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5 Things Before You Start a Boutique

1.) Analyze

The first step to starting a boutique is analyzing the needs and demands in your community for the model of business you want to start. I know you want to sell the things you love but will your community love the them as much as you do? Is your market already fulfilled in your community for what you want to sell?.I will take the beginning experiences of my store as a model to learn upon and possibly save you a year or two of rocky financials when you start your store.

When I first started my boutique I didn’t ask myself once whether the market that I was selling to was already fulfilled for by other stores in the area and instead I built my boutique upon the idea that I was going to be clothing gals and girls like myself and they were going to love it. I thought I had a really good eye for fashion and the pieces I was going to bring in were going to be irresistible. It turns out I do have an eye for fashion but unfortunately to try and get women to all of the sudden stop shopping at department stores, boutiques and online sites that they love and start shopping at your store was a little more difficult then I had imagined.

What ended up happening was a spent the first your not making any money, I would get six to seven sales a day and I was doing everything I possibly could to market the store. My location was pretty good, the in store ambiance and design was great but I was just not getting the conversions I needed to be successful. I was in desperate need for a niche and eventually I found one by continually lowering my prices. It turned out that most of the boutiques in my community were selling 25-50 dollar range clothes and almost immediately when I switched to selling goods 15 – 25 did I gather a lot more sales. Profit margins are hard to come by at that range but when you find the right suppliers you can make it work.

2.) Costs

So great, your going to analyze your market, find some awesome suppliers to fulfill your strategy and now we can examine the financials of how we are going to make this happen. Equipment, rent cost and loans will be different for everyone, I decided to find an article that could give you a general idea of what you need to pay for and revise it according to my outlook. The below info is taken from www.inc.com.

1. Rent and Operating Costs

Security deposit for the rental lease ($1,877, based on 1,609 square feet in a well-established, centrally located strip shopping center in North Austin, Texas)
First month’s rent in advance, plus triple net ($1,877; $835 for her portion of the center’s operating expenses and property taxes)
Utilities security deposit ($300)

Rents vary, of course, depending on where you live and how valuable a particular location is (which is why retailers should employ a tenant’s agent for help). Munroe says she chose a fairly middle-of-the-road location that was in a shopping center and near plenty of residential housing, exactly the kind of place her target market–families with kids–would frequent. (Click here to learn more about commercial real estate.)

Total Rent and Operating Expenses: $4,889

2. Location Improvement Costs

Construction costs to customize the space ($4,000)
Store fixtures, including poles, racks, shelves, gondolas, mannequins, a cash counter, sizers, and bookcases ($3,500)
Handyman and supplies ($150)

Munroe says she wanted her store to feel like a boutique, so she invested in making improvements–such as updating the bathroom with new fixtures, paint, and flooring–to make her customers feel comfortable. She also saved money by purchasing her fixtures from a reseller. (For more on the office and operations, click here.)

Total Location Improvement Costs: $7,650

3. Inventory

Munroe has a huge advantage over other retailers in that she doesn’t have to pre-buy her inventory, which has allowed her to spend less than $750 on purchasing merchandise since January 2011. Instead, she splits the proceeds of every sale 50-50 with her consigners. (Click here to learn more on managing inventory.)

Total Inventory Costs: $0

4. Miscellaneous Operating Expenses

Hangers for clothing ($1,000)
Liability insurance ($185 quarterly)
Accounting setup ($25 per month for QuickBooks Online)
Association fees and directories ($250)
Office and cleaning supplies ($100)

Hangers are an underrated cost for any retailer. (Munroe tries to save money by buying recycled ones whenever possible.)

Total Miscellaneous Operating Expenses: $1,560

5. IT

Computer, laser printer, and cordless phones ($900)
IT consultant and tech support ($600)
Telecom services: high-speed internet via cable modem and digital phone ($100)
Domain registration ($15)
Google services, including the store’s e-mail ($50)
Website hosting, design, and development ($3,500)
Specialized POS software for the resale industry ($1,000)

Given her experience working in the computer industry, Munroe wanted to give herself all the possible advantages technology could bring. That’s why, though many retailers might start off doing things manually, she sprung for a new laptop computer and software that would make it easy to track what she needed to pay her consigners. (Click here to learn more about setting up a website.)

Total IT Costs: $6,165

6. Marketing

An exterior sign and center pylon signs (two) ($4,500)
Interior signage and décor ($600)
Trademark registration and legal services ($500)
Logo design ($1,500)
Business card design and printing ($1,300)
Flier design and printing ($350)
Coupon design, printing, and redemption costs ($150)

Not surprisingly, Munroe invested in multiple marketing efforts to help build the brand of her new business. “Image is so important,” she says. “I wanted to put my best foot forward in setting the tone for what the store is about and how we do business.” (Click here to learn more on how to market your business.)

Total Marketing Costs: $8,900

7. Public Relations

Grand opening event, including food and beverages, entertainment, and signage ($750)
Public relations and media relations around the grand opening ($800)
Advertising around the grand opening ($120)

To kick off her new business, Munroe decided to foot the bill to hold a “Grand Opening” event that had healthy snacks, a friendly clown, and a musical sing-along with a popular local band. “It was really important to have something that told people we are officially open and that they should come check us out,” says Munroe. (To learn more about public relations, click here.)

Total PR Costs: $1,670

Grand Total of Startup Costs: $30,834

I know what your thinking, I am NEVER going to be able to start a boutique at those costs. Fortunately for you there are a lot of ways to cut this total cost of $30,834 in half.

Here’s where we can trim.

Construction costs to customize the space ($4,000) I did most of this with my husband and friend and the materials we bought came out to about 1,000
Store fixtures, including poles, racks, shelves, gondolas, mannequins, a cash counter, sizers, and bookcases ($3,500) Poles, racks, shelves all custom built by my husband and I, the most expensive thing we bought was a very nice cash counter and store fixtures.
Handyman and supplies ($150) Get some friends to help!

Hangers for clothing ($1,000) Hard to get around this cost if you want professional unique hangers.
Liability insurance ($185 quarterly)
Accounting setup ($25 per month for QuickBooks Online) Quickbooks is great!
Association fees and directories ($250)
Office and cleaning supplies ($100) Had all of this at home already a part from a nice sweeper.

Computer, laser printer, and cordless phones ($900) Got a new printer and used by macbook.
IT consultant and tech support ($600) Are you kidding, do it yourself or get on a tech help hotline.
Telecom services: high-speed internet via cable modem and digital phone ($100)
Domain registration ($15) You don’t have to have a custom site, get a facebook page!
Google services, including the store’s e-mail ($50)
Website hosting, design, and development ($3,500)
Specialized POS software for the resale industry ($1,000)

An exterior sign and center pylon signs (two) ($4,500) This will put you back, mine was not 4,500.. but it did run me 1,300 plus installation.
Interior signage and décor ($600) more like 200
Trademark registration and legal services ($500)
Logo design ($1,500)
Business card design and printing ($1,300) This is the funniest one of all, are you kidding me with $1,300? Try $130 or www.moo.com or free with vistaprint
Flier design and printing ($350)
Coupon design, printing, and redemption costs ($150)

3.) Licenses

Most of you will only need two permits, a resales license and a Tax EIN # so you can establish your business and pay your taxes, yay for taxes!

4.) Resales license is used to purchase from most wholesalers

A resale permit allows a business owner to purchase merchandise wholesale and resell it to consumers. Resale permits are also commonly used to establish wholesale accounts with suppliers, which require proof of being in business before you’re allowed to make a purchase.

5.) Register business

The federal tax ID number is commonly referred to as an EIN, or Employer Identification Number. You will need one if your boutique has employees, is a corporation or partnership.

Boutique owners in all states, with the exception of Alaska, Delaware, Montana, New Hampshire and Oregon, must collect state sales taxes.

Depending upon where your boutique is located, you may need certain licenses and permits, including those related to zoning and signage

For more information and details visit this link: License to start a boutique and BoutiqueSetup.

Conclusion

As you can see it is quite a bit of money to start a boutique and that is why if you are really going to do start one you need to make sure it will succeed. It’s important to realize that every franchise and/or large company from Taco bell to Forever 21 do an extensive amount of research into demographics, competitive analysis, city growth, etc. before even thinking about opening a store in a new area. As a possible business owner you need to do the same, so go analyze!