Craft and Cash: How to Start a Gift Basket Business

Consider these crucial factors when launching your gift basket business:

1. Find a niche — Consider specializing in a niche to differentiate your business, such as gourmet food baskets, corporate gift baskets, holiday-themed baskets, or personalized gift baskets.
2. Suppliers — Curate high-quality items for your gift baskets. Source products from reliable suppliers and ensure they align with your chosen niche. Offer a variety of options to cater to different tastes and budgets.
3. Online store and presence — Create a professional website with an online store where customers can browse and purchase your gift baskets. Use high-quality images and detailed descriptions to showcase your products.
4. Packaging — Invest in attractive and durable packaging materials. The presentation of your gift baskets is crucial for making a positive impression on customers and recipients.
5. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or choose one of the top services available.
6. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a gift basket business has pros and cons to consider before deciding if it’s right for you.

Gift basket industry trends

Industry size and growth

• Industry size and past growth – The global personalized gifts market was worth $26.3 billion in 2019 after years of steady growth.((https://dataintelo.com/report/personalized-gifts-market/))
• Growth forecast – The global personalized gifts market is projected to grow by nearly 60% by 2026.

Trends and challenges

Trends in the gift basket industry include:

• Gift baskets that include a variety of items plus a tech gadget are trending, presenting an opportunity for higher revenue products.
• 40% of gift baskets are purchased as corporate gifts, which gives gift basket designers a new market to target.

Challenges in the gift basket industry include:

• Food gift baskets present some liability if perishable items are included and mishandled.
• Offering gift baskets that contain alcohol presents the challenge of complying with laws and regulations. Some states do not allow alcohol delivery to consumers – Alabama, Utah, and Oklahoma. 

How much does it cost to start a gift basket business?

Startup costs for a gift basket business range from $3,000 to $8,000. The main costs are for baskets, wrapping, gifts and a website. You can cut costs significantly if you start out by selling on Etsy or another online platform. 

There are online videos about how to make gift baskets on sites like Gift Basket Review Magazine. You can get a membership for $69 and watch unlimited videos. 

You’ll need a handful of items to successfully launch your gift basket business, including: 

• Baskets
• Tissue paper
• Cellophane wrapping
• Ribbons
• Tags
• Gift items
• Shipping supplies

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100-$300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Baskets, wrapping, ribbons	$500 - $1,000	$750
Gift item inventory for baskets	$1,000 - $3,000	$2,000
Total	$3,050 - $8,100	$5,575

How much can you earn from a gift basket business?

The average price of a gift basket is about $50. Your prices will vary based on what items you put in the baskets. You should aim for a profit margin of about 40%.

In your first year or two, you could work from home and sell 40 baskets per week, bringing in $104,000 in annual revenue. This would mean more than $40,000 in profit, assuming that 40% margin. As your marketing efforts grow, sales could climb to 200 baskets per week. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 20%. With annual revenue of $520,000, you’d still make more than $100,000.

What barriers to entry are there?

There are a few barriers to entry for a gift basket business. Your biggest challenges will be:

• Finding gift items that you can buy in bulk to keep your costs low
• Standing out from established names like Harry and David

Step 2: Hone Your Idea

Now that you know what’s involved in starting a gift basket business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research gift basket businesses in your area and online to examine their products, price points, customer reviews, and what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a custom gift basket company that allows customers to choose specific items for the basket.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine what kind of gift baskets you’ll sell

You need to determine what kinds of gift items you want to include in your baskets. You could specialize in wine gift baskets, or care package gift baskets for college students. You could also choose to offer a variety of baskets instead of specializing.

How much should you charge for gift baskets?

Your prices will depend on the items that you put in your baskets. You should try to mark them up by about 100%, giving you a profit margin of 50%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on what type of baskets you offer. If you make baskets that will attract corporate clients, you’ll find business owners on LinkedIn. You can also call on business owners directly. If you sell online, you don’t have to limit the businesses you call to local businesses. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a production facility. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Gift Basket Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “gift baskets” or “corporate gifts”, boosts SEO
• Name should allow for expansion, for ex: “The Basket Boutique” over “Wine Baskets”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Gift Basket Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief summary highlighting the main points of the gift basket business plan, including its objectives, market opportunity, and financial projections.
• Business Overview: An overview of the gift basket business, detailing its mission, vision, and key differentiators in the market.
• Product and Services: A description of the types of gift baskets and additional services offered, emphasizing unique features and value propositions.
• Market Analysis: A thorough analysis of the target market for gift baskets, including demographics, trends, and potential growth opportunities.
• Competitive Analysis: An examination of competitors in the gift basket industry, outlining strengths, weaknesses, opportunities, and threats to identify a competitive edge.
• Sales and Marketing: A strategy for promoting and selling gift baskets, encompassing advertising, pricing, and distribution channels to attract and retain customers.
• Management Team: Profiles of the key individuals involved in the gift basket business, highlighting their expertise and roles in ensuring the company’s success.
• Operations Plan: Details on how the gift basket business will operate, covering production, sourcing, and logistics to ensure efficient and effective day-to-day functioning.
• Financial Plan: A comprehensive financial outlook for the gift basket business, including revenue projections, expense forecasts, and a break-even analysis.
• Appendix: Supplementary materials, such as additional data, charts, or supporting documents, providing further context and information for the gift basket business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to gift basket businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your gift basket business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a gift basket business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Licenses/Permits

Starting a gift basket business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your gift basket business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as  LS Retail, Vend, or Retail Pro, to manage purchasing, inventory, and invoicing.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Professional Branding — Develop a brand identity that embodies creativity, warmth, and meticulous attention to detail, reflected in your logo, packaging, website, and promotional materials.
• Website Optimization — Create an attractive website that showcases your gift baskets with detailed descriptions and high-quality images. Optimize your site for keywords related to gift baskets and personalized gifts to enhance local search visibility.
• Local SEO — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Social Media Engagement — Use platforms like Instagram, Pinterest, and Facebook to display your baskets, share customer testimonials, and post creative gift-giving ideas.
• Content Marketing — Maintain a gift-giving blog with tips, occasion ideas, and stories behind your unique baskets, establishing your brand as a top choice for thoughtful gifting. Produce videos that highlight the creation and content of your baskets.
• Direct Outreach and Partnerships — Connect with corporate clients, event planners, and local businesses to offer customized baskets for their specific needs and collaborate on bulk orders.
• Email Marketing — Send newsletters updating customers on new themes, promotions, and seasonal offerings to keep your brand top of mind.
• Experiential Marketing — Participate in local markets and fairs to display your baskets, and host workshops where customers can create personalized baskets.
• Collaborations with Local Businesses — Partner with local artisans, gourmet food producers, and merchants to feature their products in your baskets, enhancing the local appeal and variety of your offerings.
• Customer Loyalty Program — Implement a loyalty program that rewards repeat customers with discounts or special perks.
• Customization Services — Provide services that allow customers to select specific items for their baskets, enhancing the personal touch and satisfaction.
• Targeted Advertising and Seasonal Promotions — Utilize local advertising and online platforms to reach potential customers, especially during holidays and special occasions with themed promotions.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your gift basket business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your gift basket business could be:

• Professionally styled gift baskets to wow your clients
• Festive holiday gift baskets to send to your loved ones
• Custom personalized gift baskets to show you care

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a gift basket business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in gift baskets for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in gift baskets. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a gift basket business include:

• Gift Basket Makers – put together gift baskets, ship
• General Manager – ordering, scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Gift Basket Business – Start Making Money!

A gift basket business is easy to start – you just need some baskets, wrapping materials, and all those lovely gifts. It’s a great business to run from home, and eventually grow into a thriving gift basket operation. You can specialize in corporate gift baskets, holiday baskets, care package baskets, or just anytime baskets. 

Now that you’ve wrapped up your business know-how, go ahead and start gifting your way to success!

Quick Answers

Can a gift basket business make money?

Yes, a gift basket business can make money. You just need to try to mark up the cost of your baskets to make a good profit. Just make sure you’re making great baskets that your customers will appreciate.

How do you secure items in gift basket to ship?

To secure items in a gift basket for shipping, you can use tissue paper or crinkle paper to fill any gaps and prevent movement during transit. You can also use bubble wrap or packing peanuts to provide additional cushioning and protect fragile items.

What gift baskets make the most money?

Some popular gift baskets include gourmet food and wine baskets, spa and relaxation baskets, and baby and child-themed baskets. It’s important to research the demand for different types of gift baskets in your area and to tailor your offerings accordingly to maximize profitability.

How can you ensure that your gift basket products are visually appealing and attract customers?

To ensure that your gift basket products are visually appealing and attract customers, you can focus on using high-quality and aesthetically pleasing packaging materials, such as colorful ribbons, cellophane wrapping, or decorative baskets. 

How to differentiate your gift basket business from competitors?

To differentiate your gift basket business from competitors, you can focus on providing exceptional customer service, offering unique or personalized products, and using eco-friendly or sustainable materials.