Caroline Weaver, from last week’s interview, is the founder of CW Pencil Enterprise, and her first shop was the most friendly and beautiful 200 square feet in all of New York City. She’s currently in the process of moving to a new location, and so we’ve asked for her expertise on the process. Here are her 10 steps and tips to opening your own shop, sprinkled with our links to resources and explanations to help you to accomplish them.
1. Have an idea you are extremely committed to.
“I think the hardest thing is coming up with an idea that you’re not going to get sick of, and something that you love enough that it’s convincing to your customers and your industry too – that you’re really serious and you really care and this is truly the one thing that you want to be doing with your life. You have to find something that’s convincing for yourself and for every body else.”
2. Think of a name for it that fits.
“When I was trying to pick the name of the store, there are so many puns and stupid jokes about pencils; I definitely didn’t want anything remotely close to that. I wanted to make sure people treated the business seriously. Then I realized, no matter what I call it, people are just going to call it the pencil shop. So I researched the way people used to form their business names and that’s how I came up with it. I like that it has a super serious name.”
3. Legally form the business.
“To start a business, you have to register with the state and follow their procedures. Most people start a business as a LLC.” A LLC or Limited Liability Company is a type of business that can be owned by one or more individuals, and the point of forming it is creating an entity separate from yourself that’s responsible for its own debts and lawsuits. It’s what makes you an official business, and without it, you can be taxed twice. Setting up these forms is actually a pretty simple process. The forms and fees for filing them vary by state, and so here’s the most comprehensive guide we found for doing so.
4. You also need a Tax ID Number, or EIN.
“This is basically a social security number for the company. It’s especially important for a retail business to have because that’s the number that you use when you’re buying inventory so you don’t have to pay tax on it.” Later down the line once you sell things you have to pay sales tax, so without this number, you have to pay twice. To get this number, you need to do so online directly through the IRS, and their application is here.
5. Set up a bank account in your business’ name.
This one’s pretty important to do too, especially for buying what you’re planning on selling. “They won’t let you into trade shows without showing a credit card or debit card with a business name on it!” It’s also very helpful when tax season rolls around so you aren’t mixing in personal expenses that might show you have more to pay than you actually do. Most banks offer this service, though not all credit unions do, so it’s best to check in person or call around to learn about the fees and setup processes that differ from bank to bank.
6. Decide if you want a physical or online retail store.
Especially in NYC, renting out a physical storefront is expensive to do. And if you do this, you have to get commercial rent insurance and really think about how much of your resources you can spend on making it look good. If you are nervous about this leap, it may be a good idea to start with an online shop instead. “It’s important to decide either way what you want the vibe of the shop to be. Are you going to go with your own taste and assume that everyone will like the same thing? What kind of customers are you trying to attract? What do you like that you feel you can really sell because you just really love it? It’s about taking what you know and like and making it into something other people will like too.”
Also, think about exactly how much space you’ll need for this venture. “My closets became full of pencils and fulfillment was really tricky since it was me running around trying to find the right things for each order. In addition, the little details are what matter most. You have to figure out things like packaging and what’s going to special and still cost effective.” Which leads us to…
7. Be careful with your budget!
“Don’t spend a lot of money on things that it doesn’t make sense to spend a lot of money on. It’s really important to not get in over your head on this. Don’t spend a ton of money on your buildout when you could do something just as cool on half the budget. Know how to allocate your funds properly, be a little bit frugal always. I just think about the cost of everything in terms of pencils – how many pencils do I have to sell to do this? This is kind of the mindset you always have to be in.”
8. Decide what you’re good at and what you aren’t.
There are a million moving parts to any business, so the faster you figure this out the better. From there, you can find other people or technology resources to help you with this. For example, a POS (point of sale) system is what you use to take transactions, and there are different options. Caroline recommends using Shopify, for her it was “super user friendly for people who don’t know a lot about computers like me”. In addition to this, when you’ll have to file for taxes, if you don’t have a strong background in that, there’s apps that can help. “We use the bookkeeping app Bench. They import all bank statements and POS stuff automatically and sort through it and categorize it so when it’s time for taxes they just give me a package and it’s good to go. I send it to the accountant and I don’t have to do anything. Also they’re integrated with another website called Gusto and we use that for payroll and they deal with all the taxes for me and I don’t have to worry about that.”
“It’s just as important to find the programs that can help you and make your life easier. For the amount of time it would take me to sit down and reconcile our books…it’s 100% worth it for the $100/month I pay to use the service. My time is worth more than that. The value of time is a concept that takes time to really get a grip on. It’s really about figuring out what you can do, what you can’t do, and finding the right people [or programs] to come and help you.”
9. Social media is very important.
“I’m not a huge fan of social media, I don’t really use it personally, but it’s really, really important to understand how valuable that can be and how if used properly can be more valuable than any amount of money you’re going to spend on marketing or PR.”
For shops with aesthetically beautiful goods, social media can be a game changer. “We get a lot of press stories through Instagram”. It can be a good idea to start early on too. “Even starting [posting] before you open your store, but you have to be careful because if you start too early people lose interest by the time you actually launch.” Also, it’s a helpful platform to engage with your customers. “Instagram has been very useful for us and it helps that our store is very Instagram-able and customers are always posting photos that we can use as content.”
10. Leap of faith and a deep breath.
At some point and time, you just have to trust yourself and your gut. You have to “hope it’s all going to work out and that people will buy your things.” Depending on your situation, you might need to figure some other things out. I.e. if you’re hiring employees, you’ll have to figure out workers’ compensation insurance and if you want to do a pop-up in another state, that can be complicated too but if you’re excited about it and it’s something you genuinely really want to do, you’ll figure it out. Just don’t rush it – “take your time and be thoughtful about it and do it exactly the way you want to.”
Thanks for your tips and lovely photos, Caroline! We hope it helps any readers looking to start something of their own. We'll see you next Monday for an interview with a woman whose job is practically to be a fairy godmother.