While furniture is a necessary purchase, it’s not child’s play to run and grow your furniture business. With stiff competition from big-box retailers and online merchants, you must know how to run your business effectively.
Buyers and investors are always interested in well-established furniture businesses for sale, so you'll need to stay up-to-date on consumer trends, learn how to increase your revenues, and tie it all together with some cutting-edge marketing.
Find out how to do all that and more further below.
Tips for improving your furniture business
Improving your furniture business doesn’t need to be complicated. You can implement these three tips to help drive growth:
Follow up with previous customers
Your customers will be glad that you care enough to follow up about their experiences. You can use positive testimonials on your website or social media profile as proof of your quality furniture. But if you do receive any complaints, make sure to note them down as future improvements.
As a bonus, you’ll be front and centre in customers’ minds when they think about buying furniture next.
Create a uniform and enjoyable customer experience
Customers use many different channels during their shopping process, from Instagram and Facebook to your website and physical store. You want each of these channels to fit with your brand’s image. Customer experience is so crucial that 86% of people say they’ll pay more for a better experience.
It’s also good to share unique content on each platform since it gives customers a reason to interact with each channel.
Offer limited edition furniture and one-of-a-kind models
Limited product quantities help you sell more through the principle of scarcity. Since these pieces of furniture will usually be unique, they’re also great for marketing on Instagram or Facebook as they can go viral.
Whether you resell products or manufacture your own, try to include some pieces in limited quantities.
Research, research, and more research
Industries in Australia are constantly changing, and furniture businesses are no different.
While doing market research, you should:
- Always keep an eye on industry trends through publications, websites, and competitors.
- Pay attention to any new products introduced, the latest style trends, and any competitors revamping their brand.
- Analyse trending products and design styles against your current offerings
- Find out what potential customers are saying through Facebook Groups, Reddit Threads, and Instagram pages. Pay attention to their reviews of other products, complaints, needs, and desires.
- Make sure to schedule some time each day or at least each week for ongoing market research.
Inventory management for furniture businesses
If you’re a smaller boutique furniture retailer, inventory management won’t be too difficult as you’ll have fewer pieces to account for. However, as your business grows, here are some tips you can implement:
- Follow the IKEA model: To save money on shipping fees, create or resell flat-pack furniture. You can pass these savings onto your customers in the form of higher quality furniture or cheaper products.
- Invest in inventory management software: Inventory management software is essential if you sell many different types of furniture. Instead of manually calculating stock levels, this software can give you real-time updates and alerts to warn you of potential stock shortages.
- Pay attention to purchasing trends: Are there times of the year when customers buy more? What about the overall state of the economy? Ensure that you’re analyzing purchase data, so you’re not stuck with out-of-date stock.
Interesting insights into the furniture industry
The Australian furniture industry has been and is expected to continue enjoying modest, steady growth over the next few years.
Here are some interesting statistics to help you take advantage of that growth:
- Wood is the most popular material for furniture purchases making up 55% of purchased furniture in 2019. The material is expected to hold this market share over the next few years.
- There are around 1.6 million potential furniture buyers in Australia each year.
- The two major segments of the Australian furniture market are Dining and Lounge furniture (48%) and Bedroom furniture (32%).
You can capitalize on these trends by focusing on wood furniture within the Dining and Lounge and Bedroom segments.
Increase your revenue with goal setting
Goal setting is vital to increasing your business revenue as it can break down all the steps to achieve your goal.
There are three main ways to increase your revenue in the furniture business:
- Sell furniture to more people
- Sell more furniture to the same amount of people
- Sell your furniture for a higher price
Instead of dramatically increasing one aspect of revenue generation, why not put systems in place to achieve small improvements across the board? This strategy is psychologically easier since you have three smaller goals to hit rather than one big one.
For example, instead of trying to sell furniture to 20% more customers, you can:
- Sell 5% more furniture
- Add a 5% increase to your furniture’s price
- Increase your customer value by 5% (above your new furniture prices
Once you decide on the specific percentage for each goal, make sure to flesh out your goals using the SMART framework.
Marketing has come a long way from simply taking out an advertisement in the local paper or some airtime on the radio—not that these aren’t viable anymore.
However, some attractive marketing options in the digital age are:
- Augmented Reality: Plattar’s AR allows customers to visualize furniture within their homes with the help of their smartphones. This technology can help customers make smarter shopping decisions since they can “try before they buy.”
- Influencer marketing: Reach out to social media influencers within the home/interior design niches and ask them to feature your products. You’ll likely need to offer them an incentive such as affiliate commission or a set fee per post. However, before you engage an influencer, make sure that their audience can purchase products from you.
- Re-target previous customers: Make sure that you’re capturing customer emails during the sales process so you can send them relevant newsletters and product information. For example, create email campaigns specific to items that customers have previously bought.
Most businesses have a few key marketing strategies that drive most of their growth. Give the above ideas a try and see which ones work for you.
Financing options to spur growth
Sometimes all you need is a little financing to help your business grow.
Whether you need money to expand your showroom, hire an employee or invest in some equipment, here are a few places you can get it:
- Loans: Traditional bank loans are still the most popular option in Australia. However, you can also ask friends, family, or alternative lenders for a loan.
- Lines of credit: This option is great for financing short-term money shortages. Lines of credit work in a similar way to credit cards, but they usually have lower interest rates.
- Private investors: If your business is performing well, it may be possible to secure investment capital. This investment may be in the form of a loan or in exchange for a share of your business’s profits.
- Supplier credits: If you see an opportunity within the market but lack the funds to capitalize on it, you may be able to organize funding from your suppliers. However, credits are only suitable for short-term financing.
- Crowdfunding: This is an excellent option for testing a new product line. You could even offer limited, one-of-a-kind furniture as an incentive for support.
Staffing needs for your business
Most furniture businesses require at least one other staff member to help with labour since furniture can be quite heavy at times. However, these needs will differ depending on the size and niche of your business.
If you create custom furniture on a small scale, you may need someone to design, build, and offer general labour or sales advice. You could share all tasks with them or create a division of work where you each specialize in your own areas. A designer and furniture builder will generally cost $45k - $75k per year.
If you resell products, you may only require help with general labour and sales advice since they won’t need to create furniture themselves. A general labour or sales employee will generally cost $50k - $65k per year.
To keep these employees performing at their peak, it’s a good idea to offer them incentives such as:
- Commission for sales
- Discounts on furniture
- Extra time off for a good track record
- Above-average pay
Exit strategies for furniture businesses
While you’re still in the process of growing your business, it’s crucial to have a plan in place to exit your business successfully.
Whether you plan to sell your business in five or 40 years, you should know:
- What your exit goal is, e.g. a substantial payday or simply passing the business onto family
- How to value your business, and finding the right tool to achieve this valuation. BusinessesForSale.com offers a free, accurate valuation tool.
- Roughly when you want to exit your business
- How to negotiate a business deal so that you get maximum value from the exit