From floor to ceiling and from entertainment to functionality, furniture stores help consumers to express their individual styles within their homes. These stores can be unique, locally-made, follow different themes, and offer a curated selection of products to different audiences. If you have an eye for design, enjoy keeping up with the latest home decor trends, and want to build a business of your own, starting a furniture store might be an ideal option.
But how do you actually launch a furniture store? What’s the market like, and what trends should you be aware of? In this guide, we’ll walk through the process of starting a furniture store, offering an overview of the business, practical steps to help you get started, and answers to common questions.
Furniture stores sell new and/or used furniture, including beds, tables, dressers, couches, and more. Some stores specialize in particular types of furniture, such as high-end designer models or modular furniture. Depending on the type of furniture a store offers, its audience can vary. Most of the time, customers will be homeowners or renters, though college students can be a secondary audience.
Currently, furniture stores face competition from online furniture stores and big-box chains that can offer discounted prices because of their higher volume of purchases. However, furniture stores also offer the convenience of providing fully assembled pieces that can often be delivered to a customer’s home.
Starting a furniture store is a big undertaking, especially if you plan to sell new furniture. The initial capital to start a furniture store can vary greatly, depending on factors such as the size of the store, location, inventory, and whether it’s a physical or online store. Opening a used furniture store will cost less than a new retail store, but it also requires a strategic plan to constantly acquire new and affordable used furniture. New furniture stores can purchase wholesale furniture from a variety of retailers, but the costs can be significant, especially when the business is just starting up.
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The furniture industry includes household furniture retailers for living rooms, bedrooms, kitchens, home offices, and outdoor spaces. This market has several key players, from big-box stores like Ikea and Ashley Furniture to specialty retailers focusing on particular styles. In addition, e-commerce has made it easier for small businesses to sell furniture online through their own websites or third-party marketplaces.
The furniture store industry has undergone recent growth and is spurred by increased consumer spending. From 2018 to 2022, the industry grew by 1.6%, resulting in $128.3 billion in revenue over those five years.
Independent furniture stores face competition from warehouses and supercenters (IBIS World). These major retailers have significant store space and are able to offer diverse selections of furniture, including tables, chairs, and more. Because these retailers can purchase in such a high volume, they can offer customers greater discounts than independent retailers can provide. This may prove a threat to the furniture industry.
Furniture purchases are closely linked to disposable income. A thriving housing market also contributes to furniture sales as new homeowners tend to spend heavily to furnish their new homes.
Other key industry trends include:
- Online visibility and sales: As with everything else, furniture stores must focus on developing a strong online presence to grasp the attention of online shoppers. This includes having an e-commerce website, offering virtual showrooms, and creating a shopping experience that is both easy to use and memorable.
- Omnichannel retailing: Customers are researching what they want to see online before they ever cross the doorway into a brick-and-mortar location. Customers want to research and browse furniture online, visit physical stores to see and touch the products, and then make a purchase online or in-store.
- Customization and personalization: Customers are seeking more personalized and unique furniture options. Furniture stores are responding to this demand by offering customization options, such as the ability to choose fabrics, finishes, sizes, and configurations. This allows customers to create furniture pieces that align with their specific preferences and needs.
- Eco-friendly products: Furniture stores are incorporating sustainable practices as customers become more educated about environmental hazards.
- Multi-functional and space-saving designs: As living spaces become smaller, furniture that serves multiple purposes and optimizes space utilization is gaining popularity. Furniture stores are offering innovative designs such as sofa beds, modular furniture, and storage-integrated pieces to provide functionality without compromising on style.
- Seeing the furniture in their own space: AR (augmented reality) and VR (virtual reality) technologies are being used to enhance the buying experience by showing the customer exactly how the furniture will look in their space. Customers can visualize how furniture will look in their own homes using AR applications, and VR showrooms allow them to virtually explore different furniture settings.
A furniture store’s target market will vary greatly depending on the store’s location, the demographic the store markets to, and the type of furniture that the store stocks.
A store in a lower-income area that stocks affordable, practical furniture can appeal to the general population but homeowners, renters, and college students, in particular. Alternatively, a store in a higher-end area that stocks designer furniture will appeal to a different market, mainly adult homeowners.
Some of the target markets could be:
- Homeowners looking to furnish or update their homes are a primary target market for furniture stores.
- First-time homebuyers will be looking for furniture to fill their new space.
- Renters represent a significant portion of the target market for furniture stores. Renters do not always own their furniture or may be looking for pieces that are easily moved for future changes in residence.
- Interior designers who work with clients to create spaces that are unique and tailored to specific preferences make up a part of the target market.
- Some furniture stores also target business-to-business or commercial clientele. Those stores will be looking to supply offices, hotels, restaurants, medical offices, etc.
- Some furniture stores may have a niche target market, focusing on specific demographics such as luxury furniture for affluent customers, children’s furniture for families, eco-friendly furniture for environmentally conscious consumers, or specialized furniture for seniors or individuals with disabilities.
Checklist for Starting a Furniture Store
If you’re thinking about starting your own furniture store, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Assess the Market
Market research is a vital step in the process of starting any business, including a furniture store.
The main reason you want to assess demand first is to validate there are enough potential customers to make the business viable. Opening a store requires substantial upfront and ongoing investments – rent, inventory, employees, marketing, etc. You want to make sure the market can sustain those costs and generate sufficient sales and profitability. Otherwise, you risk the business failing.
In the context of a furniture store, market research can reveal important information about customer preferences in terms of furniture styles, price points, and shopping habits. Understanding these factors can help you determine whether there is enough demand for a new furniture store and guide you in tailoring your offerings to meet customer needs.
There are several cost-effective ways to conduct market research for your potential furniture store:
- Online research: Use online resources to study existing furniture stores, especially those in your intended location. Look at their product range, pricing, and customer reviews to identify gaps that your store can fill.
- Competitor benchmarking: Visiting competitor stores, both online and offline, can help you gauge what’s resonating with customers and what gaps might exist in the market. You can also observe customer behavior, store layout, product range, and pricing strategies during this research.
- Furniture store owner interviews: Talk to owners of furniture stores in similar markets and ask about their customer demographics, sales volumes, industry challenges, etc. This can provide insider intelligence and possible mistakes to avoid.
- Population data: Look at population and housing data for your target region through the Census Bureau or local economic development agencies. Growing areas with new housing developments have higher furniture demand. Also, look at your area’s median household income levels. Higher incomes support more furniture spending.
- Social media: Platforms like Instagram and Pinterest are popular for home decor ideas. These platforms can provide insights into trending furniture styles and customer preferences. You can also see reviews and comments on what customers liked and didn’t like about these stores.
Step 2: Develop a Business Plan
Writing a business plan for your furniture store is more than a mere formality to request a loan. A business plan serves as a blueprint for your furniture store, providing detailed guidance on how your business will operate, grow, and succeed. Think of it as a roadmap, leading you through the unfamiliar terrain of starting and running a business, helping you avoid potential pitfalls along the way.
If funding is needed, here are some sections that I recommend focusing on when writing a furniture store business plan for lenders and investors:
Market analysis: Given the competitive nature of the furniture industry, a comprehensive market analysis is essential. This should include details about your target customers, their preferences, buying habits, and the overall demand for furniture in your chosen location. You should also analyze your competition, identifying their strengths and weaknesses.
Marketing and sales strategy: How will you attract and retain customers? This section should detail your promotional strategies, pricing model, sales tactics, and customer service approach. Given the rise of online shopping, your digital marketing strategy is also an important consideration.
Management team: The success of any business is largely influenced by the people behind it. Introduce the people behind the business. In a furniture store, this might include design experts, experienced retail managers, or individuals with a strong community connection. Emphasize their skills and experience and explain how they contribute to the success of the business.
Financial projections: This section should provide a clear picture of your anticipated revenue, expenses, and profitability. Include a break-even analysis to show when your furniture store is expected to start making a profit.
Related: How to write a business plan
Step 3: Find a Location
Securing an ideal location for your furniture store is a critical step in the process of setting up your business. The location can greatly impact your store’s visibility, accessibility, and overall success. With funding secured, you’re ready to navigate the real estate market and prepare your chosen location for business operations.
A few things to consider when looking for a space for your furniture store:
- Sufficient space: The location needs adequate showroom space to display a wide selection of furniture, decent-sized stock rooms for inventory storage, and room for checkout counters, offices, etc. Evaluate the square footage to ensure it can accommodate your planned furniture displays, sales volumes, and operations.
- Retail visibility: High visibility from main roads and highways is ideal. This makes signage viewable and brings in passing foot/vehicle traffic. Corner lots on busy intersections are great. Avoid spaces tucked away with no storefront visibility.
- Accessible loading areas: Since you’ll be moving large furniture in and out, easy access for large trucks, vans, and loading bays is important. Make sure there’s a dock, wide drive-in door, or freight elevator suitable for large inventory.
- Parking: Abundant, free customer parking adjacent to the store is ideal. Make sure spaces can accommodate customers with large furniture purchases.
- Zoning regulations: Verify the property is zoned for retail/commercial use. Check local ordinances for any restrictions too.
- Condition: Assess electrical, plumbing, HVAC systems. Older buildings may require upgrades to support a retail business. Factor in renovation costs.
- Lease terms: Negotiate affordable rent with flexible lease terms in case you need to relocate as business grows.
- Growth potential: If looking to expand later, ensure there’s physical space to do so on-site or nearby.
Above all, resist the temptation to sign a lease or purchase the building until funding is secured. Delays or denials in funding are common, and you could be stuck making payments on a building, resulting in financial strain.
Step 4: Secure Funding
Starting a furniture store requires careful financial planning and access to sufficient funding to cover various startup costs. While the dream of opening a furniture store is exciting, the reality of securing funds can be a complex and often challenging process. Here’s a comprehensive look at some common sources of funding:
Personal savings: The first and most common source of funding for many entrepreneurs is personal savings. The advantage here is that there are no loan payments or interest rates to worry about, which can ease financial pressure in the early stages of your business.
For a furniture store, initial costs can be quite significant, considering the expenses related to securing a location, purchasing inventory, and setting up the store. Therefore, personal savings will likely need to cover at least a portion of these costs. Depending on the scale of the furniture store, personal savings may be used to cover a portion or all of the initial costs.
Friends and family: Seeking financial help from friends and family is another option. Putting any agreements in writing is essential to avoid misunderstandings or strained relationships later on. Clear terms and expectations should be outlined, whether it’s a loan or investment.
Traditional bank loans: For those needing more substantial funding, traditional banks can be an avenue to explore. Lenders typically require a borrower to invest 15%-25% of their personal funds, have a good credit score, and provide sufficient collateral. If a bank deems the loan too risky, they may opt for an SBA loan guarantee, which can provide added security to the lender.
Microloans: If the funding needs are relatively low or traditional credit isn’t available, microloans can be an attractive option. Many microloan providers not only offer financial support but also provide valuable business training. This combination can be particularly helpful for new entrepreneurs in navigating the early stages of business development.
Angel Investors: Angel investors can be local individuals with a higher net worth and interest in your type of business. While this source of investment may seem appealing, it can be challenging to obtain, especially for a furniture store. Most angel investors are looking for high-growth and scalable businesses. The furniture industry may not always meet these criteria, but finding the right investor who believes in you and your vision can still be possible.
Step 5: Register the Business
Starting a furniture store business involves several steps to ensure everything is properly registered and compliant with local, state, and federal laws. Here are some key steps you need to take:
Choose a business structure: The first step is to decide on the appropriate business structure for your furniture store. The four primary types are Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation. Each structure has its own advantages and requirements.
- Sole Proprietorship – Simplest, but you’re personally liable if the business is sued.
- Partnership – Like the sole proprietorship with multiple owners, but liability is shared among partners.
- Limited Liability Company (LLC) – Offers liability protection without complex corporate setup. A common structure for furniture businesses.
- Corporation – More complex and expensive to establish but offers the strongest liability protection.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Obtain business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, occupancy permit, and Employer Identification Number (EIN).
Step 6: Design & Set Up the Store
Designing and setting up your new furniture store is an exciting step in the process of starting your business. It involves several key considerations to create an appealing, efficient, and customer-friendly space.
Store Layout and Design
Furniture stores require a spacious layout allowing customers to view and navigate the inventory easily. Consider creating different sections within the store for various types of furniture (e.g., living room, bedroom, dining room) to help customers find what they’re looking for more easily.
Ensure there’s enough space around each furniture piece so customers can inspect items from all angles. Lighting is also crucial as it highlights the features of your furniture and creates a warm, inviting atmosphere.
In terms of design, aim for a look that aligns with your brand image and appeals to your target customer. For example, a rustic, nostalgic store design might be appropriate if you’re selling vintage furniture. Conversely, a sleek, minimalist design would be more fitting if you’re selling modern furniture.
Inventory Management System
An efficient inventory management system is crucial for the smooth operation of your furniture store. This system should enable you to track stock levels, sales, orders, and deliveries in real time, helping to prevent stockouts and overstocking.
There are numerous inventory management software solutions available, many of which integrate with point-of-sale systems, e-commerce platforms, and accounting software for streamlined operations. Choose a system that fits your budget, meets your specific needs, and can scale with your business as it grows.
Clear and attractive signage both outside and inside your store can help attract customers and guide them through their shopping journey. External signage should reflect your brand and make your store easily identifiable, while internal signage should help customers navigate your store and find the products they’re looking for. Before ordering signage for the building, be sure that the city will approve it!
Step 7: Select Suppliers
With the store opening not too far away, the next step is to get suppliers lined up. Suppliers play an essential role in defining the quality, variety, and price range of the products you offer. Here are a few things to consider when choosing suppliers in the furniture industry:
- Before contacting suppliers to request info packets and pricing catalogs, be sure the business is officially registered. Many suppliers won’t provide this information until the business is legally registered.
- Attend furniture trade shows and markets to meet potential suppliers in person. Major events like High Point Market allow you to see many vendors at once. Introduce yourself, discuss your store plans, and request sample catalogs. Another benefit of going to industry events is being able to talk to other furniture store business owners.
- Search industry directories like Furniture Today’s supplier guides to identify major manufacturers and distributors within your target categories and price points. Make a list of the ones to contact.
- If possible, visit local showrooms of suppliers you hope to work with. Seeing products in person can help assess the quality and fit for your inventory.
- As a new store, expect to pay 50% or more upfront for initial inventory orders until you build a track record. Ask suppliers about payment plans and volume discounts.
- Focus first on finding staple inventory sources. Then expand into more niche or custom furniture suppliers as you grow.
- Always get wholesale pricing in writing and review delivery timelines, shipping fees, and return policies before ordering.
Step 8: Hire Staff
The next step to tackle is hiring and training employees. As an employer, it’s important to know the responsibilities and legal obligations. These vary by state, but here is a general overview:
- Research your state’s specific labor laws around hiring, pay, breaks, leave, and termination to avoid violations. There may be special contractor vs. employee regulations, especially for furniture moving/delivery roles.
- Verify eligibility to work in the US for all new hires by reviewing ID documents and having employees complete I-9 forms.
- Set up payroll processing systems to handle taxes, withholdings, direct deposit, and year-end tax documents. Using a payroll provider can simplify this.
- Review insurance needs and options for providing affordable health benefits to full-time employees if desired.
- Implement an employee handbook clearly outlining workplace policies, codes of conduct, safety protocols, leave, and other HR aspects.
- Perform background checks if employees will handle expensive merchandise or interact with customers in their homes.
- Provide mandatory new hire orientations to train on company guidelines and job duties and have employees acknowledge policies.
Related: Guides to hiring in each state
Step 9: Create a Marketing Plan
As you approach the grand opening of your furniture store, attention needs to turn to making marketing a top priority. Without a solid marketing strategy, even the best furniture store can go unnoticed. Utilize various channels, both online and offline, to create awareness and attract customers. Some ways furniture retailers market their business include:
Traditional advertising: Utilizing local newspapers, magazines, direct mail, radio, and even billboards can be effective in reaching potential customers in your area. These mediums allow you to showcase your products, special offers, and unique selling propositions.
Social media and online marketing: Engaging with customers through social media platforms like Facebook, Instagram, and Pinterest allows you to showcase your products visually and connect with customers on a more personal level. Running targeted online ads can help you reach specific demographics.
In-store events and workshops: Hosting workshops, open houses, or launch events can create a buzz around your store. Collaborating with local interior designers or offering DIY furniture workshops can add a community-oriented touch.
Joining the Chamber of Commerce: Being an active member of your local Chamber of Commerce can enhance your network and provide opportunities for collaboration with other local businesses. It adds credibility and helps in connecting with the local community.
Claiming your business on online directories: Besides building a strong presence on platforms like Google Business Profile, ensure your store is listed on relevant online business directories. Listings with appealing photos and descriptions can significantly boost your visibility online.
Loyalty programs and referrals: Encourage repeat business with loyalty programs and incentives for referrals. Satisfied customers can become your best promoters.
Collaborate with real estate agents: Building partnerships with local real estate agents can be an innovative way to introduce your furniture to new homeowners in the area.
Step 10: Prepare to Open
As you approach the final steps before opening, there are likely several key loose ends to tie up. While the exact needs of each individual will differ, here are some common and essential steps to ensure a successful launch:
As we conclude, there are several crucial steps to consider when preparing to open a furniture store. Each business’s needs may vary, but the following are common considerations:
Business insurance: It’s essential to secure proper insurance coverage to protect your business from potential risks. This might include general liability insurance, property insurance, and product liability insurance, especially relevant in the furniture industry where faulty products could lead to claims.
Bookkeeping: Setting up a reliable bookkeeping system is vital for tracking income, expenses, and overall financial health. You might consider hiring a professional accountant or using software like Wave Accounting (FREE) or Quickbooks.
Bank account: Opening a business bank account is an important step that separates personal and business finances, simplifies tax preparation, and presents your business more professionally.
Management software: Implementing a robust management system can streamline sales, inventory management, and customer relationship management. Some popular options for furniture stores include Furniture Wizard and STORIS.
Credit card processing: To accommodate customers’ payment preferences, setting up a credit card processing system is essential. Services like Square or Stripe offer user-friendly solutions that integrate well with various POS systems.
Preparing for the grand opening: Plan a grand opening event to generate buzz and attract initial customers. This could involve special promotions, local advertising, and perhaps even a ribbon-cutting ceremony.
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Common Questions When Starting A Furniture Store
How much does it cost to start a furniture store?
Because furniture takes up so much space, a store needs to be much larger than your typical independent retail store to offer a large amount of inventory. While a lease on a larger space will cost more, maximizing your storage space can help you make the most of every inch in the store, offering as much inventory as possible to drive sales. If you can find a quality that makes your store unique and sets it apart from competitors, you can leverage this unique quality to draw attention to your store and position it to be a success.
On average, the total cost to start a furniture store can be anywhere between $150,000 to $500,000, but it can easily reach millions for a larger, high-end showroom. Here’s a breakdown of the significant expenses involved:
Leasing space: Costs will vary by location, size, and lease terms. Expect to pay anywhere from $5,000 to $25,000 for the first few months and deposits.
Renovations and showroom setup: Designing the store to suit your brand and arranging furniture display areas may cost between $10,000 to $40,000.
Initial inventory purchase: Depending on the types and quantity of furniture, this cost can range from $50,000 to $300,000.
Initial insurance costs: General liability and property insurance for the first few months might be around $1,000 to $3,000.
Business registration and licensing: This might include state registration, local permits, and more, ranging from $500 to $2,000.
Initial marketing campaign: This includes the cost of creating a website, local advertising, and other promotional activities. The initial budget could be $3,000 to $10,000.
Other equipment: Shelves, computers, security systems, and other essential tools could add another $10,000 to $30,000.
Staff salaries: If hiring staff right away, you’ll need to cover the first month’s wages for training, which could be $5,000 to $15,000.
Starting a furniture store is a substantial financial investment. These costs are approximate and can vary widely based on many factors. It’s crucial to have a clear understanding of your business model and work closely with a financial advisor to get a precise estimate for your situation.
It’s also worth considering having three to six months of operating expenses on hand as a buffer. This ensures that you can sustain the business in its initial phase, allowing time for the store to find its footing and begin generating revenue. It’s not just about opening the doors; it’s about staying open and thriving in those critical first months of operation.
How profitable is a furniture store?
The profitability of a furniture store can vary widely based on factors like location, size, marketing strategy, and target market. However, an average furniture store might operate on a gross margin of around 40% to 50%. To get a rough idea, let’s break down the numbers using this industry standard:
Revenue: Using data from IBISWorld, in 2022, 65,886 furniture stores generated $128 billion in sales. This means the average store generated $1.9 million. This may be on the high side for a new store, so let’s use $1,000,000 as the sales for the first year.
Cost of goods sold (COGS): With a gross margin of 40%, the COGS would be 60% of revenue, or $600,000.
Furniture stores require significant working capital to purchase inventory. If inventory doesn’t move quickly, working capital can be tied up in those products, making it difficult to restock in-demand pieces. Good inventory management is critical to profitability.
Gross profit: Subtracting the COGS from the revenue leaves a gross profit of $400,000.
Operating expenses: These include rent, wages, marketing, utilities, and more. In a typical furniture store, operating expenses might be around 30% of revenue, or $300,000.
Net profit: The final net profit would be the gross profit minus operating expenses, or $400,000 – $300,000 = $100,000.
This gives us a net profit margin of 10% on the revenue. It’s worth noting that these numbers are illustrative and can vary based on a multitude of factors, including the store’s efficiency, competition, economic conditions, and management’s ability to control costs and drive sales.
What skills are needed to run a furniture store?
Anyone can start a furniture shop – even with no small business experience – but the following skills and experience can make it easier to get a store up and running successfully.
An eye for design: When it comes to selling furniture, an understanding of current and evolving home furnishing trends will help to keep fresh and interesting inventory in the store. Running a sizable furniture store entirely on your own is difficult, so plan on hiring at least some part-time staff to assist with moving, assembling, and delivering furniture.
Being able to spot quality furniture that will be in demand can help an owner fill a store with products that will draw in customers and sell quickly. Design skills are also necessary for creating attractive windows and in-store displays. Pairing furniture together in sets and accessorizing with accents can help draw customers’ attention to furniture and even drive sales.
Customer service skills: Expect to engage with customers daily. Previous customer service experience is beneficial when owning a furniture store, especially since many purchases are expensive. Customers can quickly get upset if a product or delivery doesn’t turn out as planned.
Given the intense pricing competition from warehouse clubs and larger competitors, an emphasis on customer service is critical.
Management skills: Hiring, training, and managing employees takes talent, and it’s a necessary and daily part of owning a furniture store. Previous experience as a manager is valuable in the furniture industry.
Marketing skills: A strong marketing plan is essential to launching a furniture store, but ongoing marketing efforts are important, too. Putting items on sale helps to drive the purchase of some higher-cost pieces, but you need to publicize the sale to get people in the door. Familiarity with email marketing, social media platforms, and even print marketing will be important and can save you money over hiring a marketing professional.
Business skills: A successful furniture store does not necessarily need an owner with a business degree to start and manage their stores, but business skills are important. An owner of a furniture store should manage inventory, identify appropriate pricing, market the business, and more. While previous business experience will help, owners can also learn many of these skills through business classes and a business mentor’s help.
What is the NAICS code for a furniture store?
The NAICS code for a furniture store is 442110.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?