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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 4, 2022
Investment range
$2,550 - $39,100
Revenue potential
$250,000 - $1.25 million p.a.
Time to build
1 – 3 months
Profit potential
$75,000 - $250,000 p.a.
Industry trend
Growing
Commitment
Flexible
Take these crucial factors into consideration when starting your home decor business:
Starting a home décor business has pros and cons to consider before deciding if it’s right for you.
The US home decor industry has steadily grown since 2010 and continued to perform strongly even when the Covid-19 pandemic struck in 2020.
Trends in the home décor industry include:
Challenges also exist in the home décor industry, which include:
To start an online store for which you have items drop-shipped from a supplier or manufacturer, it will cost about $2,500. That includes the cost of your first order as well as a website. Drop-shipping means that you order products from suppliers only after customers place the order, and then the supplier ships the items directly to your customers. You could sell your items through an Etsy or Shopify store rather than your own website if you choose.
To start a home décor store it will run you up to $40,000. The costs include space rental, the preparation of the space, and your initial inventory.
| 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 |
| Space rental deposit | $0 - $5,000 | $2,500 |
| Space preparation | $0 - $5,000 | $2,500 |
| Initial inventory | $0 - $25,000 | $12,500 |
| First drop ship order | $0 - $1,000 | $500 |
| Total | $2,550 - $39,100 | $20,825 |
Prices will vary by item, but these calculations will assume an average item price of $50. You can mark up your items 20%-40% depending on the item, for an average of 30%. If you have an online store, after expenses, your profit margin should be about 20%.
In your first year or two, you could work from home and sell 5,000 items in a year, bringing in a healthy $250,000 in annual revenue. This would mean a tidy profit of $75,000, assuming that 30% margin. As your brand gains recognition and you get repeat customers, sales could climb to 25,000 items a year. At this stage, you’ll have to rent a storefront and hire staff, reducing your profit margin to 20%. With expected annual revenue of $1.25 million, you would make an impressive $250,000 in profit.
There are a few barriers to entry for a home décor business. Your biggest challenges will be:
Now that you know what’s involved in starting a home décor 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.
Research home décor businesses in your area and online to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the local or online market is missing a home décor business that specializes in 3D art.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as lamps.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll need to determine if you want to specialize in certain types of products, or if you want to offer a variety of home décor products. You should choose the specific items based on what is trending in the market, but you can also use your own eye for design.
Prices will vary based on the items. You’ll need to research what comparable items are selling for to keep your prices competitive. You should aim for a profit margin of about 20%.
Once you know your costs, you can use our profit margin calculator to determine your mark-up and final price point. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be extremely broad, so you should spread out your marketing efforts. You can find customers on TikTok, Instagram, Facebook, and LinkedIn. You could also partner with interior designers to get referrals to their clients.
You can run your business from home if you sell online and use drop shipping. If you open a store, you’ll need to rent a commercial space, preferably in an area that has other shopping options and a lot of foot traffic. 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:
Here are some ideas for brainstorming your business name:
Discover over 310 unique home decor business name ideas here. If you want your business name to include specific keywords, you can also use our home decor business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
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. 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 set 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.
Here are the key components of a 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.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
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 home décor 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.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your home décor business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
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.
Choose Your State
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.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a home decor business. You might also try crowdfunding if you’re making unique home décor items to sell.
Starting a home decor 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.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
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.
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 home décor 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.
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:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
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 Autodesk AutoCAD LT, TurboCAD, and Live Home 3D for interior decoration 3D rendering.
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.
Here are some powerful marketing strategies for your future business:
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 home decor 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 home decor business could be:
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 home decor business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in home decor 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 home decor. 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.
If you’re starting out small from a home office, you may not need any employees. If you open a store, you’ll need workers to fill various roles. Potential positions for a home decor business would include:
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.
So many possibilities! A home décor business offers many options. Whether you make your own items or re-sell some curated items online or in-store, there is money to be made in a steadily growing industry that’s approaching $200 billion.
If you have a great eye for design, and you do some effective marketing to differentiate yourself from the big industry players, you can develop your own client base and grow a successful home decor company. Now that you have fully decorated your business knowledge, you’re ready to build a business plan and be on your way to entrepreneurial success!
If you’re successful, it can be very profitable. You can make about a 20% profit margin depending on the items you sell, and your initial investment can be as little as $2,500, so you should have an excellent return on investment.
Home decor typically refers to the elements used to decorate and furnish a home, including furniture, lighting, decorative accessories, wall art, rugs, and window treatments.
Home decor is purchased by a wide range of people, including homeowners, renters, and businesses. However, some demographics that tend to buy home decor more frequently include women, millennials, and high-income earners.
The most popular home decor items vary depending on current trends and styles. However, some perennially popular home decor items include throw pillows, rugs, wall art, lighting fixtures, and decorative accessories such as vases and candleholders.
Yes, it is possible to start a home decor business on the side. Starting a side business can be a great way to test your ideas and see if there is a market for your products or services. You can start by identifying a specific niche within the home decor industry and creating a business plan that outlines your goals, target audience, marketing strategy, and financial projections.
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