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Do you want to start a clothing retail business?
Do you want to start a clothing retail business? Clothing retail is a business in which you buy clothes directly from manufacturers and resell them to your customers. The business is getting popular as there is a demand for diverse types of clothing in different areas.
The business is profitable as well as easy to run because you don’t have to perform the manufacturing process yourself. You just have to purchase stitched or unstitched fabric to sell it in your own store.
For starting a clothing retail, the first thing you need to do is making a business plan for retail clothing. If you don’t know how to do a business plan for a retail clothing store, you can take help from here.
In this blog, we are providing all the business details of a clothing retail startup, Amy’s Closet.
Executive Summary
2.1 The Business
Amy’s Closet will be registered and licensed clothing retail operating in Los Angeles. The clothing store business plans will procure and resell stitched and unstitched fabric from American, Hispanic, Latin American, and Mexican brands and fashion designers.
In the initial phase, the company will purchase the clothes from the following manufacturers: Richemont, Armani, Chanel, Hermes, and Gucci. As well as from Hispanic, Mexican and Latino cultural brands such as Arezzo, La Martina, Carla Fernández, and Pineda Covalin.
2.2 Management of Clothing Retail Store
The clothing store business plans is all about management and negotiations. Before exploring how to set up a retail clothing store you should ensure that you will be able to manage it appropriately. You will need to establish contact with clothing manufactures to buy their products regularly and selling them in your own store.
In this sample of apparel startup clothing store business plans for startup business, we’ll be providing all details of Amy’s Closet. If you need help regarding how to start an online clothing retail business or in-store clothing retail business, you can have it from here.
2.3 Customers of Clothing Retail Store
The customers of Amy’s Closet will be the local Hispanic and Latin community, local Anglo Americans, and others.
2.4 Business Target
We aim to become the number one choice for Los Angeles people whenever they would have to buy some apparel. Our profitability goals for the three years of our launch are demonstrated in this table.
Company Summary
3.1 Company Owner
Amy will be the owner of Amy’s Closet. Amy has done an MBA from the University of Southern California. She has remained a bright student and an excellent collaborator throughout her academic years. Moreover, she also holds a one-year working experience as a Managing Director at a local restaurant.
3.2 Why the Clothing Retail is being started
Amy always wished to become an entrepreneur due to the exclusive benefits one gets on entering the business world. She procured her degree in the relevant field to have proper knowledge of administering a business solely.
Due to the COVID situation, Amy was previously thinking of starting a clothing store business plans online. However, eventually, as the situation improved she decided to open up a physical store whether that required her to delay the launch.
3.3 How the Clothing Retail will be started
Step1: Make retail clothing store business plan
To ensure smooth and successful execution of your business’ operation, you will be required to first create a apparel startup business plan. From this example of clothing retail business plan you can learn how an effective sample business plan for a retail clothing store can be written.
Step2: Define the brand
The next step is to define your identity. You have to set and promote your business values, services, and exclusive features so that your customers can learn who you are.
Step3: Recruit staff/ procure equipment
After acquiring the license and permissions, Amy will start procuring the required equipment for her store. Meanwhile, she’ll also hire the staff to manage her business operations.
Step4: Promote/ market/ establish web presence
To reach out to a wider audience, Amy will promote her services and competitive advantages through local magazines. Moreover, she’ll also establish a strong online presence to strengthen her association with the public.
| Start-up Expenses | |
| Legal | $253,000 |
| Consultants | $0 |
| Insurance | $34,000 |
| Rent | $30,000 |
| Research and Development | $26,000 |
| Expensed Equipment | $58,000 |
| Signs | $4,200 |
| TOTAL START-UP EXPENSES | $405,200 |
| Start-up Assets | $320,000 |
| Cash Required | $340,000 |
| Start-up Inventory | $48,000 |
| Other Current Assets | $216,000 |
| Long-term Assets | $230,000 |
| TOTAL ASSETS | $1,154,000 |
| Total Requirements | $1,559,200 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $405,200 |
| Start-up Assets to Fund | $1,154,000 |
| TOTAL FUNDING REQUIRED | $1,559,200 |
| Assets | |
| Non-cash Assets from Start-up | $1,522,000 |
| Cash Requirements from Start-up | $365,000 |
| Additional Cash Raised | $55,000 |
| Cash Balance on Starting Date | $34,000 |
| TOTAL ASSETS | $1,976,000 |
| Liabilities and Capital | |
| Liabilities | $30,000 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $47,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $77,000 |
| Capital | |
| Planned Investment | $1,559,200 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,559,200 |
| Loss at Start-up (Start-up Expenses) | $339,800 |
| TOTAL CAPITAL | $1,899,000 |
| TOTAL CAPITAL AND LIABILITIES | $1,976,000 |
| Total Funding | $1,559,200 |
Services
Owning a retail clothing store business plans allows you the privilege to take on any type of services you like. In this retail clothing business plan template we are listing the services Amy decided to offer to different communities living in Los Angeles.
- Hispanic and Latin Apparels: Our primary service will be providing trendy and fashionable clothes for the Hispanic and Latin communities. They will mainly include their cultural wear, tunics, and mantles.
- Mexican Clothing: We’ll provide nearly all types of clothes that are liked by Mexican people. These services will comprise the following wearables: sombrero, poncho, sarape, guayabera, charro suit, and baja jacket.
- Local Clothing and Fashion: We’ll provide all types of formal and casual wear that are liked by local white and black Americans. They will include denim, jeans, shirts, sweaters, and popular party wears.
- Accessories: Lastly, we’ll offer a large collection of jewelry, handbag, clutches, watches, socks, belts, hair accessories, and shawls.
Marketing Analysis of Clothing Retail Store
Marketing analysis is a necessity before opening a retail clothing store. There is no purpose of starting a retail clothing business if you don’t know
- The fashion and products that might interest your customers
- The products already provided by your competitors
- The vacant opportunities i.e. the in-demand services that no one has provided yet
Amy did great research on the population, ethnic groups, and clothing preferences of the people of Los Angeles. She studied market trends of various clothing-related products. Moreover, she also divided the population into distinct groups to study their interests.
Note
In this clothing retail sample clothing store business plans you can see the accurate market analysis done by her. If you are looking for how to write a business plan for a clothing store you can have help from here.
5.1 Market Trends
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According to IBISWorld, there are more than 50k women’s clothing stores operating throughout the United States. Combined, they hold a market size of $37 billion. It’s not that women are crazy about clothes, men’s clothing stores are also earning a great deal in the U.S. The same source states that more than 10k businesses based on selling just men’s clothes are running successfully – accounting for a market size of $7 billion.
Well, it may not be wrong that you’ll have to face severe competition if you open clothing retail. But that can be handled if you come up with exclusive services that no one else is offering.
5.2 Marketing Segmentation
Considering the huge demand for Mexican, Hispanic, and Latin dresses in her locality, Amy divided her customers into the following three groups.
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Local Hispanic & Latin Community
In Los Angeles, 47.5% population comprises Hispanic and Latin ethnic groups. However, there is hardly a store that provides them their favorite apparel.
As Amy’s Closet, we see this group as our primary customers because we’ll be providing a large collection of products and clothes that would interest them. Our offering for them will include stitched casual and formal dresses according to their culture.
5.2.2 Local White & Anglo Americans
Our second group of target customers will comprise White and European Americans. For them, we will offer causal dresses as their daily wear and formal dresses as their office wears. Moreover, we’ll also offer a collection of party dresses.
5.2.3 Others
The last group of our target customers consists of all ethnic groups other than those catered for already. They will able to find every type of clothes and fashion at us including Mexican wears. Moreover, they are expected to be a significant buyer of our accessories.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Local Hispanic & Latin Community | 44% | 48,000 | 49,000 | 51,000 | 53,000 | 55,000 | 10.00% |
| Local White & Anglo Americans | 42% | 43,000 | 46,000 | 47,000 | 49,000 | 51,000 | 10.00% |
| Others | 14% | 16,000 | 18,000 | 20,000 | 22,000 | 23,000 | 11.00% |
| Total | 100% | 107,000 | 113,000 | 118,000 | 124,000 | 129,000 | 10% |
5.3 Business Target
The business targets of Amy’s Closet are as follows:
- To earn a profit margin of $20 per month by the end of the third year
- To achieve a net ranking of above 4.7 on our website
- To achieve a Net Promoter Score above 60 within three years of our launch
- To maintain a customer return rate of 75% throughout our service years
- To maintain a CSAT score of above 85%
5.4 Product Pricing
Though we are operating in an almost monopolistic environment, still we have kept our prices reasonable.
Great service
Great service. Good turnaround time and quality work. Thanks!
Marketing Strategy
Sales strategy is the plan developed to promote and market your clothing store business plans. The marketing plan for retail clothing company should be made with great consideration and research. As it is actually the factor that brings your customers to you for the first time. In this sample business proposal for an online clothing retail store, you can see the sales strategy developed for Amy’s Closet.
6.1 Competitive Analysis
Our biggest competitive advantage lies in our products. Only we in the entire city are offering clothes exclusively from Hispanic, Latin, and Mexican culture. Secondly, we obtain our products from top-class fashion designers. So, the rich community around us would be able to find the best clothes for them. And lastly, we have spent a lot on our interior and exterior décor. Through our impressive display, we expect to get more customers and visitors.
6.2 Sales Strategy
- We will advertise our services and products through social media, Google Local ads, and local newspapers
- We will offer a 30% discount on all of our services for the first month of the launch
- We will organize a cross-cultural event on the day of our launch to let people know about us
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Hispanic and Latin Apparels | 41,000 | 43,460 | 46,068 |
| Mexican Clothing | 30,000 | 31,800 | 33,708 |
| Local Clothing and Fashion | 38,000 | 40,280 | 42,697 |
| Accessories | 17,000 | 18,020 | 19,101 |
| TOTAL UNIT SALES | 126,000 | 133,560 | 141,574 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Hispanic and Latin Apparels | $40.00 | $46.40 | $53.82 |
| Mexican Clothing | $36.00 | $41.76 | $48.44 |
| Local Clothing and Fashion | $42.00 | $48.72 | $56.52 |
| Accessories | $32.00 | $37.12 | $43.06 |
| Sales | |||
| Hispanic and Latin Apparels | $1,640,000.00 | $2,016,544.00 | $2,479,542.50 |
| Mexican Clothing | $1,080,000.00 | $1,327,968.00 | $1,632,869.45 |
| Local Clothing and Fashion | $1,596,000.00 | $1,962,441.60 | $2,413,018.19 |
| Accessories | $544,000.00 | $668,902.40 | $822,482.39 |
| TOTAL SALES | $4,860,000.00 | $5,975,856.00 | $7,347,912.54 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Hispanic and Latin Apparels | $37.00 | $42.00 | $48.00 |
| Mexican Clothing | $34.00 | $38.00 | $44.00 |
| Local Clothing and Fashion | $39.00 | $45.00 | $51.00 |
| Accessories | $29.00 | $33.00 | $39.00 |
| Direct Cost of Sales | |||
| Hispanic and Latin Apparels | $1,517,000.00 | $1,825,320.00 | $2,211,244.80 |
| Mexican Clothing | $1,020,000.00 | $1,208,400.00 | $1,483,152.00 |
| Local Clothing and Fashion | $1,482,000.00 | $1,812,600.00 | $2,177,536.80 |
| Accessories | $493,000.00 | $594,660.00 | $744,946.80 |
| Subtotal Direct Cost of Sales | $4,512,000.00 | $5,440,980.00 | $6,616,880.40 |
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Personnel plan
To run clothing retail, you need employees who will cooperate and collaborate with your customers. A good practice is to first create a list of required employees while writing a business plan for a clothing retail store. After that, you can set criteria for selection to weigh the competency and skill of your applicants.
7.1 Company Staff
Amy will manage the clothing store business plans herself. However, she’ll hire the following people:
- 1 Co-Manager to help manage the operations
- 2 Sales Executives to negotiate contracts with clothing manufacturers
- 1 Advertising Manager to execute company’s sales strategy
- 1 Website Manager to manage company’s online presence
- 2 Cashiers to maintain financial records
- 1 Front Desk Officer to receive customers
- 5 Salespersons to interact with customers
- 2 General Assistants to carry out routine tasks
- 2 Drivers to provide transportation
- 2 Cleaners to maintain the facility
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Co-Manager | $13,000 | $14,300 | $15,730 |
| Sales Executives | $19,000 | $20,900 | $22,990 |
| Advertising Manager | $11,000 | $12,100 | $13,310 |
| Website Manager | $8,000 | $8,800 | $9,680 |
| Salespersons | $50,000 | $55,000 | $60,500 |
| General Assistants | $17,000 | $18,700 | $20,570 |
| Drivers | $18,000 | $19,800 | $21,780 |
| Cleaners | $16,000 | $17,600 | $19,360 |
| Cashiers | $18,000 | $19,800 | $21,780 |
| Front Desk Officer | $8,000 | $8,800 | $9,680 |
| Total Salaries | $178,000 | $195,800 | $215,380 |
Financial Plan
The financial plan is the most important part of a clothing store business plans. As it enables the business owner to avoid losses. A financial plan provides clear data showing financial ups and downs according to the sales and economic conditions. Moreover, it also gives an idea of how much profit to expect in how much time.
Through cash flow diagrams, balance sheets, and break-even analysis, you can also get an idea of variables, changing which can result in profits and losses.
Creating an accurate financial plan needs proper knowledge and expertise. Amy possessed the required skillset, therefore she opted for making her financial plan herself. If you think that you do not have the relevant experience you must hire a professional to create a clothing retail business plan for you.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.04% | 8.11% | 8.15% |
| Long-term Interest Rate | 8.29% | 8.34% | 8.40% |
| Tax Rate | 23.02% | 23.40% | 24.00% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5343 |
| Monthly Revenue Break-even | $134,200 |
| Assumptions: | |
| Average Per-Unit Revenue | $235.00 |
| Average Per-Unit Variable Cost | $0.67 |
| Estimated Monthly Fixed Cost | $161,700 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $4,860,000 | $5,975,856 | $7,347,913 |
| Direct Cost of Sales | $4,512,000 | $5,440,980 | $6,616,880 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $4,512,000 | $5,440,980 | $6,616,880 |
| Gross Margin | $348,000 | $534,876 | $731,032 |
| Gross Margin % | 7.16% | 8.95% | 9.95% |
| Expenses | |||
| Payroll | $178,000 | $195,800 | $215,380 |
| Sales and Marketing and Other Expenses | $101,000 | $130,000 | $131,000 |
| Depreciation | $2,300 | $2,300 | $2,400 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $3,000 | $3,100 | $3,200 |
| Insurance | $2,000 | $2,100 | $2,200 |
| Rent | $3,200 | $31,000 | $33,000 |
| Payroll Taxes | $30,000 | $38,000 | $41,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $319,500 | $402,300 | $428,180 |
| Profit Before Interest and Taxes | $28,500 | $132,576 | $302,852 |
| EBITDA | $28,500 | $132,576 | $302,852 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $5,700 | $26,515 | $60,570 |
| Net Profit | $22,800 | $106,061 | $242,282 |
| Net Profit/Sales | 0.47% | 1.77% | 3.30% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $56,000 | $60,480 | $65,318 |
| Cash from Receivables | $16,000 | $17,280 | $18,662 |
| SUBTOTAL CASH FROM OPERATIONS | $71,000 | $77,390 | $83,581 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $72,000 | $78,000 | $84,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $37,000 | $39,000 | $40,000 |
| Bill Payments | $20,000 | $21,000 | $23,000 |
| SUBTOTAL SPENT ON OPERATIONS | $57,000 | $60,000 | $63,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $59,000 | $63,720 | $68,818 |
| Net Cash Flow | $15,000 | $16,000 | $17,000 |
| Cash Balance | $26,800 | $27,110 | $28,770 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $280,000 | $313,600 | $344,960 |
| Accounts Receivable | $25,000 | $28,000 | $31,472 |
| Inventory | $4,000 | $4,480 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $294,500 | $329,840 | $370,740 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $18,000 | $20,160 | $22,680 |
| TOTAL LONG-TERM ASSETS | $24,320 | $27,238 | $30,643 |
| TOTAL ASSETS | $299,000 | $334,880 | $376,740 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $21,000 | $23,520 | $26,436 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $20,000 | $22,400 | $25,178 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $15,800 | $17,696 | $19,890 |
| Paid-in Capital | $31,000 | $32,000 | $33,000 |
| Retained Earnings | $56,000 | $61,040 | $67,144 |
| Earnings | $199,000 | $216,910 | $238,601 |
| TOTAL CAPITAL | $273,400 | $298,006 | $327,807 |
| TOTAL LIABILITIES AND CAPITAL | $289,200 | $334,880 | $376,740 |
| Net Worth | $280,000 | $305,200 | $335,720 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.00% | 7.76% | 8.59% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.22% | 10.22% | 11.32% | 9.80% |
| Inventory | 5.33% | 5.91% | 6.54% | 9.90% |
| Other Current Assets | 2.10% | 2.33% | 2.58% | 2.40% |
| Total Current Assets | 150.00% | 152.00% | 152.00% | 158.00% |
| Long-term Assets | 11.63% | 11.70% | 11.82% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.59% | 4.63% | 4.67% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.33% | 7.39% | 7.46% | 7.38% |
| NET WORTH | 101.09% | 101.90% | 102.84% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.99% | 97.55% | 100.29% | 99.00% |
| Selling, General & Administrative Expenses | 92.80% | 95.31% | 97.97% | 97.80% |
| Advertising Expenses | 1.65% | 1.69% | 1.74% | 1.40% |
| Profit Before Interest and Taxes | 42.00% | 43.13% | 44.34% | 33.90% |
| Main Ratios | ||||
| Current | 36 | 37.2 | 38 | 32 |
| Quick | 33 | 35 | 35.875 | 33 |
| Total Debt to Total Assets | 0.17% | 0.19% | 0.18% | 0.40% |
| Pre-tax Return on Net Worth | 74.12% | 75.10% | 76.90% | 75.00% |
| Pre-tax Return on Assets | 94.19% | 98.90% | 103.84% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 33.05% | 34.07% | 35.13% | N.A. |
| Return on Equity | 55.92% | 57.65% | 59.44% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.9 | 7.9 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 33.1 | 34.755 | 35 | N.A. |
| Accounts Payable Turnover | 16.5 | 16.6 | 16.8 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.4 | 2.5 | 2.5 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.03 | -0.03 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $236,000 | $249,216 | $263,172 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.8 | 0.83 | 0.89 | N.A. |
| Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 26.8 | 27.1 | 28.2 | N.A. |
| Sales/Net Worth | 2.1 | 2.2 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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