How do I open a charity shop?
Starting a charity shop is complex and shouldn’t be entered into lightly. Charity shops can be great for raising awareness and funds for a charity but you will find that you are faced with the same issues as someone running a small business: security, health and safety, trading law, in addition to specifics to charity retail, such as sourcing stock and volunteers.
I want to open a charity shop. What do I do first?
- Register as a charity with the Charity Commission.
- Learn about the statutory obligations that come with being a retailer, charity, employer and occupier of property.
- Learn about tax and charity shops. Charity shops are exempted from corporation tax. They benefit from zero rated VAT on the sale of donated goods, and 80% mandatory non-domestic business rates relief. The HMRC website has guidance on these issues.
- Approach your local council, to arrange rates relief.
- Create a budget for the shop, with likely income (from sales) and expenditure (from rent, wages, repairs, bills, insurance, etc.). Remember that 60-80% of a shop’s income may go to running costs, such as rent and wages.
- Raise your start-up capital. You will need to pay the rental deposit, usually the shop-fit, potentially essential building repairs and possibly staff recruitment.
Getting your charity shop up and running
- Choose a geographical area for your shop. Usually a mixed income area with good footfall and nearby parking.
- Find a property with a good sized backroom for storage and stock preparation, and a suitable public area. In order to comply with Health & Safety legislation and the Disability Discrimination Act (DDA) (www.equalityhumanrights.com), the shop will need to be safe, well lit, and accessible to those with disabilities.
- Fit front-of-shop with shelves, railings and a counter with a till, while the backroom will need storage and sorting facilities. Security equipment is highly recommended as suits your budget.
- Hire a shop manager with retail experience. They will be responsible for all the shop’s activities including all aspects of stock, volunteers, cash handling and sales reporting.
- Find volunteers with a view to a minimum of two people working in the shop at all times, for safety, security, and stock processing. The average charity shop has 20 volunteers.
- Train your workforce to know about your charity’s aims, customer service, retail law, product safety, stock preparation, spotting valuable goods, as well as issues like health & safety and security.
Prepare your charity shop for long term success
- Encourage donations from your community via social media, signage and neighbourhood forums.
- Sort, clean and price your stock. Unsold textiles (i.e. too old or damaged) may be bought by a textile recycler – we recommend a TRUST-accredited recycler – who will recycle or export them.
- Make sure the shop is a safe and secure place to be and to work in by completing risk assessments and display the correct posters and notices including: employer’s liability insurance certificate, Health & Safety law poster, employer’s Health & Safety policy statement, fire emergency instructions and the emergency aid notice. The Royal Society for the Prevention of Accidents website has more information.
- Make sure the shop is welcoming to disabled customers and volunteers to comply with the DDA regulations. This involves practical things, like having a ramp over steps, as well as training staff on how best they can help.
- Make sure the shop complies with consumer law, and sells safe goods of satisfactory quality. Visit Trading Standards for further guidance. Our members have access to charity retail-specific guidance.
- Apply for a music licence if desired.
Further information
We recommend the following sources of information:
- The Charity Commission provides information on the legal aspects of charity trading, including operating under a trading subsidiary in CC35 – Charities and Trading.
- The Charity Shops Survey is an annual survey of the charity retail sector published by Civil Society.
There are charity retail consultants available too – some of whom you can find here.