How to start an online boutique
Let's face it. Starting a new business is hard work. But if you're willing to put in the work, your business will blossom. Some of the steps you'll take will be common to all ecommerce businesses. But, you'll have to make some decisions unique to your ecommerce clothing boutique.
1. Give your online boutique a name and entity type
Your online boutique business needs a name and business structure. You can be a sole proprietor, add a partner, or create a more complex structure. Here are some of the most common business-type options.
- Sole proprietorship - If you're a sole proprietor, you are in charge. But, you're also the person who has to do everything. Setting it up is easy because you don't have to register with the state you're operating in. In this type of business, you report your business income and losses on your personal tax return. It also means that you're responsible for any debts or legal obligations your boutique accrues.
- Limited Liability Company (LLC) - An LLC offers more flexibility as a business entity because it separates any business liabilities from your personal liabilities. You can choose to have an LLC taxed like a corporation or as a pass-through entity.
- Corporation - You have two options when forming a corporation - S-corp or C-corp. As a corporation, your online boutique is a registered business entity and has liability protections. It also has a different ownership and tax structure than LLCs or sole proprietorships. If you think you'll offer stock in the future, then you need to have a corporation.
These decisions should be made with the help of a tax or business attorney's advice to help with the complexities in each structure.
Choosing a Name
Choosing a name for your business is as easy or hard as you make it. A good place to start is your state's online business database to check for name availability. You should also check federal, state, and local trademark listings to make sure your boutique's name or logo doesn't infringe on another company's intellectual property.
It's also helpful to double-check domain names, although you can often find domain names available with a lesser used top-level domain (.com, .net, etc.). Having a good domain name is important because that's the URL your website visitors will use to find your online clothing boutique. If the domain name you want isn't available, you should consider changing the name of your boutique to one that is so your customers won't be confused.
If your business entity is in a format that doesn't need to be registered with the state, you should consider filing a DBA (doing business as) form, so you don't publicly tie your name as a default to your online boutique's name.
2. Creating a complete business plan
Once you've established your name, entity type, and domain name, the next critical step is to create and complete a business plan. A business, even one that is only online, takes an initial investment and a well-thought-out plan to build, grow, and succeed. While the business plan may seem tedious and take a long time, it's worth it to take that time to complete it.
A business plan is a pathway to follow in order to set up your business. It's similar to an itinerary of a group tour to somewhere you've never been before. If you have a well-thought-out plan, and you follow it, then your online boutique has a better chance of success.
Having a business plan isn't just for you. If you seek funding from loans or investors, they'll want to see your business plan before they give you money.
A detailed business plan will literally give you a "to-do list" the minute you are ready to get started.
What do you need in a business plan for an online boutique?
- A company overview and executive summary:
An analysis of the market for your boutique:
- What is your online boutique business?
- Why are you opening an online clothing boutique?
- What will your online fashion boutique sell?
A solid financial plan and reasonable revenue and profit projections:
- What is the current market for boutique items sold online?
- Who is your target audience, demographic, and why should they buy from you?
- What makes your online boutique different from other boutiques?
- How will you position yourself as a unique fashion business?
- How are you planning to earn your money specifically?
- What do you anticipate your costs will be to get started?
- Where will you get funding?
- What is a realistic estimate of your revenue in the first 6 months to a year? What about in 5 years?
How much money does it take to start an online boutique?
Starting an online boutique can't be done for free. Therefore, you need to create financial projections for startup costs and initial operating costs.
How much does it cost to start your own online clothing store?
Compared to traditional brick-and-mortar retail boutiques, an online clothing boutique has lower startup costs. In fact, you could get started with under one thousand dollars. The crucial question is, do you want to?
In order for your boutique to succeed, it helps to have some backup spending money just in case. Most new businesses find that expenses crop up they might not have anticipated.
Costs to consider when starting an online boutique:
- Website: You can't get a domain and build a website for free. At the very least, you will have to pay for your domain name, web hosting, an ecommerce software platform, merchant services, and more to get your website ready for visitors.
- Inventory: You need to have something to sell, and that means ordering inventory. Depending on your products and vendors, you may have to make a minimum purchase or have items in stock before you open your business.
- Shipping: Shipping is a huge piece of your new online boutique. Vendors can ship products to you or dropship to the customer. To achieve a high customer satisfaction rating, you need top-notch shipping. Finding the right partner(s) for shipping is essential to your boutique's success.
- Marketing: How are shoppers going to find your new boutique? You have to invest in marketing and advertising to reach out to your preferred audience. There are numerous ways to market and promote your online boutique that have minimal costs to get started.
- Government: You may need to register your company with the state or local government or require a license to operate.