How to start a thrift store business the right way

Starting a thrift store is a rewarding venture that combines a passion for unique finds and sustainable fashion with sharp business savvy. The secondhand market is a multi-billion dollar industry, fueled by steady demand for affordable goods from budget shoppers, vintage collectors, and environmentally conscious consumers.

This guide will take you through the practical steps of validating your concept, securing funding, choosing a location, and building supplier relationships to help you launch a successful thrift store business in the U.S.

Step 1: Create your business plan and validate your concept

First, define your niche. Will you sell vintage clothing, modern brands, or furniture? Visit at least five local competitors. Note their pricing, store layout, and the type of customer they attract. This helps you find a gap in the market.

Use Google Maps to find all secondhand stores in a 10-mile radius. A common misstep is to only focus on direct thrift store competitors. You should also check out consignment shops, antique malls, and even local buy-sell-trade groups on social media.

Estimate your startup costs

With your research done, you can build a realistic budget. Your initial investment will likely fall between $10,000 and $40,000. The biggest variables are your location and how you source your first batch of inventory.

Plan for major expenses like a lease deposit ($2,000-$10,000), initial inventory ($3,000-$15,000), and store fixtures ($2,000-$7,000). Also, set aside funds for licenses, a point-of-sale system, and marketing. It is a good idea to have a cash reserve for the first six months.

Here are 3 immediate steps to take:

• Define your store’s specific niche, like vintage menswear or children’s toys.
• Map out all competitors within a 10-mile radius and visit the top five.
• Create a preliminary budget that breaks down your major startup expenses.

Step 2: Set up your legal structure and get licensed

You might want to consider forming a Limited Liability Company (LLC). This structure separates your personal assets from business debts. Profits pass through to your personal tax return, which simplifies filings compared to a corporation. Most states charge a filing fee between $50 and $200.

Next, get a free Employer Identification Number (EIN) from the IRS website. You will need this federal tax ID to open a business bank account and hire employees. The online application takes only a few minutes to complete.

Secure state and local permits

You need a Seller’s Permit, sometimes called a Resale Certificate, from your state’s department of revenue. This allows you to buy inventory tax-free and collect sales tax from customers. A frequent misstep is sourcing inventory before getting this permit, which forces you to pay unnecessary sales tax.

Your city or county will require a Certificate of Occupancy to ensure your storefront is safe and zoned for retail. This involves an inspection and can cost $100 to $500. Also check with your local city clerk for a general business operating license, as requirements vary by municipality.

Here are 4 immediate steps to take:

• Apply for a free EIN on the IRS website.
• File for an LLC with your state’s Secretary of State.
• Get a Seller’s Permit from your state’s tax agency.
• Contact your city clerk about a Certificate of Occupancy and business license.

Step 3: Protect your business with the right insurance

With your legal structure in place, the next move is to secure insurance. You will want to start with General Liability Insurance. This covers customer injuries from accidents like slips and falls. A standard $1 million policy typically costs between $400 and $700 per year.

Key policies for your thrift store

Commercial Property Insurance is another must-have. It protects your inventory and fixtures from events like fire or theft. If you hire even one employee, you will also need Workers' Compensation insurance, as it is a legal requirement in almost every state.

A frequent oversight is using a personal vehicle for donation pickups. Your personal auto policy will not cover accidents during business use, so you need a Commercial Auto policy. This protects you from liability if an accident happens while you are on the clock.

When you shop for policies, consider providers like The Hartford, Hiscox, or Next Insurance. They often work with small retailers and can bundle policies for a discount. Be sure to mention you are a thrift store, as donated goods can present unique risks.

Here are 4 immediate steps to take:

• Request quotes for a $1 million general liability policy.
• Calculate your inventory’s value to get an accurate property insurance quote.
• Check your state’s laws for Workers' Compensation requirements.
• Ask about a Business Owner's Policy (BOP) to bundle coverage.

Step 4: Find a location and buy equipment

Look for a retail space between 1,500 and 3,000 square feet. Your location needs to be in an area zoned for commercial retail. High visibility and foot traffic are good, but lower rent in a slightly off-beat location can work if your marketing is strong.

When you find a spot, negotiate the lease. Ask for a Tenant Improvement (TI) allowance to help pay for build-outs like fitting rooms or a sorting area. Many new owners accept the first offer, but you can often negotiate a lower rate or a few months of free rent.

Stock your store with fixtures

Your next spend is on equipment. A point-of-sale (POS) system will run you $500 to $1,500. Budget $50 to $200 per clothing rack and another $300 to $1,000 for a basic security tag system. You can buy hangers and price tags in bulk from suppliers like Uline.

To preserve your startup capital, consider used fixtures. You can often find quality racks, shelving, and display cases from stores that are closing or remodeling. This can cut your initial fixture costs by 50% or more, freeing up cash for inventory.

Here are 4 immediate steps to take:

• Scout three potential locations with 1,500-3,000 square feet.
• Ask landlords about a Tenant Improvement (TI) allowance during tours.
• Price out a basic POS system and security tags.
• Compare costs for used versus new clothing racks and shelving.

Step 5: Set up your payment processing

Most customers expect to pay with a card or digital wallet, so you need a reliable system from day one. Many new owners get locked into processors with monthly fees and transaction rates between 2.5% and 3.5%, which can quickly eat into your profits.

Choose your payment solution

For thrift stores that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for sidewalk sales or selling at a local market.

Getting started is straightforward:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers.

Here are 3 immediate steps to take:

• Compare the transaction rates and monthly fees of at least two payment processors.
• Download the JIM app to see if its features fit your business model.
• Calculate your potential savings with a flat 1.99% transaction rate versus other options.

Step 6: Secure funding and manage your finances

A smart approach is to secure external funding instead of using all your personal savings. An SBA Microloan is a solid option, offering up to $50,000. Lenders typically look for a credit score above 650, and interest rates generally fall between 8% and 13%.

You might also consider a business line of credit. This gives you flexible access to cash for unexpected inventory buys or slow months. Unlike a loan, you only pay interest on the amount you use, which helps manage cash flow without taking on large, fixed debt.

Calculate your working capital

Set aside a cash reserve to cover your first six months of operation. A buffer of $15,000 to $25,000 is a realistic target. This money covers rent, utilities, and payroll while your sales build. Some new owners miscalculate this and face a cash crunch right before they hit their stride.

In addition, look for local grants. Your city’s economic development agency or chamber of commerce often has programs for new retail businesses. These funds do not require repayment and can provide a welcome financial cushion as you get started.

Here are 4 immediate steps to take:

• Check your credit score to see if you meet the 650+ benchmark for an SBA loan.
• Research SBA-approved lenders in your area for their Microloan programs.
• Calculate your first six months of operating expenses to set your working capital goal.
• Visit your city’s economic development website to find local business grants.

Step 7: Hire staff and set up operations

You will likely need two key roles to start: a Store Associate and a Sorter/Pricer. Associates handle sales and customer service for about $15-$18 per hour. Sorters work in the back, processing donations. No special certifications are needed, but retail experience is a definite plus.

Manage your team and workflow

Many new owners find their biggest bottleneck is an understaffed sorting room. If you cannot process donations quickly, your sales floor will suffer. A good rule of thumb is to aim for one full-time employee for every $100,000 in projected annual revenue.

Once your team is in place, you can use scheduling software like When I Work or Homebase to manage shifts. These platforms simplify communication and help you build a schedule that ensures your sales floor and sorting room are always covered, especially during peak donation times.

Here are 4 immediate steps to take:

• Draft job descriptions for a Store Associate and a Sorter/Pricer.
• Estimate your staffing needs based on a goal of one employee per $100,000 in sales.
• Research scheduling software like When I Work or Homebase.
• Create a weekly schedule that balances floor coverage with backroom processing.

Step 8: Market your store and attract customers

Build your online and local presence

Focus your marketing on Instagram and Facebook. Post daily photos of unique finds to create urgency. Use Reels and Stories to show off your store’s personality. This visual approach keeps your audience engaged and eager to visit.

You should also claim your Google Business Profile immediately. Add high-quality photos, your address, and store hours. Many new owners overlook this free resource, but it is often the first place shoppers look for local thrift stores.

In-store events build a loyal community. Consider a "Fill-a-Bag" sale for a flat price to clear old inventory and create buzz. You could also host a monthly themed event like "Vintage Denim Weekend" to attract niche buyers.

Measure what works

Track your Customer Acquisition Cost (CAC). Aim to spend less than $10 to get a new customer through the door. If a $100 Facebook ad brings in 20 new buyers, your CAC is a healthy $5. This tells you where your marketing dollars are most effective.

Also, watch your in-store conversion rate, which is the percentage of visitors who make a purchase. A good target is between 20% and 40%. If your rate is low, you might need to adjust your pricing or store layout.

Here are 4 immediate steps to take:

• Claim and complete your Google Business Profile with photos and hours.
• Set up an Instagram account and post five unique items you plan to sell.
• Plan your first in-store event, like a "Fill-a-Bag" sale.
• Calculate a target Customer Acquisition Cost (CAC) for your first month.

Step 9: Price your inventory and manage stock

Develop your pricing strategy

Your pricing model directly impacts profit. A tiered system works well for basics. You might price all t-shirts at $4 and all jeans at $8. This speeds up pricing and gives customers predictability. For unique or designer items, price them individually based on market value.

To find an item’s value, check sold listings on eBay or Poshmark. A common mistake is to guess the value of vintage or brand-name goods. Research prevents you from underpricing a gem or overpricing an item that will not sell. Your goal is a 4x to 8x markup on purchased inventory.

Keep your stock fresh

A stale sales floor discourages repeat visits. You should implement a stock rotation system. Use different colored price tags for each week of the month. For example, week one is yellow, week two is blue, and so on. This shows you how long an item has been on the floor.

After four weeks, any item with the oldest color tag should be moved to a clearance rack for 50% off. If it still does not sell, you can include it in a "fill-a-bag" sale. This constant flow of fresh merchandise keeps shoppers coming back to see what is new.

Here are 4 immediate steps to take:

• Create a tiered price list for your top five inventory categories.
• Research the sold prices for 10 unique items on eBay to practice valuation.
• Choose four colors for a monthly tag rotation system.
• Decide on a markdown schedule for items that do not sell within four weeks.

Step 10: Maintain quality and scale your operations

Establish your quality standards

Create a simple A-B-C grading system for donations. "A" items are like-new and go to the main floor. "B" items have minor wear. "C" items have visible flaws and should go straight to a deep discount bin or be bundled for "fill-a-bag" sales.

Track your donation rejection rate. A healthy rate is 20-30%. Many new owners accept too much low-quality stock just to fill the racks, but this hurts your store’s reputation. Be selective from day one to build a brand known for quality finds.

Know when to grow

Use clear metrics to guide your growth. Once your sorting room backlog consistently takes more than three days to clear, it is time to hire another sorter. Consider a second location only after your first store hits $300,000 in annual revenue and is consistently profitable.

As you grow, a basic POS may not be enough. Look into inventory management systems like Lightspeed Retail or Vend. They help you track stock levels, sales trends, and supplier data, which is valuable if you plan to open more stores.

Here are 4 immediate steps to take:

• Create a simple A-B-C grading system for all incoming inventory.
• Start tracking your donation rejection rate, with a target of 20-30%.
• Set a revenue benchmark, like $100,000 in annual sales, for your next hire.
• Research inventory management systems like Lightspeed Retail or Vend.

Your thrift store is more than a shop; it's a community hub built on unique finds. The key is a constant flow of quality inventory to keep shoppers coming back. You have the complete roadmap, so take that first step with confidence.

When you make that first sale, keep the payment process simple. JIM lets you accept cards right on your smartphone for a flat 1.99% fee, with no extra hardware needed. Your money is available instantly. Download JIM to be ready from day one.