Toy shop business plan for starting your own store

Do you want to start a toy store business? Many people search for toy stores as toys are an essential part of the life of every child and are crucial to enhance their imagination and abilities. So, if you are starting this business, the only worry you can have is to find some suitable location and start your business with a stepwise approach.

To be clear about what you’ll need to do, you’ll have to develop a detailed business plan. If you don’t know how to write one, then you can take help from this toy shop business plan sample written for a startup, ‘Sean Toy Store’.

Executive Summary

2.1 The Business

Sean Toy Store will be a licensed and registered toy store based in downtown Chicago, providing the widest selection of toys and fantasy costumes for children. To make shopping much entertaining and easier with us, we’ll be providing online shopping facility as well.

2.2 Management

Before starting a toy store business, you must know how to open a toy shop and which accessories to provide to gain maximum attraction. To manage the company’s store as well as the online services, Sean will hire a team of store managers, web developers, and salesmen.

2.3 Customers

Our customers will be the parents and grandparents living` near our location, in this business plan toy store pdf we will be doing marketing segmentation in detail to identify our customers.

2.4 Business Target

Our target is to be the best and most renowned toy shop in our city, to earn a profit margin of $15k per month by the end of the first year, and then continue this margin at a steady rate over the years to come.

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Toy Shop Business Plan 2
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Company Summary

3.1 Company Owner

Sean Kingsley, who has a bachelor’s degree in fine arts, will be the owner of Sean Toy Store. Besides doing painting and artwork, he always had a wish to start his business which he is going to fulfill by opening a toy shop

3.2 Why the Business is being started

Sean is passionate about artworks and paintings but in order to have a permanent and profitable source of income he has decided to start his own business. After analyzing which businesses he can start, he has decided to opt for opening a toy shop.

3.3 How the Business will be started

A location which was previously used as a gift shop will be taken on rent in downtown Chicago. Sean will purchase a large assortment of toys, dolls, games, puzzles, play sets, kid’s stationery items, and many more things. To manage the business Sean will hire a staff comprising of store managers, salesmen, and web developers. All the details about Sean Toy Store are given here in detail for anyone who wants to know how to open a toy store business.

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The detailed startup requirements including startup funding, startup expenses, total assets, total funding required, total liabilities, total planned investment, total capital and liabilities, as forecasted by company’s analysts, are given below:

Start-up Expenses  
Legal $55,300
Consultants $0
Insurance $32,750
Rent $32,500
Research and Development $32,750
Expensed Equipment $32,750
Signs $1,250
TOTAL START-UP EXPENSES $187,300
Start-up Assets $0
Cash Required $332,500
Start-up Inventory $32,625
Other Current Assets $232,500
Long-term Assets $235,000
TOTAL ASSETS $121,875
Total Requirements $245,000
START-UP FUNDING $0
START-UP FUNDING $273,125
Start-up Expenses to Fund $11,875
Start-up Assets to Fund $15,000
TOTAL FUNDING REQUIRED $0
Assets $23,125
Non-cash Assets from Start-up $18,750
Cash Requirements from Start-up $0
Additional Cash Raised $18,750
Cash Balance on Starting Date $21,875
TOTAL ASSETS $0
Liabilities and Capital $0
Liabilities $0
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $0
Capital $0
Planned Investment $0
Investor 1 $332,500
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $695,000
Loss at Start-up (Start-up Expenses) $313,125
TOTAL CAPITAL $251,875
TOTAL CAPITAL AND LIABILITIES $251,875
Total Funding $255,000

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Products

After knowing how to start a toy store business, the next step would be to list the products you want to sell in your store. The items Sean Toy Store has decided to provide the following items to its customers, which will be displayed in the store as well as on the company’s website.

  • Toys: We’ll have a large collection of toys, puzzles, games, play sets, cars, trains, dolls, animal figures, balls and other unique things for children.
  • Kid’s Stationery: We’ll have a collection of attractive stationery items for kids such as designed erasers, geometry boxes, pencils, crayons, printed glace papers, cards, markers, colors, clipboards, etc.
  • Kid’s Accessories & Costumes: We’ll keep bags, shoes, wallets, watches, jewelry, lunch boxes, bottles, character costumes and wigs in our store.
  • Sports & Outdoor Toys: For children of age group 5 to 16 we’ll be having bicycles, roller skates, kids scooter, badminton, cricket, dart & dartboard, basketball, and other sports items.

Marketing Analysis of Toy Store Business

There are a lot of toy stores running in the United States, to be different and more successful than the existing ones, you should analyze the market demands in which you’ll be serving. In this toy store business plan sample, marketing analysis and segmentation done for Sean Toy Store is given for your help.

5.1 Market Trends

Note

The toy store businesses are responsible for generating a revenue of $20 billion annually, and according to IBISWorld, the industry is reportedly growing at an annual rate of 1.1%.

The toy store business offers a lot of opportunities for one who has creative ideas and can explore unique things for children, something which is evident by the fact that more than 21k toy store businesses are successfully running in the United States. These stats show that you won’t be at loss provided that you plan your business successfully.

5.2 Marketing Segmentation

Sean Toy Store has identified the following type of target audience which can become its future consumers:

Toy Shop Business Plan 4

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The detailed marketing segmentation of our target audience is as follows:

5.2.1 Parents & Grandparents: The biggest group of our target customers will be the parents and grandparents of children with ages less than 16. This category is always in search of something more innovative and lucrative to help their kids having fun along with enhancing their creativity.

5.2.2 Adults: Our second target group comprises of adults aged above 25 years. These adults often gift toys to the children of their friends, colleagues, and family members.

5.2.3 Children: The third target group comprises of children who themselves will come to our shop to buy some toys, stationery or fantasy costumes.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Parents & Grandparents 32% 11,433 13,344 16,553 18,745 20,545 13.43%
Adults 48% 22,334 32,344 43,665 52,544 66,432 10.00%
Children 20% 12,867 14,433 15,999 17,565 19,131 15.32%
Total 100% 46,634 60,121 76,217 88,854 106,108 9.54%
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5.3 Business Target

Our main business targets to be achieved in one year are to achieve the net profit margin of $15k per month by the end of the first year, to balance the initial cost of the startup with earned profits by the end of the first six months, and to become the best toy shop of the city.

5.4 Product Pricing

Our prices are almost the same as our competitors, however, the products which only we will be introducing in toy stores will be a little bit expensive.

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Strategy

Before you start a toy store business, you must find something that will make your store different than all other toy stores. From this sample business plan for toy store, you can know the strategy Sean Toy Store will adopt in order to attract a wide range of customers.

6.1 Competitive Analysis

Our biggest competitive advantage is the large variety of products we will be offering in our store. Our customer will be able to find any desired item in our store. Secondly, we will be having character costumes such as Elsa Costume Collection, Black Panther Costume, Belle Signature Costume, etc. These fantasy costumes along with all accessories are only available at our store in our area. Lastly, we’ll be having excellent customer care service. Our guide will help the customers to choose the best and desired item matching the event unless our customers are totally satisfied.

6.2 Sales Strategy

To advertise what we are offering other than the usual toys, we’ll be advertising our products by running a social media campaign and by ensuring a strong web presence, and also through eye-catching billboards and posters. Moreover, we’ll also be offering a 10% discount on our services for the first two weeks of our launch.

6.3 Sales Forecast

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Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Toys 1,887,030 2,680,320 2,588,240
Kids’ Stationery 802,370 815,430 823,540
Kids’ Accessories & Costumes 539,320 770230 1,002,310
Sports & Outdoor Toys 265,450 322,390 393,320
TOTAL UNIT SALES 3,494,170 4,588,370 4,807,410
Unit Prices Year 1 Year 2 Year 3
Toys $140.00 $150.00 $160.00
Kids’ Stationery $600.00 $800.00 $1,000.00
Kids’ Accessories & Costumes $700.00 $800.00 $900.00
Sports & Outdoor Toys $650.00 $750.00 $850.00
Sales
Toys $2,149,800 $2,784,000 $3,383,200
Kids’ Stationery $120,050 $194,500 $268,500
Kids’ Accessories & Costumes $50,110 $71,600 $93,000
Sports & Outdoor Toys $139,350 $194,600 $249,850
TOTAL SALES
Direct Unit Costs Year 1 Year 2 Year 3
Toys $0.70 $0.80 $0.90
Kids’ Stationery $0.40 $0.45 $0.50
Kids’ Accessories & Costumes $0.30 $0.35 $0.40
Sports & Outdoor Toys $3.00 $3.50 $4.00
Direct Cost of Sales
Toys $989,300 $1,839,000 $2,679,700
Kids’ Stationery $66,600 $119,900 $173,200
Kids’ Accessories & Costumes $17,900 $35,000 $52,100
Sports & Outdoor Toys $19,400 $67,600 $115,800
Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700


6.4 Sales Monthly

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6.5 Sales Yearly

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Personnel Plan

The staff required by Sean Toy Store in order to manage the store operations as well as the online shopping is given in this sample business plan for a toy store. We are enlisting the required persons with a little job description for anyone who wants to benefit.

7.1 Company Staff

Sean will hire the following people:

  • 1 Accountant to maintain financial records
  • 1 Store Manager to manage store overall operations with the owner
  • 2 Sales Executives to market the business
  • 4 Salesmen
  • 2 General Assistants to carry out day-to-day tasks
  • 1 Customer Representative to interact with customers
  • 1 Driver to transport and bring items
  • 2 Web Developers to manage the company’s website and social site
  • 1 Security Guard

7.2 Average Salary of Employees

The following table shows the forecasted data about the salaries of the employees for the next three years.

 Personnel Plan      
Year 1 Year 2 Year 3
Accountant $85,000 $95,000 $105,000
Store Manager $45,000 $50,000 $55,000
Sales Executives $187,000 $194,000 $201,000
Salesmen $145,000 $152,000 $159,000
General Assistants $152,000 $159,000 $166,000
Customer Representative $85,000 $95,000 $105,000
Driver $50,000 $55,000 $60,000
Web Developers $187,000 $194,000 $201,000
Security Guard $42,000 $45,000 $48,000
Total Salaries $297,000 $311,000 $325,000

Financial Plan

The last factor which will decide whether your business end up as a success or a failure is your financial plan. The financial plan should cover startup costs, expenses, a rough estimation of expected profits and a rough estimate to meet financial goals. It is always better to get your financial plan written by a financial expert especially if you are starting your business on a larger scale. For giving you an idea of how a financial plan should be, we are providing this toy store business plan free of cost written by a financial expert hired by Sean Toy Store.

8.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 11.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 26.42% 27.76% 28.12%
Other 0 0 0

 

8.2 Brake-even Analysis

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 Brake-Even Analysis  
Monthly Units Break-even 5530
Monthly Revenue Break-even $159,740
Assumptions:
Average Per-Unit Revenue $260.87
Average Per-Unit Variable Cost $0.89
Estimated Monthly Fixed Cost $196,410

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $309,069 $385,934 $462,799
Direct Cost of Sales $15,100 $19,153 $23,206
Other $0 $0 $0
TOTAL COST OF SALES $15,100 $19,153 $23,206
Gross Margin $293,969 $366,781 $439,593
Gross Margin % 94.98% 94.72% 94.46%
Expenses
Payroll $138,036 $162,898 $187,760
Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
Depreciation $2,070 $2,070 $2,070
Leased Equipment $0 $0 $0
Utilities $4,000 $4,250 $4,500
Insurance $1,800 $1,800 $1,800
Rent $6,500 $7,000 $7,500
Payroll Taxes $34,510 $40,726 $46,942
Other $0 $0 $0
Total Operating Expenses $188,766 $220,744 $252,722
Profit Before Interest and Taxes $105,205 $146,040 $186,875
EBITDA $107,275 $148,110 $188,945
Interest Expense $0 $0 $0
Taxes Incurred $26,838 $37,315 $47,792
Net Profit $78,367 $108,725 $139,083
Net Profit/Sales 30.00% 39.32% 48.64%

8.3.1 Profit Monthly

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8.3.2 Profit Yearly

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8.3.3 Gross Margin Monthly

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8.3.4 Gross Margin Yearly

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8.4 Projected Cash Flow

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 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $40,124 $45,046 $50,068
Cash from Receivables $7,023 $8,610 $9,297
SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $21,647 $24,204 $26,951
Bill Payments $13,539 $15,385 $170,631
SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
Net Cash Flow $11,551 $13,167 $15,683
Cash Balance $21,823 $22,381 $28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $184,666 $218,525 $252,384
Accounts Receivable $12,613 $14,493 $16,373
Inventory $2,980 $3,450 $3,920
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $12,420 $14,490 $16,560
TOTAL LONG-TERM ASSETS $980 $610 $240
TOTAL ASSETS $198,839 $232,978 $267,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,482 $10,792 $12,102
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $9,482 $10,792 $12,102
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $48,651 $72,636 $96,621
Earnings $100,709 $119,555 $138,401
TOTAL CAPITAL $189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
Net Worth $182,060 $226,240 $270,420

 8.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 4.35% 30.82% 63.29% 4.00%
Percent of Total Assets 4.35% 4.71% 5.80%  9.80%
Accounts Receivable 5.61% 4.71% 3.81% 9.70%
Inventory 1.85% 1.82% 1.79% 9.80%
Other Current Assets 1.75% 2.02% 2.29% 27.40%
Total Current Assets 138.53% 150.99% 163.45% 54.60%
Long-term Assets -9.47% -21.01% -32.55% 58.40%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.68% 3.04% 2.76% 27.30%
Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
Total Liabilities 4.68% 3.04% 2.76% 54.10%
NET WORTH 99.32% 101.04% 102.76% 44.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.18% 93.85% 93.52% 0.00%
Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
Advertising Expenses 2.06% 1.11% 0.28% 1.40%
Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
Main Ratios
Current 25.86 29.39 32.92 1.63
Quick 25.4 28.88 32.36 0.84
Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 19.20% 21.16% 23.12% N.A.
Return on Equity 47.79% 50.53% 53.27% N.A.
Activity Ratios
Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
Collection Days 92 99 106 N.A.
Inventory Turnover 19.7 22.55 25.4 N.A.
Accounts Payable Turnover 14.17 14.67 15.17 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 1.84 1.55 1.26 N.A.
Debt Ratios
Debt to Net Worth 0 -0.02 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $120,943 $140,664 $160,385 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.45 0.48 0.51 N.A.
Current Debt/Total Assets 4% 3% 2% N.A.
Acid Test 23.66 27.01 30.36 N.A.
Sales/Net Worth 1.68 1.29 0.9 N.A.
Dividend Payout 0 0 0 N.A.

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