Start a leather business by following these 10 steps:
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 leather business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 leather business?
It is possible to get started in a leather business for a relatively low overhead, depending on your focus. If you are selling some pre-crafted items online from your home, you will need to spend most of your money on building up your stock. Handbags, purses, gloves, and smaller leather items can be purchased wholesale and stored in your house or other storage options until being shipped to customers, as the orders are received. You will need some sort of forum for reaching customers, such as a website or access to online retail options, such as eBay or Poshmark, for example.
If you choose to operate out of a storefront, you will need to factor in the costs for rent, utilities, and business insurance. Although this will raise your overhead costs, you may reach more customers, depending on the location of the store.
If you are creating your own leather products or offering service and repairs for leather goods, you will need to add the costs for materials and equipment, such as an industrial sewing machine, leather needles, cutting tools, and patterns.
What are the ongoing expenses for a leather business?
Most ongoing expenses will pertain to materials and finished resale products, especially if you operate online. A store location will add rent, utilities, internet and phone and some advertising.
Who is the target market?
Your target market will more than likely consist of customers who have purchased a leather items before. Although leather is popular, many consumers will shy away from animal products. Therefore, its critical to attract customers who appreciate durability, rugged, yet refined quality, and the look and feel of leather products. Some items can be reasonably priced, but most of your goods and services will tend to be priced below luxury, yet above department store numbers.
How does a leather business make money?
A leather business makes its money from the sale of leather and leather products as well as the repairing of leather goods, such as shoes and apparel, such as purses, suitcases, or briefcases.
How much can you charge customers?
Client pricing will depend greatly on what you’re selling and offering. Research competition thoroughly to see where your price points will fall. Some high end leather bags will range upwards of five figures, whereas leather glove repairs may only fetch $10-20. Understand what you’re offering and charge accordingly.
How much profit can a leather business make?
Depending on what you sell and what services you offer, you can see earnings in the $30,000-40,000 range, especially if you are able to keep your overhead costs low.
How can you make your business more profitable?
Offer related products, such as leather cleaning and care oils and solutions. Sell these items in conjunction with your orders and many customers will continue to purchase the products, even without buying more leather goods. If you are an accomplished leather worker, offer specialty designs and custom builds. You can charge a premium price for your services, as it will be an additional source of revenue, and not the primary moneymaker.
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 Leather Business 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 leather business 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.
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 leather business. 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.
For 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.
Certificate of Occupancy
A leather business is generally run out of a storefront. 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 leather business.
- 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 leather business will be in compliance and able to obtain a CO.
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.
How to promote & market a leather business
As mentioned above, create an online presence through social media and a website. This allows you to garner customers from all over the world, which will help your name and reputation exponentially grow. You might also want to gain membership to leather guilds and organizations. The connections created should be beneficial to both parties. Also, visit crafting conventions and trade shows help show off your wares and abilities.
How to keep customers coming back
Reputation is so important. Make sure you’re prompt with your work or shipments and always maintain a professional and courteous attitude with customers and vendors. You should also strive to offer your customers the best designs and products. Avoid becoming complacent with your work, as customers will flee from stagnation.
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.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Leather Business 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?
A leather business, much like other specialty businesses, looks to offer customers leather products and services. Therefore, knowledge of leather products, leather crafting, sewing, and repairs is recommended, if not necessary. Talking to customers and communicating online are also critical skills for building this type of business. Finally, experience in retail sales or retail marketing and promoting, preferably leather related, are also great bonus tools to possess in your skill arsenal.
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 leather business?
Whether you operate in a brick and mortar storefront or are making and shipping orders from home or a workshop, the majority of your day to day will consist of taking and processing customer orders and creating leather products for said customers. You will also spend some of your time interacting with your leather and leather product distributors and wholesalers. Last, but not least, your marketing and advertising efforts will have to constantly be updated and pushed to a larger audience. As a niche operation, it is critical that you keep current customers coming back as well as attracting new customers.
What are some skills and experiences that will help you build a successful leather business?
A profitable leather business must understand its customer base and their needs and should strive to stay aware of the changing fashion styles and adapt accordingly. You will need to be a student of the fashion niche you inhabit. If purses and handbags are your specialty, or your focus is shoes, gloves, and jackets, stay knowledgeable of the industry around you. Make your business your business.
You will also find that communication is key to building and expanding your customer base, as well as developing relationships with your leather wholesalers and distributors. Communication will also help you in the marketing and promoting of your business. Equally, you will need to stay aware of sewing and crafting techniques and equipment and continue to add to your repertoire to develop fresh ideas and designs.
What is the growth potential for a leather business?
Leather seems to retain its popularity, both as a stylish material and as a durable product, capable of remaining functional and posh for many years. Accordingly, a good quality leather business will find and retain loyal customers for many years. Sometimes, successful leather businesses can foster multi-generational ownership and profitability.
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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 leather business?
Marketing and advertising to create a name for yourself might be one of your biggest initial hurdles. Even if you are an amazing leather artist, if nobody is aware of you, your efforts will be for not. Design and build a website with the help of a trusted web page designer. Create a social media presence through Facebook, Instagram or other relatable sites and be vigilant about showing your work. There are lots of outlets for leather products, so you have to make sure yours stands out and is memorable, as well as accessible.
It is also advisable to do research into the viability of such a business. Research your competition, both regionally and style-wise. You don’t want to oversaturate a niche market. And, if there is some competition, find out what they don’t offer and focus on those areas. Once you’ve made your name, you can expand to more areas you may have originally considered, when you were starting out.
Finally, find a way to be competitive in your pricing without being too cheap or too overpriced. The right wholesale distributor connection may be the make or break point for your business.
How and when to build a team
Fortunately, a business such as this one can successfully be operated by a single person. Especially if you sell and operate online, without a storefront, you will be able to handle the billing and shipping, for the most part. Adding team members usually occurs as the business continues to grow past the two to three year mark. When you are financially stable and still expanding, bring on another person to help with logistics. This will free you up to focus more on the creating and acquisition of product.
If you do open up a brick and mortar location, you, plus a couple employees to start, should suffice. Again, as your business grows, so will your staff.