60+ Essential Marketing Budget Statistics (2024)
February 14, 2024
Marketing is essential for any small business that wants to grow and succeed. We surveyed our large audience and analyzed over a dozen high-impact reports to establish how small businesses approach their marketing.
Our original surveys were presented as multiple-choice questions; each received a minimum of 500 unique responses.
Table of Contents
- Top Marketing Budget Statistics
- Average American Marketing Spend
- Marketing Budgets Broken Down
- Where Most Companies Draw the Line
- Social Media Marketing
- The Effectiveness of Content Marketing
- Preferred Ad Platforms
- Online vs. Traditional Businesses
- Return on Ad Spend Distribution
- A Reduction in Long-Term Marketing
- Marketing Goods vs. Marketing Services
- B2C vs. B2B
- Methodology
Top Marketing Budget Statistics
- On average, each American business spends $14,575 on marketing per year—$481 billion in total. But 66.3% of small business owners spend less than $1,000 on marketing each year.
- Major outliers drive that average up. The majority of marketing spending is done by just 14.9% to 18% of all businesses.
- 60% of business owners consider social media their best marketing strategy, but 24% are disappointed with its returns.
- Less than 6% of small business owners consider content marketing their best marketing strategy, but 93% of business owners who invest in content marketing are satisfied with their results.
- Marketing a service costs 36.5% more than marketing consumer goods.
- Business-to-consumer (B2C) companies spend 52% to 71% more to earn the same revenue as business-to-business (B2B) companies.
Keep reading for more high-impact marketing statistics, plus cutting-edge marketing strategies you can implement right now.
Average American Marketing Spend
There are over 33 million businesses in the U.S., and they spend a combined $481 billion a year on marketing. This means the average American business spends $14,575 on marketing annually.
But this is a top-heavy figure. Most marketing spending comes from 14.9% to 18% of all businesses (from sole proprietorships to publicly held companies). By comparison, 63.4% of small businesses spend less than $1,000 annually.
The average business spends 12.3% percent of revenue on marketing, with the median rate coming in at 10%.
Marketing Budgets Broken Down
On average, companies spend 53.4% of marketing dollars on their digital marketing budget. Small businesses spend 46.6% of marketing budgets on traditional advertising.
Here’s a breakdown by industry:
- Educational companies spend 75.5% of their marketing budget on digital marketing.
- Technology companies spend 65.7% of their marketing budget on digital marketing.
- Healthcare companies spend 64.6% of their marketing budgets on digital marketing.
- Banking, finance, and insurance companies spend 60.7% of their marketing budgets on traditional marketing.
- Real estate companies spend 60% of their marketing budget on traditional marketing.
- Manufacturers spend 56% of their marketing budgets on traditional marketing.
Research-Based Recommendation: Companies should spend between 39.3% and 75.5% of their marketing budgets on digital marketing and 24.5% to 60.7% on traditional marketing, depending on their industry.
Professional marketers who responded to Gartner’s 2023 CMO Spend and Strategy Survey intended to spend approximately equal portions of their marketing budgets on labor, paid media, technology, and outsourcing, as seen below:
Paid media spending makes up the largest portion of marketing budgets, with 25.6%, but even the smallest portion is only 2.3% behind.
Where Most Companies Draw the Line
We surveyed 1,800 UpFlip viewers about how much they spend on marketing per year.
- 66.3% of small business owners spend less than $1,000 on marketing each year.
- 15% of small businesses spend over $10K annually on marketing.
- 19% of small business owners spend between $1K and $10K on marketing each year.
That 85.1% of businesses spend less than $10,000 on marketing isn’t surprising. According to the U.S. Small Business Administration’s Office of Advocacy, 99.99% of U.S. businesses qualify as small businesses.
Research Opportunity: Further research should be done to determine 1) How marketing expenditure correlates to revenue and 2) How marketing expenditure impacts revenue per employee.
Social Media Marketing
Social media marketing uses a combination of organic marketing strategies and paid marketing strategies to build relationships with customers on platforms like Facebook, Instagram, and TikTok.
Our survey found that 60% of small business owners prefer social media marketing over Google Ads, SEO/SEM, print advertising, and content marketing.
While social media marketing dominates the battle of preference, 24% of small business owners say that it’s their least successful marketing strategy.
Research Opportunity: Further research should be performed to find what sets successful social media campaigns apart from unsuccessful campaigns.
The Effectiveness of Content Marketing
Content marketing is a strategy that involves creating and sharing blogs, videos, and other useful content to drive awareness of products and services. This strategy can be highly successful because it helps develop authority with both potential customers and search engines.
Just 6% of businesses surveyed use content marketing, but only 7% of businesses surveyed found content marketing to be unsuccessful.
These numbers indicate that small business owners can benefit tremendously by focusing on producing new content.
Research-Based Recommendation: We suggest spending at least a couple of days each month creating new content and scheduling social media posts. If you aren’t confident doing this yourself and don’t have an employee you can assign it to, consider contracting a freelance content creator.
Preferred Ad Platforms
Business owners can choose numerous forms of paid advertisement, but some platforms drive results better than others.
44% of small business owners prefer using Google Ads over Facebook/Instagram ads (32%), YouTube ads (13%), or TikTok ads (11%).
17% of small business owners prefer Google Ads over other forms of marketing, and only 13% of small businesses are not satisfied with the performance of Google Ads.
Research-Based Recommendation: Start by spending your ad budget on Google Ads, then learn how to optimize other ad platforms.
Specific Marketing Campaign Costs
Small business owners need to break their marketing budgets down by campaign. These numbers will help you get a feel for the real-world cost of different marketing tactics and tools.
- Content marketing budget: Expect to spend a minimum of $29 per piece, but know that some of the best content creators have content marketing budgets that cost up to $1,000 per piece. You may also find content creators that charge $.05 to $1 per word.
- Paid digital advertising budget: Small businesses should expect to spend $2.59 per click, $3.12 per 1,000 impressions, $0.66 to $1.23 on remarketing, $15 to $800 on tools, and a minimum of $350 per month on paid digital advertising.
- Monitor ad budget: To pay someone to monitor ads for your small business, include a marketing spend of $350 to $5K per month or 12% to 30% of monthly ad spend—whichever is more.
- Email marketing budget: Your email marketing budget will vary based on the number of email addresses on your list and the features you need, but you should expect to spend around $18 per month for up to 1,000 people on your email list. As you grow, costs may increase up to $540 per month plus related labor expenses.
- Social media marketing budget: Social media marketing in 2023 was expected to reach $72.33 billion, or $2,178.62 per business (calculated by dividing $72.33B by the number of U.S. businesses).
- Sales funnel automation budget: Automations are part of a marketing budget that will fluctuate depending on the number of automations included in your email marketing, social media marketing, and other marketing tactics.
- Marketing tools and software: You might include these in other categories or you might include them in a separate category. Depending on the size of your company and number of customers, you may need a budget ranging from free tools to thousands of dollars per month.
- Traditional advertising budget: Traditional marketing budgets are expected to decrease by 2.6% according to The CMO Survey. This includes print ads, outdoor advertising, radio, and more.
For social media, paid ads, and traditional advertising, you may want to break the marketing budget into specific marketing channels. We recommend utilizing this marketing budget template.
Online vs. Traditional Businesses
Our surveys found that online businesses are 75% more likely to increase their marketing budgets.
- 70.6% of online businesses are either increasing their marketing budgets or keeping them at the same level this year.
- 40% of businesses with less than 10% of revenue from online sales have flat or increasing marketing spending.
- 60% of businesses with less than 10% of revenue from online sales are decreasing their marketing spending.
This is consistent with consumer trends, as online sales are increasing their overall percentage of sales by approximately 1% per year.
Research-Based Recommendation: Even if you’re saving money by decreasing your digital marketing budget, foregoing an online marketing strategy may mean poor performance in the future. We recommend maintaining a digital marketing budget comparable to industry benchmarks.
Return on Ad Spend Distribution
One of the metrics small businesses use is return on ad spend (ROAS), which is defined as revenue from ads divided by cost of ads, but many business owners implement a modified ROAS calculation that uses this formula:
(Revenue – Cost of Good Sold)/Cost of Ads
893 people responded to our questions about their ROAS. Here’s what the survey showed…
- 67% of small business respondents make less than $3 for every dollar spent on ads.
- 14% of small business respondents make $3 to $6 for every dollar spent on ads.
- 3% of small business respondents make $6 to $9 for every dollar spent on ads.
- 15% of small business respondents make less than $3 for every dollar spent on ads.
Numbers From Real Business Owners
Some of our original survey respondents provided more detailed information that you can use to determine what you might aim to spend in your industry.
eCommerce
As stated earlier, 70.6% of online businesses are either increasing their marketing budgets or keeping them at the same level, while 60% of businesses with less than 10% of revenue from online sales are decreasing their marketing spending.
@bobsimpson9228 told us:
[We are in] Ecommerce and average about 3-4 ROAS) with a break-even [point] of 2.2 [ROAS].
Learn more about how small business owners start online businesses.
Car Detailing
@josh3.064 gave an example of what to expect in car detailing:
I detail cars and I average about $5-8 [in revenue] per ad [at the moment]
Want to learn more about car detailing? See our comprehensive blog and YouTube video.
Automotive Repair
@allaboutdiy1375 provided information about car shops:
Want to know more about automotive repair? Check out our how-to blog and in-depth interview. @kdp9607 had the best performance with a nearly 22x return on ad spend in the painting industry. @stoneroastery disclosed: Coffee mogul Wes Herman confessed that 19-location Woods Coffee doesn’t actually spend a lot on marketing. Read about how he runs his coffee shops. Growth in customer relationship management, customer experience spending, and brand building is expected to slow by 50% in the next year. There are some exceptions: These three industries are spending nearly double what other industries are spending. Interestingly, marketing consumer goods costs 36.5% less than marketing services. As such, the U.S. Small Business Administration (SBA) suggests different marketing budgets for different types of small businesses. Research-Based Recommendation: Effectively, this shows that small business owners should expect to spend between 10% and 40% more when they are selling services instead of a product. Business-to-consumer companies spend 52% to 71% more to earn the same revenue as B2B companies. This may be because since the 1970s, productivity has grown eight times as fast as wages. GDP has increased by a multiple of 8.7x before inflation. Businesses have more spending power today than they did in the past, but consumers have similar spending power than they did in 1979. Research-Based Recommendation: Marketing a B2B product is the least costly form of marketing. If you’re trying to decide on a type of business to start or exploring new ways to increase revenue, consider selling products to companies instead of individual consumers to maximize your marketing effectiveness. These statistics were gathered by reviewing literature, surveying our audience, and using the combined statistics to help small business owners understand the marketing landscape and highlight opportunities to improve their marketing results. We studied numerous reports and blogs on marketing statistics, marketing budgets, and other economic data to gather statistics obtained and published by other companies and organizations. We used these statistics to better understand how UpFlippers’ survey responses compare to the findings of larger companies and organizations regularly published in annual reports and other research. UpFlip surveys were conducted on our YouTube channel. Due to the limited nature of YouTube surveys, it is impossible to tie every answer to a specific respondent unless they leave additional comments. Nor could we establish whether there were correlations between ad spending and successful results with each type of marketing expense. In the future, we will update this piece with long-form surveys that will provide additional insights into how small businesses use their marketing. In some scenarios, we compared two statistics to gain more insight into a subject. Combining two statistics was useful for gaining insights about content marketing being underutilized, selling products requiring less marketing than selling services, and B2B marketing being more cost-effective than marketing to consumers. Operating based on these conclusions may have different results for different companies, and they should always use metrics to measure the success of their results. These small business marketing budget statistics can help small business owners create an informed marketing budget, especially when you keep in mind that online marketing is steadily gaining traction over traditional marketing channels like print and radio advertising. Whether you’re a small business owner or work with them, you can use the information in this report and our marketing budget template to create a balanced small business budget. What’s the biggest pain point in creating your marketing budget breakdown, and what new marketing strategy are you going to try next?I don’t advertise at all with my Mercedes Benz repair shop. It turns out that if you are honest, fair, and have integrity, word of mouth and reputation is all you need. I’ve got more work than I can even get done in five, 9 hour days.House Painting Business Marketing
Housepainting business here. I spent $1.5k on Google ads this year. The return is between 35 / 40k gross profit.Coffee Shop Advertising
I’m in the hole. Lost moneyA Reduction in Long-Term Marketing
Marketing Goods vs. Marketing Services
B2C vs. B2B
Methodology
Literature Review
UpFlip Surveys
Combining Statistics
Closing
Author
Brandon Boushy
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Have you ever bought a sandwich or a taco from a food truck and thought, “I wish I could quit my job and start a food truck for a living!” Then you've come to the right place!
We interviewed food truck owners Nic and Jada Jones to learn how they run Hen House, a food truck modeled after the farm-to-table style. Jada and Nic started Hen House in Nashville, Tennessee, and shared insights on how to make $300K in your first year as a food truck business.
[su_note note_color="#dbeafc"]
We’ll share the lessons learned from these food truck owners to guide you through how to start a food truck business. Click on any step below to learn more about food truck operations.
Starting a food truck business is as simple as following these eleven steps:
You might wonder, “What is the best food to serve in a food truck?”
You should look for the intersection between what you’re good at cooking and what the area needs.
According to other food truck operators, those choosing which food to serve for their food truck should heed this advice: do one thing and do it well. Make it a quality product and keep it very, very simple.
Over the past decade or more, food trucks have become a viable, reputable business option that has gone far beyond the tired pretzel or questionable hot dog vendor of long ago. In fact, food trucks have now become a $1.2 billion industry annually.
Local profit figures vary greatly based on location, products offered, and other factors. However, according to IBISWorld, profit for a food truck may be around 7.7% of your entire revenue, after accounting for overhead costs and wages. That means a food truck making $400,000 in sales each year would pull in just over $30,000 in profit.
So, you aren't necessarily going to get rich quick as a food truck entrepreneur. But with determination (and some hard work) you can make a decent living and own your own profitable business!
Of course, all of this is after you break even in your business, which is when your business finally stops costing you money and becomes profitable. The Vet Chef reached this at around the one-year mark, which is fairly typical. You may need to plan for longer if your starting costs are high.
If you're one of those lucky people with tens of thousands of extra dollars lying around to start a business, that's great! But otherwise, you may need to figure out how to finance your food truck business until it provides more cash flow.
As with any business, you will need to make sure your food truck complies with all of the local government standards regarding permits and licenses. This is a very important step when you learn how to start a food truck. These may range from permission to run a business to food-handling certifications and will change based on state and local regulations.
Similar to the advice of other food truck owners, Kyle's advice is that potential owners of food trucks should contact their local health department right away, and they'll know how to proceed from there. He says to expect approximately 6 months from the time you make your first contact until you can get up and running.
Entrepreneur.com parallels Kyle's advice, noting that your local department of health should be first on your list of contacts and then go from there.
Below is a general idea of what you might need, but, of course, it is necessary to find out exactly what is needed for starting a food truck in your particular location.
Now comes the exciting (and perhaps a bit scary) part! Buying your truck and outfitting it for your needs is critical to the success of your food truck business.
While your food truck is in the midst of being purchased or retro-fitted, you should be making contact with the vendors and suppliers you plan to use to source your food. You may choose these based upon quality, price, and sustainability factors.
You may want to start by asking other food trucks and similar concept restaurants who their vendors are. Restaurant industry trade shows may also reveal vendors you didn't know were out there.
Of course, a quick online search might reveal dozens of restaurant supply chains, but many small business owners prefer to deal with local suppliers.
One thing to think about is that you may want to consider vendors who will allow you to be billed monthly (rather than cash up front). Centralized billing and other contract options may help to streamline the financial processes of running a food truck business.
One important consideration along the lines of efficiency is whether your food truck will offer a Point of Sale system for credit and debit cards.
While cash used to be the mainstay for food truck mobile businesses, it's a bit slow and can be complicated when it comes to making change.
More and more mobile food truck businesses are taking advantage of Square and other Point of Sale options for accepting credit and/or debit cards. This not only makes it fast and easy for the customer, but it may also allow for an integrated accounting and business tracking system for your food truck business.
The startup costs for these can be very low, and the fees are typically minimal. But the convenience could definitely be worth it—and you aren't turning away customers who don't have cash.
Kyle told us many food truck businesses fail because their business owners lack dedication. They agree to be at a community event and arrive late, leave early, or maybe even don't show up at all. The Vet Chef says:
[su_quote]If you say you're going to be there, be there. I don't care if your tire pops on the side of the road, you better have AAA and make it to where you say you're going to be.[/su_quote]
Your successful food truck business needs to have a solid reputation for being reliable so that you'll be the first one who gets an invitation to the next event.
If you do this, hopefully you will be one of the people who survives the first five years of business. According to the Bureau of Labor Statistics, only about 55% of all new businesses last through this period.
- How to Start a Food Truck Business
- Step #1. Learn about the food truck industry
- Step #2. Generate food truck ideas
- Step #3. How much does it cost to start a food truck business?
- Step #4. Figure business operating costs
- Step #5. Write a food truck business plan
- Step #6. Determine financing options
- Step #7. Obtain licenses and permits
- Step #8. Buy your truck
- Step #9. Secure your suppliers
- Step #10. Streamline the process
- Step #11: Build your food truck business/brand
- Are you ready to start a food truck business?
How to Start a Food Truck Business
Starting a food truck business is as simple as following these eleven steps:
- Learn About the Food Truck Industry
- Choose Your Food Truck Concept
- Estimate Food Truck Startup Costs
- Plan for Business Operating Costs
- Write a Food Truck Business Plan
- Get Food Truck Financing
- Obtain Licenses and Permits
- Buy Your Truck
- Purchase a POS System
- Streamline the Process
- Build Your Food Truck Business/Brand
Step #1. Learn about the food truck industry
According to IBIS World, the food truck industry makes $1.5 billion per year with a median profit of 6.4%. Food trucks are expected to see industry revenue growth of 1.2% per year between now and 2028. There’s a lot of competition, though. There are over 36,000 food truck businesses and 2,000 new people are starting a food truck business every year.How much do food trucks make a year?
Over the past decade, food trucks have become a viable, reputable business option far beyond the tired pretzel or questionable hot dog vendor. The average food truck makes $41,295. Don’t assume you can’t make more. We’ve interviewed five food truck owners, and each business owner makes more than $300K per year. Check out our interview with the most successful food truck owner, Carlo Chalisea, who built his food truck business from a taco truck to a brick-and-mortar location and multiple local food trucks. [su_youtube url="https://www.youtube.com/watch?v=8MPTE67PYcY"] Next, find out if starting a food truck business is profitable.Are food trucks profitable?
Many food truck owners are making peanuts, but a great food truck idea can make great money. Nic told us: [su_quote]Our food truck makes $20K-30K per month depending on the catering and seasonal fluctuations. The expenses break down to:- Food: 30%
- Labor: 25%
- Overhead: 25%
- Profit: 20%[/su_quote]
Step #2. Generate food truck ideas
You might wonder, “What is the best food to serve in a food truck?”
You should look for the intersection between what you’re good at cooking and what the area needs.
According to other food truck operators, those choosing which food to serve for their food truck should heed this advice: do one thing and do it well. Make it a quality product and keep it very, very simple.
How do I price my food truck menu?
One of the key things to research about how to start a food truck is the menu pricing. Pricing menu items can be tricky. Charging too little causes losses, while charging too much means no one will buy from you. Food costs should stay under 35% of the revenue for successful food trucks. The most commonly used pricing method for food trucks is based on the food cost percentage formula. The formula can be worked in two ways:- Actual Food Cost / Food Cost Percentage=Customer Price
- (Choose a Value between 3.33 and 5) x Actual Food Costs=Customer Price
Step #3. How much does it cost to start a food truck business?
Expect to spend between $15K and $250K to purchase a food truck and start the business. Nic told us starting a food truck business required spending:∙ Purchase Food Truck New: $150K
∙ Wrapping The Food Truck: $12K
∙ Branding: $10K-15K
The good news is that buying a food truck normally requires less than 20% down. That means starting a food truck company can get started for $57K instead of $250K+.
You can also rent a food truck, which we’ll discuss in a separate blog. Food trucks have some additional costs, which we’ll discuss next.
Other startup costs
Other startup costs for a food truck may include:∙ Opening Day Ingredients: $1000
∙ Licenses and Permits: $2000
∙ Parking and Maintenance: $300 (first month)
∙ Kitchen Supplies: $1700
∙ Packaging: $2000
∙ Marketing: $3000
∙ Bookkeeping and Office Supplies: $1000
∙ Insurance: $2000
∙ Miscellaneous: $1000
Kyle, the owner of Vet Chef, bought a food trailer and custom designed his kitchen, which required adding in $8000 for equipment, another $7000 for truck permits/inventory, and various other costs. All in all, it came to just over $40K. Check out our interview with him below.
[su_youtube url="https://www.youtube.com/watch?v=YCnE13BaQlk"]
Step #4. Figure business operating costs
To figure out if this will work for you and exactly how to start a food truck, it's vital to understand what your business will cost so that you know what kind of profit you can expect to make. As with any restaurant, expect your largest costs to be food, supplies, and labor. Other food truck financial projections for regular costs may include:∙ Parking Permits
∙ Delivery Costs
∙ Fuel and Vehicle Maintenance
∙ Paper Goods, Packaging, Labels, etc.
∙ Phone/Internet/POS system
∙ Bookkeeping
∙ Marketing
∙ Equipment and Vehicle Repairs
Should I hire employees for my food truck business?
While it's advisable to keep the staff small, it won't be long until you'll need another person or two on your team. If you have a business partner, this might be delayed since you can both commit your time to working in the food truck.
Customers do expect fast delivery times from a food truck, so having staff will help you get those orders out efficiently and keep the wait times down. (Of course, you can only fit a limited number of employees in a truck at one time.)
Keeping labor costs as low as possible is vital to profitability, but you can't do everything alone. Kyle notes that:
[su_quote]You have to have employees, or you'll drive yourself into the ground. We hired my cousin, who was a high schooler then. We gave her a few hours, and we were able to only pay her for the time we were open. I cleaned and sent the employees home.[/su_quote]
According to Kyle, it's best to hire part-time staff that are willing to work very short shifts on an ad-hoc basis at the food truck. High-school students, family members, and others who need just a few hours are often a great way to begin.
Kyle also advises that, at least for the first year, it is important to make sure that you minimize what you need to pay employees for. Do all of the prep work and cleaning yourself until the business becomes more viable.
How much do food trucks make a year?
Over the past decade or more, food trucks have become a viable, reputable business option that has gone far beyond the tired pretzel or questionable hot dog vendor of long ago. In fact, food trucks have now become a $1.2 billion industry annually.
Local profit figures vary greatly based on location, products offered, and other factors. However, according to IBISWorld, profit for a food truck may be around 7.7% of your entire revenue, after accounting for overhead costs and wages. That means a food truck making $400,000 in sales each year would pull in just over $30,000 in profit.
So, you aren't necessarily going to get rich quick as a food truck entrepreneur. But with determination (and some hard work) you can make a decent living and own your own profitable business!
Of course, all of this is after you break even in your business, which is when your business finally stops costing you money and becomes profitable. The Vet Chef reached this at around the one-year mark, which is fairly typical. You may need to plan for longer if your starting costs are high.
Step #5. Write a food truck business plan
One of the most important steps in how to start a food truck is a solid business plan. According to Business News Daily, two important purposes of a business plan are to establish focus and secure funding. Writing a business plan is a fairly detailed, time-consuming process, and you may want to access online business plan resources to help you with a template. A general run-down of what you'll need in your food truck business plan includes:∙ Business summary
∙ Detailed profile
∙ Information about legal business setup
∙ Menu and price list
∙ Marketing plan
After you’ve written a business plan, you’ll want to consider how to buy a food truck.
Step #6. Determine financing options
If you're one of those lucky people with tens of thousands of extra dollars lying around to start a business, that's great! But otherwise, you may need to figure out how to finance your food truck business until it provides more cash flow.
How to start a food truck business with no money
While it's great if you have some money upfront, it is possible to get business credit. Many food trucks start by using:∙ Personal credit
∙ Business credit
∙ Small Business Administration (SBA) Loans
∙ Equipment Backed Loans
∙ Partner/Venture Capitalist
The Small Business Association (SBA) Microloan Program makes available small loans of up to $50,000 (although the average loan is $13,000). Entrepreneurs may use this for supplies, startup costs, equipment, etc.
Instead of applying directly through the SBA, you'll need to find a non-profit intermediary to get you started with your food truck.
Step #7. Obtain licenses and permits
As with any business, you will need to make sure your food truck complies with all of the local government standards regarding permits and licenses. This is a very important step when you learn how to start a food truck. These may range from permission to run a business to food-handling certifications and will change based on state and local regulations.
Similar to the advice of other food truck owners, Kyle's advice is that potential owners of food trucks should contact their local health department right away, and they'll know how to proceed from there. He says to expect approximately 6 months from the time you make your first contact until you can get up and running.
Entrepreneur.com parallels Kyle's advice, noting that your local department of health should be first on your list of contacts and then go from there.
Below is a general idea of what you might need, but, of course, it is necessary to find out exactly what is needed for starting a food truck in your particular location.
What licenses are needed to start a food truck?
Here are some commonly required licenses and permits for a food truck:- Business License –This depends on the city/county/state where you work and is based on the type of service you provide, whether events, catering, etc. In addition to licensing fees, a percentage of the revenue may also go to the government agency, so be sure to factor this into your budget.
- Employer Identification Number – You need this in order to start legally paying employees, withholding taxes, etc.
- Business Permits – This is usually issued by local municipalities. These can change over time, so be sure to review this annually so you understand what is required in the way of food truck permits.
- Vehicle Licensing – Make sure the person driving the food truck is appropriately licensed and insured for that particular vehicle. Find out if you need a commercial driver's license in order to drive the food truck (this is often related to the size/length/weight of the truck.)
- Food Handler's Permit – This may require you and your employees to take a Food Safety Course. Often done online and fairly inexpensive, it may be necessary for truck owners and all employees to complete this in order to comply with food safety requirements.
- Health Department Permit – This differs between states but is typically similar to what a restaurant requires since, technically, your food truck is a restaurant on wheels.
- Fire Certificate – This requires a local fire department inspection. Your equipment must be safety certified, whether electric, propane, generator, etc. If you purchase your truck new and/or have it retrofitted, the vehicle supplier should already know these requirements and have it ready for this inspection.
- Parking Permits – If your food truck is invited to a festival or a private event, this shouldn't be an issue. But if you plan to simply park your food truck on the side of the road, you'll need to do your homework about local parking ordinances in your area.
Where should I park my food truck?
This is the beauty of a mobile food truck business! You can park it almost anywhere you are invited. Look for opportunities like local festivals, schools, neighborhood events, and more. Festivals can be some of the most profitable (and least profitable!) locations for the mobile food truck business. Kyle mentions that some festivals can be packed with customers, with 200 people standing in line. On the other hand, based on weather or other circumstances, they can also be dead and cause you and your food truck to take a financial loss. [su_quote]One festival, we served 900 people in a day. So we went back the next year and we had all this food ready for long lines of people—but they added 20-30 more food trucks and we were doing nothing.[/su_quote] Along the lines of locations, the Vet Chef truck has recently been invited to park at Boeing during their lunch breaks, which is like striking gold. This came after the business had built a good reputation and won the “Best of Western Washington” Award. But it took some building of the brand before these types of invitations started rolling in for Kyle and his food truck. In the beginning, he says, you just need to go wherever the people are and take the opportunities as they come. Eventually, once you gain a reputation, you can become choosy about which events you'll agree to, based on how profitable they will be for you.Step #8. Buy your truck
Now comes the exciting (and perhaps a bit scary) part! Buying your truck and outfitting it for your needs is critical to the success of your food truck business.
What types of food trucks are there?
Essentially, you can choose from two styles of food trucks: drivable and pull-able. Drivable Food Trucks are licensed motor vehicles that can be driven from one place to another on their own. These are typically like a standard delivery truck, often retro-fitted to create a kitchen and serving window in the back. Trailers and Carts are other options for mobile food service that must be towed from one place to another by a separate vehicle. These are outfitted with cooking and refrigeration capabilities and everything needed to prepare and serve food. Food carts are smaller, whereas food trailers can be as large as an over-the-road semi.Step #9. Secure your suppliers
While your food truck is in the midst of being purchased or retro-fitted, you should be making contact with the vendors and suppliers you plan to use to source your food. You may choose these based upon quality, price, and sustainability factors.
You may want to start by asking other food trucks and similar concept restaurants who their vendors are. Restaurant industry trade shows may also reveal vendors you didn't know were out there.
Of course, a quick online search might reveal dozens of restaurant supply chains, but many small business owners prefer to deal with local suppliers.
One thing to think about is that you may want to consider vendors who will allow you to be billed monthly (rather than cash up front). Centralized billing and other contract options may help to streamline the financial processes of running a food truck business.
Step #10. Streamline the process
One of Kyle's sticking points for his food truck is that he aims to get food to his customers in 30 seconds or under from the time of ordering. It's part of the reason his customers love the Vet Chef food truck. This means you'll need to have your kitchen organized for maximum efficiency. Everything that can be prepared in advance should be. And employees need to be trained to work as quickly and efficiently as possible. The good news? Your food truck is very small, so you should have everything available at your fingertips!Should my food truck have a POS system?
One important consideration along the lines of efficiency is whether your food truck will offer a Point of Sale system for credit and debit cards.
While cash used to be the mainstay for food truck mobile businesses, it's a bit slow and can be complicated when it comes to making change.
More and more mobile food truck businesses are taking advantage of Square and other Point of Sale options for accepting credit and/or debit cards. This not only makes it fast and easy for the customer, but it may also allow for an integrated accounting and business tracking system for your food truck business.
The startup costs for these can be very low, and the fees are typically minimal. But the convenience could definitely be worth it—and you aren't turning away customers who don't have cash.
Step #11: Build your food truck business/brand
Here is the place where the rubber meets the road (figuratively and literally). Once you're ready to open your food truck, getting your name out there is everything! Throwing a bunch of money at advertising is one option. And social media might be a helpful way to get people to find your food truck—since you're often on the go. On top of that, social media can often be a free option for advertising. A solid Instagram or Facebook social media page may be an effective business tool. But even social media hype can only take your food truck so far. According to Kyle, the best way for food truck owners to become successful is to create a dependable business that offers a quality product people want: [su_quote]We don't spend a lot of time on Facebook. You don't have time to focus on marketing. It wasn't our most important thing. What was the most important thing was putting out the very best food, the top quality that we possibly could.[/su_quote] If you want to jump right in, you may be thinking of buying an already-established food truck business from someone who has done the startup work and created a good reputation for you. Check out this step-by-step guide that will help you understand your options for buying an established business.Why do food trucks fail?
Kyle told us many food truck businesses fail because their business owners lack dedication. They agree to be at a community event and arrive late, leave early, or maybe even don't show up at all. The Vet Chef says:
[su_quote]If you say you're going to be there, be there. I don't care if your tire pops on the side of the road, you better have AAA and make it to where you say you're going to be.[/su_quote]
Your successful food truck business needs to have a solid reputation for being reliable so that you'll be the first one who gets an invitation to the next event.
If you do this, hopefully you will be one of the people who survives the first five years of business. According to the Bureau of Labor Statistics, only about 55% of all new businesses last through this period.
Are you ready to start a food truck business?
It's possible to open a food truck business with less than $50,000 in startup costs and some hard work. You can start earning $100K gross revenue really quickly by following this guide. Though you'll put in a lot of work to enter the food truck industry, it's worth it for those who wonder how to start a food truck. With dedication, you can be like Kyle and run a successful small food truck business within a year or two. What kind of food would you serve in a food truck?
Merchandising like the retail store above doesn’t work. Take pride in how you represent yourself and your business.
The number one shed dealer, Susan Frair, is on track to turn Shed Gal into a million-dollar-per-year business. She started Shed Gal because she didn’t like how shed dealers sold their products. Instead, Susan focuses on educating, customer service, and brand messaging as the primary means of merchandising.
Whether you own a retail location, online business, or service business, these merchandising strategies will help you maximize sales.
Merchandising is a broad term that includes most business actions. From marketing strategies to packaging, pricing, temperature, store layout, and loss prevention. Merchandising is the art of creating a cohesive package that makes people want to buy your products or services.
Here’s a more full list of the aspects covered under merchandising:
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Visual merchandising is used in a retail setting to help make it more pleasant for shoppers. Four elements to enhance visual merchandising, including:
Fashion merchandising focuses on increasing retail sales for clothing. That’s why layaway sections are always hidden somewhere out of the way, but the newest trends are right there when you walk in the door.
Make sure you’re showing off your high-profit and most desirable products near walkways and entrances, but make sure no one can steal them. We’ll talk about security later.
A merchandising strategy is simply a business plan about how to present your brand and products. It will cover a large variety of subjects.
You’ll want to document:
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Stores use psychology all the time to maximize their profits. Some of them are obvious, but some are not. Here are some of the pricing strategies merchandisers use:
How you package your products matters. If you’ve ever bought a ticket to a concert, I bet it didn’t look like this. The design definitely impacts your perception of what to expect, right?
A Swedish study found that if you are a brand, the expectations for packaging are higher than for resellers. Meanwhile, other studies found that better packaging increases the perceived value by 49% even if it only costs $.19 more.
Phase1 Prototypes suggests a few strategies to help increase the perceived value:
If you are a brand, your logo should be a central focus in your merchandising. You want it to be simple but meaningful. It doesn’t have to be perfect from the start, but it should represent your brand and your values.
Effective merchandising has a logo on everything. From a retail display to your business’s online store to the products and packaging, everyone should be able to tell what company you are. If they can’t, then the merchandising strategies aren’t working.
Check out some of the logos for these companies:
A small business can use color palettes in merchandising to create different atmospheres. Most brands use two or three colors in their logos and will commonly use those colors in their merchandising.
Colors tend to be associated with emotions, and you can use that to your store's advantage. Check out these resources about color:
They offer good quality at competitive pricing, use a unique in-store layout to encourage purchases, create a customer experience that is one of a kind, and have nearly four times the sales as their largest competitor.
Check out the CNBC case study on Ikea below:
What Is Merchandise?
Merchandise is simply the products you carry for customers to buy. What is the difference between inventory and merchandise? For example, a restaurant’s merchandise is food and beverages because customers purchase those. Merchandise does not include items that customers cannot buy, like plates. When checking inventory, a restaurant would also include things that people don’t buy at the restaurant like toilet paper. So, merchandise will always be inventory, but inventory is not always merchandise.What Is Merchandising?
Merchandising is a broad term that includes most business actions. From marketing strategies to packaging, pricing, temperature, store layout, and loss prevention. Merchandising is the art of creating a cohesive package that makes people want to buy your products or services.
Here’s a more full list of the aspects covered under merchandising:
[su_note note_color="#dbeafc"]
- Pricing Strategies
- Packaging
- Store Lighting, Music, Scents, and Temperature
- Brand Logos
- Store Displays and Window Signs
- Marketing Strategies
- Color Schemes
- Store Layout
- Product Selection
- Loss Prevention
- Customer Loyalty
- Cleanliness
- Retail Merchandising
- Visual Merchandising
- Fashion Merchandising
- Cross Merchandising
What is retail merchandising?
Retail merchandising is the practice of setting up a retail store so items are visually accessible, offering something that shopping online does not. Some examples of merchandising in a store might include: [su_note note_color="#dbeafc"]- Setting up electronics where the user can try them
- Creating whole outfits to inspire the customer on matching tops and bottoms
- Offering free samples in a grocery store next to the product display (I love free samples.)
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What is visual merchandising?
Visual merchandising is used in a retail setting to help make it more pleasant for shoppers. Four elements to enhance visual merchandising, including:
- The exterior of the store: The shell of the building is the first part of a building you see. Keep the outside well lit, equipped with a brand logo and window signs, and free of clutter.
- The store's interior: Once you walk inside, customers want to see a friendly face, a clean space, and a readily identifiable store layout.
- The store's layout: The layout needs to have store displays in places that attract attention. If it’s a large store, you might also want signs to help people find what they want.
- The displays within the store: Displays should be for bestsellers, great deals, and high-profit margin items.
What is fashion merchandising?
Fashion merchandising focuses on increasing retail sales for clothing. That’s why layaway sections are always hidden somewhere out of the way, but the newest trends are right there when you walk in the door.
Make sure you’re showing off your high-profit and most desirable products near walkways and entrances, but make sure no one can steal them. We’ll talk about security later.
What is cross merchandising?
Cross merchandising is when you try to sell multiple products together. When you see a mannequin with several items on display or shampoo and conditioner combos, that's cross marketing. It can be either multiple products from the same brand or you could be pairing multiple brands together. The owner of Throwback NW discussed some ways he approaches merchandising in the video below. [su_youtube url="https://youtu.be/I4SplY80dm0"] Now that you understand that merchandising refers to the process of creating a strategy to sell your products that encompasses marketing, branding, communication, and more, it's time to learn the benefits of merchandising.Benefits of Merchandising
Some of the benefits of merchandising include: [su_note note_color="#dbeafc"]- Higher profits from increased customer lifetime value
- Customers more likely to check out sales offers
- People spend more time in-store or online
- Sell inventory faster
- Customers purchase more often
- More customer awareness
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Create a Merchandising Strategy
A merchandising strategy is simply a business plan about how to present your brand and products. It will cover a large variety of subjects.
You’ll want to document:
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- Where will you sell your products or services? In-store? Online? At other retailers? At customers' homes? Delivery? Pickup?
- What kind of logo, font, language tones, and colors will be used in your merchandising process?
- What will the packaging look like?
- What locations will you be in? Do you want higher traffic because shoppers come to your store, or would you prefer a warehouse where you ship to people? Do you want your own space or to outsource fulfillment?
- Do store associates have uniforms with a logo or wear their own clothes?
- What merchandising tools will you use? Will you do your own merchandising or hire a merchandising business to set up a product display in retail store environments? Do you have to pay a merchandising fee?
- Are you selling your own products or licensed merchandise for other businesses?
- What style guides do you have for writing a retail newsletter and product descriptions? How do you verify the communication is on brand?
- When will you have a sale? Choose your holidays. Don’t forget Father’s Day.
- How will customers pay when they are ready to purchase products? In-store payments? Online shoppers' checkout process?
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11 Types of Merchandising Strategies
Now, let’s look at all the various elements that go into marketing. We’ll share some of the top resources for learning more about each aspect of merchandising starting with pricing strategies. I hope you like psychology because merchandising is full of psychologists working to get people to spend more money. Well, we’re going to show you how to rock your online and in-store merchandising.Pricing Strategies in Merchandising
Stores use psychology all the time to maximize their profits. Some of them are obvious, but some are not. Here are some of the pricing strategies merchandisers use:
- Using “9” in the price helps products sell more. Even if the price is $44 or $49, people will more often go for the $49 price. Check out this survey on favorite numbers to get some interesting insights.
- Markdowns sell even more. Especially if you make the lower price a larger font.
- Premium items make your lower-cost items more attractive, but sometimes just raising the price creates more demand.
- Using cents impacts sales positively over a round number.
- Avoid meaningless price points. If you have three tiers, make sure they are substantially different. Neil Patel shares an example of bad price tiers.
- Make references to time.
- Don’t hide your pricing. It wastes everyone's time. This is especially important in service companies that tend to hide their pricing, which is discussed in Harvard Business Revenue.
Packaging in Merchandising
How you package your products matters. If you’ve ever bought a ticket to a concert, I bet it didn’t look like this. The design definitely impacts your perception of what to expect, right?
A Swedish study found that if you are a brand, the expectations for packaging are higher than for resellers. Meanwhile, other studies found that better packaging increases the perceived value by 49% even if it only costs $.19 more.
Phase1 Prototypes suggests a few strategies to help increase the perceived value:
Store Lighting, Music, Scents, and Temperature in Merchandising
During my engineering degree, we spent a lot of time learning about the impacts of lighting and temperature and how they impact people. Berkeley’s Center for the Built Environment (CBE) provides a table that makes it easy to compare how different types of attire and activity impact your comfort zones. Most are good in the 72° to 78° Fahrenheit level, but some activities suggest higher or cooler temperatures. Likewise, slower-paced music with a consistent volume tends to increase impulse buyers’ spending, while citrus scents impact non-impulse buyers' spending.Brand Logos in Merchandising
If you are a brand, your logo should be a central focus in your merchandising. You want it to be simple but meaningful. It doesn’t have to be perfect from the start, but it should represent your brand and your values.
Effective merchandising has a logo on everything. From a retail display to your business’s online store to the products and packaging, everyone should be able to tell what company you are. If they can’t, then the merchandising strategies aren’t working.
Check out some of the logos for these companies:
Product Displays and Window Signs in a Retail Store
In-store displays and window displays are part of effective merchandising strategies for retail sales. A small business should focus on effective merchandising tactics for window displays because it can help bring people into the physical store. That’s why almost every clothing company you see has retail merchandise on mannequins in the window displays. They’ll normally put high-value, trending products in the merchandising displays, and then they might have a window sign promoting a sale to lure in shoppers.Shelf Signage Impact on Sales
According to Harvard Business Review (HBR), “People are more likely to consume a product if they’re aware of its cost.” HBR established this by comparing a gym's participation based on how often the members paid. They found that people who paid monthly kept going because they were more aware of the cost. Granted that’s not shelving signage, but if someone can’t see the price they assume it is expensive (or going to subject them to high-pressure sales). Make it a point to have clear signs that tell the exact price. If it’s a sale price, show them the original price and the percentage they are saving with the sale. Check out the picture below for a great merchandising example of why people are hesitant when they can’t see the price.
Merchandising Is Built on Marketing Strategies
While merchandising includes so much more, businesses often begin merchandising with marketing and branding initiatives. If you haven’t started working on these initiatives, you might find product placement, table displays, and other methods of presenting products difficult. It might also create a lot of rework if you change your brand strategies frequently. Just look at how much time you see people changing product placement at Walmart. Another aspect you might change is your color schemes, which we’ll discuss next.Merchandising Uses Color Schemes
A small business can use color palettes in merchandising to create different atmospheres. Most brands use two or three colors in their logos and will commonly use those colors in their merchandising.
Colors tend to be associated with emotions, and you can use that to your store's advantage. Check out these resources about color:
- Crazy Egg: Colors to boost sales
- Map & Fire: How to use color to embody the spirit of your brand
- Canva: Choosing a color palette
Store Layout Impacts Merchandising
In a retail setting, the store layout can help encourage customers to spend money. For instance, the owner of Pooch Selfie told us: [su_quote]We encourage pet stores to carry our products near the register because we have found that it drives sales.[/su_quote] In addition to placing splurge items near cash registers, retailers put popular brands where customers are likely to see them. This encourages people to come into the store.Ikea is a master merchandiser
If you truly want to see some masterful layouts, go into an Ikea store. If you’ve never been, it takes a unique approach to presenting products. The display design groups product categories together to create rooms. In fact, it is one of the top 10 employers of interior designers. The picture below shows how the showroom and furniture areas are set up. As you can see, the showroom is a maze with hidden passages for employees and customers wanting to make a beeline for a specific area.
They offer good quality at competitive pricing, use a unique in-store layout to encourage purchases, create a customer experience that is one of a kind, and have nearly four times the sales as their largest competitor.
Check out the CNBC case study on Ikea below:
Merchandising & Product Selection
Merchandising companies will often help retail locations keep well-stocked shelves, but how does a store decide what products to carry and where to offer them? That depends on what kind of store you run. Successful brands work to build brand loyalty, which makes it almost essential for retailers to carry them. Can you imagine going into a gas station that does not carry Coca-Cola products? On the other hand, many products sell in stores just because they look cool. Major retail locations decide what to keep on the shelves based on what makes the most profit per square foot. Products that have a higher sales volume and take up less space are preferable over slower sales and bulky packages. Shoppers also expect seasonally relevant products. During mid-winter you don’t want to sell shorts in Michigan. Nor would you want to sell fur coats when it’s 105 degrees in Texas. Make sure to have a prominent section for every major holiday. Check out timeanddate.com for a full list of holidays. If a product doesn’t sell well, don’t order more. There’s no point in tying up space and expenses on products that don’t drive sales.Loss Prevention Protects Your Merchandising
Merchandising in retail often has higher prices than online because people steal products in physical locations. That’s why many retailers purchase security cameras, theft detection devices, and even security guards. For small businesses, you might want to have your store associate and cash register near the front door to save costs instead of hiring a security guard. There’s no reason not to have cameras and alarms as inexpensive as they are now. It will protect your well-stocked shelves.Customer Loyalty Programs in Merchandising
All retailers should have customer loyalty programs. Customers expect them, use them, and retailers will benefit from increasing the lifetime values of customers. They can be as simple as asking for referrals and giving a $10 discount for each referral like Alan does at GoDetail. Watch his interview below: [su_youtube url="https://www.youtube.com/watch?v=3jIWyxNjtpU"]Cleanliness is Also Merchandising
Another aspect of merchandising that people forget about is the cleanliness of a store. When you go into a restaurant and every table is dirty, do you really want to eat there? Make sure you keep your space clean.In Merchandising, What Does POG Stand For?
POG stands for planogram, a merchandising tool that helps visualize the space before setting up the display. I couldn’t find any that meet our Trustpilot requirements, but Movista has a list of planogram software providers that look like they’d be beneficial. I’d specifically check out the drag-and-drop providers, which makes it where you can do work without specialized skills. Make sure to ask your suppliers which software they use. If you use the same ones, they might save you a lot of time by sending you the product files to input into the software.Get Merchandised!
We’ve provided you with information on product merchandising, merchandising examples, and other information that will help you with merchandising. Now it’s time for you to apply the information. Go to your store and evaluate the customer experience. Check and see if there is anything you can improve. Whether it’s shelf signage, the store layout, the pricing standpoint, or the checkout process, I’m sure you can find a few ways to improve the experience and get higher sales. What do you expect to be your top-selling item this quarter?
Have you ever wondered how to become a reseller? Becoming a reseller with an online store can be a great way to start your own business or add another revenue stream to your existing business.
Tia Hall started Sneak City in her parents’ garage in 2018 and has since opened two retail locations. Today, she and her business partner Anastasia Lemley make $4.2 million annually.
They started reselling shoes they found at thrift stores for just $50. Now their business is one of the best shoe resellers worldwide.
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Want to learn from Tia’s success? We have all the info you need:
Yes. Resellers can be home-based businesses, but it really depends on your living situation. Each local jurisdiction and homeowners association may have policies about whether you can start a business from home. Tia told us:
[su_quote]I started Sneak City out of my parents’ garage, but had to get my own shop after it started taking up too much space.[/su_quote]
You might also want a shop if you have a large local customer base. Letting them pick up locally can improve the customer experience and reduce your business costs like gas and shipping.
To become a reseller, you’ll need to:
Another popular product category for resellers is clothing and accessories. This includes items like shoes, handbags, jewelry, and clothing. Resellers can purchase these items in bulk from manufacturers or wholesalers and sell them at a markup to customers.
Ryan Hogue resells clothes on his ecommerce store using print-on-demand. Check out our interview with him below.
Finally, services can also be resold. This includes things like web design, marketing, and consulting services. Resellers can partner with service providers and sell their services to customers at a markup. This can be a lucrative and profitable business model for those with expertise in a particular area.
The products and services that can be resold are virtually endless. The key is finding a product or service with high demand and a good profit margin. By building the right relationships with suppliers, you'll be on your way to becoming a successful online reseller yourself.
Now that you have an idea of how to find suppliers, let’s look at getting customers.
You can begin by identifying your niche. This involves determining the specific product categories or industries you want to focus on. By specializing in a particular niche, you'll better understand your target customers and the products they're searching for, making it easier to cater to their needs.
A reseller business plan should:
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For those of you who want to sell your own products or other companies new products, you'll want to research reliable wholesale suppliers or manufacturers to source products. Look for industry-specific directories or databases that list suppliers and manufacturers in your niche. You can also use search engines to find potential suppliers and manufacturers.
Some of the popular ones are:
Once you have a list of potential suppliers or manufacturers, it's important to vet them thoroughly.
Be sure to read reviews and check their ratings on platforms like Google, Yelp, or the Better Business Bureau to ensure they have a good reputation. Then, check their credentials, such as licenses, certifications, and insurance. Ask for references and contact them to learn about their experiences working with the supplier or manufacturer. Check out this article on vetting suppliers.
Finally, feel free to negotiate with your suppliers or manufacturers. Ask about their pricing, minimum order quantities, and shipping options. Define your expectations and requirements, then make sure you have a written agreement before purchasing products. Rocket Lawyers has free manufacturing contract templates.
With these tips, you can find reliable suppliers or manufacturers to help you become a successful reseller.
With the right strategy and execution, anyone can become a successful reseller.
You’ll want to consider multiple ways of selling your resale products when you start a reselling business. Some of the most common ways of selling include:
Marketing your reseller business involves:
Choosing the best inventory management and sales software for resellers depends on various factors such as budget, business size, and specific features needed. Here are some top options:
Each of these services offers a range of features, such as inventory tracking, order management, and shipping management. These tools will help you provide all the necessary documentation to file your taxes. Resellers should evaluate each service based on their specific needs and budget before choosing the right one for their business.
To expand your online resale business, consider some of these options.
- What is a Reseller Business?
- How to Make Money Reselling
- Is a Reseller a Home-Based Business?
- How Much Do Resellers Make?
- How to Become a Reseller Business
- Step 1. What Can I Resell To Make Money?
- Step 2. Research Your Niche Market
- Step 3. Create a Reseller Business Plan
- Step 4. Find Resale Products
- Step 5. Create Your Resale Business Model
- Step 6. Implement Your Sales Strategy
- Step 7. Start Marketing Your Reselling Business
- Step 8. Manage Your Inventory and Sales
- Step 9. Expand Your Reselling Business
- Go Resell With Your Own eCommerce Business
What is a Reseller Business?
A reseller purchases products from a manufacturer or distributor and then sells them to customers for a profit through an online store or retail location. Tia explained how to begin a reseller business: [su_quote]The easiest way to start a reselling business is to go to thrift stores and find items you can start selling online.[/su_quote] Check out our interview with Tia below. [su_youtube url="https://www.youtube.com/watch?v=dJryzKeGwtU"]How to Make Money Reselling
You have to spend money to make more money. The trick is to find products that people are selling that you can buy and sell for more than your costs as the seller, which include the following tasks: For most industries, you’ll want to pay somewhere between 30-70% of what you can sell directly to your own customers. That’s what makes a reseller profitable.Is a Reseller a Home-Based Business?
Yes. Resellers can be home-based businesses, but it really depends on your living situation. Each local jurisdiction and homeowners association may have policies about whether you can start a business from home. Tia told us:
[su_quote]I started Sneak City out of my parents’ garage, but had to get my own shop after it started taking up too much space.[/su_quote]
You might also want a shop if you have a large local customer base. Letting them pick up locally can improve the customer experience and reduce your business costs like gas and shipping.
How Much Do Resellers Make?
Typical profit margins for reselling products or services vary widely depending on the industry and the products or services sold. In general, resellers can expect to make anywhere from 10% to 50% profit margins on their sales. However, some industries may have higher profit margins, such as luxury goods or high-end technology products. Others have lower profit margins, such as basic household items or low-cost services. Tia explained how much she makes to resell shoes: [su_quote]We use the StockX price minus 30% to calculate the offer price when we buy items to resell.[/su_quote] That gives her a 30% gross profit margin in her reseller business. Keep reading to learn more about how to become a reseller business.How to Become a Reseller Business
To become a reseller, you’ll need to:
- Decide what resale items you’ll sell
- Research your market
- Create a business plan
- Find products to buy and sell
- Start your business
- Create a sales strategy
- Start marketing
- Manage your inventory and sales
- Expand your reselling business
Step 1. What Can I Resell To Make Money?
The products and services you can resell are virtually endless. The key is finding and selling items or services with high demand and a good profit margin. With the right strategy and execution, anyone can become a successful reseller. Here are some possible business ideas as a reseller: [su_note note_color="#dbeafc"]- Consumer Electronics
- Resell Clothes and Accessories
- Software and Digital Product Reselling
- Services
- Car Accessories
- Antique Furniture
- Collectibles
Electronics
One of the most common products that resellers sell is consumer electronics. This includes items like smartphones, laptops, tablets, and gaming consoles. These products are always in demand and have high profit margins, which makes them an attractive option for resellers. Mike Wilson is an eBay seller who started a reseller business to fill his time in retirement. He told us: [su_quote]The best products to resell are the ones that you know about. From sealed VHS tapes to electronics and clothes, use your life experiences to establish what it’s worth, and you’ll make a great living.[/su_quote] Check out our interview with him below.Clothing and Accessories
Another popular product category for resellers is clothing and accessories. This includes items like shoes, handbags, jewelry, and clothing. Resellers can purchase these items in bulk from manufacturers or wholesalers and sell them at a markup to customers.
Ryan Hogue resells clothes on his ecommerce store using print-on-demand. Check out our interview with him below.
Software and Digital Products
Software and digital products are also popular among e-commerce store resellers. This includes items like software licenses, e-books, and online courses. These products are excellent for resellers who want to start a reselling business with low startup costs. You can either use affiliate programs, open source software, or whitelabel digital products to resell software. Check out our interview with Mat Diggity to learn his approaches. Not into selling physical goods? Let's have a look at some services you can resell.Services
Finally, services can also be resold. This includes things like web design, marketing, and consulting services. Resellers can partner with service providers and sell their services to customers at a markup. This can be a lucrative and profitable business model for those with expertise in a particular area.
The products and services that can be resold are virtually endless. The key is finding a product or service with high demand and a good profit margin. By building the right relationships with suppliers, you'll be on your way to becoming a successful online reseller yourself.
Now that you have an idea of how to find suppliers, let’s look at getting customers.
Step 2. Research Your Niche Market
Before diving into the world of reselling, it's crucial to understand your target market. Researching your target market will help you:- Identify potential customers
- Create a buyer persona
- Analyze your competition
Identify Potential Customers
You can begin by identifying your niche. This involves determining the specific product categories or industries you want to focus on. By specializing in a particular niche, you'll better understand your target customers and the products they're searching for, making it easier to cater to their needs.
Create A Buyer Persona
Creating buyer personas to represent your ideal customers is a smart way to keep your focus on your target audience. These personas should include demographics, interests, and buying habits. This information will help you tailor your marketing efforts and product selection to appeal to your ideal customer base. One of the aspects of the persona you really want to understand is what your customers can afford. Jim Sears makes $62K per month because he recognized that selling packs of sports cards in addition to individual and boxes of cards can be highly profitable as a reseller. He told us: [su_quote]The younger generations are our target demographic, and they can’t afford boxes that sell for hundreds or thousands of dollars, but they can afford packs.[/su_quote] Hear more from Jim in the video below. [su_youtube url="https://www.youtube.com/watch?v=bP5_Zt9VFXY"]Research Your Competition
Finally, analyze your competition. You can research other resellers in your niche to understand their strengths and weaknesses. This will enable you to differentiate your offerings and identify growth opportunities to position yourself as a go-to source for your target market. Make sure to document everything you learn and share it with others to develop your niche expertise.Step 3. Create a Reseller Business Plan
A reseller business plan should:
[su_note note_color="#dbeafc"]
- Include an executive summary
- Define the products or services
- Identify your target market
- Explain the pricing strategy and how you will make a profit
- Include a marketing and sales strategy
- Provide financial projections and a break-even analysis
Step 4. Find Resale Products
To resell products you’ll have to find the product offerings at reasonable price points. Try these tips to get started:- Search for directories of suppliers online
- Go to places you can purchase products
- Vet suppliers
- Get samples
- Negotiate the terms of the agreement
Search for Supplier Directories Online
For those of you who want to sell your own products or other companies new products, you'll want to research reliable wholesale suppliers or manufacturers to source products. Look for industry-specific directories or databases that list suppliers and manufacturers in your niche. You can also use search engines to find potential suppliers and manufacturers.
Some of the popular ones are:
- Reference USA: The website claims to have over 400 data points on the majority of businesses in the U.S including which wholesale supplier provides each of their products and when the last shipment was.
- ThomasNet: Search a wholesale database by size of company, compliance standard, types of products, and annual sales.
- Wholesale Central: Search their database or check out one of their tradeshows.
- Worldwide Brands: This wholesale supplier directory only lists the highest level of wholesalers and dropshippers. Cut out middle men and get the lowest prices possible.
Go To Places That Sell Items
Another way to find resale items is to go to places where people sell products. Many resellers will go to places like:- Online Marketplaces
- Trade Shows
- Industry Events
- Yard Sales
- Used Clothing Store
- Social Media Sites
- Other Retailers
- Estate Sales
Vet Potential Suppliers
Once you have a list of potential suppliers or manufacturers, it's important to vet them thoroughly.
Be sure to read reviews and check their ratings on platforms like Google, Yelp, or the Better Business Bureau to ensure they have a good reputation. Then, check their credentials, such as licenses, certifications, and insurance. Ask for references and contact them to learn about their experiences working with the supplier or manufacturer. Check out this article on vetting suppliers.
Request Samples
Next, request samples of products to test their quality and ensure they meet your standards. If they don't, keep looking. Get ready to negotiate if the manufacturer provides a good quality product. Learn more about ordering samples.Negotiate with Suppliers
Finally, feel free to negotiate with your suppliers or manufacturers. Ask about their pricing, minimum order quantities, and shipping options. Define your expectations and requirements, then make sure you have a written agreement before purchasing products. Rocket Lawyers has free manufacturing contract templates.
With these tips, you can find reliable suppliers or manufacturers to help you become a successful reseller.
Step 5. Create Your Resale Business Model
Before becoming a reseller, it's important to understand the legal implications of this business model. You’ll need the following components in place:- Business Structure: LLCs and corporations are popular types of businesses for resellers.
- Resale Permit: Most states have a resale permit (sometimes called a resale certificate). These allow you to buy products without paying tax. Learn more about each state’s resale permits.
- Business License: May be required by state or local governments to operate legally. This permit business license allows you to purchase goods from wholesalers without paying sales tax, as you will collect it from your customers when you resell the products.
- Business Account From Bank: Make sure to get a business bank account to keep your business finances separate.
Sales Tax
You'll need to keep accurate records of your sales and purchases for tax purposes. As a reseller, you will collect sales tax and remit sales tax to the appropriate government agency. It's important to familiarize yourself with your state and country's tax laws to ensure you comply. If you reach the point that you have a national presence as an online business, you’ll have to comply with thousands of different tax requirements. Avalara is useful for sales taxes if your website doesn’t have tax handling options.Step 6. Implement Your Sales Strategy
With the right strategy and execution, anyone can become a successful reseller.
You’ll want to consider multiple ways of selling your resale products when you start a reselling business. Some of the most common ways of selling include:
- Listing on Amazon: Find out how to sell products on the world’s largest online marketplace by dropshipping products.
- Niche Marketplaces: Selling on specialty platforms can be a great way to sell products fast. With StockX you can resell the product immediately if there is a bid you are willing to accept on the type of product you are selling.
- Your Website: If you don’t get sales through a website, you’re leaving a lot of money on the table because a business grows by collecting data and increasing lifetime customer value. Learn how to create a website.
- Social Media: You can develop a following and sell on social media. Learn to earn on TikTok.
- Retail Store: Sell in your own retail store or provide wholesale orders to other retailers.
Step 7. Start Marketing Your Reselling Business
Marketing your reseller business involves:
- Setting Prices
- Creating a Brand
- Networking
- Providing Great Customer Service
Setting Prices
Competitive pricing is one of the best marketing strategies for resellers to attract customers. Customers are always looking for the best deals, so make sure your prices are the same as your competitors. You can also offer discounts or promotions to entice customers to choose your products over others. Our dropshipping blog has an example of how pricing works.Creating a Brand
Another effective strategy is to focus on building a strong brand image. This means creating a unique and memorable brand identity that resonates with your target audience. Use social media platforms to showcase your brand and engage with customers. You can also invest in professional branding services to help you create a cohesive and effective brand image. Mike Andes told us: [su_quote]The goal of branding is to bring your customer acquisition costs down as low as possible over the long term.[/su_quote] Learn more about branding. [su_youtube url="https://www.youtube.com/watch?v=C8MyjkibCxk"]Networking
Networking is crucial for resellers. Attend industry events, trade shows, and conferences to connect with potential customers and other professionals in your field. This will help you build relationships and establish yourself as a trusted and knowledgeable reseller in your industry. Check out some networking groups for businesses.Providing Great Customer Service
Finally, customer service is key to attracting and retaining customers. Focus on providing outstanding customer service by responding quickly to inquiries and resolving issues promptly and efficiently. Positive reviews and word-of-mouth recommendations from satisfied customers can go a long way in attracting new customers to your small business. Get some great customer service tips.Step 8. Manage Your Inventory and Sales
Choosing the best inventory management and sales software for resellers depends on various factors such as budget, business size, and specific features needed. Here are some top options:
Each of these services offers a range of features, such as inventory tracking, order management, and shipping management. These tools will help you provide all the necessary documentation to file your taxes. Resellers should evaluate each service based on their specific needs and budget before choosing the right one for their business.
Step 9. Expand Your Reselling Business
To expand your online resale business, consider some of these options.
- Upsell customers. A reselling business can do this both in person and in your own ecommerce store.
- Increase your marketing spending.
- Start reselling additional products.
- Create a customer loyalty program.
- Partner with or buy other businesses.
- Add a retail store.
- Expand to other regions.
- Open a reselling business e-commerce store if you don't already have one.
Go Resell With Your Own eCommerce Business
Now to know how to become a reseller. You are sure to find plenty of amazing used products to resell at garage sales and the variety of other places we’ve named above. Never forget one person’s trash is another person’s treasure. What kind of items would you like to resell?Comments
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