Is it profitable to sell clothes online?
Start your own business with a second-hand shop
If you want to start your own business with a second-hand shop, you really don't rely on a 'used' business idea! On the contrary: Second-hand is in vogue, and the potential demand for certain products is correspondingly high. Traditionally, children's clothing and textiles are at the top of the list of offers in this area. More and more people want to buy second-hand everyday items for reasons of cost and with a view to conserving resources. The money saved can be invested in other things and quality losses are unacceptable if the goods are not yet damaged. With the good feeling of having done something for the environment, there is a certain satisfaction for buyers. But which goods can be sold in the second-hand shop? Which formal and strategic aspects have to be considered when setting up a business? The following article is intended to be a compact practical guide for the project 'becoming self-employed with second-hand shops'.
Starting a business with a second-hand shop: topics for planning self-employment
- Analysis of the initial situation and assessment of opportunities
- Consider location, target group and offer together
- individual business appearance with high customer benefit
- Costs and possible financing options
- Opening a second-hand shop: formal requirements
- Advertising and insurance aspects
Second hand as your first choice? Analysis of the initial situation
The market for used goods represents an environment rich in prospects. A sustainable business model can be built up through a clever strategic placement in the right location. In general, the willingness of Germans to buy second-hand goods has increased in recent years. The large number and very frequent frequency of flea markets is a further indication of this development. For 2010, the Federal Statistical Office reported a total turnover of 839 million in the area of second-hand goods. This should now be well over 1 billion euros. In the same year 2010, more than 14,000 people were working in this branch.
The business idea must take on specific features at the beginning
So it is a significant economic factor or a potential not to be underestimated in the field of commerce. However, the competition in the clothing sector is quite big. If you want to start your own business with a second-hand shop, you should be clear about which goods are to be sold. Only with this necessary specification can the business idea take on clear features. It is important to organize these in the business plan, plan them in a target-oriented manner and underpin them with realistic figures on sales and financial requirements. In the business plan to be drawn up, it must be clear what the special opportunities of the second-hand shop are. Only in this way will it be possible for start-ups to inspire or ultimately win over external investors for their own business idea.
Take a holistic view of the location, target group and offer
As already indicated, it must first be decided what should actually be sold in the second-hand shop. With this question, however, the personal passion for certain things should take a back seat. Rather, it is important to immediately think as an entrepreneur and the location and the targeted audience to consult. What is the competitive situation like at the location? Which business areas allow you to successfully occupy the second-hand sector? What about purchasing power and age structure? Are there many families so that the offer can go in this direction?
With a view to the premises for the second-hand shop, good accessibility is extremely important. It should not be forgotten that particularly environmentally conscious customers will value good accessibility on foot, by bike or by public transport. A location in a busy shopping street is ideal, so that a certain flow of customers can be expected every day. Of course, such a location causes higher costs (possibly also due to the rate of business tax), but these are justified from a business point of view by a sustainable income base.
A specialization (niche strategy) should be examined
In principle, almost anything could be sold in the second hand shop, provided that the quality the goods make this seem sensible. However, a wide range in this area immediately gives the impression that it is a 'leftover ramp'. It is therefore more promising and easier to plan to successfully occupy a certain product niche. Apart from the clothing already mentioned, jewelry, furniture, children's toys or electrical appliances could also move into the business focus. When putting together the range of offers, it is important that there is a demand or target group for it at the location. This shows once again that forward-looking start-ups should always take a holistic view of the location, the target group and the range of services of a second-hand shop.
Effective advertising: give the second-hand shop an individual face
The second-hand image has changed in recent years. In this context, it is no longer just a question of cheap. So can definitely high quality and formerly high priced products be sold in the second-hand shop. There is usually a wide range of buyers for this. Many customers are ready to indulge in a certain luxury, since the used product is much cheaper to buy. Anyone who goes into business for themselves with a second-hand shop should ensure an individual and effective appearance in every respect. This is achieved on the one hand through the range of products, on the other hand through the external and internal design of the second-hand shop. This has an enormous influence on the perceived quality and the shopping experience for customers.
It must be in the interests of every business start-up, if possible high profit margins on sales of second-hand goods. In this respect, a second-hand clothing store can look as appealing as a boutique. The big advantage is that the goods in the second-hand trade can always be examined directly in order to determine any defects. This would not be the case with online trading, which is why internet sales, which are also open in principle, are less suitable. The presentation of the goods should therefore be carefully considered and professionally staged. In this way, the opened second-hand shop can ideally also convince those customers who are rather skeptical of this shopping alternative. The presentation is a central form of advertising and customer acquisition in this area. An appealing website, flyers, advertisements in local print media and activities on social media platforms can increase awareness of the second-hand shop and strengthen the sales base.
Selling and buying: where should the goods come from?
Entrepreneurial thinking in the form of profit orientation must already be recognizable in the business plan. When calculating sales, profit margins should be set that are realistic and as large as possible. To do this, however, it must be known where the used goods are to come from. If there are trading partners, the pricing conditions are more or less known. In many second-hand shops, however, buying is an explicit part of the business model. To become self-employed with a second-hand shop means first of all buying the goods yourself as cheaply as possible in order to then be able to sell them on at a profit with a premium.
Price and quality of second-hand goods
When buying second-hand goods, not only the price but also the quality is decisive. Depending on the target group, location and pricing strategy, damaged goods may not be bought in the first place. Otherwise, the purchase price would be so low that it would hardly be possible to make a profit through the sale. The process of purchasing, which will have a permanent place in most business models, should be carried out with clearly defined criteria and processes so that a certain degree of predictability arises with a view to prices. Under no circumstances should there be a lot of arbitrariness here, which can only damage your own quality standards.
Costs & Financing
For the rent, the equipment of the shop and possible renovation work, large sums of capital will sometimes have to be raised. If the goods are purchased through retailers, the entrepreneur has to pay in advance. In addition, there are fixed costs for rent, energy, any employees and advertising. In addition, there are costs for any advice and bureaucratic formalities: First and foremost, the possible costs for the share capital to be brought in, depending on the legal form chosen, or notary costs are to be mentioned. It quickly becomes clear why precise planning of the costs in the business plan is essential, as otherwise the overview and, above all, the necessary control over the finances that are critical to success are quickly lost.
Most founders will not be able to cover everything with equity, so Borrowed capital will be necessary for the implementation of the business idea. Possible sources of funding or financing for self-employment with a second-hand shop are, for example:
- Start-up grant from the Federal Employment Agency
- KfW loans for start-ups (ERP start-up loan 'Startgeld')
- special funding programs from the federal government or funding from the EU
Opening a second-hand shop: formal requirements
If you want to open a second-hand shop, you only have to expect very few hurdles. A special qualification is not necessary, but is strongly recommended. Starting your own business with a second-hand shop requires commercial knowledge with a view to trading, bookkeeping and especially pricing. An apprenticeship as a retail salesman with relevant professional experience is ideal.
Before the second-hand shop can open, a business must be registered. As a rule, a permit requirement is not to be expected. This would result from the range of services that must be described on the business registration form anyway. Legislators generally place higher personal and professional requirements on the founder when it comes to a security-relevant or very sensitive area. As a rule, this cannot be assumed in a second-hand shop.
As far as the premises are concerned, a change of use may have to be applied for: Structural measures must be discussed with the responsible person in good time Building authority agreed so that there are no delays and the schedule from the business plan can be adhered to. Entrepreneurs operate a trade. Accordingly, the legal framework for the retail trade with regard to opening times and the obligation to display prices must be observed.
Sensible insurance protection for starting a business
Depending on the range of products and the size of the business, the insurance needs should be individually tailored, ideally with independent and professional advice. A public liability insurance protects against financial claims if customers are harmed in the store by products or the furnishings. In this regard, legal expenses insurance can also be an option worth considering. Furthermore, inventory insurance can be useful if there are goods with a considerable total value in the warehouse.
Starting your own business with a second-hand shop: Summary for setting up a business
- The economic opportunities and prospects for trading in used goods are good, because many people are considering this cost-saving and resource-saving option
- The range of offers should be coordinated with the location and the target group in mind. A niche strategy is also a good way of realizing quality-oriented business management
- In addition to selling, buying second-hand goods will also be part of everyday life. Negotiating skills and forward thinking are required here in order to achieve the highest possible profit margins
- In addition to all strategically important business areas, the finances in particular should be carefully planned in the business plan and all possible funding options examined
- Open a second-hand shop: before starting business activity, a trade must be registered for which, as a rule, no separate permit needs to be obtained.
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