How to Start a Handbag Line

Handbags serve a purpose, but they also can be a status symbol or fashion statement. This helps explain why the global handbag market is worth nearly $50 billion and counting. If you’re a creative designer with a love of handbags, you could create your own line that satisfies countless stylish customers and maybe even build a brand that rivals Louis Vuitton. 

But you will need a good deal of business knowledge. Fortunately, this step-by-step guide details all you need to know to launch a handbag line that may just take the fashion world by storm.

Step 1: Decide if the Business Is Right for You

Pros and cons

Handbag industry trends

Industry size and growth

• Industry size and past growth – The global handbag market was worth $49.63 billion in 2021 after expanding more than 4%.((https://www.fortunebusinessinsights.com/handbag-market-103860))
• Growth forecast – The global handbag market is projected to grow 6.7% annually through 2028 to reach $78.46 billion. 

Trends and challenges

Trends

• Luxury handbag market growth is driven by the increase in working women.
• Trends in bag design include modern utilitarian styles, woven fabrics, and classic designs like sleek, black shoulder bags.

Challenges

• Handbag trends are in constant flux, forcing designers to constantly come up with appealing new ideas. 
• The rising prices of materials are making handbags more expensive to manufacture, driving some consumers out of the market.

Demand hotspots

• Most popular states – The most popular states for fashion designers are Washington, Rhode Island, and Colorado.((https://www.zippia.com/fashion-designer-jobs/best-states/))
• Least popular states – The least popular states for fashion designers are Kansas, Arkansas, and Iowa.

What kind of people work in handbag design?

• Gender – 83% of fashion designers are female, while 17% are male.((https://www.zippia.com/fashion-designer-jobs/demographics/))
• Average level of education – The average fashion designer has a bachelor’s degree.
• Average age – The average fashion designer in the US is 36.6 years old.

How much does it cost to start a handbag line business?

Startup costs for a handbag line range from $13,000 to $40,000. Costs include prototype development and an initial inventory. Manufacturers generally have a minimum order amount, so your startup costs will depend on your manufacturer’s requirements.

You’ll need a handful of items to successfully launch your handbag line business, including: 

• Pattern maker and materials
• Packaging supplies

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$100 - $500	$300
Business licenses and permits	$200 - $300	$250
Insurance	$100-$500	$300
Website	$200 - $1,000	$600
Initial Marketing Budget	$1,000 - $3,000	$2,000
Prototyping	$1,000 - $2,000	$1,500
Initial Inventory	$10,000 - $30,000	$20,000
Packaging supplies	$500 - $1,000	$750
Total	$13,100 - $38,300	$25,700

How much can you earn from a handbag line business?

Your prices will depend on how you position your brand, so profits are hard to predict. These calculations assume that you’ll aim for a mid-market price of around $250. Your profit margin after manufacturing and marketing costs should be about 40%. 

In your first year or two, you could work from home and sell 500 handbags online in a year, bringing in $125,000 in revenue. This would mean $50,000 in profit, assuming that 40% margin. 

As you gain traction, sales could climb to 5,000 handbags a year. At this stage, you might need a storage and packaging space and hire staff, reducing your margin to around 20%. With annual revenue of $1,250,000, you’d make a tidy profit of $250,000.

What barriers to entry are there?

There are a few barriers to entry for a handbag line. Your biggest challenges will be:

• Coming up with appealing designs
• Funding the startup costs
• Breaking into a competitive market

Step 2: Hone Your Idea

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

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research popular handbag lines to examine their products, price points, and customer reviews.

• Make a list of handbag lines that offer similar products.  
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the market is missing a designer bag with silver bag handles, or a utilitarian leather bag line. 

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Generally, handbag designers start with 10 designs, but you might want to start with just one prototype to test the market and the quality of your manufacturer. If all goes well, you could start selling that design and work on others as you go. 

Eventually, you could expand into belts, hats, and other accessories. 

How much should you charge for handbags?

Your prices will depend on how you position your brand. If you use high quality materials and aim to be a luxury brand, you could charge upwards of $1,000. If you position yourself as a fashion brand, your prices might be closer to $100. 

Your prices will also depend on your costs of manufacturing. You should aim for a profit margin of at least 40%. Once you know your costs, 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, again, will depend on how you position your brand. If you design less expensive trendy styles, you can likely find your customers on TikTok and Instagram. 

If you design luxury styles that appeal to professional women, you’ll probably want to focus on Facebook and LinkedIn. 

Where? Choose your business premises 

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a storage and packaging facility. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Handbag Brand 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 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “handbags” or “luxury bags”, boosts SEO
• Name should allow for expansion, for ex: “Global Grasp Designs” over “Clutch Couture”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

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 and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Handbag Line 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: Summarize the main goals and objectives of your handbag line business plan, including your unique selling points in the handbag industry.
• Business Overview: Describe your handbag line business, its location (if applicable), and the range of handbag products and services it will offer.
• Product and Services: Explain the types of handbags, designs, and materials your handbag line will feature, emphasizing any unique features or customization options.
• Market Analysis: Analyze the handbag market, including consumer preferences, trends, and the target audience for your handbag products.
• Competitive Analysis: Identify key competitors in the handbag industry and highlight what sets your handbag line apart in terms of design, quality, or pricing.
• Sales and Marketing: Outline your strategies for promoting and selling your handbags, including online and offline marketing efforts, distribution channels, and pricing strategies.
• Management Team: Introduce key team members involved in your handbag line business, emphasizing their relevant experience and roles.
• Operations Plan: Describe the process of designing, manufacturing, and distributing your handbags, including supply chain management and quality control.
• Financial Plan: Present financial projections, including startup costs, revenue forecasts, and profit margins for your handbag line, along with funding requirements.
• Appendix: Include supplementary materials, such as sample handbag designs, production schedules, or customer testimonials, to support your handbag line 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 handbag businesses. 

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 handbag line 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. Here’s how to form an LLC.
• 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. Read how to start a corporation here.
• 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 need 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: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• 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 option, other than friends and family, for funding a handbag line business. You might also try crowdfunding if you have an innovative concept.  

If your handbag brand takes off, you may be able to attract angel investors or venture capital to grow your company to the next level.

Step 8: Apply for Licenses/Permits

Starting a handbag line business 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 handbag line 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 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 Effia, Retail Pro, or Lightspeed, to manage your inventory, orders, billing, and shipping. 

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.

Create a 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 services like WordPress, Wix, or Squarespace. 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.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Influencer Collaborations: Partner with fashion influencers and bloggers to showcase your handbags in their content, leveraging their followers and credibility to boost brand visibility.
2. Limited Edition Releases: Create a sense of urgency and exclusivity by periodically releasing limited edition handbags, encouraging customers to make swift purchasing decisions.
3. Pop-Up Shops and Events: Organize pop-up shops or attend fashion events to allow customers to experience your handbags in person, fostering a direct connection between your brand and potential buyers.
4. Collaborations with Other Brands: Collaborate with complementary brands, such as clothing designers or accessory lines, to expand your reach and introduce your handbags to new audiences.
5. Storytelling through Social Media: Use social media platforms to share the unique stories behind your handbags, connecting emotionally with your audience and building a narrative that resonates with potential customers.
6. Customer Reviews and Testimonials: Encourage satisfied customers to share their reviews and testimonials, establishing credibility and providing potential buyers with real insights into the quality and satisfaction associated with your handbags.
7. Interactive Content: Implement interactive content on social media, such as polls, quizzes, and behind-the-scenes footage, to engage your audience and create a dynamic online community around your brand.
8. Subscription Boxes: Introduce a subscription box service that delivers exclusive or pre-release handbags to subscribers regularly, creating a loyal customer base and a steady source of income.
9. CSR Initiatives: Align your brand with meaningful causes and incorporate Corporate Social Responsibility (CSR) initiatives, demonstrating a commitment to social and environmental issues, which can resonate positively with consumers.
10. Localized Marketing Campaigns: Tailor your marketing campaigns to specific localities or regions, taking into account cultural preferences and trends, to ensure your handbags appeal to diverse markets.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets 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 handbag line 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 handbag line business could be:

• Make a statement with bold luxury handbags 
• Smart bags that fit your lifestyle
• Be you with our Bohemian handbags

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 handbag business, or a LinkedIn contact of yours is connected to dozens of potential clients. 

Maybe your cousin or neighbor has been working in handbags 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 handbags. 

You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a handbag line business include:

• Packagers – package handbags and prepare for shipping
• General Manager – inventory management, accounting
• Marketing Lead – implement digital marketing strategies

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: Start Making Money!

Ready to make your handbag dreams come true? It will take some hard work and creativity, but a handbag line has huge potential if people love your designs. With a bit of luck, you could end up with a nice chunk of a $50 billion market and become the next Kate Spade!

You’ve done your business homework, so now it’s time to put your designer hat on and start building your handbag empire.