“The idea is powerful,” says Becky Porter. “You have unlimited labor and merchandise. All you have to do is advertise.”

Four years ago, Porter founded the Red Apple PTA-PTO Thrift Shop, managed by school parent groups in Lynchburg, Va. The store sells “gently used” clothes and other donated items—even pianos and cars. And despite Porter’s lack of business expertise, the shop made money from the start.

Ann Holz, founder of the PTO Thrift Shop in Ann Arbor, Mich., enjoyed a similar success. Looking for a new fundraiser, she began with a big garage sale sponsored by three schools. It made $7,000, and the idea for a store was born.

Thrift stores and consignment shops (the latter return a percentage of the selling price to the person who offered the items on consignment) thrive even in a down economy, reports the Michigan-based National Association of Resale and Thrift Shops. Everyone wins, including donors and consignors, taxpayers, environmental activists, and volunteers. But the biggest winners are school children.

How big? The Chapel Hill-Carrboro PTA Thrift Shop, which includes two stores and a donation center, brings in a total of $500,000 a year in profits to split among its 15 participating schools. Red Apple earns $33,000 for its 18 schools, and the PTO Thrift Shop in Ann Arbor brings in $40,000 to $45,000 for 25 schools.

Thrift and consignment shops can be cash cows. Yet a Google search turned up fewer than 10 PTO shops on the Internet. Why so few?

It could be fear of entrepreneurship. Running a small business offers challenges that may overwhelm PTO members. But according to the resale and thrift shop association, PTO members don’t have to morph into Martha Stewarts to succeed. The real requirements are a willingness to learn about the industry, act professionally, and market, market, market. “It takes organization,” says Sherry Robertson, director of the 20-year-old Bedford School Association Thrift Shop in Bedford, Mass.

The best way to start is by studying other school-run shops. Don’t reinvent the wheel. Modify a model based on the needs and resources of your school district, PTO, and community. Ten years ago, Holz modeled the Ann Arbor shop after Chapel Hill’s, traveling from Michigan to North Carolina to get the information. Today, with fax and email, PTOs can share ideas and save money at the same time.

Spot On

Location is vital for any business. The best locations are near the target market, offer free or low rent, and have sufficient parking. Think unused schoolrooms, town-owned buildings, and donated office space.

The Bedford School Association Thrift Shop leases 925 square feet in the Town Center, a former school that houses the Youth and Family Department, Kids’ Club, and Council on Aging. “Elderly people on fixed incomes and young families comprise the majority of our buyers,” says Robertson. The town charges the shop a nominal rent, but the leased space is so tight that there’s little storage space and rapid sell-offs of merchandise.

In contrast, Red Apple rents 3,000 square feet in a former Cadillac dealership. “We’re on the edge of a wealthy district, so we get great donations,” says Porter. Customers, mainly blue collar workers, walk to the store or take a bus. “The only downside is we’re not on a main thoroughfare,” Porter says.

The Ann Arbor PTO Thrift Shop has a lot of positives. It occupies 6,000 square feet, sharing the building with a bargain book distributor. Students from the University of Michigan, enrollment 40,000, frequent the store along with full-time residents. Although the location is good and storage space is adequate, says Holz, the rent is high. So the shop banks 20 percent of its yearly profits for the future purchase of a building.

Management

The best person to launch a thrift shop, says Sally Blackman, the head of Shopper’s Corner in Wellesley, Mass., is a PTO member who manages fundraisers.

The leadership structure can be simple or complicated, but broad support makes a difference. Porter’s first leadership “coup” was gaining the support of school principals. With a $343,000 grant from the school board and city council, she hired a store manager, two clothes pricers, and two sorters.

Her five-person board of directors, which included an ex-convenience store employee, an accountant, and a lawyer, supplied business experience. Porter also used her contacts and creativity to solicit services and convince a Lynchburg college professor to assign several MBA students the task of revising Porter’s business plan.

Today, the Red Apple management team is comprised of a 13-member board of directors, four paid employees, two representatives from each school, and a director. It doesn’t have to be that complicated, though. Shopper’s Corner gets by with only a director, a shopkeeper

committee, a publicity committee, and a PTO treasurer. The difference: Shopper’s Corner is run by a single group, the Schofield Elementary PTO. Red Apple serves 18 schools.

PTO stores are generally exempt from sales and income taxes. A financial officer files the appropriate paperwork and also issues receipts to donors for tax deductions on donated items. Treasurers (of PTOs or shop boards) pay monthly bills and do the end-of-the-year accounting. Shopkeepers or day managers post the books each week. “Posting is labor intensive,” says Marian Filan, president of the PTO Economy Shop in Wyckoff, N.J. “You have to reconcile sales tickets with cash.”

Financial officers also apportion profits to schools and consignors (who usually receive 50 percent or 60 percent of the selling price of each consignment). Several shops use Chapel Hill’s formula or a variation of it. The formula is based on school enrollment (60 percent) and volunteer hours (40 percent). For example, if one school has 30 percent of the total enrollment of participating schools and meets 100 percent of its required volunteer hours, the school receives 30 percent of the store’s profits. The Ann Arbor store used Chapel Hill’s formula at first but later switched to a formula based entirely on volunteer hours, due to difficulty recruiting volunteers.

When applicable (as at the Chapel Hill PTA Thrift Shop and the Red Apple), financial officers pay salaries and compute tax deductions, such as social security and Medicare. Ann Arbor pays a private accountant because “mistakes can lead to big tax penalties,” notes Holz.

Stocking the Store

Besides clothes, shops sell everything from sports equipment and electrical appliances to diamond engagement rings and china. Experts advise accepting only best-selling books (others don’t sell and take up precious space) and brand new hats. (Health rules often prohibit the sale of used accessories for the head). Also, skip shoes, says Robertson. “They don’t sell quickly due to the customers’ needs for specific sizes, colors, and styles.” On the other hand, stores accept high-fashion clothes and often market them in a “top of the line” area within the store.

To let donors know the parameters of their holdings, stores might tack up a list of unacceptable items. Or hand out lists. Chapel Hill refuses mattresses; food and cos­metics; pesticides; life jackets; items that promote alcohol, tobacco, or violence; weapons; pornography; baby goods; and items recalled by the U.S. Consumer Product Safety Commission.

Generally, donors are asked to bring their items directly to the shop. Stores display photos of larger items not on shop grounds, such as pianos and furniture. Stores that have a truck or the use of one might designate different locations, such as strip malls or library parking lots, as drop-off points. Company donors, such as Wal-Mart, are asked to deliver their overstock.

Items that don’t sell within a set time frame usually go to social service agencies and needy persons. The Red Apple, however, sells “unsaleable” items to a jobber for Third World countries.

Setting prices can be difficult. Sometimes donors are asked to assign prices. Some shops keep an eye on what other resale stores are charging for similar items. The key is how many people are likely to be interested in an item and what the probable market is: blue collar or professional, for example. What doesn’t matter is the price the item sold for new. In general, classic clothes are priced higher than trendy ones, and wild-colored garments are cheaper than pastels and neutral colors. Name brand clothing in good condition typically goes for 25 percent of the retail price, while nearly new equipment goes for about 50 percent.

Getting the Word Out

The PTO Economy Shop holds a one-day Winter Sports Sale every year and coordinates a community-wide garage sale. The shop charges $10 for each “garage” listing. People can only get copies of the listings at the store—a tactic that generates customers and sales.

Shop directors agree they can never do enough marketing. “Despite advertising and publicity, a huge amount of people still don’t know about the shop,” says Filan. So in September Filan encloses informational letters in student packets to help increase store traffic and revenues. Porter markets heavily due to local competition from Goodwill and Disabled American Veterans. Once she advertised (at a nonprofit rate) on seven billboards. Today, she mans booths at malls and gives out information at community events. Other gimmicks? Raffles, silent auctions, and children’s holiday bag sales. Another: taking photos of kids and firemen on fire trucks. Parents or grandparents must pick up their child’s photo at the Red Apple.

PTO shops may soon be on-line. For instance, eBay will soon play a role for Porter. “A customer told us he bought a teapot at the Red Apple for $3 and sold it on eBay for $48,” she says. And there’s a lot to say for “killing your competitors with kindness.” When the Salvation Army closed its thrift shop in Lynchburg, it referred all of its customers to the Red Apple.

Finding Volunteers

As in every other parent group activity, PTO leaders have found that to successfully recruit volunteers for the store they must let parents know how their children will benefit. One way is to base class trips and other activities on the number of volunteer hours provided. Last year McDougle Middle School PTA in Chapel Hill set its goal at 1,100 volunteer hours. When interest waned, the PTA offered cash prizes. Ann Arbor PTOs offer “bonus hours” to schools for people with special expertise, such as pricing cameras, or painting. Because profits are distributed based on volunteer hours, bonus hours translate into cash for the school. Other tricks include allowing friends to work on the same activity at the same time and rotating activities so volunteers don’t get bored. Adequate training and plenty of appreciation for volunteers’ efforts are also important.

PTO stores don’t just rely on schools to provide volunteers. Parent enthusiasm can wane, and policies on using student volunteers vary depending on insurance and supervision issues. Other sources of volunteers include local religious and community organizations, such as women’s shelters, the Catholic Youth Organization, and the local senior citizens center.

A Store for Your Group?

If you think a resale shop might be right for your group, start small, with one school, suggests Holz. Then watch the enthusiasm spread. Donors like to clean out their closets, and customers who otherwise couldn’t afford it get to buy high-quality apparel. Also, “teachers love to shop here,” says Blackman of Shopper’s Corner. And despite problems keeping volunteers, Holz agrees the money is “great.”

So stay optimistic, says Adele Meyer, executive director of the National Association of Resale and Thrift Shops. Even with more than 15,000 resale shops in the United States, new ones open all the time. The stores that last follow sound business practices. And they innovate.

“We need to evolve and grow in different directions,” Porter says, referring to a second Red Apple she hopes to start across town. She also wants to turn an old school bus into a mobile thrift shop. “I’ll paint a huge red apple on the front,” she says, “to remind people we’re doing this to benefit school children.”