Start a clothing boutique by following these 10 steps:
- Plan your Clothing Boutique
- Form your Clothing Boutique into a Legal Entity
- Register your Clothing Boutique for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Clothing Boutique
- Get the Necessary Permits & Licenses for your Clothing Boutique
- Get Clothing Boutique Insurance
- Define your Clothing Boutique Brand
- Create your Clothing Boutique Website
- Set up your Business Phone System
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your clothing boutique. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a clothing boutique?
The exact costs of opening a clothing boutique vary based on your size and location. Some veteran boutique owners recommend not starting with anything less than $50,000 in financing, while others claim that $150,000 or even $200,000 are much more appropriate. What goes into this cost? It covers acquiring a storefront and setting up utilities as well as acquiring an appropriate level of insurance for your business. You will need to pay any city and state-specific licensing fees, permitting fees, and anything else required. You will need to furnish and decorate the interior of your boutique in an interesting way and spend money on professional marketing, ranging from signs and logos to ads you take out throughout the city. And, of course, you must buy the clothes themselves, which is a variable cost because the more you order, the more you'll pay. At the same time, however, the greater variety of clothes you have to offer, the more customers you can appeal to, so a healthy starting inventory is good.
Read our clothing boutique purchasing guide to learn about the materials and equipment you'll need to start a clothing boutique, how much to budget, and where to make purchases.
What are the ongoing expenses for a clothing boutique?
The most obvious ongoing expenses for your boutique will be rent and utilities, followed by the appropriate property taxes for your location. You will need to pay any employees an appropriate wage each month. You should also be advertising each month, though the exact cost of this will vary based on the forms of advertising you primarily use. If you take credit cards (which is highly recommended), you will be paying transaction fees on those transactions every month. Finally, you must always be receiving new stock while finding creative ways to sell old stock; for a clothing boutique in particular, you don't want to be stuck selling last year's fashions.
Who is the target market?
In some ways, one of the most preferred customers is the kind who is indecisive. As opposed to the customers who say they are "just looking" and want to be left alone, the undecided customers are willing to make a purchase but are unsure what it should be. By being genuine and honestly helpful, you can simultaneously secure a sale and a loyal customer relationship. Similarly, so long as they don't distract you from other customers, chatty customers are good because they already feel as if they have a relationship with you. This will promote regular visits, and they are more likely to trust your advice when you recommend a particular outfit.
How does a clothing boutique make money?
On the most basic level, a clothing boutique makes money by selling clothing and other goods. This involves buying clothes as cheaply as possible and then marking the price up a certain amount in order to create your profit margin. This may mean scouring online sales for great deals or possibly partnering with other boutiques or businesses to order certain items in bulk. However, you may want to be wary of doing this, because selling relatively unique and hard-to-find items is one of the chief attractions of a clothing boutique.
How much can you charge customers?
Typically, the clothes you sell should be marked up between 50 and 65 percent from their wholesale price in order for you to receive a decent profit. This effectively lets you calculate the exact price you sell each item of clothing for. One recommended calculation to determine the price is to take what you paid for the item and divide it by 100 minus markup percentage and then multiplied by 100. Thus, if you were selling designer jeans that you acquired for $30 at a 60 percent markup, you'd want to charge $75 for this item.
How much profit can a clothing boutique make?
A clothing boutique is potentially very profitable. The gross profit margins of apparel retail have leapt up in recent years, going from just above 36 percent in 2014 to almost 81 percent in 2015. Generally, retail rides the waves of the economy, so as more people acquire more jobs and money, they are more likely to buy clothes.
How can you make your business more profitable?
One way to make your business more profitable is to make it smaller. Most of the above assumes you are opening a traditional brick-and-mortar store somewhere. However, you can run a boutique in a small kiosk or online and dramatically reduce some of the startup and ongoing costs. If you have the skills and creativity, you can also create your own clothing line and sell it via your own store. This is a bit of a gamble since customers like traditional brands, but it lets you pocket more of what you sell when it comes to your own stuff. Finally, don't be afraid to adjust your theme or niche as time goes on. It's possible to be too specific as well as too general, so you must find the sweet spot of having a niche specialty that is still enjoyed by many different customers!
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Clothing Boutique Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your clothing boutique is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a clothing boutique. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Clothing boutiques may also wish to look into applying for a resale certificate, which allows retailers to purchase goods intended for resale without paying sales tax.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
In order to play music in a business setting, as many clothing stores do, permission must be acquired from the composer or license holder. Typically, it is possible to obtain a “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP or BMI.
Certificate of Occupancy
A clothing boutique may be run out of a physical location instead of online. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a clothing boutique
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your clothing boutique will be in compliance and able to obtain a CO.
Trademark & Copyright Protection
If your business will sell original clothing, it will be especially important to receive copyrights and or trademarks in relation to your brand name, logos, etc. Here is a comprehensive overview of trademark law from the United States Patent & Trademark Office.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a clothing boutique
There are many ways to promote and market your clothing boutique. These include traditional advertisements such as print, which is helpful to both mail out to prospective customers and to have something physical to hand walk-in customers. Catchy store displays are vital in attracting the attention of those walking by your business, while radio advertisements are a good way to reach those who are driving around shopping. Finally, don't underestimate the importance of a solidly-designed website and social media page. Many boutique shoppers are young, and they prefer being able to browse your store and interact with you online, which also lets you encourage them to show off your latest styles in pictures marked with a custom hashtag unique to your store.
How to keep customers coming back
One of the classic ways to to attract and retain clothing boutique customers is to offer special promotions. These might include offering standard coupons or, better still, a free gift or small item with their next purchase, encouraging them to return. You may consider offering semi-regular sales on special kinds of items, which can lure in customers that were on the fence about buying before. Encouraging your customers to register their information with you means you can also keep them in the loop via email or text. There are also apps such as FiveStar where you can allow customers to build points to use towards discounts or other benefits, and you can text customers special offers with this system to encourage them to return to your store.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Nextiva
Nextiva is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
Start A Clothing Boutique In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This a business best suited for those with a real passion for what they sell. Fashionable individuals are a natural fit to help showcase the very products that they sell, while those with a formal education or background in business may experience success more swiftly. And because the job involves selling clothes to those who may be overly critical of their appearance, being a "people person" is a real asset.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a clothing boutique?
Many of the day-to-day activities at a clothing boutique involve interacting with customers. This ranges from greeting them, making small talk, answering their questions, and generally guiding them to clothing and styles that are well-suited for that customer. Other activities involve the clothing itself, such as managing stock, displaying everything in an attractive way, storing and receiving any clothing deliveries, and making sure everything displayed has a price tag. Other activities may include designing and mounting attractive displays and helping to ensure the security of your store.
What are some skills and experiences that will help you build a successful clothing boutique?
Some of the skills that will help you build your clothing boutique include being organized and self-motivated. You must be comfortable talking with strangers and initiating a friendly relationship with them. The job revolves around sales and marketing, most of which you'll be doing yourself, so skill and experience in those areas are important.
A keen eye for fashion and attention to current fashion trends are also important. These can be easily cultivated by keeping up with fashion magazines and other outlets focusing on fashion.
What is the growth potential for a clothing boutique?
Overall, the growth potential for a clothing boutique is strong. Recent research indicates that clothes sales in the United States were up by seven percent in 2016. More interestingly, sales of women's plus-sized clothing rose by 17 percent. This would indicate there is great growth potential for smaller clothing boutiques that cater to demographics that are often overlooked by major retailers.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a clothing boutique?
Keeping abreast of national and international trends means you can sell clothes to those who want to be on the cutting-edge of fashion. Developing and sticking to a particular theme also helps create brand awareness for your customers and sets you apart from other businesses. Finally, to the degree that you can choose your location, try to set up near a busy retail store that sells something other than clothes, allowing you to reap the benefits of their traffic.
How and when to build a team
Because a clothing boutique is typically small, deciding when to build a team is mostly a matter of determining when there is too much business for you to handle by yourself. You might base this decision on factors such as deciding to stay open later on weekends (thus, requiring more people) or simply if you need to invest more of your time growing the business and less of your time on the sales floor.
It is important, when adding people to your team, to ensure that your new employees are as passionate about clothing and people as you are. This ensures that you continue to offer customers the best possible experience.