How to Run a Consignment Shop

Female clerk with clothes at a consignment shop
Running a thrift shop can be stressful.

Learn how to run a consignment shop in order to pass great savings on gently used items to others in your area.

Basic Startup Information

Starting and running your own business can be expensive. The first thing to do is to assess whether or not a consignment shop is something that consumers want in your area.

Having too many shops within a small radius can cause competition that will increase chances of failure-possibly yours. On the other hand, if you feel the current second-hand stores are failing to meet a particular need, it might be wise to cater to a niche market, such as children's clothing or thrifty home décor.

Once you determine whether a consignment store is a viable business venture, begin looking for a space. Most cities have zoning laws which would make it illegal to run the shop out of your home. Follow these tips to find a retail space:

  • Look for a shop location that will have high traffic. Stores that are in basements or on the top floor of high-rise buildings might be cheaper to rent, but will people actually find them?
  • Get a lease or rent instead of buying or constructing a building. This way, if your venture fails, you are not stuck with a loan on an empty building.
  • Choose a property that has ample and safe parking nearby, preferably for free or a low rate.
  • Have the building inspected before agreeing to rent or lease it.

You will also need to get proper permits from the city and state for your new venture, including sales tax permits. Be sure to check with your lawyer, tax accountant and insurance agent about your new business regarding issues like liability, tax laws and disaster insurance. Check into getting a small business loan or grant to get started.

How to Run a Consignment Shop: Daily Operations

Your shop will likely lose money the first few months, or even year, that it is in business. Advertising, marketing, utilities, rent, renovations and other overhead costs will eat up most of the profits you earn. To keep yourself sane as you run your business geared towards bargain shoppers, try to make your daily operations run as smoothly as possible.

Consigning Rules

Come up with rules and an agreement form with your lawyer that you can use with people who consign their goods in your shop. Include items like:

  • Condition of clothing
  • Percentage of sales return the consigner gets
  • Rotation of merchandise
  • How often goods will be discounted
  • Policies on retrieving any items that do not sell within a particular timeframe
  • How often you will pay consigners (usually every 30 to 90 days, depending on how quick your inventory turnover is)

Post set times for dropping off goods to be consigned. The best time is when sales are slow, such as early mornings. Write a receipt that details all of the goods you accept, along with the original price you plan to charge customers. Have the consigner sign it and keep a copy for your own files to avoid any disputes.

Shopping Hours

Sometimes it can cost more to stay open than you will make up in sales. Small town thrift stores may find that they will be able to make the most money by following similar hours to downtown businesses. Staying open late one evening and offering weekend hours can also create customers that are otherwise working during regular 9 to 5 business hours.

Post your hours clearly on the door and stick to them. If you find a change in your open hours is needed, be sure to post new hours several weeks before you change them.


Money management skills are essential to keeping the bills paid and deposits straight. Come tax time, having good records will make life a lot easier for you and your accountant.If you are not that good with math or keeping track of receipts, payroll and inventory, it might be worth your time to invest in small business bookkeeping software. Try demo versions or download free trials to find one that you are comfortable using. Consider the following software:

Consignment Growth

Once you have become an established business and are seeing profits from your sales, it may be time to build the awareness of your shop. Consider doing the following to increase sales and foster community goodwill:

  • Joining small business groups
  • Donating items to community nonprofit organizations
  • Becoming a member of the Chamber of Commerce
  • Adding a website to make money online through internet consignment sales
  • Sponsoring city athletic or hobby clubs
  • Hiring additional sales personnel
  • Expanding inventory selection
  • Hosting holiday and other sales events

Until you become profitable, it might be a good idea to keep a part-time job during your off hours from the consignment shop. This way, you have a small but steady income to help pay personal bills while you are getting your business underway.

LoveToKnow Business

Learning how to run a consignment shop can be difficult if you do not have previous management or entrepreneurial experience. Find articles that will help you in your small business venture at LoveToKnow Business:

Was this page useful?
Related & Popular
How to Run a Consignment Shop