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| Potential profits
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Since the gift basket business offers a product that is always in demand, the profit potential is impressive. Some home-based gift basket services have reported gross profits of over $100,000 a year. And many of these people started their gift basket services with less than a $2,000 investment.
Even small baskets produce substantial profits. An average gift basket may cost the business owner from $5 to $10 and retail for as much as $50. Spare-time operators have reported selling an average of 10 baskets per day, priced from $35 to $50 per basket.
In a year's time, that could mean a profit of nearly $100,000 with very little overhead involved.
Although the potential profits from a gift basket service, even with a minimal initial investment of $2,000, are substantial, you should have an estimate of your potential sales and profit before you start your business. There are several factors involved in estimating monthly sales and profit:
(1) Make an estimate of how many people in your market are viable prospects as customers for your product. In making this estimate, be reasonable and conservative.
(2) Estimate the average sales you can reasonably expect from each customer.
(3) Figure out the total yearly sales volume by multiplying the projected number of customers by the projected amount of money each will spend.
(4) Project seasonal sales patterns. Each month of the year should have varying percentages of the total volume, especially holiday months.
(5) To estimate monthly sales, take the total annual sales figure from step three and multiply it by the estimated monthly percentages.
(6) Adjust these monthly sales estimates by taking into consideration the start up period. This will be strictly an estimate if you haven't yet started the business.
(7) Subtract all your labor, materials, and overhead expenses from the monthly sales estimates. The remaining figure is your net profit before taxes.
These steps may seem somewhat complicated, especially before you've started the business. But this projected operating statement makes good business sense and will give you a head start on handling your finances once your business is off the ground. Once the business is in full operation and actual operating information is available, you can update your projected operating statement on a regular basis.
The potential for profit from operating a gift basket service depends on several factors. Most important is the market of potential customers. The amount and type of inventory you have to offer along with the creative quality of your gift baskets, also plays a major role in your financial success. If you are a disciplined and enterprising person, your potential earnings from a gift basket service could very well climb into six figures.
Success analysis
Eight contributing factors are measured on a 1 to 10 basis (with 10 being excellent) based on analysis of this opportunity.
- Time Investment 7
- Start-up Costs 6
- Gross Income Potential 8
- New Income Potential 7
- Income in Relation to Investment 7
- Stability 9
- Overall Risk 6
- Potential for Growth 9
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