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Monday, 18 March 2013

How to avoid the common mistakes while setting up a boutique?

Last month I met a relative of mine who is running a boutique at her home. She is doing the same for almost two years as a partnership business with three more ladies. Together they have sold many sarees, salwar materials and bed sheets in this short span. Yet, unfortunately she is planning to wind up the boutique as she finds it difficult to continue. The reason being, her non-cooperative partners and inability to retrieve the cost of goods sold on credit. Had she been a bit more careful in running her boutique, the venture would have made her a successful business owner by now. Definitely, you can avoid the mistakes she encountered if you are aware of them in advance.

A boutique is women’s easiest window to venture in to a business. The choice of apparels and accessories define the feminine factor in a woman. No matter how many black coloured (or any favourite colour) dress you have, you will still pick up a new one just because it looks different. And only a woman knows this weakness of the entire women clan and finds a brilliant business opportunity with owning a boutique.  Apart from a decent capital, you just need a mindset to please the customers to run a clothing store. Even then, many boutiques that boom up often fail to impress the customers. 

Do you want to know why?

12 common mistakes while setting up a boutique

Dictionary defines boutique as “A small store selling fashionable clothes or accessories”. But to be a successful boutique owner you need more than this. Following are the areas where, a na├»ve boutique owner falls short of professionalism: 

Wrong assessment of customers
If you set up your boutique without understanding your prospect customers, you will fail to make enough sales and your stocks will start piling up.  First of all define your customers from different segments like housewives, teenagers or working women. Before you start stocking, think of the taste, preferences and affordability of your expected customers. If the boutique is near a school and school teachers are the ideal buyers, stock your boutique with stuff that suits a teacher persona and respective budget. For any business, the customer is the king; never neglect anyone who walks into your boutique. Be ready to guide them to choose the best for them and be honest regarding your opinion without hurting their feelings. A happy customer is sure to return to you for the next purchase, probably bringing in her friends as well. 
                                                         Not understanding the taste of other people 

Always treat the choice and taste of customers ahead of your personal preference. For example, suppose your favourite colour is red and you stock most of apparels in red shade. But the world is filled with people of varied choice and their choice could be blues and greens. Similar is the case with the fabric – try to provide variety like cotton, synthetic, silk etc. If you fail to assess the taste of customers in advance you will end up with non-moving stocks, thus retarding the growth of your store. 
Non-fixed range of products
Having said variety is a must; take utmost care to limit the variety to products of a particular class. It will be a disaster if you stock items of different classes together. Say something like bridal sarees, ethnic wears, western wears, synthetic ones, all under one roof is not easy to setup unless you have huge capital. Define a range for your products-say if you plan to set up a bridal collection, stock your boutique with stuff that suits brides of different classes of the society. And if you are aiming at working class, have your shelves stuffed with durable and comfortable clothing. It is a lot easier if you start off as a niche clothing store and scale up to include different ranges with time and experience. Of course this doesn’t mean that all the clothing shall be of the same pricing, but the cost variations has to be comparable.
                                               Poor Quality of goods
The quality speaks for itself. If someone buys apparel from you and finds a defect in it or if the colour fades fast, she will not buy more stuff from you with the same trust. Even if you have a small range of goods, ensure that all of them are of supreme quality that you don’t have to lose another customer because of that. While stocking up items make it a routine to go through a thorough checking to find any defects. If at all a customer comes back complaining about a defect, be ready to exchange it with a new one and apologise to her from the bottom of your heart. Your behaviour can retain such an unhappy customer.  

Irregular supply chain 
A strong supply chain is the back bone of every successful clothing business. Once the stocks start moving, have your sourcing ready to fill in the rising demand. Otherwise, your regular customers will start complaining that you don’t provide them new stuff and they will resort to other stores. Maintain a good relationship with your clothing sources, weavers or wholesalers so that they inform you about new collection as and when it arrives. This will help you to arrange for the finance and transport to refill your stores at the earliest. A good back end lets you have the fresh fashion at your stores even during peak festive seasons. 
                                                        Incomparable (wrong) Pricing
The price of each item in your boutique depends on the basic cost of that piece as well as the running cost of your venture.  Try to minimise the running expenses so that the price tags are very reasonable and hence affordable for your customers. You cannot expect a customer to buy an item from you that is available at a cheaper price in the adjacent store. To avoid that, you can go through the popular clothing stores in your locality to have a fair idea of the pricing of similar stuffs as yours. Remember, boutique is a highly profitable business and hence the price tag has to look attractive as well.  
Weak Location
If you open a boutique at a dead end of the road, you will hardly get any new customers. Always assess the business potential of the location at which you are planning to open your boutique. Opening a bridal boutique at the middle of the slum will be a real disaster. On the other hand if you are aiming at the working class, find a location where the working class gather.
Poor competition assessment
Even if you find a suitable location, but fail to assess the competitors, you may fail with your venture. For example if you open yours at a room adjacent to an already established shop with extended range of products, none will visit your store unless you are very lucky. It is difficult to direct the customers to your shop if you open a boutique at a location which is flooded with similar clothing stores. If competition is very high then you can rebuild your strategy to offer unique products thus tapping in customers who are looking for something out of the box.
Unhealthy Partnership
Often having a partner will help you to share the load of running the business. But sometimes this partner can be the roadblock to your success. If the partner is non-cooperative and is not of any help other than while sharing the profit, you will want to wind up the store even if it is running with a positive balance.  While choosing the partner be specific in assigning the roles equally to each and every one.  And ensure that they are treating this venture close to heart just like you.
                                                        Allowing Bad Credit system
Selling on credit can keep the goods moving. Yet often retrieving the amount can be a headache. Even if you allow repaying as instalments many won’t be keen on returning the money on time. So it is better to restrict the sales on credit only to trustable people. Otherwise if you don’t have the money by month end, you would find it difficult to restock your store. 

Improper finance management
Running a business is all about rolling money. Always maintain a proper finance book which records the money in and out flow throughout the month. For a boutique to grow, you should reinvest the money earned from it. So you should limit the personal spending till you start seeing remarkable success from it. It is all about waiting for a while to spend without any hitch later.
                                                        Unaware of opportunities
Once you are up and running with your boutique, you should utilise every opportunity to gain more and more new customers. Taking part in sales and exhibitions can add more people to your customer base. You can also plan for special offers, like festive discounts or combo offers to please your clients. Many boutique fail because of the inability to tap more opportunities for expansion. Let it not that happen with yours and keep the focus on building more and more sales.

A good working plan will let you cover all the important aspects of setting up your business, thus minimising the mistakes encountered. It will also help you to analyse if you are proceeding in the right direction. Meeting your targets in your plan can give you the sense of success.  If you are still perplexed about how to set up your boutique please follow the following step-by-step procedure:

How to open a boutique with least risk?

1)      Make a plan about your boutique - The plan should cover where your boutique will be, what sort of items you will sell and who will your prospect clients be. You should have a fair idea of the money you are ready to invest and how you expect the business to grow.
2)      Shortlist the sources of apparels – Once you have the plan and expected range of products, start the hunt for sources for the same. Shortlist the most trusted sources who are ready to offer you varied collection, good bargains as well as an unlimited supply. You should also consider the factors like credit availability and quantity of items to be bought per sale. The better if the source is ready to take back the goods that were not sold in a fixed span.
3)      Have enough funds ready – Before you venture into boutique, ensure all possible ways to make the money for setting it up. Be it from savings, previous investments or loans.  You can also think of borrowing from friends or inviting them to be partners.
4)      Setup a partnership agreement - Talk to the partners (if any) and record the duties of every single person in the team. Let the note also cover each person’s share of investment in the team. This way you can easily clear up all doubts regarding the mentality of your partners.
5)      Do the mathematics – The rent for the space, the cost of goods, transportation charges and utility costs will form the major chunk of your expenses. The idea of running expenses will enable you to define your profit margin. You can setup the cost per item once you are done with your maths.
6)      Maintain record of your financial transactions – Always record all financial transactions pertaining to the boutique. This starts from the capital, all costs incurred in setting up as well as running expenses. Also every day’s sale has to make an entry to this record. This will help you to assess your business growth.
7)      Maintain good customer relationship – Customer is the prime factor behind the success of every business. Always please the customer by being cordial and honest. Even if a customer return without buying anything, never be upset and treat her lovingly as she is sure to visit your store in future.
8)      Unique presentation – A store can always have a new set of customers if you provide unique stuff. Try to be genuine and exceptional in the quality of goods as well as your mannerism. You can guide your customer to choose the best clothing depending on her body structure and complexion. Surely if you put in such an extra effort, customers will be pleased.
9)      Write down the store policies in advance – Keep the credit, purchase and damage policies of your store upfront so that you can inform the customer about the same before she comes back with a complaint. This will create a good impression on the customers and they will treat the items from your boutique highly trustable.
10)   Let the world know about your store – Once the boutique is ready, look for every opportunity to advertise about it. Talk to your friends and family and publicise it on social networking sites. If your budget allows you can think of advanced advertisement strategies like distributing pamphlets.

A boutique is definitely the best window for a woman to start your enterprising journey. Hope this article will guide you to set off with yours! All the best and do share your experiences through this blog.