Do you feel passionate about doing your bit for the environment by giving a second life to pre-loved clothes and accessories? If you have a penchant for vintage fashion and a head for business, you may have decided to open your own thrift shop.
Before ordering in your stock and hiring a few friendly faces to talk with your customers about the benefits of slow fashion, however, it's important to think carefully about your business plan - because the success of your venture depends on it.
If you're not sure how to go about drafting up a business plan, then you've come to the right place. Simply read our guide below to make your thrift shop business plan come to life.
Why even write a business plan for a thrift shop?
Writing a business plan is an essential step in creating a business. It has three main objectives.
First of all, it enables you to check that your venture can be profitable.
A business plan will also help you evaluate exactly how much capital is needed to start your business.
Finally, a thrift shop business plan will also be specifically requested by any bank or investor you decide to approach, so drafting one up is a mandatory step when it comes to securing financing.
What information is needed for a thrift shop business plan?
Market research is an essential prerequisite for the creation of any business plan.
It will not only enable you to understand the dynamics of the market you've chosen to enter, but also help you understand the expectations of your customers to ensure your offering the type of second-hand goods and service they're looking for.
Writing a thrift shop business plan also enables you to keep track of the staff and equipment requirements of launching and operating a thrift shop, as well as how much each investment will cost.
It's also within your thrift shop business plan that you'll add up the costs associated with the stock, insurance, legal and accountancy fees, as well as your utility bills and rent.
To obtain the best rates and ensure you estimate these expenses as accurately as possible, get in touch with several professionals and ask them for quotes.
The financial forecast of a thrift shop business plan
Let's now look at the financial part of your thrift shop business plan. The financial forecast is composed of four tables, all of which have a specific function that we delve into below.
The projected loss and profit account
With this table, you'll have an overview of the expected turnover, growth, and profitability for your thrift shop over the first 3 to 5 years of activity. This essential chart helps you identify potential opportunities to reduce costs and enables you to ensure the profitability of your thrift shop.
The projected balance sheet
The projected balance sheet shows the value of the company's assets at a given time, and, in particular, the value of the assets (what the company owns) and liabilities (what the company owes to suppliers, lenders, etc.).
The projected cash flow statement
With the help of a projected cash flow statement, you will see how much cash is generated in your thrift shop business plan, where it comes from, and how it is used, whether it's to repay its loans or purchase more stock.
You'll also be able to see if you have enough cash to fulfill your obligations, or even if you might soon have enough cash to expand your business by opening more thrift shops.
The start-up capital
This section of your thrift shop's financial forecast gives your bank or investor a quick overview of the resources needed to launch your business and their costs - as well as ways in which they'll be financed, including via equity contribution, shareholder loans, and bank loans.
The editorial section of a thrift shop business plan
Whilst some believe that numbers speak louder than words, the written part of your thrift shop business plan should not be neglected.
Considering the fact that it puts the figures and estimations set out in the financial forecast into context, it's arguably just as (if not, more) important as the financial part.
Presenting each aspect of the business in detail, as well as the specific risks associated with it (and how you plan to combat them), the editorial section demonstrates to investors that you've thought long and hard about how you can create a strong and adaptable business model.
A thrift shop business plan is usually made up of the parts we present below.
The executive summary
Think of this section as the equivalent of a cover letter for your thrift shop business plan. The aim here is to introduce your project to investors in as engaging and concise a manner as possible, encouraging them to read on and learn more about your exciting venture.
In this part, you place a spotlight on the business's partners and their roles, as well as the distribution of the company's capital and the location of your thrift shop.
Products and services
This section explains the products being sold by your thrift shop, as well as the prices you've set for each.
It's within this section of the thrift shop business plan that you'll present the results of the market research we mentioned at the beginning of this article. The objective here is to demonstrate that there is indeed a viable business opportunity for your thrift shop to flourish.
Your business strategy
In this part, you'll reveal three key plans for your thrift shop business plan:
- Your pricing strategy - the prices you'll set
- Your marketing strategy - the actions you'll take to attract customers and build customer loyalty
- Your risk management strategy - how you'll minimise the risks related to your business
From your employees to your relationship with suppliers, you'll detail the operational organisation of your business.
The financial plan of your thrift shop
The financial forecast of your thrift shop, referred to earlier in this article, is accompanied by commentary that explains the assumptions used and the main results expected.
What tool should I use to write my thrift shop business plan?
Writing a thrift store business plan is not an easy task, especially when you have never done it before. There are several tools available to help you write your thrift shop business plan. To ensure you pick the solution that best suits you, we've reviewed the pros and cons for each below.
Write your business plan using Word or Excel
This solution has one major advantage: it's cheap.
Be wary, however, that you'll need to have an accounting background (or at least be very good with numbers) to write your plan in this way without making mistakes in the calculations.
Hire a consultant to develop your business plan
Hiring a chartered accountant or consultant to take care of the financial part of your thrift shop business plan is a good way to avoid errors.
However, the fees are generally quite expensive: budget around £1.5k ($2.0k) for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders).
If you decide to hire a consultant or accountant, remember to check what's included in the service - are they developing a complete business plan or just doing the financial forecast? And are you willing to pay extra for them to make changes, if necessary?
Using online business plan software
The last option is a tempting one: create a business plan for your thrift shop using online business plan software.
There are several advantages to using specialised software:
- You are guided through the writing process by detailed instructions and examples for each part of the plan.
- You can be inspired by already written business plan templates
- You can easily make your financial forecast by letting the software take care of the financial calculations for you.
- You get a professional document, formatted and ready to be sent to your bank.
This third option offers an interesting compromise as using software is not only quicker and less technical than drafting your business plan alone, but it's also way less expensive than using a consultant.
If you are interested in this type of solution, you can try our software for free by signing up here.
That's it for now, we hope this article has helped you better understand how to write a thrift shop business plan. If you have any questions related to setting up your business, please do not hesitate to contact us.
Also on The Business Plan Shop
- How to start a thrift shop
- Business plan template for a thrift shop
- How to open a clothes shop with no money
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