How to improve a mediocre resale business plan
July 19, 2017
Your resale business plan could be missing something
No matter where you are in the process of owning your own store, there is room for improving your business plan. Your resale business plan is the foundation your store is built on. It’s filled with numbers and policies, saving you time and money. But let’s face it, very few businesses have a complete business plan.
Resale business plans often make one critical mistake
Unfortunately, business plans attempt to predict the future. You plan and prepare, but there are always factors you have not considered. One critical mistake that many resale businesses make however, is not forecasting sales. Owners of resale shops think because their items are usually one of a kind, they can’t predict future sales. Nothing is further from the truth.
Forecasting should be a part of your resale business plan
Forecasting uses past and present information to look at the future. It doesn’t require a math degree, just the good old-fashioned ability to make an educated guess. To determine the success of your resale business, you need to estimate at least 52-weeks of future sales. How is that done when you’re a brand new business or open less than a year? For that matter, how does any business determine future sales?
The value of information
One forecasting approach looks strictly at data. Take a look at the success or failure of businesses in your community. Study the competition as closely as possible. Since the rise of resale came out of the recession, study your area’s overall economy. Look at the demographics of residents in your area. Check with your local Chamber of Commerce to see their predictions for growth. If you’ve been in business for awhile, review past sales data closely. Look for seasonal fluctuations and even weekly changes, if possible. Find the trends.
The value of opinions
To realize there’s money in the resale business, you only need to look at the success of ThredUp and The RealReal. Unfortunately, translating their success to your business is the challenge. Another type of forecasting uses basic gut intuition and the valued opinions of others. According to recent articles, the upcoming Millennial and Gen Z generations are very interested in sustainability and eco-friendliness. Upcycling vintage merchandise continues to grow. Plus, the success of cable channels like HGTV shows the nation is thrilled with taking the old and making it new. Intuition would tell you there’s only room for growth in the resale industry.
If the resale industry is growing, why are businesses closing?
ThredUp recently released a study that suggests the apparel resale industry will almost double by the year 2021. According to their data, it was $18 billion in 2016. They are forecasting the industry will reach $33 billion within 5 years. The National Association of Resale Professionals (NARTS) states the industry has grown 7% each year for the last 2 years. At Traxia, one of our goals is to educate the resale community. We have worked with well over 1,000 resale shops. Generally, the reason shops leave SimpleConsign is because they are closing their doors. Why do some shops thrive while others do not survive? Read The 7 reasons consignment shops fail and how you can avoid them.
Don’t be afraid to forecast
Remember, forecasting is nothing more than an educated guess. The results are not set in stone. Simply put, estimating future sales for 1 year is a strong indicator of success or failure, but it is not gospel. A lot of factors come into play. For more information, read Creating a Sales Forecast.
