How to Start a Clothing Store

Startup Costs

Yes, opening an apparel store will cost you, and Oklahoma State University merchandising professor Nancy Stanforth, who once owned a clothing store, recommends a bankroll of as much as $250,000. But before your heart stops, read on. You can do it for less.

"You may not have $250,000, but my advice is to not even think about opening a store until you've got the right financing," says Margie P., a successful Redmond, Washington, store owner who sells women's, men's and children's clothing.

Like several other apparel 'lifers' we interviewed for this guide, Margie, whose store has been around for 23 years, first opened her doors in 1976 with her eyes wide shut, so to speak. Eager to get out of the real estate business and 'spending my Sunday afternoons sitting in other people's homes,' she opened a clothing store in the same downtown building where her husband had a restaurant. Margie got a $30,000 loan and was off and running.

We know this fly-by-the-seat-of-your-pants attitude--as well as the notion that $30K is enough to start a clothing store--goes against our principle of good business acumen, especially today.

Minimally most entrepreneurs interviewed for this business guide wouldn't dream of opening a store with less than $50,000. Stanforth recommends $150,000 to get a store up and running, while Debbie Allen, the owner of a Scottsdale, Arizona, women's clothing store and industry speaker, says you should start out with $200,000 for a 1,200- to 1,500-square-foot store--the average in this business.

The point is, you'll find many conflicting opinions when it comes to the amount of cash you should have to open an apparel store, but we won't get into any trouble by saying the more money you have, the better off you'll be. (Isn't that true in any business?) As Allen says, "The more undercapitalized you are, the longer it will take for you to turn a profit." Now that about says it all.

An Easy Rule
If reading numbers in columns makes you dizzy, we'll spell it out for you. "People get into trouble because they don't know how much their rent should be in ratio to the amount of sales their store is generating," says Dan Paul, an industry consultant with retail consulting firm, RMSA. "The fact is that rent should be kept between 5 and 6 percent of your total sales, so at the top end, you can figure that you'll need $18,000 a year for rent. That means in order to keep rent at 6 percent, your store will have to generate $300,000 in annual sales."

Start Your Own Clothing Store and More, 3E

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