Opening a Boutique Guide

How to Start Your Own Unique Clothing Boutique

Learn Quick and Simple Techniques to Launching your Dream Clothing Boutique - Learn How to Raise Funds for Your Boutique - Learn How to Find the Perfect Location - Get Tips on Negotiating a Lease - Learn How to Source Suppliers Both On and Off Line
  • Open Your Dream Boutique Today!!
  • Open Your Dream Boutique Today!!
  • Open Your Dream Boutique Today!!

Open Your Dream Boutique Today!!

  • Chapter 1- Creating Your Business Plan

Chapter 1- Creating Your Business Plan

Chapter 1 – Creating Your Business Plan

All success begins with a plan. It’s an old saying that, never-the-less, holds true. If you want to insure your success you plan and then follow through. It is not to say that the plan may not require revision along the way, but anyone who says you can skip this step is not misinformed at best. Your plan is your road map and through it you will see your way through to your goals. Your business plan doesn’t have to be a doctorate discourse but it should include at least the following considerations:

• Who is your ideal customer?
o Age.
o Gender.
o Income level.
• What type of merchandise do you want to carry?
o Women’s.
o Men’s.
o Children’s.
o Gift?
o Accessory.
• Where will your store be located?
o Mall.
o Main street.
o Shopping center.
• When do you want to open?
• What niche is your store filling?

With all these questions on your mind take a moment and write down your first answers to each. You can write this in a paragraph form or outline, whatever works best for you. Below is an example of what might be written:

My business plan is to sell women’s clothing and accessories with a contemporary feel to women between ages 20 and 45. I would like my boutique to be located in a small shopping center with moderate traffic. I plan to open my store in Fall of 2007. I believe there is no other store in my area offering the goods that I have planned, and I can offer superior customer support and ordering that is not available from other stores in the area.

You may not have answers for all of your questions now, or your answers may still be very broad. That’s okay. This is a starting business plan that will advance in detail and specifics as you continue to research.

One of the hardest of the questions to answer is often figuring out what niche you want to fill. Webster’s Dictionary defines niche as ‘a suitable place or position.’ As a business owner you must have a shop that fills a suitable place or position, or it will be overlooked.

As you consider your business plan you need to determine what will be special about your store and how it will draw in customers. Will your store offer a service that is lacking in your area? Cater to a customer base that has little available to it? Be more inexpensive than others in the area? Once you begin to determine this niche you will find other ideas coming quickly in order to further set yourself apart as the boutique to shop at.

In considering your niche, remember that a niche isn’t only something wildly different from everyone else. You don’t have to create blue jeans made out of paper mache in order to have a niche, but you do have to have some aspect of your business in which you are the best at what you do. For an example: I opened a store in 1991 for ‘funky’ clothing. At that time the only place to get such clothing was Melrose Avenue, which was well east of the San Fernando Valley, about a 45 minute drive! This meant that my niche was to provide such clothing to the women in the San Fernando Valley. The clothing they wanted without the travel! Finding your niche is really that simple, and remember to make what you choose something you enjoy. You’ll be with it for a long time.
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At this point, your business plan is not set in stone. You need to remain open to adaptation if you find that something about your plan won’t work in your area, budget or timing. For example: The clothing I opened my store with was well received in the valley, but I found that many of my customers were younger mothers that were looking for other options. They didn’t want funky, but they did want high quality, casual clothing. The location of my store guaranteed customers that were accustom to quality clothing and they wanted it in their casual wear as well as more formal clothing. To serve this aspect of my niche I brought in lines of quality casual clothing to offer with my ‘funky’ clothing lines and my customers loved it.

A counter example would be the shop that was next to mine. This shop was a specialty gift store, run by a very nice woman. She told me frequently how difficult things were for her business and how terribly it was doing, even though we were both located in an area that was well trafficked. She noticed that people in her store were often carrying shopping bags from my store, but they bought nothing in hers. She asked often what I was doing differently. Wanting to help out, I inquired of my customers what they thought of the gift store. The majority of my customers found the gift store charming, but with prices well outside of what they were willing to pay for most gifts. They wanted to spend between $30 and $50 and most of her prices averaged around $85, which was just too much.

As gently as possible I relayed this to the shop owner, who quickly defended her pricing strategy and listed all the reasons she needed to keep doing what she was doing. I understood her concerns, but thought that she really should bring in merchandise that was priced so as to meet the demands of the customers that frequented her store, but still didn’t buy there. She could keep the higher priced lines for those special occasion gifts, but needed something more. She was reluctant to listen to her customer’s wants and within a year had to close her shop.

You’ll know very quickly if your concept is one that is filling a need in your area and is truly working. If it is not you must decide how flexible you are willing to be, and find out from your customers what you can change to bring their business to your doors. You don’t have to take every suggestion, but be willing to listen and at least consider what they have to say.

Financial Planning

Once you’ve begun to narrow down the specifics of your business goals, the next part of your plan will be your Financial Plan. This is often the part of business planning that causes raised blood pressure and panic, but it is not nearly as difficult as it sounds. Financial planning is critical because it defines anticipated sales volumes, expenses, inventory and how much profit you are expecting to make. This plan helps you to keep your expectations reasonable tempered with a bit of hopeful optimism. No one really wants to work for free and most of us can’t afford to!

Refer to the Pro Forma sheet on the next page to reference the information below. This spreadsheet was created in Excel, but there are many similar programs that would work just as well.

Sales: Most stores can anticipate selling between $200 and $400 per square foot of retail space on an annual basis. So a story that is 1,000 square feet and making $400,000 per year is making $400 per square foot, a rather robust figure. If your store is making $400 per square foot you are doing very well. In the pages here for estimating I used a figure of $300 per square foot. The store size is assumed to be 1,200 square feet so the first year projected sales would be $360,000.

Each state has different laws regarding sales tax. Generally sales tax is collected with each transaction and then remitted to the state. The example below is based on California sales takes at 8.25%. You will want to adjust this for your own state or the state in which you would like to open your boutique.

In planning for future sales it is fairly safe to plan for about a 15% sales increase annually. This increase tends to level out about year five. So in our example sales would go up to $414,000, $476,100, $547,500 and level out around $629,000.
To show this increase in ‘real world’ terms the table below reflects the actual sales figures for my store in its first several years.

Cost of goods: The cost of good reflects your inventory. This is the merchandise that you purchase and offer in your store. Usually the cost of goods is about 50% of sales. In example, if you are selling approximately $30,000 per month in your retail shop, the purchasing budget you can give yourself would be about $15,000 per month. These budgets are always approximate because you will have to be flexible to your supplier’s requirements, and to keeping an appropriate supply in your inventory.

Freight charges are another concern that must be rolled into the cost of goods. Manufacturers are not going to send their supplies to you for free, so you must assume the costs for shipping. Freight charges should be figured to be about 1% of your sales. Using our previous example if you are selling $360,000 a year your freight charges will be around $3,600 a year.

Expenses: This is a big chunk to take on, so take a deep breath before plunging in. Take a look at the spreadsheet and note that each expense is listed as a percentage in relation to gross sales. These percentages should be flexible as necessary, but you need to at least have a basic guide in place as you move forward into your business.

Accounting: If you are serious about opening your own business it is well worth the expense of hiring an accountant or bookkeeper, even in the early days of your business ownership. If you have an accounting degree yourself you may decide to do this work, but you need someone involved that understands the rules of payroll and state tax requirements. It’s a very good idea to have a professional look over your records every month. I suggest that you pay the bills yourself, that way you know when money is going out to utilities and such and can control when it goes out, but then hand over the check register to a bookkeeper for generating state and federal documentation including income statements. Review the documents your accountant or bookkeeper creates. If you don’t understand them then ask for an explanation. Such knowledge empowers you to be a better business owner.

If the bookkeeper you hired does not handle payroll then get involved with a service. Pay your employees bi-weekly and let the service do the paperwork and chasing for you. It took me three years before I started delegating these responsibilities and I was so glad when I did!

Advertising: A basic rule is that advertising will use approximately 1.5% of your annual sales figures. With a small boutique you will not be able to afford large advertising mediums; billboards, TV, etc. Don’t worry and be willing to start small and work your way up as your business can support the expense.

Bank Merchant Fees: These fees refer to payment to credit card companies for authorizing the transactions you will need to process. The most common credit cards used on the market are VISA, MasterCard and American Express and you will want to offer these at the minimum. Merchant fees will run approximately 1% of your sales. Work with your bank and the credit card company for the lowest possible rate. These are based on volume and transaction sizes and range from 1.5% to 5%.

Equipment Rentals: This expense will depend on the type of business that you decide to run. You may have leased office or security equipment that requires a monthly payment and this cost needs to be part of your plan.

Exterminator: Unfortunately there is no guarantee that the boxes you are getting your merchandise in have not sat in large warehouses or industrial yards for some time. Such boxes may bring with them insects or small rodents that you do not want in your store. Having an exterminator visit at least once a month can help keep meetings between these pests and your customers at a low.

Insurance: In this case insurance does not refer to your personal insurance, but to the insurance placed on your inventory, building and employees. Depending on the terms of your lease you will be required to hold a certain level of insurance with many other optional packages. The best thing to do is to contact an insurance agent and determine what your individual needs are. The cost for insurance will be about 1% of gross sales.

Markdowns: Some merchandise will not meet your quality standards, but will not be able to be sent back to the manufacturer. In this case this merchandise will have to be significantly marked down in order to sell. You will want to sell these products in order to keep your inventory space free and make back as much as possible. The better you work with your suppliers and buy in the right amounts the less that will have to be put away for this category, but figure about 1%.

Miscellaneous: Also called petty cash. This is a small amount of money that is kept out for minor miscellaneous expenses.

Owner’s Salary: No one wants to work for free, and getting a salary that you can control and hopefully increase is part of why you’re branching out into your own business. In this example case I put in an annual salary of $45,000. You will have to see how these numbers work in your case in order to make your ideal salary. This number may not be able to start as high as you would like it to and you’ll have to be flexible as you make debt payments or absorb extra expenses. This is an estimate and should be reasonable but optimistic.

Postage and Delivery: This can generally be kept fairly low, approximately $300 a year to mail bills and packages. Note: If you agree to ship packages to customers that shipping cost is part of the payment for the item and should NOT be coming out of your gross sales.

Rent: Rent and payroll will be the largest expenses that you pay out. As a general rule you should not pay more than 10% of your gross sales in rent. This will be further discussed in the lease section of this workbook.

Repairs and Maintenance: These are generally defined as small things that may need to be done at some point during your lease. Mirrors hung, air conditioning repairs…these are examples of maintenance expenses.

Salaries – Employees: As much as possible keep your payroll simple. In the beginning you won’t need a huge staff or be able to pay them all. The spread sheet example assumes you working full time and two employees, one full time and one part time.

Sales Taxes: These taxes are required by most states and rates will vary from state to state. In our example California tax rates of 8.25% are being calculated.

Security: It is very likely that you will have an alarm system in your store. Most commercial alarm systems require having a monitoring service. This service will be notified if there is a break in or a fire and will then notify you and local authorities. Most services run about $25 a month.

Shrinkage: The unfortunate truth in retail is that all stores will suffer from a certain amount of theft and you must allow for that possibility. Allow .05% of your sales for such things.

Store Supplies: This category is for all of the little random bits that you will need around the store: Windex, gift wrap, tissue, boxes, bags, etc.

Tax/Licenses: This expense will be flexible depending on how you operate your business. Corporations pay a different licensing than sole proprietorships. You will want to get the advice of your accountant or C.P.A before deciding how you will operate and protect your assets.

On our spreadsheet I have showed a budget of $2,000 annually. This will cover business license fees, which must be renewed each year and a basic corporation fee. The remaining is for other state or local permits, fees, licenses, etc.

Utilities: Gas, power and phone bills are generally those that fall under the utilities heading. Approximately $500 should cover this easily.

Net Income: The net income is the money that is left after the costs all come out. After you put in your salary, this should be beyond all of the other expenses, does your store still turn a profit? If the answer is no you have to start adjusting expenses or salary in order to change this situation.

NOTE: One of the most important reasons for preparing a financial statement is to help YOU determine whether owning a store is REALLY the business for you. Only after looking at the hard cold facts of the matter will you be able to decide if you’re really going to to enjoy what you’re doing, and afford to make the change now.
One of the number one questions that I am asked is “What will it cost to open my store?”. This question is a good one to ask and is a major concern in stepping out into the business world. I will give you a lot of ways to cut corners in this document and still have a great store. These are my suggestions and experiences and you will have to find your own way, but I suggest that you take into consideration what I’m offering.

The following list shows a basic list of expenses you can expect with a start up. The figures here are conservative and your business will be different based on where you are located and what you have in mind. This just gives you a good starting to place. If you have a much bigger budget then you can add additional expenses based on what you want to include in your store.

Start-up Budget

Item Budget
Inventory 45000
Promotion 1000
Store build out/fixtures 15000
Computer System 1000
Insurance 530
Legal and accounting 2000
Office Supplies 1000
Rent 6000
Employee Salaries 500
Sales Tax Bond 1000
Security System 500
Signage 2000
Store Supplies 2500
Telephone 200
Travel 1000
Utilities 1200
Working Capital 36000

Total Startup: $116,430.00

Inventory – There is a formula that can be used to figure out how much inventory your store will need. In my example I assume that sales expectations are $360,000 and the size of the store is 1,200 square feet. The wholesale price of your inventory merchandise is the cost you actually paid. This wholesale price should be at 50% of your total, $180,000 in this case. Take this annual wholesale amount and divide it by 12 months, which is $15,000 per month. At opening you should have a three month supply, approximately $45,000 worth of inventory.

This may seem like a high number and may cause you to wonder if your store can be opened with less merchandise. Yes, it can. I opened my store with $35,000 of inventory and really should have had $50,000 for my store size and anticipated sales. Because of this there wasn’t quite enough inventory to fill the store, so I put up additional mirrors and antiques which made the store look fuller. Once I started turning a profit that money went first into added inventory and I quickly came up to my ideal mark. I’m not suggesting that you open with too little inventory, but a bit of creativity might be required to reach your goal reasonably.

FYI: Places like Home Depot or CostCo can be very helpful in providing inexpensive ‘space fillers’ if needed. You do not want these fillers to take the majority of the space, but they can be very helpful.

Promotion – There are many options that can be invested in to promote your store and bring in customers. You may want to do something special for the grand opening, for example: banners, balloons, opening day party, newspaper ads, etc. We’ve budgeted $1,000 here for such expenses and will further discuss promotional issues in the marketing section of this workbook.

Store build out and fixtures – A budget of $15,000 will include everything you need for your store build out and appropriate fixtures for displaying your merchandise. Carpet, paint, wall fixtures, for ways, rounders, display cases, hangers, cash registers etc, are all included in this budget price. This budget may be more or less dependent on your location and personal tastes. If you are thrifty and take advantage of classifieds and used equipment you stand to fine many great deals that can save a great deal of expense. You may also want to hire a store designer, if you can afford one, and have them help you customize your experience.

In illustration let me share a story regarding the cost of build out and fixtures. When I opened my store I was a novice and fell into a trap of being a bit taken advantage of by my Landlord. I found a lovely location, with great street visibility and ample parking. It was perfect for what I wanted. The store was, however, totally gutted and nearly everything had to be replaced. Everything included: interior walls, ceiling, plumbing, electrical, air conditioning, alarm system, the majority of the content of the store.

Not realizing just how much work it would be or how much it might cost I signed a lease that included improving all of the space on my dime. I agreed to replace all of the gutted systems, not realizing that this was the Landlord’s responsibility. I shouldn’t have had to do more than painting walls, carpet and my own fixtures. This cost me over $45,000 in construction costs ALONE. Fortunately I was able to make the money back, but it was a lesson in what not to do if I were to start again.

Sometimes you can even find stores to lease where you will incur little or no build-out expense at all. Another experience I had just a few years after I opened my main store. I was approached by a local mall and asked to open a store in one of their vacant spaces. At first I was not interested and told them no. I had plenty to keep me busy. However, it turned out to be another great lessons learned. They approached me again and made me a deal I couldn’t refuse. They offered me a built out store for $1,000 per month. I spoke with my husband about it and we decide to do it as we wanted experience in doing business in a mall. As our store was on a main boulevard, we had always relied on self-promotion and visibility. Also, we could set our own hours and what days we wanted to be open. In a mall there is great mall traffic, but the mall controls your hours, window displays, and other details. Also, malls are open late and have extended holiday hours that you MUST abide by. Knowing all of this should be part of selecting your location. Anyway, we wanted to know how the other half lived – with all that “built in” mall traffic, so we decided to give it a try.

Remember, the new store the mall offered me was completely built out with carpet, walls, mirrors and even a cash wrap counter. It had been a shoe store and the previous owners had done a lot of work, building out with accessory cases, marble floors and lots of mirrors. I added a set of basic dressing rooms for $500 (handyman and materials), purchased some used fixtures for about $600 and had an inexpensive sign made for $250. I was up and running for virtually nothing in just a few days. THIS WAS ANOTHER GREAT LESSON FOR ME! How did the store do? It did great, truth be told! Almost as well as my first store, which cost me a great deal more to build and was very successful in it’s own right. I would suggest you walk around your mall and see if there is a space that would cost you nothing to start-up in. If you do your research, something wonderful may just come up and you may be able to save a bundle. If you find a mall space, contact the mall manager (usually they have an office in the mall), and give them your business plan immediately. Ask them what they want for the space for a 3 month trial. They are motivated to give you a shot because it doesn’t cost them anything. A mall manager’s main motivation is to keep the mall full as the mall looks much more successful that way.

Computer System – With technology being what it is, one of the best investments you can make is to get a good computer system, complete with appropriate inventory and tracking software. I recommend a system called Retail Pro, by One Step Data in Glendale, California (818) 543-4777. My first two years of business I ran my store without the benefit of a computer and found many hours a week being spent making up for the lack. If you do not initially have the funds to get a system you’ll be okay, but keep it high on your list of things to purchase as soon as you can.

Insurance – You will be required to have liability insurance just in case there is a customer injury in your store. Worker’s compensation insurance is required by most states to make sure your employees are properly cared for. Finally merchandise insurance in case of vandalism, fire, flood or theft is also suggested. Every individual situation is different so you should make sure to meet with a few different agents and get quotes. They can help you plan not only for your now, but for your future as well. A $530 budget will get you started.

Legal and Accounting – If you incorporate your business, you will pay the state an $800 fee. If you to this route you will also need to pay an attorney to form the corporation and process the paper work. It is very helpful to set up a system with a bookkeeper, accountant or C.P.A. in order to get on track before you open. If you operate as a sold proprietor, your legal fees may be considerably less than the $2,000 budgeted here. However, you should still meet with an accounting professional in order to set up your systems.

Office Supplies – You will likely want a fax machine and at lease one phone, maybe 2 if you have a back room. You will also need a basic supply of general office supplies such as staplers, scissors, paper, tape, files and a file cabinet, paper clips, etc. $1,000 should be ample.

Rent – Assuming your rent is not more than $3,000/month, the $6,000 budgeted here includes your first and last months payments. This type of payment is typical.

Employee Salaries – You may want to hire someone to help you clean up and set up the week before opening. $500 should cover their wages easily.

Sales tax bond – Depending on your anticipated sales, your state may require you to pre-pay a portion of your sales taxes. The state does this to insure that they receive all of the sales taxes you collect from your customers. When I opened my store, I was required to prepay $5,000 to the state board of equalization. Depending on your state you may be able to pay with a bond as I found out that I could. Contact legal representation for advise considering the regulations in your state.

Security System – Many businesses have an alarm system of some sort installed, and most leasors will require that you keep it active. A $500 budget will cover the installation of a basic system. If you wish more than the basics you will have to budget additional funds.

Signage – The size, look and shape of your sign may be determined by the requirements of your shopping center or Landlord. There are many different styles of signage on the market including awnings to flat signs with painted letters or a sign with recessed lights. You will need to purchase the sign and have it installed. I just recently purchased a new sign for my store. It is simple with black metal letters in a bold type style with no lighting. The cost including installation was $1,200. A $2000 budget in this area should cover your requirements for your sign. I also recommend you have a decal on your door with your store logo and name on it.

Store Supplies – This covers basic supplies you’ll need in your shop. Garment bags, make up remover, boxes, gift wrap, tissue paper, etc are all covered in this budget.

Telephone – You can easily find use for at least 4 phone lines. The first two are your main call in lines. If line 1 is busy, the call is sent to line 2. If line 2 is busy, you have call waiting or an answering service. You always want to answer your phone for a customer. The 3rd line is designated for the credit card authorization system and the 4th line is for the fax machine. Put your fax in your back room or otherwise out of the way as much as possible.

Travel – Depending upon where you live, you may need to travel to do your inventory buying. There are large apparel, gift and accessory markets in the population centers of Los Angeles, Dallas, Las Vegas, Chicago, Atlanta and New York. If you need to travel to one of these cities, you will need a budget for plane or car, a hotel and meals. I recommend you give yourself at least 3 days to get your season’s buying done, but 5 days is better, particularly on your first trip.

Utilities – You will need to set up your basic utilities, power, water and gas. A $1,200 budget should cover those initial related expenses.

Working Capital – In our example I came to a figure of $36,000 based on the store’s average monthly expenses of $12,000. I figured $36,000 is 3 months of working capital. Working capital is the “extra” money you will require to operate your business the first few months. I opened my store with no working capital, but I was single, lived at home, had no children and knew that if I didn’t make any money at first, I could still survive and had other options. That can be quite frightening for many people and isn’t necessarily recommended. Only you know what your needs are in the long run. Use your best judgment on how much you will need in order to keep things running in those first hard months.

That completes my explanation of the basic financial and business plans. You should have some idea by now if you are still interested in this industry and thoughts for what niche you might fill. If you do not that is okay, but keep it in mind as you read forward. You should now have a fairly good idea what it will cost you to open your store, what inventory you will need and how much it costs to operate the store monthly. Next let’s talk about locations!

  • Liz Evans


    Easy and practical

    Across America, you can find the hottest fashions in the smallest of places. Small fashions boutiques are the heart of the fashion industry. While mass market is profitable, the truly unique comes from these chic shops. How do you get a corner in that market? This book looks at just that. From start, to stocking, to marketing, this book covers it all. Stewart takes a close look at all the areas a beginner could possible need to examine and every how to avoid the big mistakes. The book is easy to follow, the advice is practical, and the price is right. If you ever wondered or wanted to know how to start up your own boutique, this is the place to start.

  • Jean Pierre



    I gave it a five because it answered all of my questions and more. I would recommend this book to anyone serious about opening their boutique and not having a clue where to start. This book has it all! Fantastic!!

  • Amazon Customer Keisha Lee



    This book is just what I needed to start working on my business plan and what to expect. There were a few grammatical errors and word left out but besides that it was great, easy to read, short, and to the point. Thanx Briana!!!



    Helpful Tips

    This guide gives a short but detailed overview of what it’s like owning a boutique store. It comes with figures to give examples of the finances you can expect and gives clear examples of where the money goes and how much it is likely you will need. There’s a lot of information about every aspect of the business. I appreciated the figures and the examples given because they helped provide context.


Opening a Boutique Guide

How to Start Your Own Unique Clothing Boutique

Learn Quick and Simple Techniques to Launching your Dream Clothing Boutique - Learn How to Raise Funds for Your Boutique - Learn How to Find the Perfect Location - Get Tips on Negotiating a Lease - Learn How to Source Suppliers Both On and Off Line


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