How To Start a Toy Store Business
Everyone has a favourite childhood toy. Something that takes them back to a more innocent time, where they were free to play and have fun without the pressures of modern adult life. These modern day stresses may go some way towards explaining why toys have become such big business, not just with children, but adults too.
The UK toy industry is a behemoth, with £3.3 billion of sales in 2020 alone (a 5% increase on 2019), making it the biggest toy market in Europe and the 4th largest in the world. While toys may still be a predominantly child-focused business, the last few years have seen a significant increase in sales to so-called ‘kidults’ – people over the age of 12 looking to purchase toys and collectibles. In fact, 27% of total sales in 2020 were to this age group, up 16% since 2016.
With all that in mind, it’s no wonder why many are looking to get into the potentially very profitable business of selling those must-have collectibles and cherished memory makers. If that’s you, we’ve got some top tips to help you get started with your toy store business.
- Create a business plan
- Form a legal entity
- Find the right premises
- Get the right insurance
- Hire the right staff
- Market your brand
1. Create a business plan
The first thing to decide when opening a toy store is what kind of business you want to run. With the rise of pop culture collectibles, the toy industry is now much more diverse, with a wider variety of customers on offer. Will you focus on the growing ‘kidult’ market by stocking more action figures, themed clothing and card games, or will you rely on the more traditional child market? By figuring out your niche, and deciding exactly what types of products you want to sell early on, you can tailor your plans to meet the needs of your target audience from the off.
Once you’ve figured out who you want to sell to, you’ll need to think about your anticipated level of demand. How many customers are you expecting and how much money do you realistically think you’ll bring in? It’s important you’re honest with yourself, as this will allow you to invest the appropriate amount to get the business off the ground, with the knowledge you’ll be restocking the coffers in a reasonable amount of time.
Next up, you’ll need to determine where you’ll be running your business from – whether that’s a physical shop or as an online store. The idea of an online only business may be questionable to some, but with online toy sales up 31% last year, accounting for 49% of all sales, the numbers tell a different story. Having an online presence, whether that’s a completely online store, or a click and collect service linked to a physical shop, could lead to a noticeable income boost.
If you opt for a physical store, you’ll need to think about where you’re going to be located and what the potential customer base in that area is. Are you looking at an area with a lot of young families? Or perhaps near to a college or university, with an eye on that older collector market? Establishing your intentions at this stage allows you to plan with your target market in mind, and base your plans around them.
What do I need to include in my business plan?
Once you’ve decided on the kind of toy store you want to run, it’s time to put together your business plan. You’ll want to include:
- What type of business you want to run
- What kinds of products you’ll stock
- The name and image of your brand
- Your budget
- Start up and staffing costs
- Your premises
- Marketing and advertising
2. Form a legal entity
Legally, every business needs to be registered with HMRC and Companies House, either as an incorporated company, a sole trader or a partnership. As well as this, you’ll need to make sure your operating premises are filed under the correct use class with the Local Planning Authority – a retail business like a toy shop would be class A1.
You’ll need to ensure you get this done well in advance, as everything needs to be registered at least 28 days before your business opens to customers.
Costs involved in starting a toy store
As with all businesses, there’ll be some start up costs before you can open your toy store. The bulk of this will be the upfront costs of your shop equipment and decoration, but you’ll also need to consider the licensing costs of your commercial premises. Remember, even things as small as playing music in your shop need a license, so make sure you’re covered.
You’ll also have regular monthly or annual outgoings, such as:
- Rent or mortgage costs
- Utility bills
- Shipping costs
- Licensing fees
- Marketing costs
Budgeting is key here. This may seem like a lot of spending to stay on top of, but with careful planning and strict budgeting, you’ll be fine.
3. Find the right premises
Finding the right premises for your business can be a formidable task, but get it right and business can boom. Get it wrong and playtime could be over, just like that.
Think about where you’re based and who your target audience is. Where would you be best placed to attract as much of that group as possible? For more traditional toy shops, aiming for a busy town centre or shopping centre could be the perfect setting to attract passing interest from eager children getting dragged on a shopping trip by their parents. This kind of footfall is the lifeblood of a child-focused store. However, if you’re aiming for an older audience, looking for more specialist products, aiming for a spot close to travel links like train and bus stations, or near to colleges and universities, could be a very lucrative decision.
Carefully consider how much space you need to fully showcase your products. If you’re looking to catch the eye of those passing customers, a premises with a large display window is perfect for showing off your goods. You’ll also need to think about how your stock is going to be organised. Do you need a lot of shelf space, or are you opting for display cases or tables? All of this will impact how much space you need, which in turn will affect the cost of the premises.
Rent or mortgage on a standard retail premises can range from £1000-5000 per month on average, meaning it will likely account for the largest chunk of your ongoing costs. You’ll also need to factor in conveyancing costs, or having a solicitor oversee the leasing process. This can cost anywhere from £400-1500, depending on how much work is involved. All of this, plus your other start up costs can quickly add up, so make sure you’ve figured out your budget and are sticking to it meticulously.
4. Get the right insurance
At its heart, all business is risk management, whether it’s leveraging the cost of buying in your stock against the potential sales made, investing in the right staff to help your business thrive or jumping onboard a new trend in the hopes it’ll yield a healthy profit. But some risks just aren’t worth taking.
By investing in the right insurance policy, you can be sure you’ll be protected financially if any claims are made against you or your business. Your best bet will be purchasing a specialist toy shop insurance policy, providing you with a comprehensive package of covers to keep you protected against the most common risks that come with running a toy shop.
But if you decide against a bespoke plan, tailored specifically for your business, there are some covers you should make sure are included in your insurance policy, such as:
- Public liability insurance: This covers you if a claim is made against you or your business by a member of the public, who has suffered an injury on your business’ premises.
- Employers liability insurance: If you hire staff, legally you must have this, as it provides protection in case a member of your staff suffers injury or illness as a result of their work for your business.
- Business interruption insurance: If you have to close your business for a period of time, for example, due to fire, flood or extreme weather, this keeps you financially protected. But do note, you won’t be covered in the event of forced closure because of a pandemic, or something that forces the closure of multiple businesses in the area.
- Business contents insurance: If any stock, equipment, or anything else kept within your business premises gets damaged, lost or stolen, this covers the cost of any repairs or replacements.
5. Hire the right staff
It’s always more fun to play with others, and the same can be said of running a successful business. With the right team behind you, you can all be winners in the toy-selling game.
The first thing to consider when hiring employees is to know exactly how many you’ll need. How busy are you anticipating the shop to be, and how many people will it take to shoulder the workload?
You’ll also need to be sure of what type of employee you’re looking for. In a traditional toy store, you’ll want to be sure your staff are comfortable dealing with children and able to understand what toys they’re looking for. This is where good product knowledge is essential, and it becomes even more so when selling pop culture collectibles. Do your employees know their Pickle Rick from their Princess Bubblegum? Are they up to date on the latest line of Funko Pop figures?
This is where you’ll need to think about whether your staff need training. It may seem ludicrous, but being up to date on what the kids are into nowadays is a vital skill when running a toy shop. Along with this, you’ll want to ensure your staff are trained in more traditional retail skills like keeping inventory and working the till.
6. Market your brand
While passing footfall is great, you don’t want to rely solely upon it to get customers into your shop. That’s where the power of good marketing comes in, giving you the chance to attract customers from far and wide to your emporium of playthings.
What style of marketing you go with depends entirely on your target market. You could consider a local poster and leaflet based campaign, targeting areas like parks and soft play areas, where families are likely to gather. Alternatively, if you’ve got an online presence, then Google paid ads are a great way to go, giving you the ability to bid for ads on the front page of a Google search. You may also want to market directly to your target audience with a social media campaign, which could be particularly effective if you’re targeting the older ‘kidult’ demographic.
There are a lot of options available to you when it comes to good marketing, and it can be hard to know which is the right one for your business. If you’re feeling overcome by the marketing process, consider hiring a marketing agency who can take care of all the complicated work for you. It’s worth keeping your budget in mind, however, as marketing can become expensive depending on your approach. At Brisco Business, we prioritise building long-term relationships with our clients by offering exceptional customer service and reliable business insurance solutions.
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