If you love the fashion industry and want to try your hand at being your own boss, opening a small clothing store can be an entrepreneurial dream. Starting a business takes quite a bit of work initially, but once all of your ducks are in a row, you will have expert knowledge about the fashion industry that will go a long way.

Decide on a Legal Structure

The legal structure an entrepreneur chooses depends on the type of liability she wishes to assume, the clothing business’ tax structure and the number of investors. An individual starting a clothing store business by herself may choose to have a sole proprietorship, while those with partners or investors may choose to have a limited liability corporation. It is best for entrepreneurs opening a clothing store to learn the pros and cons of each tax structure from a business lawyer before making a final decision.

Business Plan

A business plan serves as a start-up guide and checklist for those opening any type of business, and can help entrepreneurs obtain financing to open a clothing store. The Harvard University Small Business Development Center states a business plan should include a description of the type of small clothing store the entrepreneur wants to open, the experience the business owners have in the fashion or retail industry, the market for a small clothing business in the area and a description of competing clothing stores. The financial section of a business plan should include sources of funding and its application towards the clothing store, overhead costs, projected balance sheets and income statements, projected cash flow statements and the amount of money needed to start the clothing store. The Harvard University Small Business Development Center also states that a business plan should also include supporting documents such as resumes, job descriptions, financial statements and credit reports.


Unless an entrepreneur has the means to open a small clothing store on his own, he will need to seek financing to help with the start-up costs. Start-up costs include the securing of a location, interior design costs, clothes to sell, clothing racks, counters and cash registers. Sources of financing include banks, credit unions and investors. If the clothing store is part of a franchise, the parent company may have funding resources available as well.


Forbes advises that an entrepreneur should know the zoning regulations of the area where she wants to open the clothing store, particularly if it is in a residential area. The best locations to open a small clothing store are those that are highly visible to street traffic or near other retail locations, such as a strip mall. The ideal location should offer the potential for future growth, have sufficient floor space for customers to browse and try on clothes, a large enough storage area for extra inventory and have an adequate parking lot.

Licenses and Permits

The licenses and permits needed to open a small clothing store vary by state, city and county. It is best for an individual to learn what permits she must obtain from her area’s Secretary of State's office. Forbes states that an individual opening a small clothing store will typically need a resell permit or certification, business license and a tax identification number from the Internal Revenue Service.


One of the most important aspects of a clothing store is its inventory. Because small clothing stores do not have the space to please every type of customer effectively, the entrepreneur will have to sell to a niche market. Ideally, the store should represent an underrepresented market and offer clothing items not found in other nearby locations. Clothing items a small store could sell include business clothes, formal wear, maternity clothing, sports and active wear, special-sized clothing, clothes for teens or underwear.


Insurance helps protect a small clothing store’s assets from unforeseen events. Commercial insurance policies can help cover losses in the event of a fire and theft from the clothing store. It may help pay for medical costs if a customer gets injured and legal fees if the clothing store owners are sued. It is best for a business owner to consult with a commercial insurance agent to verify the appropriate type of insurance for his small clothing store.