Gift basket business is full of opportunity Low starter costs, big demand make it growth industry

Succeeding in Small Business

August 17, 1992|By Jane Applegate | Jane Applegate,Los Angeles Times Syndicate

It sounds too good to be true: A fast-growing, fun and profitable small business with low overhead and unlimited opportunities.

What is it?

Making gift baskets. Don't laugh. No matter how awful the economy gets, people still have birthdays and babies and need cheering up or congratulations.

"With the economy the way it's been, gift baskets have a great leave-behind value," said Elizabeth Skelton, associate editor of Gift Basket Review magazine of Jacksonville, Fla. "As an alternative to flowers, people think they are getting more for their money when they buy a gift basket."

The gift basket industry has taken off over the last 10 years, embraced by everyone from Harry & David, the mail-order fresh fruit giant, to solo entrepreneurs working out of their homes. Last year, gift basket entrepreneurs reported a 30 percent increase in sales and had an average income of $77,160, according to an industry survey. Two years in a row, Entrepreneur magazine has ranked the gift basket business among its top 10 new business opportunities.

It's certainly one of the more accessible small businesses. Anyone with creativity and sales ability can get started for about $1,000, according to Eddie Zaratsian, a prize-winning gift basket designer.

To be sure it's the right business for you, try to get a part-time job working for a successful gift basket company. Or find an owner willing to give you tips in exchange for free help. Subscribe to gift industry trade magazines, such as Gift Basket Review, and attend design classes and conferences (see below).

Four years ago, Zaratsian persuaded his parents to let him sell balloons in the family's Tic Tock watch repair and gift shop in Hollywood, Calif. The balloon business took off, and by popular demand, Zaratsian began creating gift baskets to accompany the balloons.

At 21, he is a staff designer for two trade magazines and a popular instructor at industry seminars. Although putting together a basket of goodies may appear simple, there's an art to it.

"The worst thing is when you don't know how to put a basket together," Zaratsian said. "Poor-quality baskets give the whole industry a bad name."

A key to success is building strong relationships with suppliers and finding companies willing to sell you what you need in small quantities.

"Start out small," Zaratsian advised. "Do baskets for friends, neighbors and relatives."

Zaratsian, who now has many corporate accounts, said that another secret of his success is to exceed a customers' expectations. "Put in that little extra thing that adds value," he said.

Although half of gift basket sales revolve around the holidays, especially Christmas, cash flow is usually not a serious problem because gift basket designers generally ask customers for 50 percent deposits.

"When you are getting started, use your own money to make up a few sample baskets, then when you get an order, use the deposit money to pay for the supplies you need," said Zaratsian, whose tiny workroom is filled with thousands of balloons, reels of ribbons, stacks of baskets, helium tanks and a rainbow of cellophane wrappings.

While the Zaratsians moved into the basket business from the gift and balloon side, Don and Dianne Fell began selling gift baskets to showcase their fresh cookies.

Today, Snookies Cookies sells gift baskets for coffee lovers, cookie lovers and chocolate lovers, in addition to a variety of one-of-a-kind baskets. Prices generally range from $21 to $65, with some custom baskets selling for as much as $300.

"The gift basket market is always growing, and I don't see an end to it," said Dianne Fell, co-owner of the company, which has outlets in Glendale and San Francisco, Calif.

"A gift basket is not only something you can visually enjoy, but you get the pleasure of eating what's inside," she said.

*

If you are interested in learning more about the gift basket business, consider attending the industry's Holiday Jubilee trade show at the Fairmont Hotel in Chicago, Aug. 21-23. Admission is $200. For information, call Gift Basket Review at (800) 729-6338 or write the magazine at: 1205 W. Forsyth St., Jacksonville, Fla. 32204.

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