Unique Consignment in Puerto Vallarta - how to operated a consignment business
Unique Consignment
How to operated a consignment business
Fisrt you need the following steps
-
- Creating a business plan that includes estimates of startup costs, sales revenue, business overhead, and profit ( you need to include all your cost for the operation as your daily or monthly expenses, sep up a contract for your consignees, marketing, employes salary ).
- Choosing and registering a business name and also an effective name to remember
- Opening a business checking account
- Obtaining a business license
- Choosing a location, choose a high traffic location this will help to be located easily and everyone can know about your business
- Purchasing store fixtures, such as merchandise displays or racks, sometimes you can work with other business or remodeling proyects as hotels or restaurants.
- Specialized in a particular market that could be for example antiques.
If you do not already have a location selected for your business, you may wish to start with this important step. Choosing a location is critical to the success of your business, so it deserves some careful thought and a little luck as well! Here are some tips for choosing a good location:
-
- Parking should be close, free (if possible), and plentiful. That will help your new cliente to stop by and check in your business.
- Consider the weather! Your business could suffer if you are in a location that has no covered sidewalks, strong winds, or particularly cool or warm temperatures. Be aware that strong sun in your display windows can damage sensitive merchandise. You should spend some time out of your car during normal business hours, right in front of the location you are considering. Pay attention to wind, temperature, noise, and light. If you are uncomfortable, you may be an an area that pedestrians will avoid.
- Consider the area, particularly the number of people walking by the building. One very simple way to evaluate a location to simply watch the location for an hour or two during a normal business day. If no one walks by, your only methods of attracting customers will be advertising, which can be expensive, or word-of-mouth, which takes time.
- See who your business neighbors are. For example Restaurants or other stores related with you which is ideal!! Look for opportunities to "share" customers with the businesses in the area.
- Look for other activities that may attract customers to the location. which creates a steady flow of people walking by the store.
- Pick the best location, but make sure you can afford it! Sing a contract with your Landlord for specif time ( my own advice at least 5 years or so). If you think you have found an ideal location, but the rent is too high, try to find a similar location in an area of lower rent.
- Tidbit for furnitures consignment stores:
- Find out the new develops building in your area and advertise your business as an option to buy and decored.
- Having other consignment stores nearby may help, as many consignment shoppers like to do "tours" of several shops.
- With some hard work and a little luck, the right location can be found. Now on to the rest of the business!
Before you can make your first sale, you need to organize your business, and collect items from consignors for inventory. You need a system for keeping track of consignor accounts and the items they have consigned with you. Here are suggestions for a basic consignment business system:
-
- Plan your consignment policies and decide what your business will and will not accept for consignment. Decide:
- What items you will accept for your inventory (new, pre-owned, estate, etc.)
- What your pricing policies will be (typically 30% of retail for pre-owned items)
- What your consignment period will be (90 days is common or under your own terms)
- What will happen to expired items (usually returned to consignor or donated to charity)
- What your return policy will be (typically - "All Sales Final, No Returns")
- What your consignor split will be (40-60% is typical)
- What forms of payment you will accept (cash, credit cards, personal checks)
- Whether you will require consignors to make appointments or allow "walk-ins" (Nine Lives strongly suggests "By Appointment Only")
- Begin an account list which keeps your accounts in order. Assign an account number to each account. Start numbering accounts at a large, round number, such as 1000. Your first consignors will be more comfortable with numbers that make you look less like a new business. Collect the following account information:
- Account Number
- Most Recent Item Number
- First and Last Name
- Phone Number (work and home)
- Mailing Address
- Email Address
- Keep track of intake of items using an intake sheet, which is a form with spaces for consignor and item information. This is also a great place to present your consignment policies, store hours, and contact information. Remember to include a place for your consignors to sign the form. The intake sheet is actually a contract between your business and the consignor. The consignor's signature indicates that they agree to your policies. This is important if any problems arise during or after the consignment period.
Consignors will need a record of items they have consigned with you, and a copy of the intake sheet is ideal for this purpose. Two-part NCR paper (the kind that makes a copy for you automatically) is great for intake sheets, but expensive. Your first intake sheets can be written up using ordinary carbon paper to create the consignor's copy.
A three-ring binder is an excellent place to put intake sheets, because it allows you to easily add new sheets to existing accounts. Plan on keeping about 50 active consignor accounts in a single one-inch binder.
Keep the account information handy. Consignors will frequently contact you for the latest information on their items. You will make a better impression and enjoy more repeat business if you can answer their questions quickly and accurately.
-
- If you have items of your own to consign, the first account you open should be your own. Most consignment store owners will eventually purchase items that they intend to consign themselves, so it is a good idea to go ahead and be the first consignor in your store even if you currently have nothing to consign. Use an intake sheet to open your account, and file your sheet in your account binder. Add your name and number to the account list.
- Be prepared for your first sale with sales receipts. Sales receipts are available in "books" from office supply stores. A book of 100 will last for weeks in a new business.
Most receipts are already numbered. If the receipts are not numbered, use a simple numbering method to create your own numbers. Nine Lives uses the date (without the slashes) and then the number of the receipt for that day. For example, on May 25, 2009, the third receipt is numbered 05252009. It is easy to remember and easy to match receipt numbers to dates. You may wish to number a few slips in advance so they will be ready to use during a busy period.
- Consignors and Inventory
Most consignment businesses cannot open until they have enough inventory to offer shoppers a reasonable selection. Your initial inventory must be large enough to satisfy your shoppers, but not so large that you have to wait too long to open your business while you collect it. Plan on spending your first month or two collecting inventory, not running the store. Use this time to take consignment appointments and organize your store.
As you work with your first consignors to start your inventory, practice your skills for the day your business opens:
-
- Stick to your policies! The inventory you accept will be with you for months, and it sets the quality standards for your business.
- Learn to evaluate your inventory! Be critical and detail-oriented. Don't let your future customers catch flaws in the inventory that you should have seen.
- Ask for referrals - suggest to consignors that they tell their friends about your new business.
- Ask about competitors - consignors are frequently your best source of information about other businesses in your area. Ask consignors about pricing, their favorite stores, what they like in a consignment store.
- Ask for help on pricing. Consignors know what the original prices were on most items they consign. Use this information, and your policies to set the price for each item. Price items as high as you can, but remember: pricing too high will stop sales! In the beginning, try to price some items high, and some low, to determine where your market pricing level lies. Over time you can develop a sense of how to pick the best prices for all of your different types of items.
Label everything in inventory. Nine Lives uses heavy paper for inventory tags, with the store logo on each tag. Inventory tags should include at least:
-
- Account and Item Number
- Date item was placed on display
- Item description
- Item price
Nine Lives adds brand, material, size, and color to their inventory tags to make it easy for the customer to evaluate the item.
Inventory tags can be attached to items with small "guns" which "shoot" a plastic tie right through the tag and into the item material, or into holes in the item.
Location of inventory tags will be different depending on the item, but be consistent. For example, on men's shirts, always attach the tag to one sleeve, either left or right. Customers will appreciate finding the tags easily while shopping.
Before you open the door for the first time, the store must be well stocked with inventory, and it must be clean, well organized and attractive. Your inventory should be grouped logically
- Customers and Sales
When opening day arrives, you must be ready to make your first sale. Prepare yourself for business with:
-
- A "bank" of cash and coins large enough to handle a day's worth of sales. Use your own judgement on the amount of cash to have in the bank, but plan on having about one quarter of anticipated sales. For example, if you anticipate selling one thousand dollar's worth of items, have a two hundred and fifty dollar bank.
- Sales receipts.
- Credit card receipts, if you accept credit cards.
- A calculator to total sales receipts.
- A tax table, if your area requires sales tax.
- Brochures listing your policies and business information.
Soon your first customer will arrive!
When making sales, follow these steps:
-
- Clip the inventory tag off of each item.
- Date and number the sales receipt, and indicate form of payment - Cash, Credit, Check
- Enter a short description of each item on the receipt, and the price of each item. Make sure you enter at least the account and item number.
- Add up the subtotal, calculate tax (if any) and place the grand total at the bottom of the receipt.
- Now is the time to state your return policy!
- Collect for the sale, and give the customer their copy of the receipt.
- Staple the inventory tags (and credit card voucher, if you accepted a card) to the store copy of the receipt, and file the completed receipt.
End of the Day
At the end of the day, you need to organize your sales receipts, count your cash, and update your consignor records.
- Separate your receipts into cash, check, credit and mixed groups. Total each group.
- Count your cash, and verify that your cash sales match the extra cash you have in your "bank." Set the extra cash aside to be deposited.
- Add the totals for cash and checks together. This is the amount you will deposit.
- File the totals so you have a record of today's sales.
If you have a manual system, check off sold items on each consignor's intake sheet, noting the sales price if it is different than the listed price.
Handling Expired Items
Every week or so, check your inventory for expired items. Items that have been in your store longer than your consignment period must be dealt with. If items are not selling, follow your item return policy. Get those slow movers out of your store!
Keep your inventory as "fresh" and up-to-date as you can. Shoppers remember items longer than you might think, and a store full of items that never sell creates the wrong impression (not to mention how it hurts your business!). Some items may take longer to sell, such as expensive items, or items that are not seasonal. These items can be extended for additional consignment periods to give them extra time on display. If you extend an item more than one time, however, it is probably a sign that that particular item is not interesting to shoppers. Consider returning the item to the consignor to make space for new inventory.
End of the Month
After the last day of every month, it is time to total the month activities and pay the consignors.
For stores with manual systems:
- Add up the grand totals of your sales. This number is used to determine your profit.
- If you collect sales tax, total the taxes collected as well.
- Work through your consignor accounts, adding up sales for each account. Apply the split percentage to the total.
- Write a check for each consignor.
- If you collect sales tax, write a check for collected taxes to the proper agency.
- Create a "monthly summary" page listing your sales, taxes, totals of checks written to consignors, and the total of other expenses for the store, such as rent.
- Total the page - the final number is what you need to calculate to determine if your business is generating a profit.
Congratulations!
You have just launched your business. Of course, there is much more to running your business than this, and more information will be added to this manual over time
About the Author
Gerardo Lopez
