How to Open a Clothing Store

Co-authored by Madison Boehm

Last Updated: December 29, 2022 References

If you have a passion for fashion and style and want to be your own boss, then opening a clothing store may be the perfect decision for you. Starting a business takes some thought and planning, but the effort is worth it! We'll walk you through how to launch your own apparel store from deciding on your target audience to securing funding to marketing your business online. For a complete guide to launching your dream boutique, apparel e-commerce store, or classic brick-and-mortar clothing shop, read on.

Part 1

Part 1 of 4:

Researching the Market

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Identify your target audience. Your target audience determines almost everything else about your store, from the products you carry to the location of your storefront. Start by brainstorming who you’d like to market to.^{[1]
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Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} Then use that decision to make other decisions about your store.^{[2]
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- Think big at first. Do you want to appeal to men or women? Then get more specific. Think about what ages, professions, and styles you want to appeal to.
- To start, go by what you know. If you worked in a store that sold suits to businesspeople, then you already know that market. Consider entering a field you have experience in like this.
- Consider where you might make the most money. Business suits might not be in high demand in a small town. But you may get a lot of tourists in the summer. In this case, it may be better to open a store geared to tourists.
2
Investigate potential locations for your store. Location is one of the most important early decisions you’ll make in opening your business, so conduct careful market research.^{[3]
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Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} Look for a location that has a good foot traffic to get your first customers.^{[4]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.} Look for other businesses like yours. Small businesses often cluster together to attract as many customers as possible, so this may be a ready-made location for you.^{[5]
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- Don’t locate yourself too close to identical stores. If there are a lot of other small clothing stores in the location you’re looking, this market may be too saturated. Consider finding a different location.
- If you’re marketing to tourists, for example, then locate your store near the main attraction areas.^{[6]
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  Art Lewin
  Entrepreneur
  Expert Interview. 11 June 2021.}
- For good foot traffic, open the store near restaurants and coffee shops. Places where people visit often can bring in a lot of window shoppers.
- Find out what the rent is in every area you look. This will be a big expense, so don’t overlook it in the planning stage.
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3
Find a specialty for your store’s merchandise. Big department stores offer all the big brands at low prices, so your store won’t stand out if you try to follow that model. Think about what would set you apart from larger competitors and other small businesses.^{[7]
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Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} Carry brands or products that department stores don’t, or develop a specialty in a field that your area lacks.^{[8]
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- One good angle is carrying brands made by local manufacturers. This gives a much different flavor to your store than someone could get at a large retailer.
- Your town may have a lot of off-brand boutique stores, but perhaps they lack a maternity store. This could be where you make your niche.
4
Develop a backup plan if your business isn't successful. Remember that starting any business is a risk and many small businesses fail. Don’t let this discourage you, but also have backup plans in mind in case the business doesn’t work out.^{[9]
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- Have emergency savings to cover 6 months of living expenses if you have to find a new job.
- Remember that clothing stores usually have smaller profit margins than other businesses. Get into this because you love the industry and want to work with people. This passion will help you deal with below-average profits.

Part 2

Part 2 of 4:

Financing and Incorporating the Business

1
Determine your total operating costs. Figure out how much your store will cost to run before opening it. If you don’t have a full financial picture, your store is unlikely to succeed. Operating costs, sometimes called overhead or fixed costs, are the expenses you have to pay regularly just to keep the store open.^{[10]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.} Add up all the costs that remain consistent each month and have to be paid. The resulting sum is your operating cost.^{[11]
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- Common items for operating costs are rent, utilities, insurance, and phone/internet connections. If you take out loans, paying them back is also a fixed cost.
- Common advice is to keep your rent about 6% of your yearly sales. Keep this in mind when you add up your costs. If rent is $2,000 per month, that's $24,000 per year. That means you'd need about $400,000 in sales to meet this recommendation. If you can't project sales that high, consider finding cheaper rent.
2
Add up your inventory and labor costs. These costs are called variable costs, because they can change from month to month. For instance, you could buy less inventory or hire less workers and your store would still stay open. Add up what all your inventory will cost you and how much paying your employees will cost.^{[12]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.} Then combine this number with any other variable costs you have.^{[13]
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- Some other variable costs include advertising and marketing expenses, since you technically don’t have to do these things to stay open.
- Add up your fixed and variable costs to get your breakeven price, meaning the amount you have to make each month just to cover your expenses.
3
Draw up a business plan. A business plan is crucial not only to focus your own thoughts, but also because any potential investors will want to see your plan before providing any financing. Put together a comprehensive explanation for your business, including the products you’ll sell, your operating plan, and all your expenses. Be ready to present this plan to anyone you ask for financing.^{[14]
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- Start by describing your business concisely. What will you sell and who is your target audience?
- Then outline how you will fit into the current market. Explain the research that you’ve done and how you’ll set yourself apart from competitors.
- Finally, outline your total costs, both fixed and variable. Then note how much financing you’ll need to get started.
4
Form a legal business entity. While forming a business entity is not a requirement, there are many advantages to doing so. Forming an entity separates your personal and business finances, so your personal savings are protected. Merchants, manufacturers, and lenders are also usually more willing to work with a business rather than an individual. Finally, you can declare business expenses and get tax write-offs as a business owner.^{[15]
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- The most common entities are a Limited Liability Company (LLC) and corporation. Most small businesses are LLCs because they usually don’t involve a lot of people.
- File for a business license in the state you’re operating in. If you don’t want to handle the paperwork yourself, you can hire a lawyer or other business to do the work for you.
5
Apply for a business loan or find private investors. If you don’t have enough savings to open the store yourself, then secure financing from a bank or private individuals. Apply for a small business loan from a local bank. If the bank won’t provide enough funds, a private investor may be a better option. Keep in mind that private investors usually want to see a larger return on their investment than a bank. They may want to own a part of the business in exchange for the loan.^{[16]
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- The amount of the loan depends on your total costs. Experts recommend having 6-12 months of expenses on hand when you start up, because it will take several months to start bringing in money.
- Typical amounts for opening a small clothing store range from a low of $50,000 to over $200,000, or even more for larger stores.
- It’s better to have more cash on hand than not enough. Most small business fail within their first year because they don’t have enough capital.

Part 3

Part 3 of 4:

Stocking and Staffing the Store

1
Contact suppliers for quotes on merchandise. With your financing and business plan in place, begin stocking your store. Look for suppliers or manufacturers in the niche your store is in.^{[17]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.} Find the best items for the best price and place orders for your initial stock.^{[18]
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- Consider buying items in bulk to save costs. However, don’t order more than you think you can sell. If you sink all your startup money into merchandise right away, you might not be able to pay your other bills.
- Try contacting manufacturers directly rather than wholesalers. You might save money by buying directly from manufactures.
- Trade shows are also good places to pick up cheap wholesale items.
2
Carry products from local manufacturers to set your store apart. Small stores are part of their communities, and a great way for you to insert yourself into the local community is by showcasing local manufacturers. Contact jewelry makers, artists, and clothing makers to place their items in your store. This gives you a good supply of merchandise and is also great for your marketing.^{[19]
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- If you don’t have room in your store for locals to stock their items all the time, consider doing a monthly event for local manufacturers. Set up a tent in your parking lot and let them come showcase their products, for example.
3
Hire employees if you need them. The number of employees you’ll need depends on the size of the store. A common recommendation is for 1 full time and 1 part time worker for each 1,000 sq ft (93 m²) of store. Think about how much work you can do yourself. Then hire more people as you need them.^{[20]
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- Have at least one trusted employee who can run the store when you’re not there. You never know when you’ll have an emergency or get sick, so someone should know as much as you know about running the store.
- Remember that each employee you hire is another added expense. Only hire people you need.
- If work is irregular, consider hiring seasonal employees to save money. If you run a tourist shop that is only active in the summer, you don’t need many employees in the winter months.

Part 4

Part 4 of 4:

Marketing the Business

1
Have a grand opening event. After all your hard work, arrive with a bang by having a big grand opening event. Invite everyone you know and advertise the event around town. This is your big chance to show everyone your store and get the word out.^{[21]
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- Offer special sales on opening day to give everyone a sample of what you have to offer.
- Contact local media sources to come cover the event. This could give you some free advertising.
- Invite the mayor or other local politicians to bring more attention to the event.
2
Use social media to place ads. Social media offers a great, cheap way to advertise. First, start a page for your store on all the major social media sites.^{[22]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.} Then start ad campaigns on these sites to spread the word to locals about your business.^{[23]
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- Since your business has a physical location, set the ads to target people living 5-10 miles from you. Advertising to people 100 miles away will waste your ad budget.
- Update all your social media sites regularly. If you haven’t posted on Facebook in 6 months, people may think your business closed down. Aim for at least 1 post per week on each of your accounts. Also make any major announcements, like sales, on all your accounts and website.
- Remember that advertising still costs money. Work these ads into your budget to avoid going over costs.
3
Appear at local fairs and festivals. Most communities have events like these to showcase local businesses. Do your best to attend as many as you can to promote your business. Bring samples and items to sell so people can see what you offer.^{[24]
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- Always bring plenty of business cards when you attend these events. Pass them out to as many people as you can.
- Check with your local chamber of commerce to find a list of upcoming business events. Attend as many as you can.
- Don’t leave the store unattended or closed when you attend events. Leave your best employee to run the store while you’re gone.
4
Sell online to reach a wider audience. Websites like Amazon and eBay offer a massive platform for small businesses. If you only focus on your in-person sales, you’re missing out on a huge potential to reach more customers. Make selling accounts on one or more online retail site and list your products. This is a great way to attract more customers or keep your profits up if visits to your store are slow.^{[25]
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Art Lewin
Entrepreneur
Expert Interview. 11 June 2021.}
- Stay on top of your online sales. If you get a reputation for poor service, you could get banned from these sites.
- Include links to your online store on all your social media sites.
- Remember that all online stores have fees associated with them. Find out all the fees you’ll pay and price your items accordingly so you won’t lose money.

Expert Q&A

Question

What are the costs of opening a clothing store?

Art Lewin
Entrepreneur
Art Lewin is an Entrepreneur based in Los Angeles, California. He specializes in business, sales, marketing, and real estate investing. Art is the CEO and Founder of four companies based in Los Angeles: Art Lewin Bespoke, Healthy Choice Labs, SFR Properties, and Professional Business Network (PBN). Art is known globally for his exclusive custom-made and ready-to-wear business wear designs. Some of his notable clients include royal family members, politicians, and Hollywood stars including Hugh Hefner, Sylvester Stallone, Johnny Carson, Steve Allen, and William Shatner.

Art Lewin

Entrepreneur

Expert Answer

The first cost will be inventory. Try to keep that to a minimum, as many people are tempted to fill up the store right away. The other costs will be square footage for whatever retail location you're looking at.
Question

How do I make my clothing store successful?

Art Lewin
Entrepreneur
Art Lewin is an Entrepreneur based in Los Angeles, California. He specializes in business, sales, marketing, and real estate investing. Art is the CEO and Founder of four companies based in Los Angeles: Art Lewin Bespoke, Healthy Choice Labs, SFR Properties, and Professional Business Network (PBN). Art is known globally for his exclusive custom-made and ready-to-wear business wear designs. Some of his notable clients include royal family members, politicians, and Hollywood stars including Hugh Hefner, Sylvester Stallone, Johnny Carson, Steve Allen, and William Shatner.

Art Lewin

Entrepreneur

Expert Answer

Like residential real estate, location is very important. Make sure that whatever you want to sell in a retail store matches the neighborhood you'll be serving. For example, if you want to sell high-end goods, you wouldn't open a store in a low-income area.
Question

How much does it cost to start a clothing line?

Art Lewin
Entrepreneur
Art Lewin is an Entrepreneur based in Los Angeles, California. He specializes in business, sales, marketing, and real estate investing. Art is the CEO and Founder of four companies based in Los Angeles: Art Lewin Bespoke, Healthy Choice Labs, SFR Properties, and Professional Business Network (PBN). Art is known globally for his exclusive custom-made and ready-to-wear business wear designs. Some of his notable clients include royal family members, politicians, and Hollywood stars including Hugh Hefner, Sylvester Stallone, Johnny Carson, Steve Allen, and William Shatner.

Art Lewin

Entrepreneur

Expert Answer

It depends on the clothing line, as there's a lot of money that goes into pre-production. To save money, start producing the garments you think will be most popular instead of making everything at once.