Running a clothing store comes with its own set of challenges. Logistical, commercial, operational, and financial challenges must be resolved. To build a profitable business over the long term, it is important to have a well-structured business plan at your disposal. A business plan for a ready-to-wear store is more than just a document.
The business plan is the synthesis of all the parameters that will impact your clothing store’s success.
Also, it constitutes effective support, allowing you to obtain financing from investors, a credit structure, or a bank.
What should be found in the business plan of a clothing store?
How much revenue can your ready-to-wear store generate?
And how to budget for a clothing store?
How to prove to a financial partner that his ready-to-wear store can become profitable?
What should the financial part of a clothing store business plan contain?
We will deal with all these questions later in the article.
Finally, our expert team constantly monitors the clothing store market. His working hours can be summarized in the complete package for a ready-to-wear boutique.
WRITING A BUSINESS PLAN FOR A CLOTHING STORE
SHOULD I MAKE A BUSINESS PLAN BEFORE OPENING A CLOTHING STORE?
Yes, establishing a business plan before opening your ready-to-wear store will allow you to:
– analyze competing ready-to-wear stores
– find competitive advantages for your clothing store
– identify and target the needs of your market segments
– build a convincing development plan
– develop a marketing strategy related to the textile industry
– identify the constraints posed by the management of a clothing store
– prove to a financial partner that your project will generate profits
– study the entire clothing store industry
Our business plan model for clothing stores achieves these goals.
HOW IS A CLOTHING STORE BUSINESS PLAN STRUCTURED?
Here are the five parts that we find in our business plan for a ready-to-wear store :
– the “Market Opportunity” part will be used to present the market in a global way
– the “Presentation of the Project” part, to mention the project in detail
– the “Market Study” part allows you to list competitors, market segments, competitive advantages, etc.
– the “Strategy” part will be used to roll out a development plan over three years
– the “Finance” part, for the financial analysis of the clothing store
WHAT ELEMENTS SHOULD BE INCLUDED IN THE BUSINESS PLAN OF YOUR READY-TO-WEAR STORE?
To make a successful business plan for your clothing store, here is what needs to be done:
– Demonstrate that the break-even point can be reached quickly
– Outline a comprehensive financial strategy
– Prove that your clothing store has competitive advantages
– Show how you go attract your first customers
– present a long-term plan to continue to grow sales
WHAT IS THE BUSINESS MODEL OF A CLOTHING STORE?
The business or economic model of a clothing store is the sale of textile pieces via a physical store.
A clothing store can make clothes or resell the textile parts of one or more suppliers. Sometimes, he buys inventory, which he resells with a profit margin. In others, he does not buy stock but earns commissions on each garment sold.
Today, more and more physical stores are also choosing to develop an e-commerce channel to sell clothes there.
Our business plan for a clothing store contains a Business Model Canvas which presents the economic model of a ready-to-wear store.
RULES FOR OPENING A CLOTHING STORE
First, you should know that no diploma is required to open a clothing store. However, it is advisable to benefit from commercial or specialized training in clothing.
Also, there is a regulatory framework around opening a clothing store.
First, it is mandatory to follow ERPs’ safety and accessibility standards (Establishments Receiving the Public). To do this, it is necessary to set up evacuation systems and ensure the proper functioning of emergency exits, fire extinguishers, alarms, and the fire safety system. In addition, people with disabilities and reduced mobility must have easy access to your establishment.
HOW TO ESTIMATE THE INCOME OF YOUR CLOTHING STORE?
What turnover for a clothing store?
Embarking on a project to create a ready-to-wear boutique without knowing the answer to this question is not an option. You must indeed present a realistic and pragmatic forecast of turnover in your business plan for your clothing store.
Next, we want to know how many customers will enter your store and buy clothes there. What is this number? Adopt a conservative approach for the first few months: promoting your clothing store takes time.
However, this number will increase in the following months (thanks, in particular, to your efforts in marketing and communication). We have often seen managers increase their clothing store’s turnover by 30-60% between year one and year 2.
In your clothing store’s business plan, you can display ambitious revenue projections. However, we urge our readers to be cautious: overly aggressive financial forecasts are difficult to justify to a banker.
For an accurate estimate of a clothing store’s revenue, you can use our financial model for a ready-to-wear store.
WHAT IS THE ESTIMATED BUDGET FOR OPENING A CLOTHING STORE?
On average, opening a clothing store costs between 100,000 and 180,000 euros.
The start-up budget varies according to several factors:
– the size of the store
– the choice of location
– the renovation work
– the method of acquiring the premises for your store (renting or buying)
Finally, the business model is important: a franchised store will have to pay franchise access fees, for example (which is not the case for an independent).
To obtain the complete and personalized forecast budget of your clothing store, you can rely on our financial model for a clothing store.
WHAT ARE THE INVESTMENTS TO CREATE A READY-TO-WEAR STORE?
The major projected expenses when you open a clothing store are:
– the acquisition of the premises (purchase or rental of real estate)
– all the renovation work to make it a clothing store
– small furniture and store equipment
– the first salaries for the team working in the store
– the drafting of the articles of association, court fees, accountant’s fees
– a budget for advertising and communication around the opening of the store
Our financial model suitable for a clothing store contains a complete and detailed list of income statement expenses.
You can make your modifications and thus obtain your list of investments necessary for creating your ready-to-wear store.
WHAT ARE THE RECURRING COSTS OF A CLOTHING STORE?
The most important current expenses when managing a clothing store are:
– the rotation of the stock of clothes offered for sale
– the expenses related to the occupation of the premises
– the staff costs
– the taxes, contributions, and taxes
– the traditional administrative expenses
The financial forecast for a clothing store contains the complete list of the current expenses of a clothing store’s profit and loss account. In this model, you can make your modifications and thus obtain your list of common loads.
OPENING A CLOTHING STORE: IS IT PROFITABLE?
Your clothing store is profitable when turnover is sufficient to cover all current expenses. You are then said to have reached the break-even point.
The break-even point will largely depend on your ability to earn profit margins on the clothes sold. So how to estimate the cost price and gross margin per garment sold?
A good financial forecast, like the one we have built, will allow you to make several assumptions and find a selling price that will allow you to easily reach your break-even point.
You can use our financial model adapted for a clothing store to know your projected turnover, expenses, and break-even point.
WHAT FINANCIAL TABLES AND INDICATORS TO INCLUDE IN THE BUSINESS PLAN OF A CLOTHING STORE?
To present a complete analysis of the projected finances of your clothing store, here are the indicators that must be found:
– a projected income statement
– a financing plan
– the list of investments to start
– graphs and financial ratios
– income assumptions
– a provisional balance sheet
– a provisional cash budget
– performance indicators (intermediate management balances)
You will find all these elements in our financial forecast for a clothing store.
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