So, you have decided to take the plunge into the home staging market. The biggest expense you will incur throughout the life if your business is acquiring ample inventory. Let’s talk about how and when inventory financing can help you in your business.
When you are starting out, there are so many boxes to check and tasks to complete such as getting education from a RESA Accredited Education Provider, setting up your LLC or S-Corp, registering with the Secretary of State, setting up a bank account, setting up insurance, and coming up with a sales and marketing plan before you can even think about staging.
Once all your beginning tasks are checked off you are ready to start staging houses. What do you need to stage houses? INVENTORY.
Starting out there are a few different ways you can go. Some stagers use items from their own houses to start staging other houses. You can work with what the seller already has, assuming this is an occupied stage, and augment with your own pieces. Some stagers simply work with what is already in the home rearranging and decluttering.
If you decide that you want to acquire inventory to stage houses there are a few ways you can acquire the pieces. You can use credit cards, personal loans, some savings, but for the sake of this blog we are talking about inventory financing.
In the beginning stages of your business, I recommend that you use one of the first three options previously stated to get your feet wet and see if this business is really for you. Remember, just because you are a genius at staging houses and have the expert decorator eye, that does not mean you are cut out to run a business.
I would say it would be wise to start out with maybe a house or two of inventory and start building up some consistent clientele. Over the next couple of years, take your profits and reinvest back into the business by acquiring more inventory. For financing, the two-year mark is a magic time to hit. Prior to that financing can be obtained but it is very expensive. By the two-year mark, you will know if this is an industry you are ready to go “all-in” on.
Once you have reached the two-year mark in your business you are ready to make that “all-in” leap. Now it is time to switch gears and look at the business a little differently. You could continue to bootstrap the business by acquiring inventory on credit cards, paying for it out of cash flow, or saving up until you can buy more. However, at this point, you have another affordable option: inventory financing.
We need to start looking at the inventory used to stage houses in a different light. Often stagers will view all their inventory as an asset. In truth, it is an asset. However, it is a rapidly depreciating and therefore a poor asset. Home stagers need to start viewing the inventory as a tool. It is just a tool for you to make money. Nothing more, nothing less.
The more tools you have at your disposal, the more opportunities you will have to make money. With inventory financing, you will be able to acquire a larger order of pieces at once and make set monthly payments for a set amount of time. This allows you to possibly buy at wholesale discounts from many manufacturers, allows you to acquire more pieces than you normally would, and allows you to set monthly, quarterly, semi-annual, and/or annual inventory budgets.
In addition, there are many upsides to using inventory financing. You no longer must load up your credit cards with inventory, thus helping your credit score increase tremendously. You no longer must wait until the cash is available or you no longer take all your cash to acquire more inventory leaving nothing to pay yourself with.
If I have piqued your interest a little and you have questions on how I can help you grow your business and take it to the NEXT LEVEL in 2022, give me a call and let’s talk. Remember… we buy things that appreciate and finance things that depreciate.
Rod Basconcillo, CEO of R&R Financial, Inc.
(503) 329-1770
I’ve always been a very competitive person. As a young boy, I wanted to win everything I participated in–from sports to being the top seller in my school’s magazine selling contest. As an adult that hasn’t really changed. I still have that competitive drive in work. I strive to be the best at what I do for my clients, driven to figure out ways to help my clients build and grow their businesses.
During my downtime, I love exploring local flavors, both here in Portland where I live and when visiting clients throughout the USA. Summers are spent on the water enjoying the beautiful weather in the Pacific Northwest. Weekends in the fall are spent attending Oregon Duck football games and spending time with my son who I’ve totally enjoyed raising.
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