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How To Start A Home Decor Business

How To Start A Home Decor Business

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How To Start A Home Decor Business

How To Start A Home Decor Business

Do you have an eye for coordinating items into a cohesive ensemble for living spaces? The home decor industry spans a range of products, from furniture and lighting to art, textiles, accessories, and more.

While creativity is critical, turning your passion into a profitable business requires more than just talent. This guide will walk you through the basics so you can confidently launch your home decor venture.

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Business Description

A home décor business displays and sells furniture and home decor items that customers use to decorate their homes. These products can range from furniture and light fixtures to rugs, artwork, and other decorative pieces. The business model may also include offering interior decorating services, where you work with clients to design and decorate their spaces.

Individually owned stores acquire furniture and home décor items from various sources and display the items for sale in a showroom or on a website. These home décor stores sell brand-new items, name-brand items, or discounted furniture from off-brand wholesalers, discontinued lines, or refurbished inventory.

Industry Summary

The home decor industry is expected to bring in $62.1 billion in 2023. Over the past five years, the industry has grown at .5% each year.

Competition is high, as major retailers like IKEA, Crate and Barrel, and specialty boutiques compete for customers. However, small businesses can find a niche by providing personalized service and curated, unique products. Focusing on a specific style, price point, or geographic area can help you differentiate yourself.

Shifting lifestyle trends also present opportunities as busy professionals seek quality furnishings tailored to small spaces and multipurpose rooms. Consumers increasingly value unique, customized home decor that reflects their personal tastes over mass-produced items. They also show a greater preference for environmentally sustainable, ethically made products. Retailers who can leverage these growth factors through specialized offerings, customization, sustainability, and curated selections will be well-positioned to capitalize on the industry’s steady expansion.

Target Market

Individuals and businesses are the two main markets for home décor businesses. Individuals shop at home décor retailers to furnish, decorate, and organize their homes. Similarly, businesses, such as offices, restaurants, and studios, need home décor stores to furnish their businesses.

Arguably, a large market for home décor businesses is new home buyers. These buyers have a new space that needs to be styled and decorated. In addition to new home buyers, other groups who need a home décor business include those who:

  • Are redecoration or remodeling
  • Are downsizing or upgrading their space
  • Have added family members or housemates

Steps To Start A Home Decor Business

Starting your own home decor business can be a great way to turn your passion for interior design into a career. But, like any other business, there are a few key steps you need to take before you can get started. Here is a checklist of the major steps you’ll need to take to get your business off the ground.

Step 1: Research the Market

Before you dive into the home decor business, knowing your market is crucial. You might think your unique designs will win everyone over, but that’s not enough. This research will help you make sure there’s a demand for what you want to offer. Though it’s not an exact science, market research can give you valuable insights and reduce the risks involved.

The first question to answer at this stage is, who exactly are you selling to? One of the most important aspects of starting a business is understanding your target market. With home decor, it’s important to identify the age, income, geographic location, lifestyle factors, and purchasing behaviors of your ideal customers. By conducting market research and consumer surveys, you can gain insights into your target customers to align your product offerings better.

Next, take a look at your competitors. Look at businesses that are directly competing with you as well as those that are slightly different but still operate within the home decor space. Assess their product range, pricing strategy, and how they market themselves. This will not only help you find an untapped niche but also let you identify strategies that have proven successful. To get more in-depth knowledge, consider going undercover as a mystery shopper to experience competitors’ customer service, store layout, and operations first-hand. This on-the-ground research can provide invaluable insights into where you can differentiate your own business.

Market research isn’t foolproof, but it’s an essential first step. You want to go into this adventure with as much knowledge as possible to potentially save you from investing time and money into a venture that’s not yet viable. So, do your homework, find your niche, and be prepared to pivot or refine your business idea based on what you learn.

Step 2: Write a Business Plan

Writing a business plan is the next step after market research. Not only does it serve as your roadmap, but it also becomes a vital document when seeking funding. Financial projections, alongside other key sections, help lenders and investors gauge the potential and risks of your home decor business.

There are a few key sections that funders will closely scrutinize, which includes:

Market Analysis:

In the Market Analysis section, go beyond merely presenting statistics and forecasts. This is your opportunity to answer the question: Why will your home decor business succeed? Maybe you’ve identified an untapped market segment, or perhaps your business will focus on a trending design style that’s currently underserved. Your objective here is to show a deep understanding of the market needs and demonstrate how your business is uniquely positioned to fill a gap.

Management Team

Investors and lenders often put a lot of weight on the management team, which includes the owners of the business. The success of a business is often closely tied to the people behind it. Highlight your team’s experience, skills, and qualifications, demonstrating how these will contribute to the success of the business.

Location

Whether you’re planning a brick-and-mortar store or an online business that ships products across the country, the Location section is crucial. For physical stores, discuss the traffic patterns, proximity to similar businesses, and how the location fits your target demographic. For online stores, explain your digital marketing strategies to capture your desired market. The aim is to convince the lender that your chosen location amplifies your business’s chance for success.

Financial Projections

Banks and investors will pay close attention to the Financial section. They’ll want to see realistic projections showing that the business will be profitable. You’ll need to explain how you arrived at these numbers, so make sure you understand them thoroughly. Include sales forecasts, income statements, cash flow statements, and balance sheets for the next three years.

Before you submit your business plan to lenders, have someone with experience, be it another business owner or an accountant, scrutinize your plan. This second pair of eyes will help you catch errors or omissions and provide valuable feedback on the plan’s feasibility. Having someone challenge your assumptions could be the difference between a well-received plan and one that falls flat.

Related: How to write a business plan

Step 3: Secure Funding

Starting a home decor business requires not only creativity and passion but also a significant financial investment. Making sure you have access to the money is an important step in launching your business and here are several sources of funding to consider:

Personal savings: Using your savings is often the easiest and fastest way to access startup capital. It avoids interest and loan payments. However, make sure not to wipe out your emergency fund if your business launch doesn’t go exactly as planned.

Friends and family: Some entrepreneurs turn to their inner circle for financial support. While this can be a quick and uncomplicated way to raise funds, it can also put personal relationships at risk if the business struggles. Make sure you outline the terms clearly, just like you would with any other investor.

Small business loans: Banks are a common source of funding for small businesses. However, they typically require a borrower to invest at least 15% of their personal funds towards the project’s total cost. In addition, a good credit score and sufficient collateral are usually necessary. If a bank considers the loan too risky, they might use an SBA loan guarantee to secure the funding.

Line of credit: Establishing a line of credit can give you the flexibility to draw funds when needed and pay back on more flexible terms. This can be particularly useful for covering operational costs like inventory and payroll.

Microloans: If your funding needs are low or you’re unable to obtain credit through a lender, microloans could be an option. These are small loans, often accompanied by business training, offered by local economic development organizations.

Related: Finding the money to start a business

Step 4: Register the Business

Starting a home decor business involves more than just a great eye for style; it also requires navigating the legalities of setting up a business. Here are some key steps to follow:

Business structure: Before you do anything else, you’ll need to decide on the structure of your business. There are four primary types:

  • Sole proprietorship: This is the simplest form. It’s easy to start and has lower costs but offers no liability protection. You’re personally responsible for all debts and obligations.
  • General partnership: Two or more individuals manage the business. Like a sole proprietorship, there is no separation between personal and business assets.
  • Corporation: This structure separates personal and business assets and allows you to sell shares of your company. It offers liability protection but requires more paperwork and following corporate procedures.
  • Limited Liability Company (LLC): This is a hybrid that offers the liability protection of a corporation and the ease of operation of the sole proprietorship and partnership.

For a home decor business, an LLC is often the most common structure due to its flexibility and 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!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

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.

Related: Finding a domain name for your business

Obtain business licenses and permits: As with any new business, it’s important to make sure all of the necessary licenses and permits are secured before opening your doors.

The specific licenses required for a home decor business will vary depending on your location and the services you offer, but some common ones include a business license, a sales tax permit, and an Employer Identification Number. It’s also important to consider whether or not you need zoning permits for your physical storefront.

Related: Common business licenses, permits, and registrations by state

Step 5: Acquire & Set Up the Store

After squaring away funding and registering the business, acquiring a location and setting up a facility is the next step in launching your home decor business. Whether it’s a physical storefront or an online platform, the space you choose can heavily influence your business’s success.

If you’re going for a physical retail space, location is key. You need a place that’s easy for customers to find and convenient for them to visit. Look for areas with high foot traffic, but don’t forget about parking. Ample parking facilities make it convenient for customers to visit your store, especially if they plan to purchase larger decor items. Signage visibility is another factor; your store needs to be seen to be visited. The more visible and accessible your storefront is, the more potential customers you’ll attract.

Once you’ve secured your retail space, it’s time to design a floor layout that promotes sales. The layout needs to be both functional and appealing, leading customers through a journey from the moment they walk in. Well-organized pathways and clearly designated areas for different types of home decor will help shoppers find what they’re looking for, increasing the likelihood of purchases.

Equally important is how you outfit your store. The fixtures you choose, from counters and shelving to lighting, should not only be functional but also align with the aesthetic of your brand. Good lighting can make your products look their best and can create a welcoming atmosphere. When it comes to setting up displays, consider how they’ll catch the eye. Merchandise should be displayed in a manner that is easy to access, encourages interaction, and embodies your brand’s style. Invest in quality display units that make your products look their best.

If you’re also considering an online store, or only an online store, the principles are somewhat the same. The “location” is your URL, and the layout is the website design. You won’t need to worry about parking, but website navigation should be as straightforward as possible to guide customers to check out smoothly.

Step 6: Begin Working with Manufacturers

In order to launch a home decor business, the selection of manufacturers can make or break your success. It’s important to do ample research and choose manufacturers who have the merchandise your customers will want to buy. In the home decor industry, suppliers can range from large manufacturing companies to individual artists and craftspeople. Depending on what you plan to sell, your suppliers could be as diverse as furniture makers, textile producers, and even artists who create one-of-a-kind pieces.

Start by determining what type of products you want to sell. This will help narrow down potential manufacturers in your industry. Next, gather information on their practices and ethics, as well as their track record in terms of quality and timeliness. Consider visiting the manufacturing facility in person to see their processes firsthand and ask questions about their production methods. Finally, take the time to negotiate terms and fees before making any commitments.

Step 7: Hire Staff

When starting a home decor business, you may find the need to hire employees to assist in various roles. Common positions in such businesses include retail associates who manage the storefront and sales, designers who can provide expert advice on home decor selection and arrangement, and possibly warehouse or logistical staff if you have a significant inventory to manage.

As a new employer, it’s necessary to be aware of the legal requirements associated with hiring. Here is a brief overview:

Obtaining an EIN: An Employer Identification Number (EIN) is a unique number assigned by the IRS to businesses for tax reporting purposes. You’ll need an EIN to report information about your employees to state and federal agencies.

Employment eligibility: As an employer, you are required to verify the employment eligibility of your employees. This typically involves completing an I-9 form for each employee and checking their identification documents.

State reporting: Employers are required to report new hires to a designated state agency. This helps states enforce child support orders and reduce fraudulent claims for public assistance, unemployment insurance, and workers’ compensation. Each state has different requirements, so it’s important to check with your state’s labor department or an employment attorney.

Worker’s compensation: Most states require employers to carry workers’ compensation insurance, which provides benefits to employees who suffer work-related injuries or illnesses.

Labor laws: Employers are required to comply with various labor laws, including minimum wage requirements, overtime rules, leave policies, and safety regulations. These laws can vary by state, so it’s important to familiarize yourself with the regulations in your specific location.

Once you’ve taken care of these legal requirements, you can move forward with recruiting and hiring qualified candidates for your home decor business. Training will be an essential part of this process, ensuring employees are well-versed in your products, customer service standards, sales techniques, and company values.

Related: State guides for hiring your first employee

Step 8: Create a Marketing Strategy

Launching a new home decor business is a significant endeavor, and marketing is a crucial part of that journey. There are a variety of ways to spread the word about your products and services, but it is valuable to have a game plan before opening your store.

One option is to connect with local interior designers, architects, real estate agents, and home builders to let them know about your store opening, so they can refer clients to you. Since you are in the business of selling good design, be sure all of your marketing materials, from business cards, brochures, website, and store signage are professional.

Additionally, don’t underestimate the power of social media. Set up profiles on social media platforms like Instagram and Facebook and showcase your products, special offers, and client projects. You can also consider hosting events or workshops at your store as well, where potential customers can interact with your products in person.

With a little creative thinking and effort, you’ll have no problem getting the word out about your new home decor business.

Related: Low-cost ideas to market a new business

Step 9: Prepare to Open!

As you get closer to launching your home decorating business, there are still several steps to take care of. Every business’s needs will be different based on factors like size, location, and business model. These tasks represent some common loose ends that most new home decor businesses will need to tie up before getting started.

Business insurance: This is a must-have for any business. It provides protection against unforeseen circumstances like accidents, natural disasters, and legal challenges. Different types of insurance may be needed based on your specific business operations.

Setting up bookkeeping: Proper bookkeeping is essential to manage your finances effectively. This includes tracking sales, expenses, and taxes, among other financial elements. You might consider using accounting software like Wave Accounting (FREE) or Quickbooks or hiring a professional accountant to ensure accuracy.

Opening a business bank account: Separate your personal and business finances by opening a dedicated business bank account. This makes it easier to track your business finances.

Accepting credit cards: Make it easy for customers to shop with you by accepting credit card payments. This involves setting up a merchant account with a bank or payment processing service like Square or Stripe.

Joining industry associations: Associations like the Home Furnishings Association, the American Society of Interior Designers, or the American Home Furnishings Alliance can provide valuable networking opportunities, professional development resources, and industry insights.

Preparing for the grand opening: Plan a grand opening event to generate buzz and attract initial customers. This could involve special promotions, refreshments, or even inviting a local celebrity or influencer.

Common Questions When Starting A Home Decor Business

How much does it cost to start a home decor business?

Starting a home décor business can feel like a choose-your-own-adventure story. Your store could operate entirely online, keeping costs low, or you may choose to open a franchise or a showroom to display inventory. Whatever adventure you choose can be profitable, but the costs will vary. Expect between $25,000 to $130,000 for a physical storefront. The major start-up costs include retail space, inventory purchases, store build-out and fixtures, permits and licenses, insurance, marketing, and more.

Location costs: One of the biggest expenses will be the retail space. In most cases, you’ll need to provide an initial deposit that’s equivalent to one to three months’ rent. If rent is $2,000 a month, your deposit could range from $2,000 to $10,000. The amount might vary based on location and the terms of your lease agreement. Depending on the space, renovations may be costly.

Inventory costs: Stocking your store with high-quality home decor items is crucial. Depending on your supplier and the range of products you’re planning to offer, this could set you back $10,000 to $100,000 initially.

Furnishing and setup: Tables, shelves, cash registers, computers, and initial utility setup could add another $5,000 to $10,000 to your starting costs.

Business registration: Expect to pay around $500 to $1,000 for various permits and licenses. This varies by jurisdiction and could be more if you’re dealing with complex zoning laws.

Insurance: Initially, you may have to pay for liability insurance and property insurance upfront, which could be around $1,000 to $2,000 in total.

Marketing: For the initial launch, you may spend around $2,000 to $5,000. This includes everything from a grand opening event to initial online advertising to attract your first customers.

Miscellaneous costs: You might also have smaller costs, like office supplies, that can add up. Factor in an extra $1,000 to $2,000 for these.

It’s also a good idea to have 3-6 months of operating expenses in the bank as a buffer. This gives you additional funds to cover costs before establishing consistent sales and cash flow. Having sufficient capital upfront is key to successfully launching a home decor business.

How profitable is a home decor business?

According to industry statistics, a typical home decor store generates an average annual revenue of about $500,000. Taking into account standard industry profit margins and expense ratios, a rough profit estimate can be calculated. A

The math breakdown is:

$500,000 in annual revenue x 40% gross margin percentage = $200,000 gross profit.

From this gross profit, you would then deduct your operating expenses such as rent, salaries, utilities, marketing, and other costs. Let’s say these expenses amount to $125,000 for the year. This would leave you with a net profit of $75,000 ($200,000 – $125,000) for the year.

This simplified estimate uses industry benchmark ratios to demonstrate how a home décor retailer with $500,000 in annual sales could potentially achieve $75,000 in pre-tax profit. Performance would vary based on actual sales and cost management. But these standard industry formulas provide a reasonable indication of the profit possibilities for a home decor business owner.

What skills are needed to run a home decor business?

From accounting to purchasing, styling a showroom, and delivering items, having a base set of skills will help your business be successful. The skills listed below will help operations run smoothly if you operate online or face-to-face with customers.

An eye for design: Customers rely on the expertise of home décor businesses to help them find the perfect piece to match the style and needs of their home. Understanding design elements and what works versus what clashes are essential skills for staging your showroom. An eye for design also helps to sell items and counsel customers through purchases.

In addition, being able to style and place items pleasingly and functionally looks great and helps your marketing efforts. Professional-looking pictures for your website or social media accounts enable you to market your products and draw intrigue.

So, although you don’t need a degree in interior design to start this business, it doesn’t hurt to have a keen sense of style, taste, and design terminology to help your clients get the look they’re after.

Management: A home décor business requires organization and management. For instance, some areas needing management include appointment scheduling, deliveries, inventory purchases, employees, and item staging.

So, being able to organize the business’s countless tasks makes the difference between chaos and calm. Fortunately, organization is a skill that can be learned, and planners, apps, and calendars are helpful tools that keep your business on track.

Negotiation and sales: A major part of home décor businesses is negotiating for items from sellers and reselling the inventory at a higher price. Therefore, negotiating and selling are valuable skills to help you acquire the perfect items and sell them for a profit.

Marketing: A well-rounded marketing plan contributes to your business’s success. To make sales, you need customers, and marketing gets those customers. If marketing is not one of your strengths, then hiring a marketing expert is an excellent way to get help with planning your advertising and marketing strategy.

What is the NAICS code for a home decor business?

The NAICS code for a home decor business is 442299, which is classified under All Other Home Furnishings Stores.

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?

Final Thoughts

Although home décor businesses have had their challenges the last few years, there is money to be made yet. Many people are returning to in-store shopping, and businesses are increasingly providing an online shopping experience. So as both consumers and businesses meet partway, there is still an opportunity to make money.

How To Start A Home Decor Business

How To Start A Home Decor Business

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I am a serial entrepreneur, educator, business advisor, and investor.

StartingYourBusiness.com is here because of the many clients I worked with who made decisions based on inaccurate and outdated information.

Starting a business is hard, but here you will find the practical tools, resources, and insider tips to help you successfully start a business.

If there is a question about starting a business or help finding a resource, I'm here to help!

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