The set-up costs depend greatly on how large your shop is and where you locate, since rental costs will be a major expense. The location of your shop will determine how much you pay on to rent. For example, around 800 SqFt on the high street in Chester will cost about £22,000 a year to rent. However, the same amount in space in central Manchester can top £100,000.
You will need to have storage space as well as a shop floor. The shop floor will need to be equipped with display rails and shelves, chairs, mirrors and changing facilities. You can buy many of these second-hand, but remember, the image of your shop will reflect on the clothes, so beware of using cheap display equipment.
Liz Urwin, who runs Bottega a ladies fashion boutique in Cheshire, completely refitted her shop when she took over the business. "The cost for renovating this place was £15,000, although it was done expensively and involved a new floor and all new fixtures and fittings. The shelves alone were £5000 and the floor is maple. But the clothes are upmarket, so it has to be displayed in a nice environment," she explains.
You will need a cash-till, which can cost from £200 for a basic stand-alone machine to around £2000 for an EPoS machine and software. You will also need a computer, printer and basic accountancy software in order to deal with the administration of the business. Crime can be a serious problem for clothes shops so it is worth investing in CCTV and a security tagging system if necessary.
Finally, you will need to purchase the stock. Initially this could be expensive since, as a new business, suppliers may refuse to give you credit. Urwin explains,
"If taking a £5000 order with 30 or 60-day credit, the supplier will need to take out credit insurance. But they can't always get insurance when supplying a new business. You can therefore get caught up with difficult payment terms. It doesn't mean they won't supply to you, but you may have to pay up front, which can seriously dent your cashflow."
So although the initial cost depends to a great extent on where you are, how you furnish your shop and what you stock, it is safe to say that you will probably need upwards of £50,000 to get going.
What can I earn?
Your turnover will vary greatly on what you stock and how much you sell. There will be a higher profit margin on more expensive items but you would expect to sell these less frequently. A way to boost your income is to stock accessories and jewellery, for example, as these will often have a bigger mark-up than clothes.
Michael Goodmaker of the Institute of Business Advisers believes that it’s not uncommon for people to make a tidy profit from this type of business.
“If you get it right, you can do really well. The risks can be enormous but so can the rewards. Unfortunately, these days the rewards are so much harder to come by."