How to Start a Clothing Boutique

Serious shoppers tend to prefer stylish boutiques, with their unique products and personal service, over big department stores. The US clothing boutique industry has been growing steadily for years and is now worth more than $22 billion. If you’re a fashion lover with an eye for trends, you could get a piece of this vast market with your own boutique.

Challenges exist, however, when starting any business, and success requires a good plan, knowledge, and diligence. Lucky for you, this step-by-step guide provides all the information you’ll need to start your entrepreneurial quest into boutique clothing.

Step 1: Decide if the Business Is Right for You

Pros and cons

Every business has its pros and cons, and a clothing boutique is no exception. You should carefully consider these to help you decide if the business is right for you.

Clothing boutique industry trends

Celebrities like Rihanna and Maria Menounos are often seen in high-fashion streetwear, which is strongly influenced by pop culture. But the hottest fashion trend of the past decade is probably activewear, as leggings, yoga pants, sports bras, and crop tops have gone from the gym to the mainstream.

Industry size and growth

• Industry size and past growth – Market analyst IBISWorld values the US clothing boutique industry at over $22 billion.((https://www.ibisworld.com/industry-statistics/market-size/clothing-boutiques-united-states/))  
• Growth forecast – Recent economic forecasts for the next few years envision sustained growth, which is positive for the industry, as boutiques tend to perform better in boom times.((https://www.ibisworld.com/united-states/market-research-reports/clothing-boutiques-industry/))
• Number of businesses – Nearly 160,000 clothing boutiques are operating in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/clothing-boutiques-united-states/))
• Number of people employed – The industry employs almost 250,000 people.((https://www.ibisworld.com/industry-statistics/employment/clothing-boutiques-united-states/))

Trends and challenges

Clothing boutique trends include:

• Streetwear, which is casual but fashionable clothing such as designer t-shirts or sneakers, is a fast-growing market segment 
• Activewear and athleisure clothing are continuing to gain popularity because of people working from home((https://theconversation.com/sure-theyre-comfortable-but-those-leggings-and-sports-bras-are-also-redefining-modern-femininity-156956))
• Use of augmented and virtual reality in engaging with customers

Challenges face by clothing boutiques include:

• Supply chain problems due to disruption caused by the pandemic
• High level of competition in a saturated market

Consumer spending

• Average consumer spend – The average American household spent more than $1,400 on apparel and services in 2020.((https://www.bls.gov/opub/reports/consumer-expenditures/2020/home.htm))
• Potential customer base – More than 130 million consumer units in the US are all potential customers as clothing is a basic necessity.
• Average prices – A T-shirt costs as low as $10 apiece.((https://www.globalprice.info/en/?p=usa/prices-on-clothes-in-usa))

What kind of people work in a clothing boutique?

• Gender – 87% of boutique managers in the US are female, while 13% are male.((https://www.zippia.com/boutique-manager-jobs/demographics/#gender-statistics))
• Average level of education – 62% of boutique managers hold a bachelor’s degree.((https://www.zippia.com/boutique-manager-jobs/demographics/#degree-level-types))
• Average age – The average age of a boutique manager is 44 years old.((https://www.zippia.com/boutique-manager-jobs/demographics/#age-statistics))

How much does it cost to start a clothing boutique?

Startup costs for a clothing boutique range from around $35,000 to over $130,000. The largest expenses are for store preparation and initial inventory. Of course, the smaller your boutique, the lower your startup costs.

You’ll need a handful of items to successfully launch your clothing boutique. Here’s a list to help you get started:

• Stylish clothing and accessories
• Racks and shelves
• Checkout counter
• Point-of-sale (POS) system

Startup Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Licenses and permits	$200 - $300	$250
Insurance	$100 - $300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Location security deposit	$3,000 - $10,000	$6,500
Store preparation and decor	$5,000 - $20,000	$12,500
Initial inventory	$25,000 - $100,000	$62,500
Total	$34,650 - $134,100	$84,375

How much can you earn from a clothing boutique?

The profit margin for retail clothing usually runs from 4% to 12%. But good news for you: high-end boutiques tend to have higher mark-ups, so we’ll assume a margin of 12% for your shop.

In your first year or two, you might make an average sale of $200 and do 10 sales per day, bringing $730,000 in annual revenue. This would mean over $87,000 in profit, assuming that 12% margin. As your brand gains recognition, sales could climb to 20 per day. With expected annual revenue of nearly $1.5 million, you would make nearly $175,000.

What barriers to entry are there?

There are a few barriers to entry for a clothing boutique. Your biggest challenges will be:

• Startup costs – Building inventory and renting out space can be expensive
• Location – Finding the right location is critical, and top locations are pricey
• Building a brand — Drawing those initial customers is often difficult

Step 2: Hone Your Idea

Now that you know what’s involved in starting a clothing boutique, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research clothing boutiques in your area to learn their offerings and prices, and what does well. Based on local and national trends, as well as your own personal tastes, consider which items might do best. Next, seek out a good location for your boutique. You should look for an area with other retail outlets but little direct competition. In general, you are looking for market gaps to fill.

What? Determine your products

You’ll need to determine whether you are going to carry men’s or women’s clothing, or both, and whether you’ll also sell shoes, jewelry, and other accessories. Then decide if you want to sell activewear, streetwear, evening clothes, vintage, business attire, or some combination of these. Your shop’s focus may need to change as fashion trends evolve.

How much should you charge for clothing?

Prices vary and will depend on what kind of clothing you’ll sell. A typical markup for clothing is 2-2.5 times the wholesale price. So if you buy a dress for $50 wholesale, you should sell it for $100-$125. You also need to consider other expenses, such as staff and rent, and determine your prices based on your target market and expected margin.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be completely dependent on what items you decide to sell. If you decide to sell high-end women’s clothing, your target market will be more established women. You can most likely find them on sites like Facebook and LinkedIn. If your clothing is high fashion, you might also find younger customers on Instagram.

Where? Choose your clothing boutique location

Selecting the right location for your clothing boutique is crucial for attracting customers and ensuring its success. Look for a spot in a high-traffic area with good visibility, such as a popular shopping district or a bustling downtown area.

Consider accessibility and convenience, ensuring that the location is easily reachable by public transportation and has ample parking.

By strategically choosing the right location, you can establish a profitable and popular clothing boutique that caters to a wide range of customers and stands out in the competitive fashion industry. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.

Step 3: Brainstorm a Clothing Boutique Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “clothing” or “boutique”, boosts SEO
• Choose a name that allows for expansion: “Fashion Fusion Co.” over “Vintage Clothing Boutique”
• Avoid location-based names that might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Clothing Boutique Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A concise overview of your clothing boutique business, summarizing its mission, goals, and key aspects.
• Business Overview: Detailed information about your clothing boutique, including its vision, mission, location, and legal structure.
• Product and Services: Clear description of the clothing and accessories you’ll offer, emphasizing unique selling points and quality.
• Market Analysis: Thorough research on the target market, customer demographics, and trends in the clothing industry.
• Competitive Analysis: Evaluation of competitors in the local market, highlighting strengths, weaknesses, opportunities, and threats.
• Sales and Marketing: Strategies for promoting your clothing boutique, including advertising, social media, and other marketing initiatives.
• Management Team: Introduction to key individuals involved in running the business, emphasizing their relevant skills and experience.
• Operations Plan: Details on day-to-day operations, suppliers, inventory management, and other logistical considerations.
• Financial Plan: Projections for startup costs, revenue forecasts, and financial statements, providing a comprehensive overview of the business’s financial health.
• Appendix: Supporting documents such as resumes, detailed market research data, and any additional information relevant to the business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to a clothing boutique.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your clothing boutique will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a clothing boutique. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Clothing Boutique Business Licenses and Permits

Starting a clothing boutique requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your clothing business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use industry specific software, such as Manhattan, Brightpearl, or ApparelMagic, to track inventory, manage operations, and more.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

For your clothing boutique, the marketing strategy should focus on showcasing the uniqueness, style, and quality of your apparel and accessories. Emphasize the personalized shopping experience, the exclusivity of your collections, and the fashion-forward nature of your brand. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Ensure your branding reflects the unique style and sophistication of your boutique, from your logo to your store’s interior design.
• Direct Outreach: Network with local fashion influencers, stylists, and lifestyle bloggers to create buzz around your collections and store events.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop an attractive, easy-to-navigate website showcasing your collections, with detailed product descriptions and high-quality images. Implement SEO best practices to optimize your site for relevant fashion and local boutique search terms.
• Social Media Engagement: Use platforms like Instagram, Pinterest, and Facebook to post stylish photos of your clothing, share fashion tips, and promote new arrivals, sales, or events.

Content Marketing and Engagement

• Fashion Trends Blog: Share blog posts about the latest fashion trends, styling tips, and how to incorporate your pieces into various looks.
• Customer Style Spotlights: Feature photos and stories of customers wearing your clothing, highlighting their individual styles and experiences with your boutique.
• Style Guides and Lookbooks: Create seasonal lookbooks or style guides that showcase how to pair different pieces from your collections.

Experiential and In-Person Engagements

• In-Store Events: Host special events like trunk shows, fashion shows, or styling workshops to attract customers to your boutique and create an engaging shopping experience.
• Pop-Up Shops: Set up pop-up shops at local events, festivals, or in collaboration with other businesses to reach new customers and create buzz.

Collaborations and Community

• Collaborations with Local Designers: Feature collections from local designers or exclusive pieces to offer unique products that can’t be found elsewhere.
• Community Involvement: Participate in community events, fashion shows, and charitable causes to increase brand visibility and connect with the community.

Customer Relationship and Loyalty Programs

• Loyalty Rewards Program: Implement a program that rewards repeat customers with discounts, early access to sales, or exclusive events.
• Referral Incentives: Encourage customers to refer friends by offering them a discount on their next purchase.

Promotions and Advertising

• Targeted Advertising: Utilize digital advertising on fashion and lifestyle platforms, local online communities, and social media to reach your target audience.
• Email Marketing: Send newsletters with information about new arrivals, upcoming events, fashion tips, and exclusive offers.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your boutique meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your clothing boutique could be:

• Fine clothing and personal styling
• Great style, for work and play!
• Streetwear to keep you going

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a clothing boutique, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in clothing stores for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in cothing. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

With a clothing boutique, you’ll likely need workers right off the bat to fill various roles. Potential positions for a clothing boutique would include:

• Store Clerks – make sales, stock clothing
• General Manager – order inventory, scheduling, staff management
• Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Clothing Boutique – Start Making Money!

Starting a clothing boutique is exciting! You have a lot of profit potential, and you get to shop, and sell clothing, for a living. You could eventually open other stores and build a fashion empire. 

It’s a big industry, and with the right plan in place you can capture your share of the market. You’ll just have to decide from the start which segment you’ll focus on and how you’re going to build your brand. You’ve taken the first step and gathered the right information, so now you’re ready to start your entrepreneurial journey and build a thriving clothing boutique!