not able to operate this business out of your home, consider renting or leasing a separate location, although this could be rather costly. Your location should be in an area of high traffic and parking should be available. Do your research. Look at population trends and the business climate. Check statistics on traffic counts, community characteristics, and demographics. Consider six key factors: regulations, costs, accessibility, parking, the neighbourhood and the competition. Ensure that your location has adequate storage for your inventory and product as well as a visitor area where customers may browse and view your product.

Inventory

Consider collecting items for gift baskets through both wholesale and retail means. Some of the items you will be able to purchase at a wholesale price are baskets, items common to several baskets and 'filler' items such as tissue paper. Inventory should change with sales volume, but at the start, keep inventory at a realistic level. Some of your inventory items can be found by:

• Attending local and regional gift shows to get crafts and 'hard to find' gifts.
• Adding your name to supplier mailing lists so that you can become aware of sales.
• Buying your items for your gift baskets in bulk. Many retailers give quantity discounts for purchases over a specific amount.

Human Resources

Most business owners in this field enjoy the independence of owning their own business and want to run the business themselves. During peak seasons, however, you may find that there are more orders than you can handle on your own. You can hire employees to help you with the daily operations of your business. Educate yourself in all areas of human resources - how to recruit, interview, motivate, train and develop personnel policies. (wages, benefits, etc.) Refer to the Human Resource Infosheet for more information.

Product

When you start your business, make a list of 5 to 10 baskets you would like to offer. There are a number of standard baskets most services tend to offer. Some are:

Gourmet/Food Baskets- These are the most popular gift baskets customers give to their friends and family. Theme arrangements are suitable, such as a Chocolate Lover's basket or wine and cheese baskets, etc.

Toiletry Baskets- Also very popular, common ingredients of these baskets tend to include such things as oils, lotions, scented soaps and fragrances, etc.

Shower Baskets- These baskets are best suited for wedding and baby showers and are usually filled with any number of necessities for a change in lifestyle.

Customized Baskets- Many of the orders you will receive will require something that you do not include on your list of products. It will be your job to shop retail to get the proper items for this "special" gift. Keep in mind that because you are shopping specially for the basket, they will naturally be more expensive. Consider working with your customer's budget and explain the increased cost of such a gift to your customers before shopping for the basket.

Advertising & Promotion

Word of mouth and your customer's satisfaction will be the most important advertising that will make or break your business. As well, other advertising methods should be used to ensure that you are always reaching new customers. Consider a call program to larger firms to produce baskets for internal promotions, illness, or employee milestones (10 years with the company). Advertising through newspapers and direct mail may help you do this. Most businesses spend anywhere between two and five per cent of expected gross sales on advertising. By advertising your business you can:

• Convince customers that your baskets are the best.
• Enhance the image of your company.
• Create a desire for your product and draw customers to your service.

Equipment

Besides regular office equipment, consider investing in shrink-wrap equipment to seal your products. Fresh fruits, cheese and candy among other fresh items will have a better appearance by using shrink-wrap. You should also consider the investment of a company car. A car is useful for your custom shopping, as well as for the deliveries of your baskets.

Pricing

To effectively price your baskets for quick sale, you should consider some factors in determining the right price for you:

• The labour and materials which include the time it requires you to assemble the basket, the cost of the merchandise in the basket, as well as the delivery charges that will apply to having the basket reach its destination.
• The overhead operating expenses are also important as you have to allow some of the revenue to go towards paying for your expenses associated with your location and business.
• Your profit should also be calculated into the price of the basket so you can make a set percent for every basket you sell to a customer.
• Make sure you check with your competitor's pricing and try to stay within a reasonable amount of what they are charging for their products. If it is not possible because of costs, try to find ways to assemble your own baskets in a less expensive way.
• Competitors may drive the prices of your products down, even as the costs to make the basket increases. Your goal will be to find a common ground between the two to be successful in your business.

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

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