Furniture store deposits: test stock and delivery cash first
Separate furniture orders, deposits, stock payments and delivered sales. Use a small order test and a slower ramp before committing a showroom's reserve.
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Build an order-by-order payment and delivery calendar before using customer deposits or widening the opening assortment. A deposit can arrive before supplier payment is due, yet the store still owes furniture or a refund. Check what remains available after those obligations, then test whether a slower flow of completed orders can support paid staff and the showroom.
The StartFigures furniture store case describes one independent leased showroom with a curated new-furniture range, paid owner and sales coverage, limited receiving/storage and outsourced delivery. The examples below are authored assumptions in constant 2026 dollars. They are not observed store results, national averages or estimates of your refund obligations. The evidence register explains the inputs and their limits.
Track written orders, deposits and completed sales separately
A signed order, a customer payment and a completed furniture delivery are different events. One record should connect them without counting the same sale more than once.
Havertys' 2025 filing records payments received before merchandise delivery as customer deposits. That is a useful illustration of the distinction, rather than a rule that certifies every independent store's contracts or accounting. Confirm your recognition and tax treatment with your accountant. Havertys 2025 Form 10-K, revenue note.
| Event | Record | Decision it supports |
|---|---|---|
| Quotation and specification | Pieces, finish, dimensions, access, full customer price and realistic delivery window | Can the store deliver what the customer expects? |
| Customer commitment | Deposit, remaining balance, cancellation terms and the unresolved obligation | How much cash is connected to undelivered orders? |
| Supplier commitment | Landed cost, deposit/prepayment, minimum order and payment date | What must be funded before customer completion? |
| Receipt and inspection | Availability, damage, replacement need and stock location | Can delivery be confirmed without another cash or service problem? |
| Completion and aftercare | Accepted delivery, balance receipt, provider bill and remaining claim | What contribution and cash actually remain? |
This table is an operating checklist. It does not assume that deposits must legally be held in a particular account. The practical point is to keep their obligations visible when deciding how much unrestricted funding the store has.
Test one order before forecasting a showroom
Start with the price the customer actually pays for merchandise, then deduct the costs needed to complete that order. A supplier invoice alone misses delivery support, payment costs and unrecovered damage.
The website's selected basket is $1,700 after ordinary discounts and returns, excluding sales tax. Its category and pieces-per-order bridge is an assumption to replace with the proposed assortment. For context, IKEA's inspected U.S. page showed a KIVIK sofa at $799 and sofa with chaise at $1,199. Those are different individual offers, not evidence of an average furniture order or the wholesale cost available to a new showroom. IKEA U.S. KIVIK series.
| Component | Assumption | Amount |
|---|---|---|
| Net merchandise sales | One completed order | $1,700 |
| Landed merchandise | 55% of net merchandise sales | −$935 |
| Net delivery support | 5%, after identified customer recoveries | −$85 |
| Payment costs | 3% effective allowance | −$51 |
| Unrecovered damage | 2% cost allowance | −$34 |
| Contribution before fixed costs | 35% of net merchandise sales | $595 |
These are management-planning categories. Inbound freight and duty already belong in landed merchandise; do not charge them again as customer delivery. Normal discounts and refunds already reduce net sales. Delivery recoveries are presented as a cost offset here, so your accountant may need a different gross presentation without changing the underlying economics. The damage allowance represents unrecovered cost, not another deduction of the full refunded selling price.
The payment allowance is also a selected blend. Square's current U.S. Free-plan price table lists in-person processing at 2.6% plus 15 cents, with different rates for other methods. Deposits and balance settlements, tax collected, refunds and financing offers can change the effective cost. Verify the actual contract and tender mix rather than copying one headline rate. Square U.S. pricing.
A deposit can leave a procurement gap
Assume the customer pays a 50% deposit on that $1,700 merchandise order: $850. If the supplier requires the full $935 landed merchandise cost before delivery, the store must supply at least another $85 before considering payment fees, delivery or other obligations.
The deposit percentage and supplier prepayment are a separate illustrative timing test, not established terms for this business. Twenty such open orders would mean $17,000 of customer deposits against $18,700 of merchandise commitments, before the remaining costs. Counting the deposits as free cash would hide the same gap repeatedly.
A supplier balance due after customer delivery produces a different path. So do cancellations, damaged special orders or a delayed final payment. Put those dates in a weekly schedule. Keep the customer's unresolved obligation visible even when the cash has already been paid to a supplier.
Keep stock funding separate from the loss reserve
The worked case allocates $95,000 to display furniture and opening salable stock and another $100,000 to an uncommitted operating and reorder reserve. Stock is not interchangeable with cash: it may need a discount, time or additional delivery work to become a completed sale.
The base operating ramp starts at half of mature completed orders and adds five percentage points a month. With the paid roster and overhead retained, its cumulative operating deficit reaches about $41,331 before improving. That calculation excludes stock-payment timing, customer deposits/refunds, tax, debt, major replacement and capital spending; it is not a complete cash requirement.
A separately assumed slower ramp starts at 40% and adds three percentage points monthly. Its cumulative operating deficit reaches about $107,117 and the first monthly operating break-even occurs in month 16. That operating deficit alone exceeds the selected $100,000 reserve. The slower case therefore needs additional secured funding, lower commitments or a different launch design before it is accepted; customer deposits do not cure the gap.
The SBA's startup-cost framework likewise distinguishes opening assets and expenses from money needed during early deficits. Its framework supplies no current furniture-store dollar benchmark. SBA: How to Estimate Starting Costs.
Make the buying limit follow completed orders
The mature website case assumes two completed orders per day across six public days, using the shared 4.33-weeks-per-month convention. It pays owner management, a sales lead, an associate, receiving help and relief, plus showroom overhead. Those are explicit scenario inputs, not a measured local demand estimate.
At the base basket and retained contribution, the mature monthly operating proxy is about $4,916. An assumed 20% shortfall in completed orders produces a loss of about $1,267 a month with the same staffing and overhead. Orders can fall fractionally as a monthly average even though each customer's order is indivisible. These results exclude depreciation, interest and tax and do not calculate owner distributions.
| Metric | Model output |
|---|---|
| Capital to open | $290,000 |
| Year 3 revenue | $1,059,984 |
| Year 3 EBITDA margin | 5.6% |
| Operating break-even | Month 8 |
Before widening the assortment, review which display pieces generated completed sales, which open orders remain unresolved and how much buying cash is committed. Reduce reorder depth or test a narrower range if stock age and fulfillment work rise faster than realized contribution. A warehouse or owned delivery fleet introduces a new capital and staffing decision; it is not an automatic remedy for slow completion.
The financial model page explains the documented visitor, repeat-customer and category sales structure and its inspection limits. The business plan connects the customer proposition with buying, paid organization and delivery responsibilities. Use the operating threshold calculator for price and order-volume tests, then join those results to your actual weekly cash calendar before signing the lease or placing the opening order.
