Fashion trends come and go but one thing remains the same. Americans are always looking for new places to find clothing they can connect with. Retail boutiques offer an assortment of designer and mainstream apparel options.
The global clothing retail market saw a peak of $1.5 trillion in 2021. It’s projected to reach $2 trillion by 2026. According to Grand View Research, luxury apparel has a predicted CAGR of 3.5% between 2015 and 2025.
For entrepreneurs learning how to start a boutique, it’s not a bad time to get involved.
To open a successful boutique you need to know the ins and outs of your industry. In a saturated market like fashion, local retailers need to stand out among competitors. Both brick and mortar and online boutiques need a solid business plan.
Throughout this guide, we’ll discuss the major steps to take as you learn how to start a boutique. From marketing and equipment sourcing to customer engagement. Here’s what you need to know about boutique business in America.
1. Conduct Boutique Business Market Research
Before opening a business, market research strengthens your business plan and supports marketing endeavors. There are two types of market research, primary and secondary.
Primary research is all the research you do yourself. Any first person data collection, including:
- Chatting with locals
- Creating polls and surveys for customer preferences online
- Visiting competitor shops
Secondary research is information pre-collected. It’s easier to access and requires less work on your part to track down. Secondary research includes:
- Government data
- Research statistics
- Online competitor reviews
Throughout your research you should look at a variety of factors impacting local boutiques, such as:
- Target market demographics
- Trending fashion
- Popular accessories
- Number of boutiques in the area
- Other small business owners near your shop
- Investigating online boutiques and ecommerce business options
Market research tells you a lot about your industry, customer base, and even the community you open your shop in.
Choosing the Right Products and Services for Your Boutique
Many American boutiques specialize in clothing, but carry other items as well. Some of the products that sell well in a clothing boutique include:
- Knick Knacks
A boutique by definition is a retailer of trendy clothing and accessories. That doesn’t mean you can’t offer services as well. Modern retailers are constantly evolving and finding new ways to stand out. Partner with a hairdresser or jewelry designer to split lease costs and maximize profits. Other services you might offer are:
- Shoe repair
- Clothing alterations
- Jewelry cleaning
Any service that pairs well with your sales products are useful to furthering your brand and drawing in new customers. You may also consider creating an ecommerce website.
2. Analyze the Boutique Business Competition
To get ahead in the retail industry you need to look at what other retailers are doing. What makes local boutiques in your area successful? Are there things they aren’t doing that your boutique could offer consumers?
Competitive analysis shows you areas you can improve, and lets you more closely examine your target market. Some ways to check out competitors as you learn how to start a clothing boutique business include:
- Visiting competitor boutiques in person
- Reading online reviews
- Chatting with local consumers
- Following competitors on social media
- Visiting competitor websites
Boutique clothing business competition goes both ways. Most competition will be local. If you sell your clothing through an ecommerce website, competition ranges as far as national or even international retailers. Some stand alone retailers that have made names for themselves include:
T.A. is named for founder Telsha Anderson. The boutique is a New York City staple, selling eclectiv products from a long list of designers. Some of the designers in T.A. include DAIVD & GOLIATH, Lady Grey, House of Aama, and MRZ. It was listed in a 2021 Vogue article as one of the best fashion boutiques in the United States.
If you love one of a kind fashion, you’ll love Bill Hallman. This Georgia-based boutique sells men and women’s fashion. They cater to brands like Nifty Genius, Ag Jeans, and Show me Your Mumu.
3. Understand the Costs of Starting a Boutique Business
Starting a successful clothing boutique takes a keen sense of business, fashion, and finance. Before you start earning money with your latest design trends, you need to spend a little money first.
A lot goes into setting up a retail store. Here are some places you’ll spend money before the grand opening.
What Does It Cost to Start a Boutique?
Opening a boutique comes with many costs. Some are forthright, others aren’t so obvious. Before people can shop in your store you need merchandise to sell, equipment to collect funds during each purchase, and packaging for customers to transport goods home in.
You also need to register your business and perform all legal duties required of you to operate in the U.S.
Some of the costs you’ll encounter as you get started on this endeavor include:
- Sales inventory
- Clothing racks and display cases
- Commercial property lease
- Security system
- License and permits
- Web domain and site design
- Business cards and marketing materials
- Accountant and/or accounting software
Opening a small clothing boutique costs anywhere between $50,000 to $100,000 to start up. These costs increase as you add stock room supplies (extra inventory), staff, and commercial vehicles.
Opening a franchise like Plato’s Closet could cost more. This well known second hand clothing boutique franchise asks $275,000 to $350,000 as an initial investment from franchisees. They also expect you to have 75,000 to $105,000 in liquid assets and a net worth of $400,000 or more.
When you invest in a franchise you spend more because you skip a lot of the initial leg work. There’s no market research, branding, or marketing to worry about. Some franchises even send in merchandisers and supply inventory to get you started.
To open a retail boutique, there are equipment and supplies needed. Retail merchandise can be sourced through designers and manufacturers. But you also need a place to display, pay for, and allow costumers to try on your designs.
Here are some of the common pieces of equipment needed to start a boutique.
- Retail shelving – $100 to $200 for slotted wall shelving. Individual pieces for slotted wall shelving runs $5 to $10. Build your shelves based on your style and budget.
- Counter displays – $100 to $500 based on size and material.
- Bags and boxes – $50 to $60 for a case of 500 12 x 12 bags. Prices change based on branding and special designs.
- Counter – $400 to $900
- Retail software – $30 to $50 per month
- Barcode scanners – $60 to $1,000 based on included technology. Higher priced scanners come with handheld readers.
- POS printer – $250 to $450
- Tag gun – $20 to $30
- Tagging barbs – $4 to $5 for a case of 1000
- Receipt paper – $30 to $50 for 50 rolls.
You’ll also want to invest in mirrors, change rooms, and rolling racks for returns. Check Madix for modular change room options.
Cost of Renting or Leasing a Location
Renting a commercial space is a cost per square foot situation. You might see a retail lease listed as $25 per square foot. For a 1000 square foot shop, that’s $25,000 per year in rental fees.
Commercial spaces range in price based on location. The closer you are to a city center and largely populated areas, the more expensive the building.
Before you open the doors to your boutique, you need to register it as a legal business. Apply to the Small Business Administration to register your boutique name. You can also apply for permits and licenses at this time. The entire process runs somewhere between $300 and $800, based on the forms you need to file.
Insurance is a necessity for any business. It protects you, your business, and your personal assets from getting wrapped up in legal issues. Most small businesses invest in general liability insurance.
No business insurance protects against illegal doings. Instead, it protects against unfortunate accidents, such as damage to people or thier property caused by your products or boutique. If someone slips on a freshly mopped floor, insurance pays for medical and legal bills associated with the fall.
Utilities vary from business to business. The most common utilities for a fashion boutique are:
Utility costs range based on daily use, location, and building size. In most instances, you can assume utilities will make up 4% of your business costs.
What Are the Ongoing Costs of a Boutique?
Running a boutique is more than registering business names and paying for equipment. There are ongoing costs that keep your business running throughout its lifetime. Some of the costs you’ll encounter over the years include:
- Bank account fees
- Utility costs
- POS fees
- Receipt paper
- Administrative supplies
- Bags and packaging
- Delivery fees
You’ll also encounter ongoing costs in terms of branding merchandise, bags, and packaging.
4. Form a Legal Business Entity
To operate in the U.S. businesses must form legal entities. There are four main types of business formations. These are LLC (limited liability corporation), sole proprietorships, partnerships, or corporations.
Limited Liability Corporation (LLC)
A limited liability corporation, or an LLC, is a good entity formation for a single or partner-style ownership. It offers a great deal of stability in business structure, especially where finances are concerned. This is one of few entities which separate professional wealth from personal wealth.
If your company goes to court over a liability issue, your personal wealth is safe.
The sole proprietorship business entity is designed for a single business owner or a married couple. It offers sole ownership and decision-making power to you as owner, but it doesn’t protect your personal assets.
If your boutique goes bankrupt, a sole proprietorship allows lenders to look at personal assets for collateral.
Partnership entities are similar to sole proprietorships. Where a sole proprietorship is for one business owner, a partnership is more for multiple business owners. This is a good choice for family members opening a company together.
Like a sole proprietorship, a partnership formation doesn’t protect your personal assets. If your company has financial trouble, it could bring your personal savings into play.
A corporate entity is one of the most secure. It’s also one of the most costly to obtain and complex to apply for. The corporation entity status is good for big businesses or business chains. For a small local boutique, this probably isn’t the right fit.
5. Register Your Business for Taxes
Before operating any business type in the U.S., you must register an EIN. an EIN or employee identification number lets you do things like:
- Pay taxes
- Pay employees
- Open a business bank account
Without an EIN, you can’t legally sell any of your boutique wares. Register for your EIN through the U.S. Small Business Administration. You can also check with U.S. government guidelines for local sales tax.
6. Setup Accounting for Success
What’s the point of a business if not income? Revenue needs to be monitored to catch mistakes and hold yourself and your staff accountable.
There are several ways to implement a bookkeeping and accounting strategy for your boutique. Here are a few options.
QuickBooks is a leader in accounting software. It offers multiple packages at varying price points for businesses of all sizes. Some of the functions offered through accounting software like QuickBooks includes:
- Bill management
- Payroll and invoicing
- Inventory management
- Job costing
- Cashflow reporting
Accounting software is a time and money saver. It combines all the daily tasks of a standard bookkeeper with your boutique business software. It even inputs sales tax into business expenses reporting. This means less time fumbling over financial reports and more time focusing on sales.
Find an Accountant
Along with your accounting software, your boutique should consider working with a certified accountant. Accountants are trained in the legal side of business finance and tax reports. Avoid problems with the IRS or potential fraud investigations by dotting all your i’s and crossing all your t’s.
A professional accountant comes at a cost of anywhere up to $400 an hour.
Get a Business Bank Account
According to the IRS, a business bank account is a useful way to organize business spending and hold your boutique accountable. Using a personal bank account to finance a business gets confusing. Not just for you, but for the IRS at tax time as well. A business account makes everything easy to track, label, and report on later.
Apply for a Business Credit Card
Business credit cards come with a wide range of benefits, including low or no APR for a period of time. They also offer higher than normal travel miles and cash-back rewards.
Be careful with your business card. It’s great for separating personal and professional spending, but a business credit account can impact your personal credit score.
7. Obtain Business Licenses and Permits
Unless you’re shipping goods out of the country, there are no federal licenses or permits required to operate a boutique. Double-check with the U.S. Small Business Administration to be sure before opening for business.
Check out the SBA’s website for any special permit or license requirements based on your state and city. There are permits for many things, including buildings. If you plan to build or add to an existing building for your boutique space, you’ll likely require a permit.
8. Get Business Insurance
Any U.S. business with employees needs to invest in worker’s compensation and unemployment insurance. You should also purchase general liability insurance. This covers you against financial hardship caused by damage to people or their belongings by your products.
If one of your boutique dresses gives a customer a strange rash, general liability covers hospital bills or legal costs.
Prices for general liability insurance are different from carrier to carrier. You can expect to pay somewhere between $300 and $1,500 a year for $1 million in protection. The price varies based on boutique size, previous coverage and policy use, and risk level of your business and products.
9. Create an Office Space
Every business owner needs office space. Administrative duties are difficult to carry out on the retail floor. One solution is to create an office in the boutique. A back room not being used for stock or breaks can be turned into an office.
If you don’t have an on-site office available, here are some options.
A home office is a great solution for boutique owners without in-store offices. If you need a space for administrative work, a home office provides a low-cost alternative to other commercial options.
One of the best perks of a home office is the tax breaks. The IRS lets you deduct $5 per square foot up to 300 square feet, or deduct individual costs up to $1,500 a year.
A coworking space is one shared with other workers. You might share the space simultaneously, or take turns using a private office. The overall result is a quiet, professional workspace with no long-term contracts or high corporate price tags.
Try WeWork for customizable coworking office space solutions, including private, semi-private, and shared offices.
Commercial Building Office
A final option for office space is in a commercial building. These are professional-looking spaces, but they come at a higher price than the alternatives. For a small boutique business, a commercial office might be too much hassle. Along with the large price comes a lengthy lease.
10. Source Your Equipment
Sourcing boutique equipment like sales racks and pricing guns isn’t complicated. There are many retailers in the U.S. selling these items wholesale. Finding the right source is important. You want someone reliable, who delivers what is promised, delivers on time and charges fair prices.
There are two ways to source equipment for your store, buying new and buying used.
New boutique equipment is shiny and sure to last. It comes at a higher price point than used products, but usually also includes a warranty of some kind.
Unless you’re in a used clothing store, you aren’t likely to buy sales merchandise used. You can, however, invest in shelving, clothing racks, and even signage through sites like Facebook Marketplace and Craigslist.
Keep a lookout for local stores closing out or having liquidation sales. You can get a lot of equipment at low prices this way.
11. Establish Your Brand
Your brand makes you unique within the boutique industry. It helps consumers find you in the sea of local retailers. There are many ways to successfully brand a new boutique business. Here are a few ways to get started.
Get a Business Phone Number
Business phone numbers add a measure of professionalism and organization to a boutique business. No more receiving business calls on your personal line. All calls relating to the boutique are filtered through one number and can be answered by you, or any one of your employees.
Many major phone companies offer business lines, including AT&T and T-Mobile. Shop around to find the best rates and plans for your boutique.
Another option for business phone lines is Google Voice. Google Voice can be used from a mobile phone, laptop, tablet, or desktop computer. Business lines start at just $10 a month.
Create a Logo & Brand Assets
What’s a successful boutique business without an attention grabbing logo? Logos are an essential marketing tool. They brand your signs, business cards, and merchandise labels. Your logo is one aesthetic factor that sets you apart from local competition.
A winning place to shop for logo designs is Looka. Looka uses state-of-the-art AI technology to design logos based on your font, color, and image preferences. The tool supplies several options based on your preferences, letting you choose one that fits your boutique best.
Create Business Cards and Signage
Business cards leave a tangible imprint on the people you meet. It’s like sharing your boutique link on social media with immediate and lasting results. Unlike emails or social media comments, business cards can’t get lost in junk filters or amidst comment threads.
There are plenty of places to design and print business cards. We recommend Vistaprint. Vistaprint offers a range of products including business cards, signs, stickers, labels, and even branded merchandise like clothing and tote bags. Kick your new Looka logo up a notch with the perfect business card design.
Purchase a Domain Name
A domain name is an important part of your digital footprint. It shows customers where to find you online. Choosing a simple domain name with your business name or industry in it is wise.
Domain name choices dwindle with popular words or categories. As soon as you select your business name, check to see if a domain of the same name is available.
Get a .com address for as little as $6 from businesses like Namecheap.com.
Build a Website
Your website is your shop front online. For e-commerce boutiques, this is especially important, but even brick-and-mortar businesses need a solid website these days. Not everyone is equipped with the digital skills to build and design a functional website. Fortunately, there are ways to work around that.
Fiverr is a freelance platform where you can hire experts in a variety of fields, including website design. Post your project and receive bids from eligible candidates. Choose the best fit for your task and pay the agreed-upon price. You can also work with platforms like Wix to build your own site using preformed templates.
12. Join Associations and Groups
Joining boutique business owner groups and associations helps you network and market your brand. It also connects you with designers, merchandisers, marketing reps, and manufacturers in the boutique fashion industry.
Local boutique associations give you an in into local sales techniques and fashion trends. While broad associations at the national and international levels are valuable, local groups get you closer to your target market.
Google key phrases like, “boutique association in” and add your city and state to the phrase. Different states have different groups to join, like the California Retailer’s Association and the Retail Council of New York State.
Meeting up in person is a good way to socialize with peers in your industry and get invited to big events. Trade shows and boutique conventions connect retailers to new vendors and designers.
One place to begin your search for local meetings is Meetup. Use meetup to search for events in your area. You can join a group, or create your own.
Boutique Business Facebook Groups
Facebook is a solid resource for meeting other boutique owners in your area or internationally. Chat to others and learn what the latest trends are, how they market products, and even the best merchandising layouts.
Check out these Facebook groups for inspiration.
- Boutique Owners and Fashion Entrepreneurs
- Boutique Owners ONLY Wholesale Group
- Business and Boutique Owners Coaching Group
If you don’t see a group you like, create one of your own. You never know who else is looking for a boutique association like yours.
13. Focus on Marketing Your Boutique Business
Small businesses need a lot of marketing when starting out. Market research will help you pinpoint your target audience and the best method of marketing based on age and location.
The best marketing campaigns use a multifaceted approach to advertising. Here are some ways to get started.
Ask Friends, Family, and Coworkers
One of the easiest ways to start marketing your new boutique is to ask friends and family to get involved. Word-of-mouth marketing is impactful, and who better to trust with your brand image than your love ones?
Ask friends and family to market your boutique by:
- Telling colleagues and neighbors
- Wearing clothes from your store to local events and public outings
- Hanging out business cards and flyers
- Sharing your boutique business page on social media
- Leaving online product reviews with photos
The more genuine the marketing efforts, the more likely they are to draw real interest from local consumers.
Boutique Business Digital Marketing Ideas
According to Statistica, online clothing sales make up about 23% of all online transactions in America. Knowing this, digital advertising like social media marketing is a worthwhile investment for a fashion boutique. It opens doors to national and global e-commerce sales and drives more local traffic to your website.
Some ideas to digitally market your brick and mortar or online boutique business include:
- Social media marketing through ads
- Google ads
- Starting a YouTube or TikTok channel
- Writing weekly newsletters
- Posting pictures of new inventory to social media
- Hosting online contests
Modern consumers are smart. We take our time and shop for the best brands by doing our research. When local shoppers get online, you want them to find your brand fast. Digital marketing will help improve search engine optimization and ranking as well as customer engagement. Online boutiques and physical shops benefit from digital marketing.
Traditional Marketing Ideas for Your New Business
Your boutique might sell some products online, but most of your sales are likely to be in person. It only makes sense that much of your marketing is also tangible and in-person. Traditional marketing offers tactile and visual ads your customers can’t delete at the touch of a button.
Some traditional marketing concepts useful to boutique owners include:
- Business cards
- Grand opening mailer invites
- Direct mail coupons and QR codes
- Billboards and bus ads
- Newspaper ads
- Community center bulletin board flyers
Never underestimate the power of public outreach through community groups and local events. It never hurts to reach out and ask local organizations to keep a stack of your business cards nearby.
14. Focus on the Customer
Customers lead the way in fashion. They set and follow trends, making it essential to connect with local consumers to enhance your brand. As a new business owner, you have the option to carry a wide variety of unique or big box items.
Focusing on the customer helps you understand what will sell best, and encourage your community to continue shopping locally. Some ways to enhance customer engagement include:
- Online surveys for products customers want to see next
- Loyalty and referral reward programs
- Exclusive sales and coupons for shoppers with loyalty accounts
- In-store events
Simple things go a long way with customers. Things like sharing customer posts on social media, replying promptly to emails, and offering e-commerce options. Any way you connect and enhance the customer experience is beneficial to your boutique.
Hopefully, this guide has provided some useful tips on how to start a boutique. Good luck and happy sales!