How Much Does It Cost To Open a Clothing Store

So, you're thinking of opening a clothing store? While it's a tried and true retail concept, the cost to open your doors can be considerable, particularly if you want a brick-and-mortar location. However, trending retail concepts and the latest technologies offer avenues by which you can trim your initial investment.

Rent

This is as basic as it gets... or is it? Retail space fluctuates wildly in price depending on your location. What costs $300 per square foot per year in a fashionable shopping center might cost $13 per square foot in a less travelled or blighted location.

Your calculus then must be whether the higher rent cost will translate into enough sales to justify renting in the swankier location. Or do you think this blighted area is about to gentrify, and you don't mind waiting a year or two for business to really take off? These are the kinds of questions you'll ponder as you determine the most effective spot for your shop. Then, once you've signed the lease, it will be time to remodel, (if necessary,) and furnish your new space.

What if you really want to set up in a more travelled part of town but can't afford the astronomical rent? All hope is not lost. Farmers markets and popup locations are becoming increasingly popular across the US. This could save you significant money on rent until you can get your name out there and thereby generate enough revenue to afford your ideal location.

Retail POS System

Your POS (point of sale) system is the life blood of your store. It's how you manage inventory, accept payments, purchase new stock, analyze your performance, and much more. Some systems can even help you run promotions and manage employees.

Your employees are going to be interacting with your POS system constantly - day in, day out; so, it's got to be fast and intuitive. If they need to jump through a bunch of hoops to perform a seemingly simple task, not only will your store be less efficient, but employee morale is likely to be negatively affected.

That said, you can save money by deploying a cloud POS system for small business. This means all the processing and storage actually takes place on network servers that could be across town or across the country; you don't need to buy your own server equipment. If you're starting your business at a farmer's market or popup shop, you may be able to get by with an iPad POS system until you move into a permanent location.

Nuts and Bolts

So much of your startup and ongoing costs deal with those little things that would be easy to overlook but which you need to cover in order to open your doors. You may be able to save a little here and there, but it's more important to err on the side of caution so you don't regret cutting corners later. Here's a by-no-means exhaustive list:

• Insurance: Whether you need it to satisfy financing requirements or you want to protect the value of your property, getting properly insured is a necessary step in your business startup. Between liability, property, health, workers comp, business interruption and key person insurance, you could be on the hook for a few thousand dollars per year. You don't absolutely need every one of those, however, skipping something like business interruption insurance - which can cover you if you are forced to close in the event of a disaster - can come back to bite you.

• Formation and Occupation: From creating your company structure, (sole proprietorship, LLC, etc.) to applying for your certificate of occupancy, there are a seemingly endless number of I's to dot and T's to cross before you can actually do business with anyone. This includes a resale certificate (unless you'll be creating all your own products or sourcing them independently,) an employer identification number, (to facilitate tax paying and collection,) any other licenses required in your state, and last but not least a seller's permit so you can actually open up shop.

• Utilities: This covers things like electricity, Wi-Fi internet, and even a subscription to a radio service so you can continuously play music throughout your store.

• Promotion: What if you opened a store and nobody came? Promoting your store can involve everything from joining the local chamber of commerce to buying a spot on the local TV station to hiring a social media marketer. You'll need to decide what will bring you the best return on your investment. And, don't forget some fun signage to attract passers-by and inform them about your latest and greatest sale.

• Professional Services: You won't get too far down this road without needing to hire a lawyer and accountant. You can be assured that these and other professionals will cost at least $2,000 and possibly more than $5,000 as you prepare to open your business, plus recurring costs throughout the life of your store.

• In-Store Essentials: This includes not only ensuring that your place is clean every time you open but also things like appointing dressing rooms and waiting areas.

• Inventory: So, what are you going to sell? Where are you going to get your stock? What kind of markup can you expect based on your niche? If you're opening a boutique or specialty shop, your markup will be greater than it will be if you're opening a more general clothing store.

• Grand Opening: When you're finally ready to welcome your first customer, you'll probably feel like you deserve to have a party. Well, that's exactly what your grand opening is - except it's a party for your prospective customers rather than for you. Between ads in local publications, local influencer marketing, and any other promotional activities you engage in, you'll need to allocate a good chunk of your marketing budget for your first year to this auspicious occasion.

There are dozens of moving parts that have to come together for you to successfully open a clothing store. You can expect the whole venture to cost anywhere between 75-$150,000 unless you're starting with a temporary setup. But once you're up and running, there's nothing stopping you from achieving or outright obliterating your business goals.