From the blog What You Need to Know: Clothing Boutique Expansion Costs

As an entrepreneur, your business ambitions might be boundless. The space where you do business is a different story.

With any luck, you’ll eventually outgrow the space where you set up your first clothing store, no matter whether you operate a brick-and-mortar storefront or run your shop exclusively online. Maybe you’ll want to display more designs than your square footage allows. Maybe your available clothing stock will overtake your storage space.

No matter whether you want to expand into a bigger space or open a second location, here are some clothing boutique expansion costs you can expect:

Lease Expenses

Most of the time, more space means higher rent. Some boutique owners might try to limit lease expenses by selecting a large space in a less desirable location. However, lower costs per square foot won’t necessarily translate into greater profits.

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Moving is always a risk. While a few of your loyal customers are sure to travel to your new location if it’s close by, you can’t expect that your customer base will remain the same. Factors like foot traffic, curb appeal, and parking matter just as much for your second location as they did for your first.

When scouting locations for your expansion, look at rates per square foot as well as factors like walkability, traffic patterns, crime rates, etc. You’ll probably have to build a new clientele from the area of your new location, and rents are usually representative of business value. Finding a location that costs a bit more can end up generating higher returns than a big, cheap space.

Utilities Costs

The bigger your new store, the more it will cost to keep the lights on. Utilities and other maintenance costs go up when you move to a bigger space or open a second location.

Keep your utility costs in mind when planning your expansion. A space that is double the square footage may cost four times as much to heat and cool thanks to higher ceilings, poor insulation, or drafty windows and doors. An electric water heating system will come with different expenses than a comparable gas unit. All of these things can have an effect on your bottom line.

A lot of boutique owners also underestimate how a move may impact their personal expenses. Moving your business can increase your commute, which impacts fuel and maintenance costs on vehicles. If you decide to move closer to your business, that can increase your personal rent, food costs, gasoline prices, and more.

Service Costs

Switching providers for essential services like internet, phone, and payment processing can be a chore. However, expansion can be a great opportunity to hit the reset button.

You should reconsider your vendor relationships as you prepare to move locations or open a second store. When moving from town to town — or even neighborhood to neighborhood — different service providers might be available to offer you a lower rate. If you can get a better rate on payment processing, for example, moving is a chance to make the switch. A trusted partner like Talus can help reduce your overhead costs, putting money back into your accounts during a critical time.

Inventory Costs

Stocking more inventory requires a greater upfront investment. A larger space will quickly feel sparse and understocked when there isn’t enough product on the floor, especially during a busy weekend. A bigger sales floor will usually require more items on display to look healthy, plus a significant backstock to keep the store looking right.

Carrying more inventory allows business owners to meet demand without delay. It allows you to carry a broader range of styles that can entice your customers, and prevents you from turning away potential sales.

Most boutiques start in smaller spaces with limited space for inventory. As they grow, the ratio between backroom storage and items on display will sometimes change. Estimating the correct ratio of product-on-hand for your new space is critical to success.

Staffing Costs

Business owners usually need to hire new staff when expanding. If you plan on opening a second location, chances are you’ll need to hire a whole new team including general managers, shift leaders, and salespeople.

Staffing is one of the biggest expenses small business owners face. Hiring capable and trustworthy employees isn’t cheap, especially in areas with low unemployment and high wages. When you’ve been operating a business largely on your own, taking on full-time workers can come as a shock. After all, employees come with costs for payroll taxes, benefits administration, and healthcare in addition to wages. Getting all these payments together and paid on time can be very difficult after expansion as there is much to deal with. There are companies such as who keep all your payroll information and money together, ready for you to pay anyone, anywhere at the right time. You won’t have to worry about people getting paid no matter where they are or you are.

Growth is an experience that can be fun — or frightening — for small business owners. With the right expectations and preparations, moving to a new location or expanding into a new market will be a rewarding and profitable experience for your clothing boutique.

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