If you know how to manage your inventory and finances, then you are likely to make a gross profit of 25% to 40% after you factor out all the costs of running a toy store. But it’s possible to make more profit from your toy store if you learn the fundamentals of how to start a toy store from a professional. Fortunately, we will be providing you with pro tips on how to start a toy shop business through this article. We will also provide you with the necessary toy store insurance requirements you need to boost your physical and online toy store income. In between you will find pro tips recommending you on which insurance companies to buy these policies from. We are positive that by the end of this article, you will be confident enough to start and open your toy business either from home or online with minimal finances.

How to Start a Toy Store

Most people assume that starting a toy store is as easy as making your bed in the morning. After all what you need are toys, a store for hire, some display shelves, a cashier book and some PR. Well, it is not that easy. If you are planning to start your own toy business you must learn how to do it like a pro. Fortunately, we got you covered with a comprehensive guide on how to start a toy store business. Here is a rundown on the steps you ought to follow before you open your own toy store.

Identify and Explore a Niche on the Market

We need not remind you that there are 16,637 toy store businesses in the USA. Though, the number isn’t that large it doesn’t mean that there is no competition. If you are to thrive and monopolize on your target market, you must identify a niche and utilize it for your own benefit. You can do this by:

Learning Every Business-Related Detail About Your Competitor

Never forget that your competitors will always serve as a source of inspiration or hindrance. Whatever you choose is up to you. So, make sure that you take your time to know your competitors when it comes to business related details. You should find answers to the following questions:

  • Who is their vendor or supplier: It’s important to know where your competitors source their toys from so that you either source from them too or you look for another cheaper and better alternative.
  • What do they lack that your target market wants: You can capitalize on what they don’t sell and sell it.
  • How do they make profits: You modify their strategies to make more profits for your business.
  • Who is their biggest buyer: You want to know the answer to this so that you look for a better deal to offer their customer.
  • When do they make sales the most: Which day of the week, month or season do they make profits the most. By knowing this you will know whether you will operate full-time or part-time.
  • How do they advertise their business: How do they reach their target market. Are their advertising strategies cost effective?

Make a Feasible Budget for Your Toy Store

If you are to successfully start and run your toy store you must come up with a realistic and feasible budget. You must estimate how much you will spend daily, weekly and monthly to run your business. You must also inquire from your state’s Department of Revenue on the tax you are likely to pay for your small business. It’s important that you have an idea on the approximate amount of money you are likely to spend while setting up your toy store

Below is a table showing the minimum and maximum costs of starting up your toy store business.

TYPE OF EXPENDITURE/EXPENSES MINIMUM COST MAXIMUM COST
Rent $1000 $80,000
Software $25 $300
Inventory $50 $5,000
Website $12 $200
Advertising and marketing $75 $5,000

 

Choose a Business Name

When selecting a business name for your toy store, aim for a catchy and memorable title that resonates with your target audience. Consider names that evoke a sense of joy, playfulness, and imagination. Brainstorm words related to toys, games, childhood, and fun, and combine them in a creative and straightforward manner. Make the name easy to spell and say so customers can remember and share it. You’ll stand out from the competition by choosing a name that captures your store’s character and appeals to both kids and parents.

Also take into account its suitability for online presence and marketing. Check if the domain name for your website is available, as having a consistent online presence is crucial in today’s digital age. Moreover, consider how the name will look on signage, business cards, and promotional materials. Avoid lengthy or complex names that may be confusing or hard to remember. Instead, opt for a concise and engaging name that reflects the heart of your toy store and creates a positive impression on potential customers.

Incorporate Your Toy Store to Form a Legal Entity

This step is optional yet very critical. You can choose to run your business as a sole proprietorship or incorporate it into a legal business entity. We advocate that you consider the latter. Through corporations, your business assets and your personal assets become legally separated. This means that in the event your business is unable to settle a debt or goes into a financial crisis, the creditors and any other party cannot use your personal assets for compensation. You can either choose to establish your business as a:

  • Limited liability company: You get to benefit from the pass-through taxation under this legal entity.
  • C corporation: Under this corp, shareholders can easily transfer their shares. There are also no restrictions on who can and cannot hold shares.
  • S corporation: Through this corporation you can easily transfer ownership of your business and gain from pass-through taxation.

Register With the Internal Revenue Service

To legitimize and streamline your toy store business, register with the IRS. An Employer Identification Number (EIN) is required. It proves your business’s tax compliance and legality. Second, with an EIN, you can hire people, expanding your team. The EIN allows you to open a company bank account and keep correct financial records. Toy store finances and operations depend on IRS registration and EIN acquisition.

Your toy store business becomes respectable and organized by getting an EIN and registering with the IRS. This method shows your tax compliance and allows you to hire personnel, enabling growth and expansion. An EIN lets you open a business bank account, separating personal and corporate finances and making financial administration easier. This vital step ensures that your toy store runs effectively and meets legal and financial criteria.

Acquire the Relevant Toy Store Business License and Permits

The consequences of operating a toy business without the necessary licenses and permits are but not limited to: Arrest, lawsuits, business closure, penalties and fines. For you to start and run your own toy store in any state you must obtain the following licenses and permits:

  • Business tax ID: You can obtain this license by registering online on the official IRS website.
  • Certificate of occupancy: You must obtain this license for you to occupy and run your toy business in a commercial building.
  • Doing business as license (DBA): You can obtain this license from your county clerk office or from your secretary of state’s office. The application fee for this license ranges between $10 to $100.
  • General business license: You can apply for this license from your secretary of state’s office or from a state certified local agency that regulates businesses in your city or county.
  • Sales tax permit: Your state’s Department of Revenue will issue you with this permit. The application fee for this permit ranges between $0 to $100.
  • Home occupation license: You must purchase this license if you will be running your business from home. The application fee ranges from $25 to $250.
  • Sign permit: You ought to purchase this permit if you are to set up a sign for your toy store business. The cost ranges between $50 to $250.
  • Fire department permits: If you deal in highly flammable toys, then you must apply for this license from your local fire department. The application fee ranges between $50 to $100.

Protect Your Business Assets by Purchasing the Necessary Toy Business Insurance Policies

We bet you didn’t know that there is a toy that sells at $8.5. The Astolat Dollhouse Castle is the most expensive dollhouse toy in the world. So, if you think that toy stores are risk free when it comes to theft, burglary and arson, then you are wrong. And even if you don’t sell this type of toy, we bet your inventory is worth something. Thus, to avoid shutting down your toy shop after the occurrence of an insurable risk, it’s vital that you purchase the necessary toy store insurance policies. Below is a list of some of the indispensable toy store insurance coverage:

  • General liability insurance: Best to purchase this policy if you sell, distribute or manufacture toys to other legal entities or customers.
  • Professional liability insurance: Its important that you purchase this policy if you or your employees provide professional services to your toy store clients.
  • Commercial property insurance: Best if you operate in an area where theft, vandalism, arson, windstorms and hailstorms are rampant.
  • Commercial auto insurance: You should purchase this policy if you will be using a vehicle to conduct your business activities or operations.
  • Workers comp insurance: You must purchase if you plan to hire employees in your toy store
  • Business owner’s policy: Best if you are on a tight budget.

Develop Ideas to Boost Your Sales

Please remember that it’s not everyday that customers will purchase a new toy. Thus, it’s important that you come up with strategies that are sure to boost your sales if not compel your customers to make purchases frequently. You can do this by:

  • Adopting a sale driven toy arrangement in your shop. Put fast-moving toys on the middle shelves and slow-moving toys at the bottom shelves.
  • Offer reasonable discounts to your customers. For instance, you can come up with a policy where one gets a 5% discount if they purchase two or three different toys.
  • Come up with customer loyalty programs where customers gain redeemable points each time they make a purchase.
  • Set specific days where you sell your toys at a lower price. Mondays and Tuesdays are the best days to do so. Don’t choose weekends as you are likely to make losses.

How to Start an Online Toy Store

According to Statista, the number of people who own smartphones in the world is approximately 6.92 billion. At least 2.64 billion people shop online. This means that you already have access to billions of customers if you learn how to start and run an online toy store. Below is a rundown on the steps on how to start an online toy store.

Choose a Good Name for Your Business and Register It.

Your business name sets you apart from your competitors. It is also your identification mark among your existing and new customers. So, make sure that you choose a business name that acts as your business foundation if not your trademark. When choosing a name for your business, please make sure that it’s easy to pronounce, remember and spell. It’s also important that you choose a business that no other legal business entity uses. Consider patenting your business name. By doing so you will ensure that you alone hold the right to use and franchise it.

You can only process payments for your online store if you have an employer identification number (EIN). And for you to get an EIN, you must register your online toy store as a business entity in your state. You can either choose to register it as a sole proprietorship business, a limited liability company, or as an S or C corporation. Please note that through incorporation, your business and personal assets become legally separated.

Thus, we highly recommend that you incorporate your online business, especially if you operate in high-risk areas. By doing so, you will protect your personal property/assets in the event a client sues your business or if it goes into debts. Please note that the business name registration process differs from state to state. Thus, it would be best if you contact your state’s secretary of state for further advice on how to go about this critical step.

Identify Your Target Market Wants and Find Solutions to Resolve Them

You must know what your target market needs and wants are and come up with solutions to solve them. You can do this by conducting online surveys, asking them personally or checking reviews on your competitor’s website. Please focus on the current trends when solving your customers’ toy needs and wants. Here are several ways to gain information and fix your consumers’ toy issues:

  • Online surveys: Survey your target audience online. Focus surveys on toy preferences, interests, and pain issues. Ask them about their favorite toys, features they seek for, and any difficulties they have buying toys for themselves or their children. Create and distribute surveys using Google forms or surveymonkey.
  • Personal interaction: Interact with customers in-store or on social media. Openly discuss and listen to their ideas. Focus groups can reveal their preferences and inspire toy improvements.
  • Competitor analysis: Check your competitors’ social media and website reviews. This can assist you discover what clients like and dislike about existing products and where you can improve.
  • Trends: Follow toy business trends. Track your Target market’s favorite toys and themes. Movies, TV, video games, and culture can impact trends, so adapt your products.
  • New toy solutions: Use survey and consumer data to create new toy solutions for your target market. Make innovative, entertaining products. Educational, sustainable, and interactive toys are examples.

Addressing these preferences will not only drive customer satisfaction but also foster brand loyalty, helping your toy store business thrive in a competitive market.

Register Your Online Toy Shop Domain Name

Your business domain name is a unique address for your website. Domain name acts as your business website address, where when your clients click on it, they are directed to your online shop or official website. Below are some of the benefits and reasons of why you should register your online shop domain name:

  • Makes your online toy shop more accessible- once a customer clicks on your domain name it redirects them to your online shop.
  • Legitimizes your business- businesses that use domain names look more legitimate than those which don’t.
  • Enhance the search engine optimization (SEO) of your website.

Before you register your domain name, please ensure that it’s catchy, simple to spell and to pronounce. You can either choose to obtain a free or a paid website domain. We recommend that you choose the latter to avoid using a commonly used domain name.

Invest on a Reliable Web Hosting Service

A web hosting is a paid or free service that allows you to post a website page onto the internet. Below are the different types of website hosting services you can purchase for your online toy shop.

  • Website builders: Best for newbie online toy shop owners.
  • Shared hosting: Under this hosting service you get to share one server with a number of other website owners. Best for online toy shop owners who are on a tight-budget.
  • Dedicated hosting: You are the only one who uses the server to post your website onto the internet. Best if you want a fast performing server with minimal to zero interruptions, or if you plan to open a large-scale toy shop.

Design a Unique and Straightforward Website

Simplicity is key when designing your online toy shop website. When designing your business website please make sure that it:

Clearly showcases what exactly you sell: Let your customers know what type of toys you sell. Whether action figures, barbies, stuffed toys, puzzles or developmental toys.

Exudes professionalism when it comes to branding: It’s a fact, people love to judge by what they see. And in this case, they will judge how serious your business is through your website. Hence, make sure that it exudes professionalism. Use simple fonts, minimal colors, high-quality imagery that are relevant to your toy shop. Don’t forget to incorporate your business logo.

Navigable: Remember not everyone is a tech-guru. So, make sure that your business website is navigable to both newbies and veteran digital shoppers. A one or two click website will do the click.

Provide your clients with an easy to find and working contact: Most often people will call or email to confirm whether your online business is legit or phony. Thus, make sure that you provide your clients with working and easy to find contact information. Its best if you provide them with an array of options, please don’t limit them. A phone number or email, live chat or a WhatsApp number will suffice.

Reviews and testimonials: Most digital buyers make a purchase after reading a review or a testimonial. So don’t forget to incorporate a section where your past clients can leave reviews and testimonials.

Invest in a Ecommerce Software

An ecommerce software is an online program that allows you to sell your toys online and also makes it easy for your clients to purchase your toys from your website. There are different types of ecommerce software you can choose from. The type of ecommerce software you choose largely depends on your budget and the size of your online toy shop. You can choose to invest in a:

Platform-As-A-Service (PaaS)

A third party hosts this software. Your ecommerce software provider allows you access to the physical hardware that runs this ecommerce software. You can also access the developer tools, database management, servers and storage space of this PaaS. Most suitable for online toy enterprises that want full and direct control of their client’s data.

On-Premise Platforms

Under this ecommerce software, your business hosts the hardware and software of your ecommerce on-site. You use an internet connection to connect your server and website onto the internet. Under this software, you have total control over the activities and operations of your website. Most suitable for large scale online toy enterprises.

Strategize on How to Market and Advertise Your Online Toy Shop

You have to come up with cost effective ways on how to advertise your online toy shop. Below are a few bulletproof tips on how you can successfully make your online toy shop known to your target market:

  • Use social media handles: The prices of your toys, the types of toys you sell, contact information, delivery periods, payment method and the areas you cover. All these are the relevant details you should post on different social media handles when advertising your business.
  • Engage influencers: Don’t hesitate to have an influencer who is relevant to your target market advertise your online toy shop.
  • Capitalize on YouTube tutorials: You can teach people how to setup the toys you sell or how to clean them. Just make sure that in the description you put a link that will redirect your customers to your website.
  • Give out free products: Give out free toys for the first few days after launching or opening your business
  • Optimize your website for SEO: Use keywords to increase traffic to your business.
About Author

Samuel

Leave a Reply

Your email address will not be published. Required fields are marked *