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When you think about it, most formal rental shops rent second hand -- or previously worn -- formal wear. Instead of buying new gowns, tuxedos, bride and bridesmaid's dresses for your rental shop, acquire them gently used. For example, most prom dresses are only worn once. Your customers will appreciate the fact they can look fabulous without emptying their wallet.
Put together a business plan. The plan will serve as your guide to the specific action plans necessary to get your second hand shop ready to open and how you intend to grow the business and be profitable. The business plan includes a description of your marketing strategies to reach customer prospects, your competitive advantages over other shops and projected financial statements for the next three years.
Determine the Market
Customers include brides, grooms, bridal party members and parents of the bride. Other potential customers include high school prom attendees and sweet 16 party dresses. Don't forget participants in formal dinner parties and formal fundraisers, and of course holiday parties.
Select the Formal Wear
Special occasion dresses are usually worn only once so they're in nearly mint condition. Find the dresses and men's formal wear at consignment shops, online classified sites and newspaper ads. Advertise to buy gently-used formal wear through the lifestyle section of the local newspaper. Post ads on the entertainment pages of community websites. Call thrift shops and let them know you're interested in gowns, party dresses and accessories, and to phone you when formal wear comes in. Let the churches in the area know you're looking for formal wear and you'll make a donation to the church for every item donated by a member of their congregation.
Find a Location
Formal wear shops, such as gown shops, shoe shops, accessories and jewelry stores often cluster together in the same location. This allows the bride, or party girl, to get everything she needs for her special day in one shopping trip. Your store gets the benefit of those shoppers when it's located with similar, but not competitive shops. Other potential locations include near arts and craft stores or boutiques which don't offer the same type of merchandise you do.
Business and Sales Tax License
In most states, both a business and sales tax license is necessary. Even in the few states where a state sales tax license is not required the city where your shop is located may require its own sales tax license as well as business license. The formal wear is just being rented, but the rental fee may be subject to sales tax. Check with your state and city business offices to see what taxes apply.
Outfit the Store
Display the dresses, accessories and tuxedos as if they were brand new. The store may rent second-hand formal wear but it shouldn't look like a thrift shop. Give the customers an elegant experience. Sort by size and then by color. For example, all the size 8 white dresses could be together, followed by size 8 yellow dresses, and so forth. That would make it easier for customers to find the dress they're looking for quickly. Dressing rooms should be roomy enough for full-skirted dresses and have mirrors and good lighting.
Set up a system that integrates your accounting software with your point of sale system. Integrating the inventory system as well lets you know exactly what you have in stock, what's rented, to whom it is rented, and when it's due back. Make the customer aware when they sign the rental agreement that there will be a surcharge for every day the formal wear is returned late. Take a credit card number in case the formal wear is not returned at all or is returned in a damaged condition. Include on the rental agreement that the credit card will be charged a predetermined amount of money if that happens.
Each time a gown is returned it has to be cleaned quickly so it goes back into inventory as soon as possible. Establish a relationship with one or two nearby dry cleaners that can give you 24-hour turnaround and a discount based on the quantity of business you'll be bringing to them.
Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."