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FEB.01, 2021

Clothing Retail Business Plan Sample

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Article Business Plan Templates Clothing Business Plans Fashion Business Plans Retail & Ecommerce Business Plans
clothing store business plans

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Table of Content

    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.

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    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.

    Clothing Retail Business Plan - 3 Years Profit Forecast

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    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.

    Clothing Retail Business Plan - Startup Cost

    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
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    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:

    Clothing Retail Business Plan - Marketing Segmentation

    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.

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    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.

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    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

    Clothing Retail Business Plan - Sales Monthly

    6.4 Sales Yearly

    Clothing Retail Business Plan - Sales Yearly

    6.5 Sales Forecast

    Clothing Retail Business Plan - Unit Sales

    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
    Any questions? Get in Touch!

    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

    Clothing Retail Business Plan - 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

    Clothing Retail Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Clothing Retail Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Clothing Retail Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Clothing Retail Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Clothing Retail Business Plan - 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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    Comments (2)

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    Linus Sullivan 7:05 amFebruary 5, 2021
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    Where is your marketing costs

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    Jakub Babkins 2:38 pmMay 28, 2021
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    Thanks for your feedback. Our templates are informative in nature, if you wish, you can contact our business consultants and they will help you in drawing up a professional business plan.

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