If you’ve decided to open a boutique you will need to gather research, obtain capital, create a business plan, file legal permits, and market your business. Depending on the size, location, and type of boutique you want to start, it can cost anywhere from $75,000 to over $500,000 to open. Income potential for the owner of a single boutique varies anywhere from $20,000 to more than $70,000 per year.
1. Research Boutique Type
When learning how to start a clothing boutique, you’ll need to gather research about your ideal boutique shop. Target the type of boutique you’d like to open and have a general idea of the cost to open it.
Start Your Boutique From Scratch
Execute the vision for your boutique by creating from scratch your boutique’s branding, business systems, and marketing strategies. Starting from scratch is typically a more affordable option than opening a franchise because you don’t have to pay an initial franchise fee or ongoing royalty fees. However, starting from scratch also carries more risk of failure because your type of boutique is not market-tested.
Open a Boutique-based Franchise
Opening a boutique-based franchise is a standard option for those who would like a lower risk of failure. When you purchase a franchise, you’re gaining access to proven branding, marketing strategies, business systems, and inventory suppliers. Additionally, most franchises provide ongoing support and training for their franchise owners.
Costs to open a boutique-based franchise vary. It costs around $150,000 to open an ApricotLane, which includes a franchise fee of $34,500. ApricotLane charges an ongoing royalty fee of 5.5% of gross revenues. Scout & Molly’s charges a $50,000 franchise fee with a total investment that starts at $300,000 and a royalty fee of 5% to 6% of gross revenue per month.
How Many Employees Should You Hire?
To operate your boutique successfully, you need at least one salesperson to help customers while you’re open. The number of salespeople on staff depends on the size of your boutique. If you run a large boutique or have a lot of foot traffic, you may need several salespeople at once in the store. Look for qualified candidates that have solid backgrounds in retail or fashion.
A common mistake new boutique business owners make is when they spend too much time with customers and not on hiring enough employees. As a boutique owner, plan on spending around 20% of your working time with customers. Then spend 80% of your time on business-related activities such as inventory management, employee management, marketing, and growing the business.
Creating An Online Store
A great way to get more exposure and sales is to create an online store. Ecommerce allows your customers to browse your current clothing selection without visiting your store. It also enables your store to have customers from all over the world, not just near your business.
Custom web designs can cost up to $10,000, so you should explore all your design options and choices before picking a website platform. We recommend using Shopify as an ecommerce-based website platform. Over 1 million businesses use Shopify and it is one of the most user-friendly ecommerce platforms available. You can add Apps, such as Mailchimp email marketing to make your online boutique more effective. The cost to get started selling online with Shopify starts at $29 per month, but you can test it for free for 14 days.
It’s important to remember that merely creating a website won’t drive visitors to the site. You will also need to learn how to use social media or use online advertising to drive interested potential customers to your website.
2. Write Your Boutique’s Business Plan
A business plan is the road map for your boutique. In the plan, you describe why your boutique will be a success, how you will make it a success, and what its income and expenses will be over a three year period. You can create your business plan from scratch or purchase an online business plan software that walks you step-by-step through the process.
Traditional Business Plan
A traditional business plan is a requirement banks and many investors have before they consider investing in your boutique. Commercial bank lenders may look at dozens of business plans every week and like to have a specific structure to the business plan. In a traditional business plan, you’ll use sections like boutique industry trends, customer demographics, and management background. Plan on spending at least 50 hours collecting data and writing this type of business plan.
Business Model Canvas
A business model canvas (BMC) is a modern business plan that includes different sections than the traditional plan. The value proposition is a section where you discuss your products or services and how they are different from your competition. Channels is another section where you explain how you will reach your customers. The BMC is a great idea if you have multiple owners because it works as a visual-based, group exercise.
The financial projections are the most challenging part of a business plan. Whether you’re doing a traditional business plan or a business model canvas, we recommend creating accurate financial projections. Part of the projections is listing your startup costs, which is needed to open your boutique. You’ll also want to create a projected income statement, which details the income and expenses the boutique will have for its first three years in business.
The Service Corp Of Retired Executives (SCORE) provides a free Microsoft Excel workbook as a template for your financial projections. In it, you’ll find an income statement, balance sheet, and cash flow statement. Many business owners struggle with the financial projections because they have to estimate every cost of running the boutique, and also how much money it will earn every month. It will take extensive research to figure out the costs of running a boutique before opening it.
Business Plan Software
If you find using a free business plan template or the free financial projections template to be too challenging, consider using a business plan software. A software such as LivePlan, walks you step-by-step through the business plan creation process.
LivePlan provides video tutorials to help you learn the specific business plan section you’re creating. Additionally, LivePlan provides over 500 business plan examples to get inspiration and learn from. You can try LivePlan for free for 60 days and then pay $11.66 per month to access your plan.
3. Obtain Capital For Your Boutique
If you’re looking to obtain capital for your boutique, there are several options available to you. A traditional bank loan will be for a larger boutique that needs at least $100,000 in funding. A personal business loan is typically under $50,000 and is largely based on the borrower’s credit score.
The cost to start a boutique varies depending on the size of the boutique and its location. While it may be possible to start a small boutique in an affordable location for $75,000, we recommend having at least $100,000 of cash available before opening a small boutique. These funds typically come from personal assets, family and friends, an investor, personal loan, crowdfunding campaign, or a combination thereof.
Traditional Bank Loan
It’s unlikely you’ll use a traditional bank loan to open your first boutique. One challenge with a traditional bank loan is that the bank will require the amount of the loan in a liquid and accessible account such as a certificate of deposit (CD). The bank requires a liquid account, so it can collect on the loan if the boutique were to fail.
You may be able to use a traditional bank loan to open a second location. However, the bank will want to see that your original boutique has been operating at a healthy profit for at least three years. If your boutique business owned an asset such as the building it’s operating in, that collateral will help you qualify for a bank loan.
Personal Business Loan
An alternative to the bank loan is a personal business loan. This loan is an unsecured loan with an approval and interest rate largely based on the borrower’s personal credit score. Using personal loans along with additional sources of capital is common. For example, to raise the $150,000 needed to open your boutique, you may invest $50,000 of your own personal funds, $50,000 of family and friends funds, and take out a $50,000 personal loan.
Find An Angel Investor
An angel investor is typically a wealthy individual who is looking to fund early-stage businesses with their own capital. The angel investor lends funds in exchange for an ownership interest in the boutique. They will receive a percentage of the boutique’s yearly profit.
It can be difficult to find an investor. It’s recommended to network locally with other business groups and discuss your boutique plans to discover an investor. Before ever approaching an investor, make sure to have a business plan, accurate financial projections, and a persuasive pitch.
Run A Crowdfunding Campaign
A crowdfunding campaign is when you raise funds for your boutique by pre-selling products or services, which are called rewards. For example, The Doll’s House Boutique raised over $30,000 on Kickstarter by selling several items such as thank you cards, grand opening tickets, VIP memberships, and unique clothing. When you use a crowdfunding platform, they typically take a percentage fee of your final amount raised. Kickstarter’s fee is 5%, plus a 3% payment processing fee.
4. File Your Boutique’s Legal Paperwork
It’s essential to take the proper legal steps before opening your boutique. Registering your business as a legal entity and passing local building inspections are all a part of the process. You’ll also want to open a business checking account to separate all business and personal expenses.
Obtain An Employment Identification Number
The federal government issues employment identification numbers (EIN) to track business taxes. It’s often a requirement to have an EIN when opening a business bank account or applying for a business loan. The EIN is free and is done in less than 15 minutes through the Internal Revenue Service (IRS) website.
Register Your Boutique With The State
Registering your boutique as a legal entity in the state it’s operating in is highly recommended. For example, if you register as a limited liability company (LLC), it protects the business owner’s personal assets if a lawsuit were to ever occur against the business. If the boutique were to ever default on a loan, the bank couldn’t have a judge order the boutique’s owner to pay the loan with personal funds.
The cost to register a business varies state to state. The cost to register in Kentucky is $40 and in Massachusetts it’s $500. You can register through your state’s official business registration website, however many business owners find the website difficult to navigate. Another registration option is to use an online legal service to assist in business registration. IncFile is an online legal service that will register your business for free, plus any state fees.
Get Local Licenses & Permits
For a boutique with a physical location, it’s likely you’ll need several local permits or licenses before opening the business. For example, if you’re doing extensive renovations, you may need a building permit. Additionally, you may need a “certificate of occupancy” license for your business which certifies how many people can safely be in your business without violating the building code. It’s best to visit your state and city’s official business websites to get the complete license and permit information.
Open A Business Checking Accounting
It’s important to open a business checking account before incurring any expenses for your boutique. This ensures personal and business finances are kept separate at all times. If an IRS audit were to ever happen to the boutique, it can get complicated if business expenses are in a personal checking account. You can make an IRS audit go smoothly by keeping all your business income and expenses in a single checking account such as a Chase Business Checking account.
5. Set Up Software To Run Your Boutique
Software is an important component of your boutique that will make business operations run smoothly. You can organize everything from payroll to employee scheduling. You will need the following systems to make your shop run smoothly:
- Point-of-sale (POS) system—processes in-store and online orders
- Accounting software—helps you record income and expenses for the boutique
- Payroll software—ensures your employees are paid promptly and accurately
- Employee scheduling software—allows your employees to sign up for shifts
The POS system is one of the most important components of your business. It’s typically a tablet or iPad with a credit card scanner and built-in software that accepts payments from customers. Many boutiques use their POS software for inventory management, which helps a business owner recognize when to re-order merchandise. Lightspeed is a POS software that has robust inventory management in addition to payment processing.
Accounting software assists you to keep track of the income and expenses in your boutique. It often connects with a POS system to automatically transfer sales data. Additionally, you may be able to connect your business credit card and checking account to the accounting software to automatically record expenses. QuickBooks is a commonly used and highly rated accounting software specifically for small businesses.
Payroll software is used to ensure your employees get paid on time. Additionally, payroll software often assists with paying payroll taxes and offers HR benefits such as health insurance. Regarding costs, Gusto, a popular small business payroll software, charges $39 per month, plus $6 per employee.
Online Employee Scheduling Software
Online employee scheduling software allows employees to sign up for shifts in your boutique without the owner micromanaging the schedule. You build the schedule and the employees sign up for shifts through a computer or an app. Additionally, if you have full-time employees, the software can manage time-off allowances. Homebase provides free employee scheduling software for one location with unlimited employees.
6. Market Your Boutique
Effective marketing of your boutique is crucial for success. Your boutique’s branding has to speak directly to your ideal customers. Your website has to show off your clothing merchandise and accessories in a fashionable and appealing manner. Your Google My Business listing ensures your boutique’s information accurately shows in Google. Social media platforms allow you to stay in contact with your potential and future customers consistently.
Branding Your Boutique
Branding is how your customers view the overall image and essence of your boutique. Everything from the font in your logo, to the type of clothes your boutique sells, helps establish your brand. It’s important to thoroughly think through how you want your boutique to come across to your customers before opening your business. Fashion and clothing is a business built on emotion; your brand evokes a particular feeling, which can range from trendy and hip, to mature and established.
Physical Marketing Materials
It’s important to develop the branding first because if your boutique’s colors and fonts vary across your marketing materials, it will look unprofessional. Once the brand is established, you can create physical marketing materials such as signage, business cards, and brochures.
Local networking for your boutique, in particular with local media, will help establish relationships that spread the word of your new boutique through media. Getting your boutique profiled in local newspapers, talk shows, magazines, and blogs will help get your boutique in front of your ideal customers. You may want to reach out directly to specific journalists that cover your particular industry to ensure they know your business is opening soon. If you’re lucky, they may write a profile on the opening of your new boutique.
When a potential customer types in your website or searches for your boutique online, you want to make sure it appears in search results. Get in front of your customers daily with free marketing on social media platforms and through email.
- Website: Potential customers will visit your website to determine if your boutique sells the type of clothing they would wear. Unless you have a high level of tech skills, you’ll spend at least $1,000 for a simple branded website design.
- Social Media: Instagram and Facebook are free opportunities to reach current and potential customers online. In particular, Instagram Stories allow you to reach your most loyal customers daily.
- Email marketing: To make email marketing effective for your boutique, you can’t just send promotional emails. Consider writing emails with more value for your customers such as new fashion trends for the season. Use Mailchimp to send free emails to up to 2,000 subscribers.
- Google My Business listing: Businesses looking for local customers can register for this free listing from Google. The Google My Business listing is more than a static page, it’s a directory listing to manage on a monthly or weekly basis.
Many boutique owners open shops in several locations to earn additional income. Once you have established your brand and business systems, consider expanding to additional boutique stores in your city or other nearby cities.
Opening a boutique is more than simply selling clothes or accessories to customers. Your boutique is where customers will go to learn about the latest fashions and discover clothes that will make them look and feel great. If you establish and follow a clear business plan, sell the right items, and build a reliable staff, you will be well on your way to becoming a boutique success.