Starting a Gift Basket Business

Starting a home-based gift basket business can be fun as well as rewarding. Here are tips and resources to get you started.

We all love to receive gifts but when it's your turn to gift someone, it's time for some frustration, moving from store to store and wading through endless gifts, trying to find that perfect one. But thanks to gift basket businesses, one can now choose over a vast selection of creative gifts for virtually any occasion.

Gift basket making is a thriving industry offering lot of creativity, fun and income for the entrepreneur. Although it can be started with little initial investment as a home-based business, it has the potential to grow into a large business within a relatively short span of time.

Getting Started

Majority of people who are into gift basket making have had some experience creating wonderful assortment of gifts. What is most important in this business is creativity. If you were good in crafts or other creative activities, coming up with attractive gift baskets shouldn't be of much problem. However, if you lack such talents, you may also consider partnering with someone who is good at it. That way, you can focus on business building activities like marketing and promoting and your partner can focus on the creative aspect of gift basket making.

The beauty of this business is that it can it doesn't require large office space and can be started from your home office or garage with little inventory. You need some basic equipment like phone, computer, printer, internet connection (if you also plan to take orders on the Internet), which most homes have. You may also want to invest in some basic office furniture like chair, desk, file cabinets and shelves.

You'll also want to invest in a shrink wrap machine to give professional touch to your creations. A basic one will cost you under $300.

Your Target Market

It is very important to narrow down your target market initially. Marketing can eat up most of your initial budget and without devising a proper strategy or knowing who your target market is, you can end up losing more than you attract.

You can either target individual buyers or corporate clients. Individual buyers, in which women constitute a large majority, are easier to target and attract but you have to get lot of orders to make profit. Corporate clients on other hand are more rewarding as a single order can be worth thousands of dollars and they don't wait for any particular season for gifting. But you can't attract them by placing ads in newspapers. A reference or recommendation can get the job done.

Conducting a market survey is often advisable and may include the following basic steps.

1) Specify the limit of area you wish to market.
2) Research the spending patterns and characteristics of your potential market.
3) Figure out the buying capacity of your market. In other words, how much your market is willing to spend on gift baskets.
4) Research your competitors, if they exist, and the volume of business they are doing.
5) Prepare a rough estimate of turnover you can achieve.

There are many government agencies or other businesses within the gist basket industry that have already compiled reports of statistics which may help with your research. Some data however need to be gathered on your own.

Pricing Your Creations

The success of your business will depend a great deal on how you price your creations. Most businesses price too low initially to attract customers but later find it difficult to generate the desired profits. Price too high and you risk losing business. Pricing is a numbers game and should not be guesswork. It'll require some calculations and research before coming on to the right price.

Generally, the pricing should be such that you should take into consideration the wholesale price of the raw materials, overheads, freight, labor and profit. The most important aspect is deciding the labor costs. Decide in advance the rate per hour you wish to be paid and then time yourself for creating your gift baskets. Do not estimate. Some baskets will require less time while others involving more creativity and complexity will require more time. Deciding how much profit you wish to gain is up to you. Most gift basket businesses generally price their creations in such a way that they net profit in the range of 15 to 30 percent.

Promoting Your Business

If your market is small, word-of-mouth advertising along with radio and newspaper can prove to be very effective in reaching your target market. Direct mailing is also another cost effective medium that you must consider.

Local Newspapers. If you are catering to a local market, placing ads in local newspapers can work very well. Many local newspapers also offer free publicity to new local businesses and you must take advantage of this. Getting your business involved in charity or organizing contests can also get free publicity for your business in local newspapers.

Small Market Radio. Small market radio is also an affordable means of advertising. Spot announcements on most small, local stations can be had for under $10. You can also get a bargain if you order package deals. Ask them if such deals are available before ordering.

Direct Mail. Another cost-effective medium used by gift basket businesses to attract customers is direct mail. If done properly, this form of advertising can prove to be very affordable and effective. You can procure mailing lists for direct mailing purpose from list brokers. You can find them through the yellow pages under "Advertising" section. Make sure you buy the list from a reputed source and ask relevant questions like how old the list is, number of times it has been rented over past few months, etc. If needed, contact previous renters of the list to inquire about its responsiveness.

Final Word

Gift basket business is a rapidly growing industry as the market for this business is almost unlimited. If you are looking for ways to start a home-based business that involves creativity and is both fun as well as profitable, then this is the business to be in.

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