Opening a boutique is a dream for many women who want to stand on their own feet and feel the freedom and joy of owning a business, in a field they have a great passion for.
A boutique is a small retail shop selling clothes/ fabric/accessories and other goods to a specific segment of the market. It is easy to start, easily manageable by even one person, requires a comparatively small amount of capital to start, engages the creativity and passion of the owner to a great extend. And all of these more often than not leads to a successful and enriching life for all involved.
Steps to starting a Clothing store – Boutique
- 1. Decide on the type of boutique you want to start
- 2. Decide on the USP of the store – the purpose of your business
- 3. Decide on the clothes you will carry and who you will sell it to
- 4. Decide on the source of funding for the business
- 5. Look for the location where you can have your store
- 6. Decide on where you will source the clothes/fabric from
- 7. Decide on the pricing
- 8. Decide on the store layout
- 9. Decide on the operational procedures of your store
- 10. Finish the legalities of the business
- 12. Hire good employees
- 12. Make a Marketing plan
- 13. Buy everything you need
- 14. Write down your business plan
- 15. Plan a grand opening
- Future plans
1. Decide on the type of boutique you want to start
There are basically 3 types of boutiques in terms of the way they stock goods – consignment boutique, regular buy and sell retail boutique and the franchisee boutique
A consignment boutique will stock goods manufactured by other designers or manufacturers and will take a percentage as their share when the item is sold.
The consignment model means that you do not have to need initial money for the inventory but the profit share will be much lower than buying and selling. The consignment stores operate at a volume model which means you will have to sell a lot of goods for a decent profit. This type of store is a good option if you do not have the initial investment money to buy merchandise. You will have to seek designers or factories ready to keep goods in your shop to sell.
The buy and sell boutiques will buy goods at a wholesale price from manufacturers or distributors and sell them at a higher mark up to customers. This model of boutiques will make a much higher profit at the end of the day but you need a large initial investment to buy merchandise. You will have to develop a relationship with wholesalers and get the best price so that you can make more profit. You may have to buy bundles / large quantities of the same style to get this discount ( Minimum order quantity). You will be making more money with this model than the consignment boutique.
The franchisee boutique will be operating under a large brand name and will exclusively sell that brand. A franchise fee (one time as well as annual) will have to be paid to the parent company to use the brand name and logo etc and be allowed to sell their merchandise.
This model needs a lot of initial investment as you will have to give a franchise fee to the company as well as keep up the quality standards as specified by the company in terms of decor etc. You have the advantage of already developed brand awareness, company advertisements etc and may not have to convince customers to buy the products as much as if you were starting a new line.
The fourth type of boutique can be the retail outlet of a production house. This will involve a lot more initial investment than the other three. You will be procuring fabric and making clothes and then selling – so labor cost, material cost, and production cost on top of the cost of setting up the shop. The reward will be all the more if you are successful.
2. Decide on the USP of the store – the purpose of your business
Decide on why you want to open the boutique and what you will be offering. You will also have to know what is in trend and the colors which appeal to the market at the moment
Develop a business mentality from the word goes. You are in this to make a profit and a better life for yourself. Without profit nothing is possible – so always be thinking about profit and cutting costs.
So think about “the reason why you want to start a boutique?“.
Some girls think that a boutique will help them pass time.
Some want an escape from home. Some think ‘I can be around lots of clothes and can wear what does not sell’
Some feel compelled by their relatives to prove themselves.
All sufficient enough reasons to start a business but not enough for a business to be successful. A burning desire is needed to make any business a success – not to say anything about the cutthroat fashion business
Make sure that you have enough education for carrying on a business.
I do not mean a degree in fashion or a degree in marketing. A general education on how to run a business is an essential part and you can get this from reading relevant books.
With education, you do not have to rely on others. If you have the knowledge none can fool you. Even if you employ qualified employees who will take care of everything for you, they are employees. The knowledge you have will stand you in good stead and you will be able to make good and informed decisions. Conducting business is challenging and needs expertise and nurturing.
3. Decide on the clothes you will carry and who you will sell it to
Make a customer profile or profiles of your ideal customer and find products for them.
Think about the purpose of your business and whether it tries to solve a real problem.You can conduct a small market research to know what is currently lacking in the market that you can provide.
You should not go all out to please everyone – finding a niche market is the best way for boutiques; you cannot serve all the people – unless you have the budget of an Amazon.
Decide on the target market – the customers you are going to sell to. Identify a problem in that market that you can solve. Check your customers purchasing preferences. The styles, color, and fit should meet the preference of your target market.
If you are going to start in a residential colony with a mostly retired population you are not likely to be successful with a boutique selling cool funky clothes.
Think about what your customer wants rather than what you like.
If something sells, it is in demand and you can start selling that. Do what the successful one does – one trick that most business experts vouch for is to begin selling what already sells.
If there is a demand it means that they will buy from you too – you should increase the value proposition of the product – give them better quality than what is in the market.
I love this quote “Do not reinvent the wheel” – this is contrary to what I have always heard but it makes solid business sense. We are not all Steve Jobs to start a trend – following the herd is better in business for most people especially if you do not have money to spend (splurge) in marketing.
Visit the stores that seem similar to your idea and compile a list of the brands they carry which you wish to carry. Most likely they will be your best sellers too.
4. Decide on the source of funding for the business
Ideally, you should start with enough money to carry on for the next 6 months in the business. I would say 1 year or 2 years. Most businesses do not turn a profit within the first few years so having enough cash to carry on the business and also bear your personal expenses is necessary if you do not want the business to fold before it has a chance to prove itself.
You will need money to give as a security deposit for renting space; money to pay employees, money for inventory, for doing up the store interiors, to name a few expenses.
Will you need a business loan ?
This can depend a lot on the location of your store, will you be renting or buying, type of clothing you mean to carry, the size of the shop, hiring employees, store decor, other costs, etc; Also on whether you have the capital to start the boutique on your own or whether any of your friends/relatives are willing to lend the money to you.
Risk is a double-edged sword. It can be your savior in business or it can kill you forever. So take only calculated risks especially when other investor money is involved. How the money is utilized should be planned carefully.
5. Look for the location where you can have your store
Location is one of the most important factors in deciding the success of your store.
But choosing the best location depends on your budget. A boutique located in a very busy mall will have heavy traffic but comes with heavy rent. A boutique located in a quieter residential area will not have customers thronging the halls but the rent will be less. So the choice is dependent on you and what you can afford.
Being where your customer shops/ goes is the only criteria in choosing the location for a boutique.
6. Decide on where you will source the clothes/fabric from
You need a source which will supply good quality products for your boutique.
Look out for manufacturers that specialize in products you have in mind. Ask for samples; the pictures in websites/catalogs never tell the full story. After you have seen them firsthand, You can negotiate with them and they can work out the budget according to your quantity.
You may want to carry a particular designer’s clothes in your shop, in which case you should contact them directly; if you have a contact person who can vouch for you, reputed designers would be interested.
Finding the suppliers
- If you have wholesale trade shows near your place attend them.
- Visit wholesalers/ distributors of whole sale clothing in your area.
- Talk to other boutique owners. The boutique owners in your area may not be willing to part with the information of their suppliers. You should visit boutique owners in a place not close to where you are meaning to start; they may share the information more readily about where they source their inventory from, as you are not their competition.
- You can also source clothes from online wholesalers like Alibaba from countries outside yours. You will have to get samples of their merchandise; get recommendations from others and look for good ratings and reviews and be very vigilant in all transactions.
- Some boutiques consider in-house production – but mostly after establishing themselves by selling other’s products.They will have a separate unit with employees producing goods to their specifications. Quality is assured in this case and you are not dependent on others.
Once you identify the supplier you may have to decide on the style you want from their collection; You may have to buy in multiples (wholesale) for getting discounts.
Decide that you will not deal with counterfeit goods – this is a matter of ethics as well as good for your safety in the long run. Selling fake goods can land you in trouble. Read about the tips to not buy fake goods here.
7. Decide on the pricing
Pricing rightly will make or break your store. Remember that you will have to take into account a whole lot of factors when deciding on the price.
Decide on a price which your customer (refer the customer profile) can afford and which can give you a nice profit. If you want to make a profit you will have to have adequate mark up pricing on the wholesale price. Some markets will take a higher mark up than others.
Study the customer profile to know what you should charge. When you are making things for small babies and kids, the new parents may be willing to pay more than they would for their own clothes (just my way of thinking)
Most boutiques have a 100% mark up on whole sale pricing ie twice the price of wholesale. Add sales tax if applicable.
8. Decide on the store layout
The store decor is an important element in making people feel whether they should buy from your store or not. Colors you use inside the store, shelf and storage layout all are contributing factors to buying decision.
The customer has to feel that the product you offer is worth the money they pay. They should be made to open their wallet; for that, they have to trust – Trust can be induced by the layout of the store and the look of the storefront.
The atmosphere of the store should make the customer comfortable.
Collect appealing pictures of other stores from the internet; visit some stores you admire so that you will have an idea of the ideal store layout. Make a picture board.
Some boutique owners want the customers to walk free inside the store touching the clothing and wanting them by the feel. Some do not want the customers to touch the clothes. They would rather present the materials to the customers one by one. The layout of the store should complement this policy.
Dress forms or mannequins can display your clothes attractively in the store front and attract buyers/ passersby.
Racks / cupboards for display and adequate storage and changing room are all essential for a boutique.
If you have a bridal boutique you will need the space to model the collection to the prospective buyer. A runway with a big mirror is a good touch in cases like this.
A fitting room with surrounding mirrors is common in all retails stores. People need to know how they look in the clothes they are buying
Effective use of space is a necessity when space is a premium. Consult a space designer (yes, there is a portfolio like that) if you are insisting on a professional touch.
Your employees will need a break room in the store for resting and for having food.
Display units / storage
You can splurge on decor or be creative and create your own specific display units that meet your requirements
A customer should have enough space to walk through the store between display units and racks. Cluttered storage shelves will put off buyers. Make sure that you have a policy in your store to keep the clothes in order after every purchase or display.
All big retail shops have bright lights inside the fitting rooms that make the customers look good. This is necessary if you want them to buy the clothes you offer. So spend money on bright lights – it is not a luxury but a necessity.
A sales counter for wrapping / the clothes is also needed near the cash area.
9. Decide on the operational procedures of your store
This is the policy you want to set up about how you mean to run the business.
Record keeping should be assigned properly- what all books should be kept like the cash receipt book. Consult someone about handling your taxes as well.
Hiring an accountant who has experience in the retail business to handle the accounts is a good idea. Get an accounting software on your computer in which you can keep the necessary information.
You need to be having a system to store the contact information of all your customers. You need the customers to be informed of future sales etc.
The customer you have now is more valuable than the customer you may eventually have.
You need a system to manage your inventory ; You should also have a policy regarding how to use the cash register; how to maintain the cash flow, how to deal with customers, refund policy for goods purchased.
10. Finish the legalities of the business
Decide on a name for your business. Make sure that your name is not a trademarked name of some other company.
Register the name of the business.
Start a business current account with a bank; a merchant account with ability to process credit/debit card transactions is a necessity especially if you will be allowing transactions other than cash.
You will have to have documentation on company ownership and other details like business license, tax, seller’s permit, business insurance.
If you want to source clothes from very reputed suppliers they will require that you be an established business, rather than a nonentity. This will ensure that you will get goods at a very discounted rate.
Book all the social media profiles in the name of your store – do not wait for this. Do it as soon as you decide on a name.
Contact the business developments officer at your locality for more details and permissions in opening up a business in your area. Follow it to the T.
Read up on the legalities of selling goods in your area. For eg. in US you cannot sell cotton nightwear garments for kids, but there is no problem with it in some other countries. So local laws have to be heeded properly and followed diligently.
You can start the boutique as sole proprietorship, in partnership, or as a private limited company.
Add your name to google.com’s List my business – you can learn about “Add or claim your business on Google My Business” here.
If you have a partner even if it is a sibling, draw up documents. I have heard stories of close relationships souring on account of the partners being slack in documentation. A partnership agreement drawn by a lawyer is a must in such cases.
12. Hire good employees
It is ok if you do not have employees. Many business owners start on their own, doing everything themselves till they start making a profit.
But everyone needs a backup. You will have to hire someone at some point of time at least temporarily. You need staff to clean the space, manage the cash, as sales persons. Managing everything yourself may burn you out before soon.
Ensure that the employees you hire follow all the operational policies in your store. Do not compromise in this; if the owner is slack about rules, expect the employees to throw the rules down the drain.
12. Make a Marketing plan
Run different promotions throughout the year (25% off this Valentine’s day for buying couple scarves) and communicate this to your customer database. Customers love discounts and they will come and buy non-discounted items too.
Small sales every month or so for selected items can clear up space in your shop.
Every season a major sale (end of season sale) can also clear your inventory and infuse freshness to your store.
Social media marketing is a very important element in your marketing plan; Radio and TV ads, print ads, blogging are all marketing tactics you could try to promote your store.
You need to invest in your customers; promote to them ; they will come again and again and promote your store to their acquaintances. So make sure that you note down all the contact info of your customers and sell to them again and again.
A customer is gained for life; make them your best marketing tool.
A website with a blog can be used as a marketing tool that will attract more customers.
13. Buy everything you need
You will need the following supplies when you start a boutique
- Scanner for bar code
- Cash drawer,
- Credit card processing machine
- Machine for printing barcode labels for the goods;
- Office furniture and supplies,
- Printed stationery like bills, receipts
- Dress forms/ mannequins,
- Clothing labels
You need CCTV cameras – this is necessary to ensure that you do not get shoplifted.
The receipts/ bills should have the business name, address, phone number printed on it; the back side should have the return / refund policy of your store.
The shopping bag you give to the customer is a type of advertisement so it needs to be a good quality one. When the customer carries it, they proclaim to the world that they have been to your shop. If it is a good quality cover they will keep it and use it afterwards as well – free advertisement for your boutique again.
14. Write down your business plan
Develop and elaborate on the business plan for your clothing store and then write it down; if you are thinking of getting a loan from a bank it is a necessity – if you can convince the officers at the bank you can be assured that you have a chance for making it a success.
15. Plan a grand opening
Get the word out that your boutique is opening. Try to get local media coverage – give press releases to all major media outlets – even the radio stations.
Ok, your boutique is open and people are buying. But do not rest on your laurels. Think about expansion as soon as you open.
No, that does not mean you open 4-5 stores at once. But think long term as soon as you have started. This will expand the possibilities of your business.
If not more stores, you can expand the fashion lines you carry, open an online store or even sell through Facebook, start a stitching unit, embroidery unit, or designing unit, sell jewelry and other accessories, tie up with designers for fashion shows and other events so that word goes out.
Starting a boutique is only a fraction of the work. Maintaining the store and making the boutique a success takes a whole lot of determination, hard work and a little bit of luck. Best wishes.