Business plan: how profitable is it to sell clothes
Clothing is a product that is always in demand, does not have complex storage requirements, is distinguished by high liquidity, good margins and turnover. In addition, such a startup beckons many entrepreneurs with the opportunity to conquer the market, showing their ability to choose stylish, fashionable and practical outfits. However, how profitable is such a business and how to correctly calculate its profitability?
The clothing trade in Russia has been going through hard times for several years. During the crisis 2021–2021 Apparel sales declined, with the largest decline in 2021, when sales were down 16.1% from the previous year.
However, in 2021 the market started to grow. In 2021, he practically won back the decline, having increased by 16.5% compared to 2021 and exceeded the value of even 2021. Experts expect that in 2021 sales growth will continue, although its dynamics will noticeably decrease: up to 5% with favorable market development.
The current situation offers good prospects for the clothing retail trade. Indeed, as purchasing power is restored, store visitors begin to acquire not only essential items, but also items of deferred demand - what they saved on in previous years, when the financial situation did not allow them to spend extra money.
How profitable can such an enterprise become? On a global scale, clothing retail is one of the most lucrative areas of the trade. For example, according to Forbes magazine statistics, the list of the most profitable retail industries is as follows:
It is interesting that small private retail outlets, with successful business development, are able to bring in much higher income than large chain stores. After all, the owner of a small trade pavilion has the opportunity to save on rent, minimize the number of staff, flexibly adapt to market requirements, quickly changing the assortment. The profitability of small clothing stores can be expected at the level of 8-16%.
The clothing market is highly competitive. According to statistics, every fifth clothing store closes during the first year of operation. But with the right approach to business, a clothing store will not only generate good profits, but also bring you real capital. After all, it was from one retail outlet that the stories of such giants of world retail as Zara and H&M began.
Business plan and profitability calculation
As with any other venture, a detailed business plan must be drawn up before opening a clothing store. Newcomers to trading sometimes try to avoid this stage, believing that it is too difficult to draw up a business plan and they will be able to adapt to the trading process "in real time". This is a big mistake: a business plan helps to see a complete picture of expenses and income, prevent many organizational miscalculations, form a realistic idea of the company's activities, which is especially important if you are raising borrowed funds.
Creating your own brand is a dream of any novice designer. Moreover, it is quite feasible. In many ways, the success of the plan depends on the choice of concept, pricing policy and the persistence of the business owner. Before you open your own clothing brand, you need to study a lot of information, and finally make a decision to act.
Like any other business, your own personalized clothing boutique must first be formalized. Therefore, determining the form of ownership will be the first steps in the algorithm.
Two types are relevant for small business:
Experts advise taking the first steps in a small business with the registration of an Individual Entrepreneurship.
Before collecting the necessary documents for registration of an individual entrepreneur, you need to choose from the proposed list of activities what the business will be doing.
All of them are collected in OKVED - an official classifier that can be studied in any tax authority and a firm specializing in this.
A type of activity suitable for the sale of women's, men's or children's clothing is listed as follows:
This type of activity will be enough to trade not only clothes, but also other goods prescribed in the classification and related to it.
Do not spare your efforts in drawing up and working out a business plan, because it provides for risks, sums up the financial justification of the case and provides a real opportunity to assess the expected benefits.
The next step towards becoming your own clothing brand will be choosing a tax system. The choice is not difficult, but very important, since a lot will depend on it, including future relations with the tax authorities. It is worth noting that for each special mode you will have to make an individual calculation.
For a store with your own brand, the following would work:
Afraid of getting burned at the beginning of the journey, many are wondering if there is something that will always be in demand among all people? The answer is yes. These items include food and clothing. Moreover, unlike products, clothes do not have an expiration date, so the idea of opening a clothing store or its own production attracts many entrepreneurs. An excellent alternative to a store with a Turkish assortment will be to create your own clothing brand. And buyers can be attracted by the showroom to demonstrate and try on outfits. A creative approach and non-standard presentation of an idea can lead an entrepreneur into a leader. This article presents a business plan for your clothing brand, highlighting the key aspects of the project.
Research conducted by AKIT and Google has shown that more than 95% of Russians prefer Russian clothing brands. Market analysis was carried out by polling more than 15 thousand people and studying search queries in the Google system.
Half of the buyers of the domestic brand make purchases consciously, because they consider the Russian brand worthy and reliable. Others carefully research the purchased line of clothing in advance in order to make sure of its quality. Still others base their choice solely on the fact that the thing is suitable for its wearer.
In 2021, interest in Russian brands increased by one third compared to the previous year. Among the most popular brands are O'stin, Gloria Jeans, Love Republic, Oodji.
Most of the buyers who bought Russian brand clothing made purchases in Moscow (65% of sales), Moscow region (15%) and St. Petersburg (12%).
In addition to the territory of Russia, clothes of Russian manufacturers are purchased in Kazakhstan, the Republic of Belarus and other countries of the Eurasian Union.
The popularity of the domestic manufacturer is growing every year, but this growth is noticeable only in large cities of the central regions. The rest of the country's citizens prefer to buy cheap Chinese products. Unfortunately, today Russian brands, for a number of reasons, cannot reduce the cost of goods sold to a price range accessible to the general public.
Based on the results of the study, we can conclude that the average Russian buyer, when choosing clothes, is guided not by the appearance of products, but by the cost. Therefore, cheap Chinese and Turkish clothing continues to outpace domestic manufacturers in terms of the number of goods sold.
In addition, the Russian clothing brand is relevant only in the domestic market, which is a significant disadvantage for modern manufacturers.
Initial costs: 1,499,500 rubles.
Form of incorporation: LLC.
Services provided: sewing women's clothing (dresses, skirts, trousers, suits).
You have already worked as an administrator for a year, you know the basics of marketing and management, you have a great desire to do business, so it's time for you to open your own store.
The peculiarities of the Russian climate are such that everyone needs to dress, so the clothing trade has been, is and will be a profitable business.
In this case, whatever you trade, fur coats, jeans, underwear or dresses, the algorithm of actions will be the same. The article describes how to open your own clothing store from scratch (business plan), outlines a sequence of actions, highlights important nuances.
Drawing up the concept of the future store
Any business begins with analyzing the situation and creating an image, a model of the future enterprise. First, on a large sheet of paper, you need to answer the questions in detail:
A shop of overalls for doctors can be called “Fashionable Doctor”, and stock trade can be carried out under the name “Eurodress”.
Clothing store business plan with calculations
So what does it take to open a clothing store? Based on the available materials, a detailed business plan is written. The document must necessarily reflect the following points:
- store concept;
- marketing research;
- selection of retail space (size, ownership);
- legal aspects;
- terms of work with suppliers;
- forecast of expenses and income, calculation of estimated profit.
It is convenient to make calculations in the form of a table. This is how the estimate for the opening of a children's clothing store with an area of 50 m2 looks like in a residential building, a sleeping area of a large city:
NameAmount, rub. Notes Legal registration of documents1,000 Rent of premises55,000Every monthCash register, scanner for bank cards20,000Repairing10,000Design of signboards and showcases9,000Equipment (showcases, mirrors, racks with brackets, children's corner) 40,000Purchase of goods400,000 if necessary Salary of an administrator and sellers 40,000 per month performed by the director Advertising (leaflets, newspaper announcements, discount cards) 20,000 as needed Unexpected expenses, risks 30,000 Total 625,000
Yes, it is possible that something will go wrong in the future, but the plan is not a dogma, but a conditional scheme of actions, there is always an opportunity to make adjustments, changes, amendments. However, having the most seedy plan is better than not having one.
The preparatory stage of the work is over. The success of the business will depend on how carefully the main points are worked out. The peculiarity of the main stage is that you do not need to adhere to a certain sequence, you can act in all six directions in parallel. Here assistants come in handy, part of the work will fall on their shoulders.
Each project leader is faced with the task of attracting sufficient attention, resources and support to his project. The concept of project branding helps to solve this problem: it is easier for a project with its own brand to succeed (at least within the company). In this article, we will discuss how to adapt the principles of traditional brand management to planning, development, launch and implementation of projects.
Brands. Products have them. Have services. Organizations. Even in humans (remember Steve Jobs, Oprah Winfrey, or Frank Gehry). We are convinced that every project within the company needs a brand as well. Broadly speaking, a brand can be defined as a unique proposition, expressed in a relevant way and with emphasized differences, aimed at generating preference and loyalty among a key audience. So why is it so important for a project to have its own brand? Because your project may suffer from the lack of an attractive brand.
Imagine a project environment at innovation giant 3M. CEO George Buckley recently spoke about the difficult struggles he has to wage to build teams and support projects that seem routine and lack disruptive potential. For example, the company recently decided to make improvements to one of its oldest product lines, industrial sandpaper. The project was strategically important to achieving 3M's organic growth goals, but employees shunned it, preferring to engage in more high-profile initiatives. Buckley lamented that projects that didn't seem "sexy" to research teams were often ranked second-rate. He found that he only pulls these projects with brute force and that his constant focus on less prestigious projects in 3M labs "drives people crazy."
The situation at 3M is not unique. And while Buckley in the CEO position could forcefully raise resources, most project managers do not have this privilege. Many work in a power vacuum and have little or no formal control over the people they must rely on to achieve project goals. Moreover, even when project managers have the opportunity to assemble a team, they often focus too narrowly on the work that needs to be done. Anxious to complete a task, managers often overlook the importance of articulating, maintaining, and communicating to project participants and stakeholders a clear, consistent, and engaging vision, mission, goals, and positive project outcomes. Consequently, they miss out on important support opportunities and, in the worst case, contribute to the “untimely demise” of projects with weak brands.
Project managers and their top managers will have a clear advantage and a stronger position to achieve their goals, advance their careers and contribute to the company's business objectives if they can adapt the principles of traditional brand management to planning, development , launch and implementation of project initiatives.
The Complex World of a Project Manager
With local and global competition intensifying and organizations looking for ways to change and rethink their goals, the number of project initiatives has skyrocketed. For example, the initiatives at the base of 3M's innovation pyramid did not replace louder breakthrough projects, but were added to the tasks of the company's research teams.
At the same time, budgets are being cut, and despite the obvious need for such measures, organizations do not always rationally allocate resources between projects in accordance with their strategic value. The result is a wolf-like world where project managers fight every day for resources and retain control over them. Team members in matrix organizations often juggle a lot of projects and responsibilities. Torn between several directions, they tend to focus on projects that are either the most interesting to them or the most important for their careers (see “Project Image Matters”), making instinctive decisions about where to put their efforts first.
Moving further beyond traditional matrix structures, emerging organizational forms include many external partnerships and informal internal relationships, and projects must use resources through formal and informal channels within and outside the organization. In these configurations, leaders have to take care of supporting and engaging more complex and geographically dispersed stakeholder groups in their projects.
In this tough environment, project managers must deliver key project messages to the right audiences in the right sequence and time - much like a marketing manager does when organizing brand building for external clients to promote products. and company services. In the same way that product branding builds brand awareness and maintains brand value in the minds of external consumers, shareholders and voters, branding thinking can help a project manager to articulate key messages and strategically select the right moments for them to get noticed and help to engage key target audience. Depending on where the project is at, the different audiences of the project brand include senior management, senior project curators, team members with priority responsibilities within the vertical organizational structure, and partners outside the organization. A competent project manager will ensure that everyone involved - top management, subordinates, colleagues from other parts of the organization, and partners outside the organization - understand and accept the project brand, agree with its goals, and provide ongoing support to all initiatives until the completion of the project.