Oh boy! It’s been a little while since I’ve blogged, huh?  It’s been another one of those slow periods where nothing major is happening.  In my last blog I recapped the LA Trade Show.  All the merchandise orders have been placed, and yes I did end up canceling about four pieces because I went over budget.  No major changes, but I’m much closer to my original plan now.

Right now I’m just kickin’ back and waiting for those shipments to come in!  That’s when the fun part will start.  Between now and then I’ll start designing the site.  Ive had design block for a while now, but yesterday I thought of something that should be cute; I just hope I can execute it.

Anyways, I was going to blog about something entirely different, but then I saw this comment that Tawny left.  It’s probably the #1 question on the mind of many a prospective boutique owner but it’s also one that doesn’t really have an answer:

  I just wanted to know How much does it cost to start your own online business? How much would I need prox. minus the merchandise? - Tawny

Thanks for asking Tawny!  There really is no approximate  answer, unfortunately.  Here’s what your expenses will be for the most part….

  • Advertisement
  • eCommerce software, hosting & design
  • Shipping materials
  • Photography
  • Business materials (labels, business cards, letterhead, etc)
  • Travel Fees

A lot of times how much you’ll spend on these things will depend on how much inventory you’re taking on.  For example, Advertisement.   Say you’re spending $10,000 on merchandise for one season, and marking that up by 2.2%.  You won’t want to spend more than $11,000 on advertisement because then you’re breaking even (actually you’ll be losing money if you factor in other expenses).  And that’s also assuming you will sell all your merchandise at full price (which is unrealistic).  Of course, when you’re starting a business you’re not expecting to make a profit and you need to get the word out more than anything.  I’m not sure if there’s a rule of them when it comes to an advertising budget but I would say stick to 50%-75% of what you spend on your merchandise (example: $7500 across 3 months).

With your eCommerce needs you’ll need a good shopping cart system plus a merchant account.  The costs for this vary.  I will probably use Yahoo Shops which costs around $100/mo and that includes credit card processing and hosting.  You could also choose to use a free script like Zen Cart and host it on your own, which will run you around $50/month for a good VPS on a host such as Knownhost.com.   For a merchant account, theres 2Checkout.com and Google Checkout, the latter of which charges significantly less for each purchase made.

And also as a part of ecommerce, you’ll need a web developer who can design and probably customize your site.  This can cost as high as $1000 or more, it really depends on what you need done and who you’re asking.  And if there is anything you’re going to spend a lot of money on it should be this because web developers are EXTREMELY FICKLE!

Another major cost is product photography, which once again depends on how much inventory you’ll have.  I’ve been quoted between $400 and $800 for one session for a maximum of 40 high resolution photos (think front and back of twenty items), possibly less for the following sessions.   You’ll need to do a session at least once a month with shipments coming in every two weeks.  And on top of that a mannequin will cost you $200-$300, OR hiring models, hair and make up will run the bill up even more than that.

Everything else is a minor fee if you ask me, except perhaps travel fees.  That depends on where you live; you might not have to travel at all or you might have to fly across the country several times a year to check out the showrooms and trade shows.  So airfare, hotel rates and meal costs should be taken into consideration, but the good thing is it’s a vacation that you can write off on your taxes as a business expense!

I know I didn’t give a definitive answer here, but I really cant.  Every situation will be different and it depends on what you want to do and how much merchandise you want to start out with! I can tell you that I plan on spending around $6000 (not including travel) ON TOP of the merchandise I’ve purchased (but doing my own design saves me a ton of money).  But that very well may change so always allow for more.

I hope that helps put things in perspective?