Small business operation requires strong planning skills and time to research your product. Retail sales present a significant risk, particularly retail clothing stores, where customers demand a large inventory of changing seasonal fashions. Opening a clothing store involves retail know-how, as well as garment industry knowledge. The cash investment required to open a business depends on the type of clothing offered, the shop's geographic location and the targeted customer base.
High-end boutiques require major inventory investments and an exclusive location. Retail prices include an amount to cover employee costs and store expenses, and must also balance the losses incurred by clothing items that don't sell in any given fashion season. Customers look for various sizes and colors. Boutique owners must cover initial inventory costs, or attract investors as partners.
High-End Designer Store
Fashion clothing has traditional seasons, but the modern fashion industry now blurs many of these traditions. This means your store must carry designs for all seasons throughout the year, adding cost to your inventory. Winter shoppers also look for cruise and vacation wear for travel over the holidays. Newness is the key to attracting clothing customers and buyers look for changes in fashion, according to designer Michael Kors, particularly in high-end clothing stores. Designer shoppers also require a desirable location, increasing your overhead for rent. A successful store has fashionable interior design, requiring cash for a designer or time away from store sales to do the design and interior installation yourself.
Second-Hand Clothing Store
Second-hand clothing stores require less initial cost for inventory, but the store overhead and marketing costs remain the same. Budget costs also include clothing buyers, since you probably won't have the time for hitting yard and estate sales yourself to acquire your inventory. Second-hand clothing stores typically require less investment for rent and interior decor demands, compared with designer and boutique establishments that require high-end fixtures and window displays.
Volume Retail Outlet and Clothing Liquidators
Opening a clothing store that sells liquidated fashions involves a large investment for inventory, but can also mean bargain prices for rent in an industrial setting or commercial strip mall. Even with clothing purchased by weight at several dollars for a pound of inventory, customers like to see a change in clothing selections and this adds cost for a start-up store.
Variable Costs and Emergency Planning
Establishing a reserve fund, regardless of the clothing offered in your store, allows your business some breathing room when clothing prices increase due to unforeseen costs. Flooding in Australia and a cold snap in China, for example, destroyed cotton crops in 2010, increasing the price of cotton clothing in summer 2011. Your clothing store must have flexible capital and a reserve fund to respond to market changes. The New York State Small Business Development Center recommends opening your business with a minimum of a year in cash reserves.