Whether selling to customers, distributing to retail stores or manufacturing mugs, there are some crucial steps you need to take in order to start your own mug business. First and foremost, decide how it will be organized. You can set up your mug business as a sole proprietorship where you are solely responsible for the business in terms of profits, losses and debts, or you can incorporate your business to protect your personal assets. If you have a partner, put a partnership agreement together and split the profits, losses and obligations of the business down the middle.
Items you will need
- Commercial space for a retail store or shop
Register with your state to operate as a retail mug business. You will probably need a retail sales business license and a state sales tax identification number so you can pay the appropriate sales tax to your state. (See Resources to find your state's department of commerce website).
Find a location for your mug store. Since you are selling low-cost items, you really need to think economically about your retail space. A kiosk in a mall may be an ideal location for a small mug store because it is low-cost and gets plenty of customer traffic.
Find a distributor who carries a wide variety of mugs with popular messages and themes (see Resources).
Establish an ecommerce website for your retail mug store. You need a hosting account, a domain name that includes a reference to mugs, a credit card merchant account, product upload software and a shopping cart system (see Resources).
Register with your state to operate as a wholesale or distribution business.
Find local or national mug manufacturers who will be willing to entrust you with selling their products. Since you are a new and unestablished distributor, you may have to purchase mugs upfront at first to establish trust with mug manufacturers.
Find crafts and gift stores in your area that sell mugs. Contact websites and corporate promoters that personalize mugs for companies and organizations (such as Corporate Express). Send all stores a catalog of the products you distribute and offer a competitive discount rate for your products. (Most retailers and companies that sell to end users need at least a 40 percent profit margin on the retail price in order to make the transaction worthwhile.)
Register as an official business within your state. Get a manufacturer's license if required. (A manufacturer's license is not commonly needed for small-scale products such as mugs.) Keep in mind that when you sell your manufactured products to wholesalers and retailers you do not have to pay sales tax on the sale.
Find reputable distributors and wholesalers that sell mugs to retailers nationally and locally and send them an inquiry along with a sample of your mugs. You may also find online mug stores that would be interested in purchasing your mugs at a deeply discounted rate. Negotiate a rate for selling your mugs to these companies wholesale (usually about 50 to 60 percent off the suggested retail price). You will invoice distributors and wholesalers in order to be paid (usually for payment within 30 to 90 days after they receive the items). You can also try selling your mugs directly to local trinket and gift stores in your area.
Find a small shop where you can manufacture your mugs on a larger scale or simply designate a specific location in your home where you can make your products. You can deduct from your yearly income taxes the percentage of your home you're using exclusively for making mugs.
Purchase materials and equipment to facilitate your manufacturing process (these materials can also be deducted). Purchase boxes and shipping materials to ship your products to wholesalers and distributors.
Don't try to sell your mugs to overseas distribution and retail companies because there is no guarantee of payment and they are not governed by the same rules.