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How to Start a Small Clothing Store

by Brian Hill

A clothing store could be targeted to men, women, teens, or children, and carry plus size, maternity, handmade, vintage, or second-hand clothes, to name just a few categories. The total retail market for apparel is $338.7 billion as of 2012, according to MarketResearch.com. Start your store off on the right foot to get your fair share of that market.

Financing

Add up what you'll need to start the store. Funds will be required for licensing, first and last month's lease payment plus a security deposit, inventory, store fixtures and display racks, insurance and employee wages for the first month. Financing sources can include your own savings, credit lines or a bank loan. Vendors may give you terms where you don't have to pay for the merchandise for up to 90 days. Consignment is another option for obtaining clothing. You pay the vendor only when the clothing sells and the vendor retains ownership of the clothing. The downside to consignment is that your profit margin is much thinner, only 20 percent, as opposed to 50 percent for clothing you buy and resell.

Location

Location is critical to the success of a clothing store. Malls have lots of foot traffic and potential customers passing by the shop, but space can be expensive. The mall may have minimum square footage requirements for the size of the store. If that's the case, consider a kiosk as a mini-store, rather than leasing a storefront. Other options include strip malls, redeveloped downtown areas or city streets with lots of noncompetitive stores.

Registration and Licensing

Besides obtaining a state business license, check to see if you need a city business license where the store is located. You will also need a sales privilege license to collect and remit sales tax. The sales privilege license is required by many wholesale vendors before they will accept you as a customer. Obtain an Employer Identification Number from the Internal Revenue Service, register your business with the state commerce department and check with your state's business development office to see what is required for your city and state.

Marketing

Starting a small clothing store requires the development of a marketing plan. Determine your market niche. In other words, who are your customers? Make a list of your competitors and note the advantage your store has. You may offer all-natural fabrics for children's clothes, have the greatest selection of vintage clothing or offer the best value. Incorporate your competitive advantage in your marketing materials. Establish a website, blog and social media accounts for the store. Advertise in both online and offline media. For example, if grandparents are part of your market niche, post banner ads on senior-focused websites in your geographic area.

Stock

Assemble your inventory from reliable vendors. When selecting vendors, consider delivery time, minimum purchase requirements and payment terms. If cash is at a premium -- and it almost always is -- it may make more sense to buy from a T-shirt manufacturer that allows you 90-day payments rather than from one that is slightly cheaper but only offers 30-day payments. A 90-day payment schedule allows you to sell the T-shirts before payment is due for the merchandise.

About the Author

Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

Photo Credits

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