How to Start an Online Boutique in 7 Steps
- Step 1: Choose your business name and entity.
- Step 2: Create a business plan.
- Step 3: Choose an ecommerce platform.
- Step 4: Register your boutique and get an EIN.
- Step 5: Get any business licenses or permits.
- Step 6: Open a business bank account and get a business credit card.
- Step 7: Get funding.
In the digital age, online boutiques are a popular alternative to heading to your local store and shopping around, looking for an item they might not even have in stock. With online shopping, you can take your time viewing items, looking up reviews, and comparing products and pricing—it’s no wonder that online shopping has taken off. So if you’re looking to learn more about how to start a business, more specifically, how to start an online boutique, there’s really never been a better time.
Starting an online boutique can feel intimidating—after all, it’s a new experience. However, as other entrepreneurs will tell you, the hardest part is often taking the first step. The important thing is that you do it. “I would tell other entrepreneurs to give their business time to develop but don’t incubate too long. Get something out there and build upon it,” Pia Rappaport, founder of the online business Pillowpia, told Fundera.
If you’ve been wondering how to start an online boutique, this is the perfect time to get started. And we’ll lay out the formula to follow so you know just what to do. In this guide, we’ll go over the steps you should take to start your online boutique and the key things to remember when making those first decisions about your new business. Let’s get started.
How to Start an Online Boutique: The Ultimate Guide
Just like with starting any business, there are some general steps you have to take when starting an online boutique because, well, it is a business. Additionally, there are some steps unique to online boutiques you’ll need to consider, as well.
Step 1: Choose Your Business Name and Entity
Part of starting an online boutique will be deciding on its name and the business structure you want for it. This means deciding whether you want to go it alone, or have a business partner, and more.
Of all the business entities out there for you to choose from, some might make more sense for your online boutique. Here are some common business entities to consider:
- Sole proprietorship: This is the easiest entity to set up, as you don’t actually have to register it with the state where you’ll be operating. With a sole proprietorship, either you or you and your spouse can be the sole owner, and you’ll report your business income and losses on your personal tax return. You will also be personally responsible for your online boutique’s debts and legal obligations.
- LLC: A limited liability company, or LLC, is a flexible business structure that separates your business’s liabilities from your personal assets. LLCs are treated by default as pass-through entities for tax purposes; however, you can choose for your LLC to be taxed as a corporation.
- Corporation: If you plan to issue stock or want the option in the future, you may decide to form a corporation. While corporations are also registered business entities and offer limited liability protections, like LLCs, they differ in their tax and ownership structures, among other aspects. If a corporation sounds like the right fit for your online boutique, you’ll want to decide between an S-corp and C-corp.
If you’re unsure which business entity to choose, this is a good time to consult a business attorney and/or tax professional who specializes in small business finances. They will be able to steer you in the right direction for your business.
You’ll also need to choose a business name so that you can move forward. Both of these decisions will be necessary for the next step: writing your business plan. As with any business, you’ll want to search on your state’s online business database to ensure the name you want is available. However, something that’s extra important to consider when starting an online boutique is whether your desired business name will be available to use as your domain name. This will be the URL of your online boutique and how your customers find your site. If your domain name isn’t available, you may want to consider another business name altogether, as it can create a confusing customer experience.
It’s also worth noting at this stage that if you chose a business entity that does not need to be registered with the state—namely, a sole proprietorship or general partnership—your business name will default to your name. If you don’t wish to publicly operate under your own name, you should file a DBA, or “doing business as” to register a different name for your online boutique.
Step 2: Create a Business Plan
This is one of the most important steps of starting an online boutique and there are several aspects within this step that you’ll want to address. As it is, writing a business plan for your online boutique involves a lot of planning and decision-making.
Your business plan will, at the very least, serve as a roadmap for you as you launch your online boutique. Beyond your personal use, your business plan will also be essential if you decide to apply for funding down the line (more on that later). You want your business plan to be as detailed as possible so that when it comes time to actually start selling items you’ll be ready to go. Your business plan will include everything from a company overview and market analysis to a breakdown of your products and pricing structure, as well as your financial plan and projections. As you get started on your business plan, here are some other considerations to address.
- Decide what to sell: You might already have something in mind that you want to sell, or a brick-and-mortar store that you want to bring online, but if not, you’re going to need to decide what you want your online boutique to sell. A huge part of this will be assessing the market, and whether there’s a need for your products, as well as deciding how you can set your store apart from others. Otherwise, you may run into difficulties.
“One thing I’d advise people thinking about [starting an online boutique] is to do a lot of research on your idea first. Make sure there’s a market for what you’re doing. Are you fulfilling an actual need people have, or is that wishful thinking on your part?” Lynn Thompson, author and the owner of the online boutique Old Maid Cat Lady, told Fundera.
- Find suppliers: Once you know what you’re selling, you’ll need to decide whether you’ll make each item yourself or source your products from a supplier. If you go the supplier route, you will likely want to direct source products to get the best price.
Finding the right supplier will take time, so start your search well before you’re ready to start taking orders from your online boutique. This will also determine a big chunk of your business costs, which you’ll want to account for in your business plan.
- Choose a shipping service: If you’re selling a physical good, you’re going to need a way to deliver your products to your customers. You have several options when it comes to choosing the best shipping services for your online boutique, but this decision will likely come down to which is the most convenient for the best price.
When choosing a shipping service though, you should consider your shipping volume, how large the items you ship are, how long the deliveries will take, and of course, price. The U.S. Postal Service, FedEx, and UPS are all solid options, but you may also opt for a shipping rate comparison software like Shippo or ShipStation. Some ecommerce platforms will also include shipping or at least help streamline your shipping processes, which we’ll discuss further below.
- Develop a marketing strategy: It’s also never too early to get a head start on your ecommerce marketing strategy. You should consider creating social media pages for your online boutique so that potential customers can see your products in action, and happy customers can post about their purchases and share your brand with others. This can help you get a good head start with some natural marketing online and get the word out about your business. You should also create a Yelp business profile and Google My Business listing to increase your chances of being found in search.
Step 3: Choose the Right Ecommerce Platform
There are so many ecommerce platforms out there to choose from it can feel overwhelming to pick one when starting your online boutique. Again, this will dictate some of your business costs so you want to choose one early on in the process and know what costs to expect, as well as what capabilities it will offer you to build a user-friendly shopping experience for your customers.
“We looked at all the big players in the space and chose the platform that best suited our needs,” says Rappaport, who ultimately chose Shopify as her ecommerce platform. “They keep the price low and features are the most universal but you have the ability to add on additional features through their app store for specific needs. Their model is very a la carte. It is nice not to have to pay for features that are irrelevant.”
Not every ecommerce platform is created equal and you’ll have to shop around a bit to find the best one for your online boutique’s specific needs. Here’s a closer look at what to consider when deciding which ecommerce platform to use for your business.
What to Look for When Choosing an Ecommerce Platform:
- Is it a dedicated ecommerce platform, or is it a website builder with ecommerce capabilities—and, which will serve your business best?
- How much are you willing to pay?
- How user-friendly is the platform—will you need coding knowledge or is it mostly drag-and-drop editing?
- Are the templates mobile-responsive so customers can shop from their phones, and does the platform offer a mobile app so you can keep tabs on your online boutique from any device?
- What level of customization does it offer?
- How many products will you be able to list on the platform (this may be limited depending by plan), and does it handle variations, such as size, color, etc.?
- How secure is the platform? After all, you want to ensure your—and your future customers’—information will be protected.
- What integrations does the platform offer?
- What is the platform’s hosting environment?
- What level of customer service do they offer?
Shopify (Rappaport’s favorite) is one of the most popular ecommerce websites out there with prices starting around $30 a month.
If you simply need a website that has ecommerce capabilities you might want to go with Wix or Squarespace instead. They’re first and foremost website builders, but you can choose to add ecommerce capabilities.
With so many options out there, you’ll definitely want to explore your options and take advantage of any demos or free trials to really get an idea of how to use the platform and how it can showcase your products or services.
When starting an online boutique and creating your ecommerce website, don’t forget about the three policies ecommerce business should have in place. You’ll especially want to make sure you have a solid and clear return policy for your online boutique.
Step 4: Register Your Boutique and Get an EIN
Just because you’re running your boutique online does not mean you’re off the hook when it comes to registering your business. You’ll still have to follow the regular guidelines for registering the business in your state as you would if you were starting a business with a brick-and-mortar location.
Most states have a website where you can check the available business names in your state. Usually it will be the secretary of state’s website or the business bureau. Registration details will vary by state, but once you’ve confirmed that your name is available, you’ll want to complete some paperwork and pay a small fee to register your business.
This is also a good time to apply for an employer identification number, also called an EIN or business tax ID number. Luckily, this is a quick task that can be done online with the IRS in a matter of minutes. While your online boutique might not be required to get an EIN, there are benefits to getting an EIN that any business may find advantageous. Having an EIN makes it easier to keep your business finances separate from your personal ones, and allows you to easily apply for a business credit card and bank account, as well as pay taxes.
Step 5: Get Any Business Licenses or Permits
The next step in starting an online boutique is to get any licenses or permits required of your business. There are federal and state licenses and permits that you might need for your business, depending on the type of online boutique you’re starting. Like the registration process, your specific requirements will vary by where you’re starting your business. This state-by-state guide can help you determine how to get a business license for your online boutique.
Additionally, the Small Business Administration has a guide to permits and licenses on their website that helps outline these requirements for you. It can help you find the right agency to contact about the licenses and permits you might need. Some of these are very local and as such, you’ll need to check with local agencies about licensing and permits. You might want to also consult a business lawyer to be sure you’re getting everything squared away.
Step 6: Open a Business Bank Account and Get a Business Credit Card
When starting an online boutique—or any business—it’s important to separate your personal and business expenses. From receiving payments from customers to paying your suppliers, you’ll want to open both a business bank account and business credit card to handle these exchanges. Opening these accounts and using them responsibly can also help boost your business credit score, which can be useful should you seek funding down the road.
When choosing a business bank account, you’ll want to decide what features are most important for your business. Since your online boutique won’t be handling cash, you may decide a physical bank location isn’t important, and you might explore your online banking options instead.
Similarly, when deciding on a credit card, think about your business’s specific needs and how a credit card can help meet them. You may find a 0% intro APR business credit card particularly helpful, especially when you’re first starting out and expenses are high. As long as you have a plan to pay off your balance in full before the introductory offer ends, you can leverage this type of credit card to help cover startup costs.
Step 7: Get Funding
While the overhead costs of an online boutique will be lower than a business with a physical location, you’re still going to have some costs you need to cover upfront, likely before you start making any money.
If you’re direct-sourcing your products, the manufacturer will require a larger order than your typical wholesaler. While this will mean lower prices per item, it’ll require a great deal of capital on your end to make the initial purchase. Additionally, you’ll want to consider other startup costs, such as setting up your website and implementing a marketing strategy and using advertising to get the word out about your new online boutique.
“I think the thing that most surprised me is how hard it is to get eyeballs on your business. Good marketing and PR investments are key. Once people found us, the business built upon itself,” Rappaport explains.
Like the saying goes, sometimes you have to spend money to make money—and when you’re a startup, you might need to borrow that money before you can spend it.
When it comes to funding, you have a few business loan options, depending on what you need the funds for, how much you’re looking for, and more. Here are some common options that can be useful for starting an online boutique.
- Business line of credit: You can think of a business line of credit as a more powerful credit card. If approved, you’ll receive a set amount of money that you can draw against when business expenses arise. You don’t need a great credit score, which can be helpful for nascent businesses, and you’ll only pay interest rates on the money you use.
- Startup business loan: There are several startup business loan options out there, all typically for businesses that are six months or younger. The loans that fall under this category include SBA microloans, small business grants, and even business credit cards.
- Purchase order financing: If your online boutique is in the business of providing custom orders for your customers, you may be able to use purchase order financing to cover the manufacturer’s costs before you get paid. In this case, after the lender pays the manufacturer and the products are delivered, you would invoice your customer, who would pay the lender directly.
These are just a few of your loan options, and you may find that other financing options fit your business better. The good news is you can fill out one application to find out which funding options you’re eligible for, and then choose the best fit for your online boutique.
Starting an Online Boutique: The Bottom Line
While starting an online boutique might sound like it alleviates some of the stressors and costs of starting a traditional brick-and-mortar boutique, it’s not without its difficulties. You still have to do much of the heavy lifting associated with starting a business.
You’ll still have to choose a business name, make a thorough business plan, register your business, set up your business finances, and more. But don’t let these steps scare you off. If you’ve been wondering how to start an online boutique for some time, this could be the right time to finally take the leap. And these steps will walk you through everything you need to do to get off the ground.