How to Start a Traditional or Online Boutique Clothing Business

Is a Boutique Right for You?

Although it can be exciting to form a boutique clothing business, there will be significant demands on you as a small business owner. Here are some of the things you can expect.

A Day in the Life of a Retail Business Owner

Here are some of the typical tasks you’ll be performing for your boutique clothing business on a daily basis.

• Seek out new clothing and garments that would fit well with your boutique
• Build your brand and focus on your unique clothing styles
• Provide advice to customers on clothes that match their personal taste
• Sell clothing to customers and deal with customer service and returns
• Handle the marketing for your boutique clothing business
• Deal with clothing suppliers and distribution of your garments
• Handle financial and administrative management

Skills Needed by a Boutique Business Entrepreneur

The following skills will be very useful in your role as a boutique clothing small business owner.

• Ability to research new trends and tastes in the clothing marketplace and garment industry
• A strong eye for style and branding so you can develop a unique niche for your clothes
• Good insight into customer tastes to help you sell clothes and manage inventory
• Financial management acumen so you can price items appropriately and pay bills
• Excellent interpersonal skills to help you deal with and sell to customers

Validating Your Boutique Business Idea

Remember, the ideas above are just a starting point, You can define and tweak exactly what type of boutique clothing business you want to run by conducting your own research. Before committing too much time, energy and money into your new retail clothing store, it’s important to test the marketplace.

• Identify your boutique clothing business’ unique selling points (USPs): Whether you’re competing on style, curation, clothing range or something else, your USPs set you apart from competitors and encourage customers to come to you.
• Look at who your competitors are in the space: Having competitors is a good thing as it shows there’s a market — but if there are too many, you’re likely to struggle without a really good unique selling point. It’s vital to find your niche and build on your brand.
• Understand your market: Clearly identify exactly who your customers are likely to be, where they hang out and how you’re going to reach them. This will be essential to your marketing, communications, sales and customer support.
• Talk to clients: Speak with potential customers to understand what they want from your clothing, and validate this by asking if they would commit to spending real money on them.

Not every idea you have will make it through to becoming a boutique clothing business. There are all sorts of reasons to say “yes” or “no” to specific businesses, so think about what your strengths and weaknesses are so you can choose something you’d be great at.

Choose the Right Business Structure for Your Boutique Business

There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:

Sole Proprietorship

If you don’t choose to form a legal business entity for your clothing venture, you will be a sole proprietor by default. This won’t give you the legal protections you need, so we do not recommend this.

Partnership

Similar to a sole proprietorship, if you go into business with someone else without forming a legal business entity, you will be treated as a partnership. This doesn’t give you limited liability protections, so we don’t recommend it for your boutique clothing business.

Limited Liability Company or LLC

The Limited Liability Company (LLC) is ideal for most small retail clothing businesses. An LLC is easy and inexpensive to set up, and it has the least administrative requirements of any formal business entity.

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organizations.

C Corporation

These are the largest and most complex types of businesses and are typically far more than the average entrepreneur or boutique business owner will need.

Setting up Your Boutique and Business Operations

Once you've legally created your boutique clothing business, you’ll need to get some other things in place.

Location of Your Boutique

If you’re selling online, you can work from home or a shared working space, although you may need storage for garments. This is great as it reduces your office costs considerably. Don't forget that if you work from home, you can write off part of your utility and housing costs against your taxes.

If you’re selling in a traditional store, you’ll need to find the right location and pay for furniture, fixtures, utilities and everything else that goes into creating a desirable retail location.

Equipment for Your Boutique Clothing business

For an online business, you’ll likely just need a computer, laptop, tablet or smartphone. For a brick and mortar business you’ll need shop fixtures, a cash register, furniture and much more.

Marketing Your Boutique

Branding and marketing will be a huge part of your boutique clothing business. Naturally, you will need an awesome website, but you'll also need to get newsletters, digital ads, social media accounts and other channels in place. You’ll want to focus on visual marketing, so Instagram and Pinterest can both be excellent channels.

Software and Processes

The right software and processes will make running your boutique clothing business much easier. See our list of the best apps and software at the end of this guide.

Employees

Depending on the type of business you’re running, you might be able to take care of everything yourself. As you grow, you can look into taking on another employee.

Finances and Taxes

You will need a separate business bank account for your boutique clothing business, and you might also want to consider a business credit card. Additionally, you will need to keep careful bookkeeping records and file business and personal taxes. Here at Incfile, we can even help you file your taxes.

Our Start a Business Checklist will get your boutique business going in the best possible way.

Rules, Regulations and Taxes for Retail Boutiques

You will need to explore local, state and federal licenses and permits, and we can also help out with researching your business licensing needs.

Taxes

Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. This can include self-employment tax, state income tax and federal income tax. You will also probably be liable for sales and use tax.

As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. We can also prepare and file your tax returns for you.

Maintaining Your Boutique Clothing Business

There are certain forms and legalities you need to follow to keep your boutique clothing business in good standing.

Insurance for Your Boutique Clothing Business

Most boutique clothing businesses should have comprehensive business insurance. There are various types.

Useful Online Tools for Boutique Owners

Here are some really great online tools for managing your boutique clothing business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.