BUSINESS OVERVIEW

As the owner of a souvenir shop, you’ll stock your retail store, cart or kiosk
with inventory of interest to tourists. Your offerings will reflect the
demographics and socioeconomic strata of the market. For instance, if
you’re at a vacation destination that draws young families, you might stock
novelty trinkets, toys, t-shirts, candy, and gum. However, if you’ll attract
more sophisticated travelers, you might sell pricier jewelry with a local slant
-- ie, designed with stones or gems found in the region.

Who is this business right for?

You can succeed if you know your market. You must be able to match
inventory with the needs of vacationers and at an affordable price point.

What happens during a typical day at a souvenir

shop?
Your typical workday could consist of a range of activities, including the
following:

 Opening and preparing your location for customer traffic

 Scheduling and supervising staff, if you have any
 Waiting on customers and helping them find appropriate souvenirs
 Handling vendors, arranging credit relationships, and ordering
merchandise
  Keeping your store clean and merchandise appealingly displayed
 Networking with other sellers in your area, so they keep you in mind if
customers ask for merchandise they don’t carry -- and you’ll do the
same for your neighboring sellers
 Staying in contact with landlords, local officials, and others who can
impact your business operation
 Paying bills, maintaining financial records, and managing cash flow

What is the target market?

If you’ve anchored your business in the right location and stocked your store
with appropriate inventory, your customers will find merchandise they’ll want
to remember their travels by. Vacationers are primed to spend premium
rates while away from home because they consider it to be part of the
experience. They’re sentimental impulse buyers looking for souvenirs that
will connect them with their travels. Or perhaps they’re looking for small gifts
for family members, friends, or co-workers who didn’t come along. Either
way, they’re motivated to spend.

How does a souvenir shop make money?

Your sole route to profitability is to sell merchandise to enough people at
costs that cover your rent, staffing, inventory and miscellaneous costs and
yield an appropriate profit. You’ll have an advantage over conventional
retailers in that you can stock your location with items they wouldn’t have
necessarily bought under any other circumstance. For instance, an
inexpensive keychain with the name of the travel destination is of value only
at that point in time. Similarly, you won’t compete with the Internet, since the
purchase is location-inspired.

What is the growth potential for a souvenir

shop?
You’ll have fewer worries when the economy is humming and people are
traveling (and spending). However, people vacation even in bad times,
though they’ll stick closer to home and spend less on souvenirs. You can
respond to the realities of the marketplace by adjusting your inventory to sell
less pricey goods when budgets are tight.
 GETTING STARTED

What are some skills and experiences that will

help you build a successful souvenir shop?
It’s incredibly important to start with a realistic business plan. This valuable
start-up tool will help you identify your customer profile and stock up on
merchandise that will sell. You must be able to accurately track sales to
unveil trends and see what’s selling and what’s not. And finally, you should
have a strong sales instinct, to turn shoppers into buyers.

What are the costs involved in opening a

souvenir shop?
That will be highly variable depending on your location, size of business,
clientele and the merchandise you carry. But here are some cost
breakdowns for illustration purposes. Lease -- $5,000 to $20,000 or more.
This is highly variable because there are so many different factors involved.
First, location. It will certainly cost you more to rent a store on Time Square
than outside of Cedar Point in Ohio. Also, you might rent anything from a
small kiosk at $800 a month for summer months only, to a year-round
thousand-square-foot shop.Utilities -- Zero to $6,000 a year or more. If you
go the kiosk route, you might pay nothing. But a year-round store could
involve air conditioning in the summer months and heating in the
winter. Inventory -- A minimum of $4,000, generally. It really depends on
what you’re selling.
Staffing -- $20,000, plus. This includes the bare minimum you have on hand
to support yourself as you get your business started. It might be a lower
amount if you’re only open seasonally. This estimate includes no additional
help. You’re likely to start alone, and add staff as the situation warrants.
Computer hardware and software and cash register -- $2,500 or more. This
includes the retail management software that will enable you to manage
sales, inventory, invoicing, cash flow, and other critical tracking needs.
Promotion and marketing -- $2,000, est. You won’t need much ongoing
advertising and marketing if you’ve chosen your location wisely. That’s
because the attraction itself, whether it’s an amusement part, a touristy part
of town, a museum, or seaside destination, will draw foot traffic. But you’ll
want to hire a graphic designer to design your logo, website, and
signage. Decorating, remodeling and signage -- $500 to $6,000 and up. It
could range from a decorative umbrella with your logo to a full store
makeover. But it’s important to decorate to draw the attention of the
audience you want.
Licensing and permits -- $200, est. This cost could be much higher in certain
exclusively priced locations, such as Time Square. Consult the Small
Business Association (SBA) website for valuable information on the licenses
and permits you might need in your area.
This Inc. Magazine article gives a good breakdown of opening costs for a
small retail store.

What are the steps to start a souvenir shop?

Once you're ready to start your souvenir shop, follow these steps to ensure
that your business is legally compliant and avoid wasting time and money as
your business grows:
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. A few important
topics to consider are:

 What are the initial costs?

  Who is your target market?
 How long it will take you to break even?
 What will you name your business?

Choosing the right name is very important. We recommend checking if the

business name you choose is available as a web domain and securing it
early so no one else can take it.
STEP 2. Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being
personally liable if your security guard company is sued.
STEP 3. Register for taxes
You will need to register for a variety of state and federal taxes before you
can open for business.
STEP 4. Open a business bank account
Recording your various expenses and sources of income is critical to
understanding the financial performance of your business. Keeping accurate
and detailed accounts also greatly simplifies your annual tax filing.
STEP 5. Set up business accounting
Recording your various expenses and sources of income is critical to
understanding the financial performance of your business. Keeping accurate
and detailed accounts also greatly simplifies your annual tax filing.
STEP 6. Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines,
or even cause your business to be shut down.
STEP 7. Get Business Insurance
Insurance is highly recommended for all business owners. If you hire
employees, workers compensation insurance may be a legal requirement in
your state.
STEP 8. Define your brand.
Your brand is what your company stands for, as well as how your business
is perceived by the public. A strong brand will help your business stand out
from competitors.
STEP 9. Establish your Web Presence
A business website allows customers to learn more about your company
and the products or services you offer. You can also use social media to
attract new clients or customers.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality
mentorship. As you start planning your business, connect with a free
business resourcenear you to get the help you need.
Having a support network in place to turn to during tough times is a major
factor of success for new business owners.

What are some insider tips for jump starting a

souvenir shop?
Find multiple sources for the inventory you want to carry. You can find most
of that online, such as this wholesale site. Also consider attending gift fairs
such as NY Now, which attracts numerous wholesale product exhibitors and
retail buyers.
Unless you have a successful track record in business, it will likely be
difficult to get bank loans. That might mean that you rely on savings, credit
cards, or small loans from friends and family. With that in mind, it’s
important that you try to earn credit with vendors and have strategies to turn
over your inventory quickly.

GROWING YOUR BUSINESS

How to promote & market a souvenir shop
Your store name and signage are important since your destination might be
one of many in the area. Also, try to stand out by the originality of your
displays. If you’re only selling the same t-shirts and mugs as everyone else
on your boardwalk, the items will become a commodity and the sale will go
to the first store in line or whoever has the lowest price.

How to keep customers coming back

Most of your customers will be new, impulsive buyers. So customer
retention won’t be an important consideration. However, be sure to hand out
business cards and fliers, and let your customers know that they can order
your merchandise online if they’d like.
As for those first-time shoppers, it’s your inviting displays and personality
that will turn them into buyers. Do you have the ability to dress up a store
and strike up instant friendships without pressuring shoppers?

How and when to build a team

If you’re starting your shop on a shoestring budget, you might try to go it
alone. However, you’ll quickly find that the long hours and multiple
responsibilities (hopefully including the long customer lines at the cash
register) mean you need help. You can usually start by finding part-time help
at or near minimum wage.

LEGAL CONSIDERATIONS
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a souvenir
shop. Learn more about licensing requirements in your state by
visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or

services they provide. To learn more about how sales tax will affect your
business, read our article, Sales Tax for Small Businesses.

For more information about local licenses and permits:

 Check with your town, city or county clerk’s office

 Get assistance from one of the local associations listed in US Small
Business Associations directory of local business resources.

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save
your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets
(your home, car, and other valuables) are at risk in the event your LLC is
sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are
to:

Open a business bank account

 This separates your personal assets from your company's assets,

which is necessary for personal asset protection.

 It also makes accounting and tax filing easier.

Recommended: Get $200 when you open a business checking account

with Chase.

Get a business credit card

 This helps you separate personal and business expenses by putting

your business' expenses all in one place.
 It also builds your company's credit history, which can be useful to raise
money and investment later on.
Recommended: Learn about the best small business credit cards here.

CORPORATE VEIL
To learn more about maintaining your LLC's corporate veil, read our guide
and protect your personal assets.

Certificate of Occupancy
A souvenir shop is generally run out of a storefront. Businesses operating
out of a physical location typically require a Certificate of Occupancy (CO).
A CO confirms that all building codes, zoning laws and government
regulations have been met.

 If you plan to lease a location:

o It is generally the landlord’s responsibility to obtain a CO.
o Before leasing, confirm that your landlord has or can obtain a
valid CO that is applicable to a souvenir shop.
o After a major renovation, a new CO often needs to be issued. If
your place of business will be renovated before opening, it is
recommended to include language in your lease agreement
stating that lease payments will not commence until a valid CO
is issued.

 If you plan to purchase or build a location:

o You will be responsible for obtaining a valid CO from a local
government authority.
 o Review all building codes and zoning requirements for your
business’ location to ensure your souvenir shop will be in
compliance and able to obtain a CO.

EARNING POTENTIAL

How much can you charge customers?

That will depend on your merchandise. But you can charge higher markups
than might be possible elsewhere since most of the items you carry can only
be easily found in your location. Once a family of customers goes home to
Germany, where are they going to find a My Heart’s in San Francisco t-
shirt? And why would they buy it anytime except during their San Francisco
vacation?

What are the ongoing expenses for a souvenir

shop?
Your ongoing costs will include staffing, inventory, rent and utilities. This can
be a pricey tally depending on your location, clientele, and type of business,
and it reinforces the need to sell as briskly as possible.

How much profit can a souvenir shop make?

According to figures that appeared in the Small Business Development
Center Network (SBDC) National Information Clearinghouse, “Seventy-eight
percent (78%) of America’s gift shops employ only one to four employees
and 75% have less than $200,000 in annual sales.” But your own sales
figures and profits will be determined primarily by your mix of merchandise
and location.

How can you make your business more

profitable?
Consider adding food or beverages to your product mix. Just remember, you
must first obtain licensing from your local health department.

Next Steps
Get more ideas with our Business Ideas Tool.
Check out our How to Start a Business page.
Sign up at the Business Center to access useful tools for your business.

USEFUL LINKS
Industry Opportunities
 Presents of Mine Franchise Opportunity
 Gift and Home Trade Association
 Souvenir Homesale Distributors Association

Real World Examples

 Hollywood Megastore
 Memories of New York

Further Reading
 Tips for Opening a Souvenir Shop
 Starting a Souvenir Shop

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