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Gift Basket Maker

If you like to do creative work and you can combine it with good business sense, a future as a self-employed gift basket maker is an attainable goal.

Insiders say that the key to a successful gift basket business is setting your company apart from the competition. Some companies specialize in edible items like sweets, deli foods, or coffee and tea. Others might focus on spa and beauty products, or baskets geared to men.

"Make sure that you have a target market, evaluate the competition and find your niche," says Karen Murphy. She has owned a gift basket company for 10 years.

She adds that once you have someone's business, you can keep them coming back by providing great service. That helps generate repeat business and word-of-mouth advertising.

Pam Newell and her husband Tom ran a successful gift basket company in Ohio for over 25 years before selling it to a customer in 2005. "Service was our number one asset," she says. "If you give your customers the best service, they won't need to go anywhere else. They purchased us, not the product."

Before you start selling, you need a business plan. When Lisa-Marie Begerow and a friend opened a gift basket business in 2001, they weren't fully prepared. "No formal letter of partnership was ever drawn up despite my insistence," says Begerow. "This caused huge trouble down the line."

Her business partner overspent and lasted less than one year before suggesting they close the business. Because they had no formal agreement, it took a year of frustrating and costly litigation before Begerow became the sole owner.

When the Newells started their business in 1979, their only plan was to earn enough to pay their bills. As the company grew, they realized they needed a realistic budget. "We allowed our largest amount for advertising and marketing, rent and utilities," Newell says. After moving to a third location in 1998, they made a five-year business plan. "We completed our goal in three years and [revised] our plan," she says. "Without a goal or plan, you won't know if you have succeeded."

Murphy adds more advice on the business end of operations. "Do your homework, write a business plan and make sure you have more money at start up than you think you will need to get past unexpected expenses," she says.

Beyond rent, utilities and supplies, Begerow says other expenses include insurance, merchant fees, shipping charges, sales tax and promotional materials. You'll also have to pay an accountant, delivery people and any employees you might hire.

Depending on your area, there might be incorporation and licensing fees, too. Anyone dealing with food items needs to know the local laws. "We handled cheese and meat, and although it's shelf-stable, it still needs to be dry and cool," Newell says. "You need to know our local township rules on storage."

"Check your local laws with the Department of Agriculture," Begerow says. "Licensing boards and city hall won't know about restrictions, and you could end up shut down before you even get started."

Before starting her gift basket company, Murphy studied market research and worked with her local Chamber of Commerce and an economic development commission to learn everything she could about doing business in her area. She also compared local and online sales so she'd know where to focus her marketing.

"Ninety percent of our sales are from contracts through sales calls and online sales," she notes.

Marketing is important if you want to succeed. Newell says flyers, postcards, e-mail newsletters and networking help drive people to your website. Tradeshows and conventions are a great way to make your company known to corporations.

Corporate clients are lucrative, but only if you can meet their demands, especially during the busy holiday season. "Business clients can help you grow your business, but you need to know what your goal is and your limits before contacting them," Newell says.

"Is it difficult? That depends on how committed you are, how organized you are and how well you know your vendors," Begerow says. "Make sure you have contingency plans in place -- family and friends who will volunteer -- and have a local van rental place on speed dial in case the next call is 'the one.'"

"Our corporate clients kept our lights on," Newell says. Corporations need baskets for more than holidays and special events. They need them for things like welcoming new employees and marking milestones.

"They faxed in their daily needs. We billed them monthly and delivered daily." Employees who receive baskets often become customers themselves.

The money you can make as a gift basket maker can vary widely.

"We've helped some gift basket owners who only needed to supplement their income, as well as owners that needed to bring in over $100,000 a year," Newell says. "If you're not paying yourself or making a profit, what's the use of being in business?"

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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.