Let me guess…
You’ve got a pretty keen eye for fashion, and you’ve always wanted to start your own business.
It seems like everyone is doing it nowadays:
Starting their own online business and making bank!
So here you are, in the beginning stages of starting your own online fashion boutique.
But you’ve got questions.
How much does it cost to start an online boutique?
How do you start an online boutique legally?
Is an online boutique even profitable?
In this article I’m going to break down all of this, as well as give you an honest look at the realistic finances required to start online boutiques of various sizes.
Why should you listen to me?
Well for starters, I’ve successfully started multiple six figure online businesses ranging from Amazon FBA to Shopify Dropshipping.
I'm Ippei, and I actually specialize in local lead gen (more on that later): the business model that took me from 2k a month to 36k a month in two years.
So let’s get right down to the nitty gritty.
How to Start an Online Boutique in 2021
Start Online Boutique Biz Summary:
Starting an online boutique can be a fun new business endeavor, but that doesn’t make it easy! To start an online boutique, you will need to prepare for wholesale inventory costs, order fulfillment, time investment, and the competitive online shopping market.
Total Cost to Start Up
Let's start with a bird's eye view of the numbers we're looking at here.
If you're like me, then you want to know the bottom line, and then fill in the details.
Here are the approximate total start up costs for small scale to large scale online boutique in 2021:
Cost Break Down
Here is a breakdown of the expenses incurred in starting your online boutique business.
Average:
Low:
High:
Professional Fees:
$5,500
$1,000
$10,000
Promotional:
$26,000
$2,000
$50,000
Start Up Inventory
$275,000
$50,000
$500,000
Operating Expenses
$60,000
$20,000
$300,000
Cost of Equipment (Tech, Inventory Tracking, etc.)
$13,750
$6,000
$45,000
Total:
$380,250
$79,000
$905,000
Average Profit of Online Boutique Businesses
Start up inventory costs and operating expenses aside...
You have to know what the average annual revenue for an online boutique is.
And what your profit margins are going to look like.
Average:
Low:
High:
Average Annual Revenue (Minus Start Up Costs):
$262,500
$25,000
$500,000
Average Monthly Revenue:
$21,875
$2,083
$41,666
Average Online Boutique Profit Margin:
46.5%
46.5%
46.5%
Ongoing Costs (Annual):
In addition to knowing your startup costs and profit margins, you can't forget about ongoing costs.
There will be unavoidable business expenses that you will need to budget for annually.
Although your costs will probably be much lower than with a retail boutique...
Don't overlook these details in your planning process.
Average:
Low:
High:
Advertisting (10%)
$26,250
$2,500
$50,000
Employees (20%)
$52,500
$5,000
$100,000
Payment Processing Fees (3%)
$7,875
$750
$15,000
Total Ongoing Costs:
$86,625
$8,250
$165,000
Take Home:
At the end of the day...
What you're probably really wanting to know is how much you're actually going to have in take home pay.
Here it is:
Average:
Low:
High:
Average Annual Profit:
$175,875
$16,750
$335,000
Average Monthly Profit:
$14,656.25
$1,395.83
$27,916.67
Now that you've had a chance to look over the hard facts and numbers of an online boutique business...
Let's take a look at the practical, hands-on steps that it will take to get there.
Here is my seven step, quick-start checklist for starting your online boutique!
Quick Start Checklist:
1. Write a Business Plan
I know, I know.
This is probably the most overused business tip in history.
Or is it?
Starting a business plan is an easily overlooked step in an entrepreneurs journey.
You’re probably thinking that it seems like something that will take a lot of time, and is probably not that necessary.
Plus you might be tempted to believe that you don’t need a business plan at all if you aren’t planning to pursue investors, right?
Wrong.
A well laid business plan can make or break the success of your business.
To clarify, the sole purpose of a business plan is to clearly outline your goals, the steps it takes to reach those goals, and the facts and logistics that surround all of this.
If you are going to need investors either now or in the future, a business plan will be a must have.
But even if you’re going it alone for the foreseeable future, don’t neglect this step.
It’s easy to think you know where you’re headed, but having goals for your business isn’t enough.
You need a clearly outlined strategy for reaching those goals.
Your business plan will be this structure.
A good business plan will comprise at least five key elements:
Five Element of a Great Business Plan:
2. Get Your Online Boutique Legal
Too many people make the mistake of launching into business without giving a second thought towards getting legal.
But hopefully that’s not you.
If you’re wondering how to start an online boutique legally, then you’re in the right spot.
It’s actually pretty simple.
You’ll need to make sure that you’ve handled three main things:
Getting an EIN number is very simple.
You’ll just need to apply online, and the good news is that this step is actually free!
Next you’ll need to choose the correct business entity for your online boutique.
You will automatically fall into the category of a sole proprietorship unless you register for an LLC or S Corp.
For small businesses, this is usually fine…
But the downside is that the legal protections for a Sole P aren’t that great.
Which leaves an LLC or an S Corp.
Most likely, an LLC is going to be the most realistic option between the two as an S Corp is going to be much harder to obtain.
Finally, you’ll need to register for a sales tax permit.
This is extremely imprtant for anyone starting an online boutique legally, since you will be selling products.
Anyone selling a product is legally required to collect sales tax.
3. Pick Your Niche and Business Model
If you haven’t already thought this far, it’s time to zero in on the niche for your online boutique, and pick a business model.
There are so many different creative niches for starting your own clothing boutique!
The niche that you land on will also determine the direction you go for establishing your business model.
For starting up an online boutique, you are really looking at three main business models.
If you choose to make your product, there are a few things you’ll need to think about.
First, if you’re yet another person trying to turn their 2020 quarantine hobby of handmade clay earrings into a six figure income…
You might want to think again.
Don’t assume that your product is unique, or that there is a high demand, simply because it’s handmade.
Secondly, making your product means that you will be a slave to your own time.
There are only so many hours in a day to make clay earrings, you know?
Which means that your profit will be greatly limited.
Now if you are wanting to start an online boutique with no money…
You also might want to think again.
But drop shipping is the closest you’re going to get.
The dropshipping model requires the least amount of initial capital, because products aren’t actually kept in stock.
When an order comes in, that order is handed over to a third party supplier who then ships out the order to your customer.
The downside to this model is that the profit margins are lower, and you will have much less control over your final product and customer satisfaction.
Your final (and in my opinion best) option is wholesale.
When you set up your online boutique with the wholesale model, you will purchase all of your inventory at a discounted wholesale price from the suppliers of your choice…
And then you mark up that price to create your final retail price based on realistic profit margins that will work for you.
This model allows you to have the most control over the quality of your product, and over your maximum profit potential.
Purchasing wholesale also allows you to carefully curate a variety of items that fit your brand.
4. Hire a Photographer
This tip might come at a surprise to you, but it shouldn’t.
When you are running an online clothing boutique that has no retail locations, pictures are everything!
Your customers cannot walk into your store and touch the garments or try them on to decide if they want to buy an item.
Which means that the pictures on your website are your greatest selling point.
They are also a huge reflection on the brand you are establishing.
Don’t rely on stock photos, mannequins, or your own digital camera to do the trick.
This isn’t the place to skimp.
Hire yourself a professional photographer, round up some models (they don’t have to be pro’s!), and get yourself some great apparel photos.
Your customer should be able to look through your website and know exactly what they will be getting because of the detailed and artful product photos!
Prepare for this to be an ongoing expense…
With each new release of products, you will want to have fresh photos taken of each new piece that you add to your boutique!
5. Set Up Your Website/Online Storefront
So obviously, if you’re wanting to know the requirements for opening an online boutique…
Having a website and online store is probably (hopefully) a no brainer.
But where should you start?
Although your website should be beautiful and well designed…
As well as being a great reflection on your brand…
The most important aspect of running an online boutique is that your website has a functional and user friendly storefront.
Fortunately, there are a ton of e-commerce platforms out there now that have seamlessly blended aesthetics with functionality.
You just need to go over the specs and decide which ecommerce platform is right for you.
Some of the big ones are Shopify, Wix, and Squarespace.
All three of these platforms offer beautiful templates for online fashion boutiques, that you can easily customize to your brand.
If you’re struggling to narrow it down, here is a great article on the top 8 ecommerce platforms: https://www.websitebuilderexpert.com/ecommerce-website-builders/platforms/
6. Market Your New Brand
When you are running your own business, you’re going to have to be a jack of all trades.
Which means that you are going to have to try your hand at many different skill sets…
Including online marketing.
It’s not enough to develop a brand for your fashion boutique and create a website if no one knows that it exists!
You’re going to have to put in the hard work to market your business just like anyone else.
I have three main tips for marketing your online clothing boutique yourself.
When it comes to social media, less can actually be more.
You don’t need to have a presence on every social media platform out there.
But you do need to take a careful evaluation of which platforms your target clientele are using, and leverage those to your advantage.
To start with, pick 2-3 platforms (such as Instagram, Facebook, and Pinterest) and focus on creating a really strong presence on these accounts.
Stay active, and engage with your audience frequently for maximum results.
Considering that email marketing started in the 1970’s…
It can feel extremely dated, and maybe even pointless.
But don’t be fooled.
Email marketing, when used correctly, can be one of the most effective marketing strategies available to you.
Start building an email list, and update your subscribers with news about things like new product launches and sales.
Reaching out to social media “influencers” can also be an incredible way to get your online boutique in front of a fresh set of eyes.
These so called influencers are rightly named.
They have a large online audience that they hold sway over.
Consider finding several social media influencers that fit with the aesthetic of your brand, and reach out to them.
You can offer to send them free items from your boutique in exchange for them posting and sharing about your business, or you even come to a paid agreement.
If they love your clothes, and share it with their followers…
Chances are thousands of people who are in your ideal clientele will now be rushing to your online shop to snag some of these “must have” items for themselves!
But a strong marketing strategy requires more than just a website, email lists, and brand deals, though...
Ultimately, you will have to be prepared with a lead generation strategy that will attract new customers to your business on a consistent basis.
Fortunately we can teach how to do exactly that through our local lead generation coaching program and online course.
7. Work On the Back End of Your Business
Now that you’ve got your online fashion boutique up and running, and you’re working on your marketing game…
It’s time to turn your attention to the back end of your business.
It can be so easy to get excited as sales start pouring in, but if you don’t have the systems in place to handle these sales, your business will suffer.
Make sure you have either hired an accountant, or at least set up a solid accounting software for your business.
A great go-to accounting software is Quickbooks.
While you can probably start an online boutique from home, if sales are coming in left and right…
You may not be able to keep up with inventory, purchasing, and fulfillment on your own.
Which means that you’re eventually going to need to hire people.
Having the sales demand necessary to hire employees is a great problem to have, but make sure you’re ready for them before you need them!
Take the time early on to set up sustainable systems and standard operating procedures for your business.
Having these systems will help you to work towards a return on your investment strategically, and grow as a business in a sustainable way.
Pros and Cons
of starting an online boutique
Pros
For many aspiring entrepreneurs, one of the greatest draws to launching a business is the freedom to set your own schedule. There’s no boss to dictate your day, or look over your shoulder… You are in control of your time. This can be both freeing, and stressful. But for most small business owners, it is one of the most gratifying aspects of being self employed.
If you’ve ever wanted to start a fashion based business, you are probably painfully aware of how expensive it is to open a retail boutique. The overhead costs are exorbitant, especially when you’ve just had to sink a bunch of money into your initial inventory stock. But with an online boutique, you are able to eliminate many of these financial stressors. Your retail space will be your website… And trust me, this will cost you far less than opening a physical shop.
The beauty of running your own boutique is that you have an opportunity to create and hone your very own fashion brand. Even if you aren’t designing the clothes yourself yet, you can selectively choose the right pieces for the brand you are building. It’s a lot of fun, and an extremely satisfying creative process!
This probably doesn’t come as much of a surprise, but the fashion industry is a fast growing one. It’s called “fast fashion” for a reason, after all. So when you open an online boutique, you are going to be tapping into the profits of this lucrative industry.
Cons
Even if you sidestep the costs of a brick and mortar boutique, you will still be facing the costs of your initial inventory. Purchasing your initial stock of clothing pieces from your distributor is expensive, but you can’t afford to have only 2-3 pieces of each item when you launch your online shop.
This point taps into the above statement… It requires a level of financial risk to purchase your initial inventory. Hopefully your marketing game plan is strong, and there is interest in your online boutique even before your shop goes live… But if not, you could find yourself massively in debt with no return on investment in sight.
Another fatal flaw of the fashion industry is that it is heavily saturated. And this is true for online boutiques as well. Just take a look at Instagram! The platform is flooded with small online boutiques. It’s easy to get lost in the crowd.
If you are starting your online boutique as a one woman or one man enterprise… You will need to brace yourself for the pressure of order fulfillment. Obviously, if you have 50-100 orders in the first week of your shop launch, you’ll be ecstatic! But that also means that you are going to be personally responsible for fulfilling all of those orders. Your life will consist of packing, labeling, and shipping.
An Online Boutique Can Work, but Lead Gen is Better, Here's Why
Most likely, if you’re reading this article right now…
You’re excited and fascinated by the idea of making money online and possibly even earning the coveted title of “entrepreneur”.
Well I’m here to tell you that this can be more than just an idea!
Becoming a full time online entrepreneur is very possible, and I know because I’ve done it.
I used my number one favorite online business model to grow my income to 52k a month in less than 5 years.
So what is that business model you ask?
It’s lead generation.
While you’re more than welcome to try your hand at starting your own online boutique:
Pouring hours of your time into vetting wholesale clothing vendors…
Updating your website with new inventory…
Constantly packaging and shipping out new orders…
I invite you to take a look at a business model that is far more sustainable, and has a much faster ROI.
When you combine the extremely high demand in every industry for small businesses to generate new leads with the power of Google and strategic local SEO…
You get the powerhouse business model of local lead gen.
This is my tried and true method for online business, and I promise that it won’t disappoint.
So if you're ready to start your local lead generation journey today, click here to learn more about how we can help you get started.
