How To Start A Toy Company (Business Plan)

Trying to learn how to start a toy company from scratch can feel virtually impossible.

There’s so much that goes into the ideation, manufacturing, and marketing… it doesn’t feel practical for the average entrepreneur. However, if you focus on the 20% of action steps that lead to the 80% of results, not only is learning how to start a toy company possible, it’s highly likely to build a highly successful one.

You just have to know what that 20% is so you can triple down on it. If done correctly, starting a toy company will become one of the best million dollar business ideas you’ve ever thought of.

So with all of that said, let’s talk about it…

How Much Does It Cost To Start A Toy Company?

There are millions of different types of toys.

This means the cost to start a toy company can vary wildly. Some toys can be doable for some entrepreneurs to afford and others require huge sums of money. So it’s extremely hard to give a “one size fits all” answer on this.

With that said, I wouldn’t think about starting a toy company with less than $25,000.

Again, this is either an accurate or inaccurate claim. The reason I chose $25,000 though is because that’s how much it usually costs to start an ecommerce business in general with good enough profit margins.

This means it’s possible to start less, but with lower margins.

It also means it’s possible to start with more, but you need more resources.

Is The Toy Business Profitable?

The toy business can be extremely profitable, hence why big media companies worry about it so much. In fact, Disney will not spend a cent on a potential billion dollar movie unless they can use that IP for toys and other merchandise.

The only downside is that most toys are a volume business.

This means that to make real money in toys, you have to sell a lot of them. This is not true in all toy categories, but it is true for a lot of them. So if you really want to know if the toy business is profitable in your specific category, you’re going to have to talk to manufacturers.

With that said, there is one way to make it more profitable by default.

By reducing marketing costs, you can make even the most razor thin margins in toys much more profitable. All you have to do is replace the cost of paid advertising with other marketing channels that don’t cost nearly as much money per unit.

Keep in mind though, this is the cost of a custom toy product.

If you’re looking to start with private label, then costs shrink to a fraction of the size due to lower cost per unit and low minimums.

How To Get A Toy Manufactured

Like most things, it depends.

However, I’ve found that most people follow either 1 of 2 paths.

1/ Directories
2/ Google

Directories are basically resources that have a list of manufacturers you can contact. Sometimes they’re free, but most of the time they’re paid, especially if you want a high quality list. To find them, you can just google “toy directories” or be specific like “teddy bear manufacturer directories”.

The second option is Google.

Using the same example of teddy bears, you can just google stuff like “teddy bear manufacturer” or “teddy bear private label”. This will give you a huge list of potential partners to work with.

Regardless of the route you take though, you’ll need to find the “winners”.

The way you do this is by going through every potential partner, analyze their sites to see what they can do, and then call up the ones that seem best. Once you call them up, ask to speak with their sales reps, tell them what you’re looking to do, and then ask them these 3 questions…

What are your costs?
What are your minimums?
What are your lead times?

Assuming they can do what you need them to do, the answers to these 3 questions will give you all the information you need to know when it comes to choosing the right partner.

The Toy Business Plan: Build

To properly learn how to start a toy company, you have to go with what’s working now.

Today, this means content.

You can see this for both huge and small businesses. For example, Lego completely transformed its business when it switched from being a toy company to being a media company that sold toys. Another example are the hundreds of kids on youtube who review toys for other kids to see. Some of these youtubers end up making their own toys to sell.

So how does this look like for you?

Technically, the most ideal path is to have your own kid(s) become influencers by reviewing kids. Of course, this can be a sticky deal for most parents. Plus, it automatically exclusives non-parents. Which is why I recommend influencers for this in the next stage.

The next best route is to target the parents.

Let’s say you’re selling a teddy bear. There are tons of resources out there that teach you how to be a better parent. So what if you made a resource for parents and then sold them your line of teddy bears for their kids? 

What you don’t need to make all of this work is millions of followers.

All you need is an audience big enough to make your first 1,000 sales so you can start with a bang and have the profit you need to re-invest into more inventory.

The Toy Business Plan: Launch

This phase is at the core of learning how to start a toy company.

At this point, you have a small, but loyal audience of kids or parents. It’s also safe to say that your products or at least your manufacturer is ready to go.

The next step is to launch your products to your audience.

Again, the goal here is to make your first 1,000 sales from this audience. Assuming it’s a big enough audience that likes what you’re doing, all you have to do is message them. Ideally, this is through an email newsletter, which will have the highest conversion rates. However, any marketing channel you’re using will work too.

Because toys can be expensive to produce though, it’s wise to repeat this 2-3 times.

By this, I mean you want to launch once, sell out all of your units, re-invest into more inventory, launch again, sell out, re-invest, and then finally launch your store permanently. Doing this will make it easier to control your costs, especially if you’re a first time entrepreneur.

If everything is going well, each new launch would be bigger than the last.

The Toy Business Plan: Scale

If you’ve done everything right so far, you have 2 things…

1/ Toys that proven to sell
2/ Organic traffic that converts

This will form the foundation of your toy business. With that said, now is when you can go for the home run and look for much bigger and faster marketing channels. For toys, this is primarily going to mean advertising, Amazon, and wholesale.

All three topics are massive topics, but the common denominator between all of them is to leverage everything you’ve already done. This means using your data to maximize the effectiveness of your ads, Amazon, and wholesale opportunities.

For example, you can do Facebook LLA ads using your audience data, which will be some of your best converting ads.

You can launch your products on Amazon by sending your audience to your listing, which is a critical part of the Amazon SEO process.

You can show data to wholesale partners to prove people like your products, which is the real key to scale in the toy business.