If you are a new boutique owner or you are thinking about starting a new boutique, this article is a must-read…
Let’s cut through the noise of those Google and YouTube searches and get down to 5 tips that will actually help you start your business off right.
While the boutique industry is glamorous, we want you to be prepared for the not so glamorous times too, so prepare yourself for some real talk. From buy-in groups, to hustle and being original, these top tips can’t be missed in your business!
Tip #1 – Do It Legal
We see so many boutiques that starting looking with some clothes to flip and posting them online. Making sure your business is set up legally from the beginning is crucial. There are a few key ways you need to prepare for this.
- File with the IRS and get your own EIN Number. This will protect you & your SSN.
- Visit with your accountant and decide how you want to set up your business. There are several choices: sole proprietor, Limited Liability Company, or S-Corp.
- File to get your state Sales Tax Permit. Clothing and decor items are taxable goods. You will need to pay and collect sales tax on these items.
- Get a checking and savings account set up for your business to keep your personal and business finances separated. When you collect sales tax, that money will need to go into your savings account. That way it doesn’t get spent before you file taxes.
- Count on 30% of the money you draw for your salary to go towards your Federal Taxes. Make sure you save for this.
Tip #2 – Cheaper Isn’t Always Better
Being the cheapest boutique on the block does not build your business or brand. When you build a business on being the cheapest, it sets you up for failure. You might be tempted to think that you will do more business if your prices are cheaper. That might work for a little while–but I challenge you to look at your margins at the end of the day. Your margin is what you have leftover after your mark-downs. That is what you pay your bills with and reinvest in your company. You aren’t going to have anything left with that business model.
Being a “clothes flipper” does not build loyalty from your customers. It builds bargain shoppers. People that shop at Wal-Mart are just looking for a good deal. When you look at companies that have achieved long-term success, they have established brand identity. Cheaper is not better…building value is best. The ideal price point is where the perceived level of value (better quality, more trendy, can wear a number of ways, can wash more than one time without falling apart!) outweighs the pain of paying that price.
It’s up to you as a boutique owner to educate your customer on what that value is.
If you have been in this business for very long, you might have heard the term keystone pricing. That is where you base your pricing on the wholesale cost. Typically this is a 2.5% markup. But other times with jewelry it is going to be 8-10%! If you buy off-price, you could get up to 15%. The higher…the better! Because it will make up for the losses you have to take when you mark your products down to move them. When you price your products on what they are worth in the marketplace, instead of based on cost you create a better margin for your boutique.
Have you heard about buy-in groups? Stay away, girl! Group buying (sometimes known as pre-sales) is a concept where a boutique owner will say that they are putting in an order and offer to let the group buy at wholesale cost. Facebook is cracking down on this because customers are receiving their products weeks later that is not what was advertised. There is no way for you to do quality control to see what it is that you are ordering, no margin, and it’s a quick way for someone to have a bad experience. There are also wholesale buy-in groups where boutique owners will go in together to buy overseas. We would caution you against this as well. Many times these items are knock-offs and copyright or trademark protected. Just don’t do it!
Tip #3 – Imitation Is NOT A Form Of Flattery
You do you, boo! Whoever said imitation is the most sincere form of flattery was a liar! As a small business owner when you pour your blood, sweat, tears, or your family’s time and someone copies it…that’s not real. When another business takes your business name, photos, designs, or product descriptions–they aren’t interested in building a long-term brand. They are clothes flippers. That being said, it’s important when we are inspired by someone to think about how we can be inspired but do something that is still unique and completely our own.
Tip #4 – Go To A Market
It’s really easy as a new boutique owner to get on Fashion-Go or online wholesale websites. But it is important to have the market experience. Pick one that fits you and go! Market is the only place that you can touch and feel products. It helps you to understand this business at a whole. The market experience also allows you to negotiate more than you can online and build a relationship with companies and reps that you want to do business with. The wholesale/retail business is truly a partnership. If you are interested in building a long-term brand you will seek out wholesale partnerships that will help you tell your style story.
Tip #5 -Consistency Is Key
It is really easy as a new business owner to compare your beginning with someone else’s middle and to think you are behind. You just started in this business and you think that you should be where so-and-so is. Because it looks so easy for them. But social media is all just smoke and mirrors, isn’t it? It’s easy to set someone else up on pedestal if you don’t understand what their numbers are and what’s going on daily behind the scenes.
So just remember to set goals for yourself. As you grow, you will continue to hit milestone after milestone. But if you don’t know what your goals are–you can’t celebrate it. It’s important to enjoy the journey along the way. Success doesn’t happen overnight. It happens with people who are consistent & persistent. See the long term vision and believe in it! What consistent action can you take on a daily basis?
The Boutique Hub and your business and your business as a whole is meant for “community over competition”. It’s so easy to get into business and worry about what everyone else is doing. But remember that business is better together. It can be really lonely at the top. Once you reach your goals and you don’t have anyone standing next to you then what was the point? Who can you bring along with you to celebrate every step of the way?
If you’re a member of The Boutique Hub, I’m sure you’ve already found a few Boutique Besties. If you’re not, don’t be afraid to seek out other boutique owners and find ways that you can collaborate together. Don’t be afraid of your competition, embrace it!
Be proud of yourself that you are on this journey and you are doing something that so many people fear; you are going out on a limb, you’re taking a risk, and you’re building a business to support your future.
Remember to be a brand builder and not a clothes flipper!
All the tools and training you need at www.theboutiquehub.com