Express your inner creativity and put a smile on your customer’s faces with a gift basket business.
Jennifer Powell, owner of Punkin’s Gift Baskets and Boxes, is no stranger to working at home. She started out telecommuting for a company as a government mortgage processor. “My partner moved his business from New Jersey,” says Jennifer, “and took a building with extra space and asked me if I wanted to use the space for a business, So, I opened a gift shop business in the fall of ’99.
Working from a storefront, Jennifer also extended business to online sales. “I started an online gift store at the same time. I don’t really know how it happened. I just kind of fell into it. When interest rates were on the rise in mid-99, I was laid off within two months of moving. My income was immediately reduced by two-thirds. Mortgage processors in my area make only 25 to 35% of what I earned. So I decided to take my chances and threw myself into the gift business full-time.”
Why a gift basket business?
Jennifer always liked coming up with just the right gift. She explains that, “Christmas is my favorite time of year and I’m the one, of 4 sisters, who can really wrap a gift. I like the creativity of it, combining ribbon and paper; patterns and color. I offered free gift-wrapping in the gift shop, year-round, just because I like to wrap gifts. The gift baskets kind of grew out of that. For example, you have a friend who likes teddy bears, so you look for a teddy bear address book and maybe a pen. I just took that a step further and combined an address book, blank journal, pen note cards and coordinating envelopes and a porcelain hinged box all in a teddy bear motif and pre-wrapped it. I thought, hey, this is fun! I’ll be up and going in no time.”
Facing challenges and obstacles in the beginning, Jennifer says, “It was a learn as you go situation. I didn’t have the time to do proper research on the demographics of the area or the industry in general (mistake #2). I no longer had the income to fund this adventure so each mistake, they are unavoidable, was costly. I didn’t know how to price a basket, didn’t know what made them stay together, how to shrink wrap, etc.”
Research The Industry
One of the most important things anyone who wants to start a gift basket business can do is research. Jennifer advises that you first, “Learn everything you can while you still have another job. Go into stores and look at their gift baskets, not only the price and products, but also the mechanics of it. Use the web to see what’s out there. Learn to make a hand-tied bow. Go to the library and check out books or industry periodicals.”
“The biggest obstacle in any gift business is competition,” says Jennifer. “There are tons of places to buy gifts: card and gift stores, online shopping, chain stores, drugstores, etc. You need to set yourself apart somehow. Whether it is hand delivery to the local hospitals or some specialty item or niche product. People need a reason not to just go to Wal-Mart and get a gift.”
Look For a Niche Market
Jennifer cornered a niche market with her “house” boxes. Realtors purchase these to give to their clients for housewarming or thank you gifts. The idea for the boxes came from a real estate industry magazine article that mentioned closing gifts. Jennifer says, “My mother has been in real estate all my life and I asked her about it and she said that it was a fairly new practice. I made up a few different designs and printed a brochure that I left in her office. I received a few orders and some feedback on the designs, made some changes, and now I have a few boxes on display in her office and a link on my website.”
Start-up Cash Requirements
Can you start a gift basket business for under $100? “I don’t think so”, says Jennifer. “With a well thought out plan you could probably start out for under $250. A quality heat gun, roll of shrink wrap, 2 rolls of wired ribbon, heavy duty tape and a turntable are going to use up your first $100.”
Pricing Your Baskets
There are different methods of pricing. Some use a mark-up percentage of the combined cost of the basket, products and filler. Others add a flat fee for the labor to construct the basket. “I use a hybrid system depending on the client and the gift,” says Jennifer.
What does the future look like for Punkin’s Gift Baskets and Boxes?
“We decided to close the actual gift store. It was just not profitable and took all the fun out of making the baskets. I’m strictly referral and online business now. I do some online advertising, mostly banner exchanges. I will be looking into more of it now that the store is closed. I’m also looking into setting up a complete online storefront. That does require an initial investment though, so it may have to wait a month or so.”
Jennifer give this advice to anyone wanting to start this business: “Research your market and your customers. And don’t be shy. Tell everyone who will listen about your new venture. Don’t bore them to tears with the details, keep it short and to the point. Your answer to: ‘Hi, how are you?’ should not be, ‘Fine, how are you?’ It should be, ‘I started my own gift basket business, here’s my card. If you need anything, call me!’ If they want to know more they’ll ask. Think of the gifts in terms of what you would like to receive. What would you rather have a large extravagant basket with only a few products in it or an inexpensive basket overflowing with beautiful products?”
- Festivities Publications, publishers of Gift Basket Review Magazine and other books and videos about the industry.
- burton & Burton is a wholesale florist, balloon and basket supplier.
- Your state’s Department of Revenue. Many wholesalers require resale or tax exempt status before allowing orders.
A little creativity and a lot of hard work greatly increase the success of your home business. Learning by making mistakes can help you make your business grow. Start slow and invest your time into research. The more you know beforehand, the better equipped you will be when facing your own challenges and obstacles.
ABOUT THE AUTHOR
Brett Krkosska provides how-to advice on small business and home-based work issues. He is the founder of HomeBizTools and the publisher of Straight Talk, a syndicated column that offers a unique perspective on today’s business issues.