How To Make Executive-Level Earnings With Giftbaskets
Finding the "perfect gift" for a special occasion is, for
many people, an exercise in frustration. Going from store to
store only to find exorbitant prices or poor quality merchandise
can take most of the pleasure out of gift giving. Too often we
settle for a gift that isn't what we want to give simply to be
done with the whole process. Wouldn't it be great to have a
selection of creative gifts to suit any occasion?
Gift-giving isn't just a seasonal concern -- there's always
an occasion. And today, many people are taking the matter into
their own hands by creating affordable, unique gift ideas. These
people have discovered the exciting new business of custom-made
Gift basket making has become a rapidly expanding cottage
industry, allowing the entrepreneur to have fun, be creative, and
make livable profits. The business of making gift baskets
requires a small initial investment as a home-based endeavor and
can grow into a multi-employee operation in a relatively short
time. For the enterprising and creative person it is a great way
to start a small business with an unlimited market.
Starting a gift basket business as a home-based operation is
an ideal way to begin since a lot of equipment is not necessary
and there's no rent to pay on office space. The biggest expense
could be a car to be used for delivery of the gift baskets.
Utilizing existing shelving and garage space for storage also
helps this home-based business cut down on expenses.
Some people have found that by working an average of 25
hours a week an annual gross of up to $15,000 is possible. Of
course, profit depends on individual initiative and efficient
marketing. Once a handsome "home-generated" profit is realized,
an expansion to a larger gift basket service could mean a sizable
In order to begin a profitable venture in the gift basket
business the individual entrepreneur must be well prepared. If
the business is to be, at least initially, home-based, several
basic steps need to be taken.
(1) Find the appropriate inventory at affordable prices.
(2) Create gift baskets that are not only marketable, but
more pleasing and affordable than those of the competition.
(3) Develop an efficient system of delivery as well as
selling retail for customer pickup.
(4) Price gift baskets for the highest profit.
(5) Promote the business at minimal expense.
These initial steps are not all that difficult. They will
require time, a small monetary investment, and even a little
experimentation. Once you develop a system for making gift
baskets, you can begin to be more creative, making specialized
"theme" baskets filled with exotic treats that will increase
demand by your market.
Most people getting into the business of gift basket making
have some experience at creating these delightful gifts. As a
hobby, these people have made baskets for relatives and friends
as gifts for special occasions. Creativity is essential. If you
are skilled, or have some experience, in craft oriented ideas,
creating unique and irresistible gift baskets shouldn't be a
problem. However, the person who has no practical experience, and
who is not "naturally artistic" might do well to hire a creative
friend or relative as a partner in this business venture.
It's a good idea to test your ability to create marketable
gift baskets before you get into the business. You can do this by
purchasing some baskets and basic materials such as gourmet
foods, fragrant soaps, colorful ribbons, exotic teas or baby-care
items for a "new baby" basket.
You need not go to great expense. Get enough items to make
two or three baskets and then experiment. You'll soon realize
what it takes to make individual gift baskets -- patience,
creativity, and imagination. Operating a gift basket service is
most often an endeavor taken by people who relish the creativity
involved in making the baskets. If you plan to establish a one-
person, home-based gift basket service, you'll need the
discipline necessary to perform a professional service. In some
instances, usually during the holidays, you can plan on a
six-day-a-week, 10 to 12 hour a day job. If you know where to
find the customers, and you're willing to put in some long hours,
the pay-off can be quite rewarding.
A gift basket service can be a successful venture operating
out of a home. Since there is no "store" location involved there
need not be a substantial outlay for rent or equipment. Inventory
can be stored in existing storage spaces within your home and
garage. You may have to add some shelves for proper storage, but
these can easily be constructed at little expense.
Most homes already have some of the equipment needed for
business use -- a phone and a typewriter. If your phone isn't
equipped with an answering machine, you should get one since
orders may come in while you are out making deliveries. Not much
else in the way of equipment is essential. However, you may want
to invest in some sort of file cabinet and cash box.
Another piece of equipment -- a shrink wrap machine -- will
add a touch of professionalism to your operation. This machine
wraps your baskets in a clear or colored plastic film. Good
shrink wrap machines sell for about $400.
If you need to buy office furniture, don't get carried away.
A small desk and chair, along with your file cabinet and
bookshelves, are all that is really needed. This should be an
expense you can hold under $500.
You'll also need adequate record keeping equipment as well
as stationery, envelopes, business cards, sales slips, invoices,
containers, labels and other miscellaneous items. Most of these
items can be purchased at local office-supply stores. Again,
don't go overboard. Buy only what you need.
Most gift basket orders can be taken at home by phone, and
the finished product can be delivered to the customers home or
place of business. If some of the deliveries are not within
reasonable driving distance, the local UPS can handle the
It is important that you keep a log of all your deliveries.
Be careful to get the full name, correct address and phone number
of the recipient. Should you get lost, you can call and get
directions to put you back on course. Most home business owners
average from 2-5 deliveries per hour. All UPS deliveries should
be logged the same as other deliveries, and you should keep a
record of all postage costs.
Since as much as 80 percent of your orders will come in by
phone, you'll either have to be available or have an answering
machine. Scheduling deliveries for morning hours will allow you
to spend the rest of the working day answering the phone and
arranging new baskets.
If, for some reason, a home-based business is not feasible,
another way to get started in gift basket servicing is to rent a
space or office in your community. Specialty shops are good
locations for a gift basket business because you will be
providing a "special" service.
Renting or subleasing space in an existing shop can be
beneficial to both parties involved. You will be getting adequate
work space for your business while paying a percentage of the
owner's monthly rent.
Once you've decided where you will start up your gift basket
business you'll need to begin making "business" like decisions.
After all, you will be the boss. You'll have to decide how much
time you are going to invest in the business. You can plan your
hourly work week by determining how many baskets you are willing
to make. This is an individual matter. It depends on how much
time you have and how much profit you wish to make.
To be successful in the gift basket business you must offer
baskets that are unique and filled with pleasing and useful
items. You'll need to locate a good source for the type of
baskets you'll be offering, and you'll need to shop for the
appropriate items to fill those baskets.
Initial inventory should be a combination of wholesale and
retail items. The wholesale inventory should be made up of items
to be used in large quantities as "fillers" and in the most basic
basket arrangements. Retail inventory should consist of items
used in making customized or thematic baskets.
Some people getting started in the gift basket business have
taken the initiative to contact various stores and businesses
that offer gift baskets for sale. Through these contacts, new
owners can obtain information on what kind of baskets and themes
work best. The beginner can then create gift baskets based on
what has worked for others.
Most home-based gift basket services purchase baskets
wholesale. Before doing this you must determine the type and size
of the baskets you'll be making. You'll need to know if you'll be
specializing in small gift baskets or large, or a combination.
Depending on your location, you'll most likely need to go to a
large city to purchase baskets wholesale.
As a small, home-operated service most of your customers
will be interested in basic, relatively inexpensive gift baskets.
If the need arises for more elaborate and expensive "designer"
baskets you can purchase those wholesale too.
To begin, you should purchase just a few types of baskets,
such as planters, fruit bowls, baby baskets and candy baskets.
These baskets are most likely to be in greater demand than other
"special" baskets. When ordering baskets, it is a good idea to
ask your supplier for recommendations. This is a good way to
learn the proper styles and amounts of baskets you should have on
hand. Of course, your customers will also furnish you with
invaluable insight into the types of baskets best suited for your
Once you have located and purchased the types of gift
baskets you plan to offer, you'll need to get items to fill them.
Keep in mind the kinds of baskets you are offering. Don't go
overboard on expensive merchandise that isn't appropriate for the
baskets you have in stock. The thing to remember is ... stick to
Since toiletry arrangements are very popular, you should
have a good supply of lotion, shampoo, bath oil, soap, and
fragrant powders. With these arrangements, it is also a good idea
to have in stock several all-natural items, and children's
The initial inventory should also include items for popular
gourmet food arrangements. You can shop around and find an
intriguing selection of teas, coffees, crackers, cheeses,
sardines, oysters and fruit. Some people include wine, beer, and
champagne in these gourmet arrangements, but a special liquor
license is needed to resell these items. That's an expense a
beginner may want to put off until the business is turning a
Your start-up inventory should also include popular items
such as candles, toys, stuffed animals, dried flowers, small
books, stationery, writing utensils, and an assortment of items
such as golf tees, tennis balls, socks and gloves.
Another aspect of gift basket inventory is decorations. With
each basket you'll want to include an assortment of trimmings,
labels and cards. You'll also need a supply of ribbon, artificial
grass, tissue paper, small cards with envelopes and tape. These
items can normally be purchased in quantity, and that can save
money on your initial investment.
To find current manufacturers and distributors of gift
basket supplies you should scan the directories published by many
giftware magazines. You can call or write to any of these
magazines to find out if they have any directories to offer, and
if so, how much they charge. You can also subscribe to trade
magazines to keep abreast of new companies entering the gift
basket supply market. A trip to your local library should furnish
you with ample information about various giftware and relevant
Usually, when starting up, a new gift basket service will
only need a few suppliers. Besides locating these suppliers by
the methods just described, you can attend tradeshows, wholesale
showrooms and conventions. A thorough and patient research of
suppliers will allow you to select the most reliable people to do
business with. You'll also get quality merchandise at the most
When selecting suppliers you should decide whether you wish
to deal with manufacturers, distributors, independent
craftspeople, import companies, or some combination of the four.
These are general categories, but they do describe most suppliers
you will be dealing with.
Many small business operators buy from manufacturers because
their prices are usually the lowest. One drawback to buying from
manufacturers is that your business location may mean high
shipping costs. Buying from a distributor usually results in
paying higher prices than those to a manufacturer, but if the
distributor is nearby, shipping costs are lower and delivery is
Some of the gift basket makers best purchases are made from
independent craftspeople. Since most of their products are made
at home, quantities of specific items may be limited, but often a
working relationship between the craftsperson and gift basket
operator is a profitable arrangement.
Depending on individual attitudes about buying foreign
products, import sources can supply a gift basket service with
both exotic and practical merchandise. The type of suppliers you
use depends on the type of merchandise you plan to market, your
budget, and your business location.
Once you have an adequate inventory of baskets and supplies
you'll need to determine how to price the finished product. Most
first-time business operators find that adding a 100 percent
markup straight across is the least complicated method of
pricing. This percentage of markup normally covers all expenses
and still allows a reasonable profit.
You can determine prices in a more complicated fashion. This
method requires keeping a log of how much time it takes to make
each basket. You'll also need to figure in the cost of the
basket, the "filler" items, and trimmings. If the basket is to be
mailed, figure in postage. If it's to be delivered, add for gas,
mileage and time. Also determine overhead costs, and then decide
what you consider a fair margin of profit. Once you've done all
that, you should be able to come up with prices for each basket.
The most important thing a new gift basket business owner
should realize is that starting slow, with a small inventory is
the most prudent and safest way to begin. It may take about one
year for a new gift basket business to get established. After
that amount of time and experience, the owner should be able to
determine what sells best as well as monthly sales and inventory
turnover. With this information, the owner can decide how much
inventory to carry. If the business is to be profitable, it is
essential to have the proper amount of inventory without an
excessive outlay of cash.
One of the most appealing features of the gift basket
business is the virtually unlimited market. Everyone loves to
give and receive baskets, and gift-giving is an almost constant
The most significant customers for a gift basket service are
women. A large percentage of these women are married with
children and full-time jobs. For whatever reason, these women are
still largely responsible for selecting and buying gifts. Since
women make up the largest percentage of the gift buying market
catering to their tastes and ideas will furnish the owner with a
good source of information about what arrangements work best.
Another important type of customer for a gift basket service
is corporate clients. Often, these customers send gifts to
business associates and their own clients. For corporations and
businesses, gift-giving can present a problem. Most businesses
choose to give gifts not only during the holidays, but in
recognition of employees promotions, retirements, birthdays and
anniversaries. The gifts they choose need to be appropriate and
personal. Gift baskets are ideal for this type of giving.
A new business will have to do some promoting to let
corporate customers know about their gift basket service. But the
effort could be well worth it. Corporate customers could provide
a sizable volume of sales, and on a repeating basis.
Even if your gift basket service is going to be home-based
and in a relatively small community, you will need to have a good
idea of the available market. A decision must be made as to the
customers you will cater to. This will help you determine the
type and price range of your product. In order to understand and
best utilize the available market, you should conduct a market
To conduct a usable market survey, several basic steps must
(1) Establish the limits of your market or trading area.
(2) Research the population within your potential market to
understand spending patterns and characteristics. A population
base of 25,000 is usually a sufficient market for a home-based
(3) Figure the trading area's buying power.
(4) Find out the current sales volume of any competing
businesses in your trading area. If there are no actual gift
basket businesses, determine the sales volume of the type of
goods you will be marketing.
(5) Project a reasonable proportion of the total sales
volume you can achieve.
Many government agencies, trade associations, or other
businesses within the gift basket industry have compiled reports
and studies that will furnish you with much of the market survey
information. Some information you will pull together on your own.
PROMOTING YOUR BUSINESS
One of the most important keys to the success of any
business is marketing. In order to make potential customers aware
of a new business, advertising and promotion are essential.
That's because a new business needs a direct line of
communication about the product to potential customers.
There are many effective methods of getting the word out
about your business. What works best often depends on location of
the business and the amount of money available to spend on
advertising and promotion.
In some cases, especially in smaller markets, word-of-mouth
advertising is responsible for a great deal of business. But, if
the owner wishes to expand the business an advertising and
promotion budget is necessary. The amount budgeted for this
purpose can vary. Many businesses budget advertising and
promotion based on anticipated gross sales. In most cases, an
advertising budget of 2 to 5 percent of projected gross sales has
Most small businesses usually advertise in the following
(3) Direct Mail
(4) Yellow Pages
In smaller markets, word-of-mouth advertising, combined with
the local radio station and newspaper can be very effective at
reaching new customers. Direct mailings are also a good way to
advertise within your budget.
For a home-based business catering to a local market,
newspaper advertising works very well. Most local newspaper ad
rates are reasonable, and a display or classified ad should bring
your product to the attention of a high percentage of potential
Many new gift basket service operators take advantage of
free publicity generated in local newspapers. Most local
newspapers are happy to give write-ups to new local businesses.
You should also furnish the newspaper with any information you
have about contest promotions or charitable endeavors. Anything
about your business the local newspaper can use as "fill" in
their paper, they usually will accept. This is a highly effective
way of getting publicity for your business and catching the
attention of potential customers.
Small market radio is also an affordable means of
advertising. You can get spot announcements on most small, local
radio stations for less than $10 per announcement. Special
reduced rates are usually available if you buy a certain quantity
or "package". Although most local radio stations cover only a
limited area, the coverage is sufficient for your market.
Gift basket business owners frequently use direct mailing as
a means of attracting new business. This form of advertising is
highly effective in that it brings a straight forward sales
message to a high percentage of potential customers. Since
special postal rates are provided for direct mail it is one of
the most affordable forms of advertising.
There are different methods of obtaining mailing lists for
use in direct mail advertising. Some businesses purchase them
from list brokers while other advertisers consult the yellow
pages under "Advertising." Normally, renting a mailing list for
one-time use will cost up to $70 per thousand names.
If you are purchasing a mailing list from a broker, choose
an established service. Find out how often the list has been
rented over the past several months. Also inspect the list
thoroughly. It may be wise to contact some of the previous
renters to find out what success they had with the list.
Another highly effective form of advertising is the yellow
pages. Regardless of budget, an ad in the yellow pages of your
local phone directory is a smart investment. These advertisements
can be creative listings complete with illustrations, or a simple
one-line mention. If possible, get the largest display
advertisement you can afford. Many local customers scan the
yellow pages when looking for a special service, such as gift
baskets. So an attractive yellow page ad is one of the best ways
to advertise a business.
Many small business operators also use brochures to convey
the services they offer to potential customers. These brochures
describe the assortment of baskets you make and contain your
mailing address and phone number as well as outline your method
of delivery. Your brochures can be as elaborate or as basic as
your budget will allow. But they will lend an air of
professionalism to your business as well as describe in detail
what service you have to offer.
The purpose of advertising is to entice potential customers
to try your product. As a gift basket service owner you want to
convince customers that your baskets are the best and most
affordable on the market. Effective advertising and promotion is
the surest way to reach potential customers and clients.
Since the gift basket business offers a product that is
always in demand, the profit potential is impressive. Some home-
based gift basket services have reported gross profits of over
$100,000 a year. And many of these people started their gift
basket services with less than a $2,000 investment.
Even small baskets produce substantial profits. An average
gift basket may cost the business owner from $5 to $10 and retail
for as much as $50. Spare-time operators have reported selling an
average of 10 baskets per day, priced from $35 to $50 per basket.
In a year's time, that could mean a profit of nearly $100,000
with very little overhead involved.
Although the potential profits from a gift basket service,
even with a minimal initial investment of $2,000, are
substantial, you should have an estimate of your potential sales
and profit before you start your business. There are several
factors involved in estimating monthly sales and profit:
(1) Make an estimate of how many people in your market are
viable prospects as customers for your product. In making this
estimate, be reasonable and conservative.
(2) Estimate the average sales you can reasonably expect
from each customer.
(3) Figure out the total yearly sales volume by multiplying
the projected number of customers by the projected amount of
money each will spend.
(4) Project seasonal sales patterns. Each month of the year
should have varying percentages of the total volume, especially
(5) To estimate monthly sales, take the total annual sales
figure from step three and multiply it by the estimated monthly
(6) Adjust these monthly sales estimates by taking into
consideration the start up period. This will be strictly an
estimate if you haven't yet started the business.
(7) Subtract all your labor, materials, and overhead
expenses from the monthly sales estimates. The remaining figure
is your net profit before taxes.
These steps may seem somewhat complicated, especially before
you've started the business. But this projected operating
statement makes good business sense and will give you a head
start on handling your finances once your business is off the
ground. Once the business is in full operation and actual
operating information is available, you can update your projected
operating statement on a regular basis.
The potential for profit from operating a gift basket
service depends on several factors. Most important is the market
of potential customers. The amount and type of inventory you have
to offer along with the creative quality of your gift baskets,
also plays a major role in your financial success. If you are a
disciplined and enterprising person, your potential earnings from
a gift basket service could very well climb into six figures.
Eight contributing factors are measured on a 1 to 10 basis
(with 10 being excellent) based on analysis of this opportunity.
1. Time Investment 7
2. Start-up Costs 6
3. Gross Income Potential 8
4. New Income Potential 7
5. Income in Relation to Investment 7
6. Stability 9
7. Overall Risk 6
8. Potential for Growth 9
Overall Potential for Success 7.38
One of the first things a new business owner has to consider
is the proper legal form under which the business will operate.
The business can either operate as a sole proprietorship,
partnership, limited partnership, or as a corporation.
Whatever the legal form of your gift basket service, you'll
need to be aware of all the legalities involved. If your business
is a sole proprietorship operation, you won't have many legal
forms to worry about. The only legal papers required for a sole
proprietorship are a business license and a fictitious-name
filing with the county clerk's office.
If you choose to operate your business using a distinctive
name, other than your personal name, you'll most likely be
required by the city, county or state to register the name. The
method of doing this will vary from state to state, but in many
states you simply pay a small registration fee at the county
clerk's office. Some states may require placing a fictitious-name
advertisement in a local newspaper.
To find out the proper procedure for your area, contact your
bank and find out if it requires a fictitious name registry or
certificate in order to start a business account. If it does, the
bank personnel can tell you where to obtain one. Filing a
fictitious-name notice will cost anywhere from $10 to $100.
Unlike other forms of business, a sole proprietorship
requires no separate income tax returns. As a sole proprietor,
all of your income and expenses will be reported on Schedule C of
IRS form 1040. If your aren't familiar with tax laws and
regulations for business operations, you should consult with a
Keeping records of your business operation is also required
by law. These records are used to determine your tax liability.
No specific type of bookkeeping system is mandated by law,
however your records must be accurate. They must also show your
income, deductions, credits, and other information required by
federal, state and local regulations.
If your bookkeeping skills are less than adequate, you'll
need the help of a competent professional. This will mean an
extra expense, but it's an expense you cannot afford to overlook.
Having accurate and complete records is not only a legal
requirement, it is also an efficient and professional way to
operate a business.
Operating a home-based gift basket service can be a highly
rewarding venture. By following several key steps, an
enterprising individual can turn creativity into profit.
(1) Investment -- Unless you have unlimited capital, keep
your initial cash outlay for equipment and inventory to a
minimum. You should be able to start up with an investment of
between $2,000 and $3,000. In some cases, even less.
(2) Product -- Learn to design and arrange gift baskets that
will keep you far ahead of any competition. If you have no
practical craft experience, there are courses that teach the
fundamentals of gift basket making. If you have limited artistic
ability, enlist the services of a more creative friend or
relative. The irresistibility of your product is the key to your
(3) Marketing -- Investigate, then utilize the most
effective means of advertising and promoting your business.
Develop a realistic advertising budget that will allow you to
reach every potential customer in your market.
(4) Regulations -- Be well versed in, and adhere to, all
rules and regulations pertaining to a small home-based business.
The regulations vary from state to state and will most like
require some research or instruction from a professional
(5) Bookkeeping -- Maintain permanent and accurate business
Since the market for gift baskets is virtually unlimited,
the business of making and selling this product is rapidly
growing. Operating your own home-based gift basket service is an
ideal way to be creative, have fun, and realize substantial
earnings. If you're interested in starting a small business that
allows you to be creative and to make money, a home-operated gift
basket service is the perfect opportunity.
AEA Business Manual No. X130, Gift Basket Service. From
American Entrepreneurs Association, 2392 Morse Ave., Irvine, CA
Tara Perkens Baskets, 2796 Harbor Boulevard, #107 Costa
Mesa, CA 92626
Giftware Business, 1515 Broadway, New York, NY 10036 (212)
Gift Association of America, 1511 K St. N.W., Ste. 716,
Washington D.C. 20005
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