Perfect Presents Wrap up profits with a gift basket business.

Christmas, Mother's Day, birthdays--at one time or another,everyone needs to buy gifts. When consumers can't find theperfect present, who comes to the rescue? Gift-basketentrepreneurs, of course.

"A great thing about running a gift-basket business is thatyou're always in the position to create just the right gift forevery shopper--one that matches the specific tastes of the personwho will receive it," says Sally Nichols, co-owner with son,Grant; daughter, Sarah; and son-in-law, Vince, of The Gift Horse, agift-basket service in Beaumont, Texas. Nichols' customers canchoose from standard baskets, which range from birthday andgraduation gifts to specialized creations for golfers and teachers.Others prefer to build baskets from scratch, providing lists of thecontents they want.

Nichols is among the many creative entrepreneurs nationwide whoenjoy satisfying work--and impressive profits--by preparingattractive gift baskets for clients. Gift-basket entrepreneurs buygift items and baskets, use an artistic flair to package themattractively, then find creative ways to market their eye-catchingcreations to others.

The gift-basket industry has been going strong for nearly 15years, and the outlook continues to be bright. "Annual salesfor gift baskets totaled about $800 million in 1996, up from $700million in 1992. It's certainly a growing industry," saysKathy Horak, editor of Gift Basket Review. A recent surveyby the magazine reveals the majority of American gift-basketdesigners in business at least one year boast annual sales of$50,000 or more; approximately 30 percent enjoy sales of at least$100,000 annually.

Basket of Profits

The most typical gift-basket buyers, according to the GiftBasket Review survey, are women between the ages of 35 and 49,who account for more than 76 percent of gift-basket sales. Next inline are corporate customers, who account for approximately 20percent of sales. Because prices for gift baskets run anywhere from$15 to $1,000, customers tend to come from the moderate toupper-middle income levels.

Despite the baskets' widespread appeal, running a successfulgift-basket business can pose a few challenges. "This is anincredibly competitive business," says Jo Masterson, owner ofMountain View Gift Baskets in Redmond, Washington. "The mainthing that surprised me when I entered this industry five years agowas the amount of competition that's out there. In my area, forinstance, we have more than two pages' worth of gift-basketprovider listings in the local telephone book, and there'sanother gift-basket shop just three blocks down the street frommine."

Other gift-basket services aren't your only competitors.Masterson notes that florists offer similar convenience and pricesand target the same market. Masterson has succeeded in thiscompetitive environment by focusing her marketing efforts oncorporate rather than individual clients.

"When I started out, I targeted my offerings to individualsrather than to businesses, because that's who I already knew.But my intention from the beginning was to gradually shift my focusto the corporate market," Masterson explains. "That'sbecause a company that uses your service regularly tends to placefive or six gift-basket orders a month, whereas most individualsorder only one or two times a year. In short, for the same amountof marketing and physical effort, you generally get a bigger returnwith the corporate market."

This doesn't mean, however, that Masterson turns her back onindividuals. "Today, I sell about 20 percent to 25 percent ofmy items to individuals," she says, "many of whom learnof my business through the workplace."

Making it Work

Anyone operating a gift-basket service should be prepared tospend much of the holiday season working long hours, especiallyduring the weeks before Christmas. "The demand for our basketsis steady all year long, but it's during the last few months ofthe year when things really heat up and we work very, veryhard," Nichols says.

Still, operating a gift-basket service offers a variety ofdistinct advantages. The market for gift baskets is sizable, withrepeat business being not the exception, but the rule. Start-upcosts can be as low as $3,000.

It's possible to make substantial profits running thisbusiness part time, as Masterson did. "I ran this as apart-time homebased business for my first two years and had somesuccess that way, but once I realized I really enjoyed thegift-basket business, I decided I needed to move things up anotch," Masterson says. "So I quit my day job as a nurseand moved into a retail spot with a showroom and a warehouse. Thatdefinitely took the business to a whole different level, convertingit from a hobby into a full-time `real job.' " Salesalso reached a new level: Mountain View Gift Baskets brought insales of more than $100,000 in 1997.

For gift-basket entrepreneurs, the rewards are more thanfinancial. "Being creative, seeing your visions come tofruition, and [seeing] the responses of [people] who receive yourbaskets--that makes all the difference," Nichols says."When you get a call from someone who tells you how happy oneof your creations made them, it just makes you feel so darngood."

For More Information

• Contact the Gift Association of America, 612 W. Broad St.,Bethlehem, PA 18018, (610) 861-9445.

• Subscribe to Gift Basket Review ($29.95 for a one-yearsubscription), Festivities Publications Inc., 815 Haines St.,Jacksonville, FL 32206, (800) 729-6338.

• Order Entrepreneur's Business Start-Up Guide #1306, GiftBasket Service, $59, from Entrepreneur Media Inc., 2392Morse Ave., Irvine, CA 92614, (800) 421-2300, http://www.smallbizbooks.com

Kylo-Patrick R. Hart is a freelance business writer in AnnArbor, Michigan.