Gift Basket Business – What I Wish I Had Known

In some ways, it seems like yesterday.  In others, it seems like an eternity.

For me, the fall of 1992 was the beginning of a new business, a new lifestyle, and a whole new perception of operating a home-based business.  I thought I knew everything.  After all, as a SCORE small business counselor, I had been counseling other startups.  I was the expert.  I had started and sold other businesses.  This gift basket business couldn’t possibly be any different.

Was I ever wrong!

Looking back 28 years later, I realize that I knew much while knowing very little.  I had a lot of misconceptions way back then.  Some of them are probably familiar to you:

The gift basket business is like any other business.

A statewide singles newspaper had been my first dip into the “own your own business” waters.  After creating and building that corporation, I sold it and developed an ad sales agency.  My clients included Romance Writers of America, numerous singles publications throughout the country among others.  That was followed by a real estate business.

Surely all these varied experiences would transfer to the gift basket business.  But I quickly learned that, even though these skills were helpful, the gift basket business is very different from any of my previous endeavors and requires new and different skills.

Previous experience in the business world or even a degree in business are all helpful but nothing takes the place of the learning curve that comes from actually operating each individual type of business.

Designing and producing gift baskets is easy.

I had never made one in my life.  But they couldn’t be too hard, could they?  After all, I am creative.

I’m still laughing at that one – and 28 years later – I am still learning the techniques to produce gift baskets that don’t look like they came from WalMart.  In this business, you can’t become stagnant, depending on what you’ve done in the past.  New products and new techniques require us to constantly be on top of what is current in this business.  Customers quickly become bored and want to see something different.

The Dollar Stores have great bargains in gourmet foods that I could use in gift baskets.

It didn’t take very long for me to learn that all the gourmet sauces and salad dressings that I stocked up on would have to be eaten by me and my family.  One of the biggest mistakes that many of us, when new to the business, make is buying the wrong kind of inventory.  Taking the time to research the types of baskets that I could sell would have saved me a lot of money and calories eating all that chutney and raspberry flavored dressing.

I needed a lot of different products to make lots of different baskets. 

Failure to research and plan resulted in some bad buying decisions.  I bought things that were “cute” and “fun.”  I soon discovered that cute and fun didn’t appeal to the corporate market who preferred elegant and gourmet.  I thought I needed a lot of different products but soon learned that I could use the same products in a lot of different baskets.

My major market would be all the people I knew who wanted to buy a personal gift. 

Although I do still sell a lot of individual gifts for personal use, it didn’t take long to learn that corporate is where the money is.  My first marketing endeavors were to individuals rather than to businesses.  They bought $15 and $20 gifts while I quickly discovered that the business people would spend $40 to $50 on a gift and buy regularly.  That was 28 years ago.  In today’s world, individuals will spend $40 to $50 or more on a basket but business people will spend $100 to $200 on a gift.

People in my area won’t spend more than $40 on a gift basket. 

I underestimated myself and my customers.  Since I only expected them to spend a maximum of $40, that was what I offered.  I’ve learned that the adage “show them and they will buy” is true.  Since expanding my product and price range, baskets in the $100 to $300 range are no longer a rarity.  As a whole, customers have little imagination.  If you don’t entice them with what you can do, they will never know.

The extra bedroom should be enough to house this business. 

As I look around my 2500 square foot home that is now almost a warehouse, I shake my head in wonder at how naive I was.  The extra bedroom expanded into the other spare bedroom and the living room and the garage and on and on.

My life wouldn’t be any different. 

No longer am I the grandma that bakes cookies or decorates the gorgeous Christmas tree.  Instead there is no Christmas tree.  Where would I put it?

But I am the grandma that they call when they need something special.  “Grandma has everything,” they say.  And instead of coming over to bake cookies, they excitedly ask, “Can we help you make gift baskets?”

A clean and neatly organized house is now a thing of the past.  Grinding wheat and making bread are memories.

But would I change it?  Not for the world!  As we age, priorities change.  The chance for dreams to become realities happens.  If we don’t take the risk and grab those opportunities while we can, the parade of life will pass us by and we’ll grow old with only dreams for memories.

Since I love shopping, that would be the best part of the business. 

That was a big mistake and the reason for a lot of the excess inventory that needs to be cleaned out.  I now rarely go to the stores unless I need something specific.  “Just looking around” is a thing of the past.  Who has time?  Shopping for me now is trade shows and wholesale internet sites.

People want gifts so I need lots of gift-type products. 

This misconception was one of the more surprising ones for me.  My inventory includes more gift products than I will ever use while my most frequent sellers are simply food-filled gift baskets.

My business would be an immediate success. 

I knew lots of people.  I knew how to market.  I could make an acceptable gift basket.  And, best of all, there was only one other company in town.  But it takes time to attain a level of recognition.  I was known as the newspaper publisher and the Realtor and the gift basket business was considered “just a little hobby”.

One of the biggest mistakes that people who enter this business make is not having the patience or the funds to stick it out.  People have now forgotten that I was a publisher and a Realtor and think of me as the gift basket lady, but that didn’t happen quickly.  It took several years.

I had to compete with the discount stores. 

It didn’t take long to learn that this was impossible.  I no longer concern myself with what is on the shelves in the discount stores.  My customers are not looking for a bargain.  My company provides uniqueness, service, and delivery and I market to those who are looking for these qualities.

Although it is wise to look at every possible competitor in this business, including stores like Walmart and Costco, while writing your business plan, it is essential to decide how you can differentiate yourself and appeal to a different target market.

Selling gift baskets in Flagstaff, AZ would be my business. 

There’s a big difference between a business that makes money and one that makes a good profit.

Business diversification and changes in marketing strategies has more than doubled my profits.  In addition to gift baskets, I offer apartment amenities, imprinted advertising products, and have even added separate divisions to my corporation for teddy bears and nationwide gift referrals.  A large increase in my sales is due to out-of-area sales from the Internet.  No longer dependent on just my local area, I can sell gift baskets and gourmet food products at higher price points online than I can locally.

Starting and building a gift basket business is a serious venture.  Many of the things that I counseled others to do, as a SCORE counsellor and small business instructor, apply to this business as well.

Start with a well-crafted business plan.  Even if obtaining a loan is not the purpose, a plan enables you to visualize where you intend to go and what the pitfalls can be.  Look at your competition but don’t be intimidated by them.  Decide how you can be different and market that difference.

I feel that the most important part of any business plan is the marketing plan.  Unless you know how you plan to make your business known to the public and what it will cost, it is all too easy to waste a lot of money trying things that don’t work.  And, make sure you have enough money to last long enough to actually build the business.  Very few are overnight successes.  It takes time, patience, and lots of work.


Would I do it again?

You bet!  The past 27 years have been some of the most exciting in my life.  When it’s over, I can say, “I dreamed, I risked, I built, and I succeeded.”

Best of luck to each of you beginning this journey.
Your Friend and Mentor
Joyce Reid