How to Start a Shoe Store

Step into the fashionable world of footwear and explore the opportunity of opening your own shoe store. With startup costs ranging from $20,000 to over $100,000, this venture requires a strong understanding of retail management, marketing, and fashion trends.

Thanks to steady demand and the rising popularity of online sales and custom options, your potential profit margins could be as high as 50%. However, you’ll need to be prepared to face challenges such as competition from online retailers, effective inventory management, and staying on top of the latest shoe trends. Are you ready to step up to the challenge and make your mark in the shoe industry? Let’s discuss the steps required to start a shoe store business.

How to Start a Shoe Store

Create a Business Plan

A business plan isn’t just important for entrepreneurs who need to attract investors or take out a business loan, it’s also crucial for helping first-time business owners stay on course and avoid common, costly mistakes early on. Most of the future questions you have about your shoe store should have answers within the pages of your business plan. This is where you’ll define your target consumer and decide what kind of shoe store business you plan to run. While writing your business plan, you may want to:

• Think about your product: Who are your wholesalers and distributors? What kind of shoes are you selling (i.e. sneakers, women’s shoes, specialized athletic shoes)? Are you selling inventory beyond shoes, like accessories or shoe repair services?
• Consider your business model: Will you have a storefront, an ecommerce presence, or is it a hybrid? What physical location is best for a storefront, and how does it compare to your competitors?
• Identify your customers: Who is your customer base? Different demographics want different things.
• Spot potential problems and make a plan to solve them.
• Check for tax breaks and local grants.
• Look at your potential revenue streams and overall expenses: Is your business financially viable?

Choose a Business Structure

All new businesses have to select a business structure for tax and licensing purposes. You can’t get a business license without one, and most startups choose between two types: limited liability companies (LLCs) or sole proprietorships. Larger shoe stores (the kind that plan to have shareholders) may wish to incorporate, but the latter two structures allow store owners to avoid the so-called “double taxation” of corporate taxes.

LLCs are one of the most popular options for startup retail stores because they offer some personal liability protection with a favorable tax structure. This is important in the event of a bankruptcy or lawsuit. The process to starting an LLC takes a little bit of paperwork, but you can file online, and it’s relatively speedy. Keep in mind LLC formation does involve a fee that varies state-to-state. You can simplify this part of the process by using a business formation service.

Sole proprietorships are taxed similarly to LLCs and free to create, but they don’t come with liability protection. This option is popular for online retailers who are selling shoes and running small-scale operations via services like eBay or Etsy rather than an actual physical location.

Pick a Name for your Business

A name is how people will know your brand, so it’s got to be a good one. This is particularly important for ecommerce brands who need to register a domain with their business’s name. Make sure your name is easily recognizable on social media and not already taken to avoid legal repercussions. You can search through local business registrations and on the internet to make sure.

Do you want to call your shoe store “Bart’s Shoes,” and your business, “Fazekas, Inc.?” A “doing business as” (DBA) name can help you do both.

Make it Legal

Before you can get started with your business, you’ll need to get the paperwork in order. This includes:

• Registering your business structure
• Obtaining an employer identification number (EIN) from the IRS
• Getting the proper insurances (for retail stores, that’s general liability insurance plus worker’s compensation and disability insurance if you have employees)
• Opening a business bank account
• Researching and obtaining the proper licenses for your shoe store

In some states, you may have to register as a sales tax vendor with whatever department handles taxation or contact the Department of Consumer Affairs to obtain a specific dealer license (i.e. a secondhand dealer license or dealer in products for the disabled license). Independent retailers may want to join the National Shoe Retailers Association (NSRA) for additional support.

Determine Your Costs

Before you can launch your business, you need to know how much it’ll cost, and that can greatly vary depending on your business model and location. As we know, retail space in New York City is far more expensive than retail space in rural Iowa, and large shoe stores can have enormous startup costs.

For example, to open an Athlete’s Foot franchise, it’s estimated that you’ll spend anywhere from $100,000 to $200,000 on initial inventory. You’ll also spend $75,000 to $150,000 on furniture, equipment, and decor, and up to $12,000 on signage alone. That’s all after the $30,000 franchise fee.

An online sneaker store costs much less. Mostly, the largest costs come from launching a website, initial inventory (which can be pricey if you’re selling name brands like Nike), storage space, and employee wages. To get a clear picture of your expenses, add up the ongoing costs (like rent, utilities, and wages) with your one-time costs (like furniture, website creation, and supplies).

How do you fund your startup costs?

Most people don’t have $100,000 lying around for initial inventory, so unless they’re running a small, online operation, they’ll probably have to find funding. This can be done through:

• Business loans. These can be acquired through a bank or the Small Business Administration (SBA), but may come with unfavorable interest rates.
• Government assistance. You may be able to get a grant or some tax breaks.
• Credit cards. Low- or no-APR business credit cards are a good option for one-time equipment and inventory purchases.
• Friends and family. This may seem like easy money, but it can sour relationships so proceed with caution.

Overall, the SBA can help you seek out multiple forms of funding via their website.

Equip your Business for Success

The equipment required to open a shoe store is similar to the equipment needed to start any retail store. Beyond furnishing your shop, you’ll need a POS system (services like Square, PayPal Here, and ShopKeep are growing increasingly trendy). You’ll also need your starting inventory and miscellaneous supplies like computers, office supplies, small business accounting software, and packing and shipping supplies.

Take a look through StoreSupply.com for inspiration about other shoe store equipment you may need.

Market your Business

Social media marketing is essential for a retail business, particularly a retail business that makes online sales. If you’re selling shoes or any other kind of fashion, platforms like Instagram and Pinterest generally lead the charge, but consider a comprehensive strategy including all major platforms and a Google PPC campaign. Instagram adverts and influencer marketing are particularly effective in this industry, and the latter has an average ROI of $18 for every $1 spent. 

If you have a physical location, you may also want to register your business on Yelp, Google My Business, and other local business directories. Consider throwing a grand opening event to create some word-of-mouth buzz for your retail store.

TL;DR

You can get creative with your retail business. You’ll need to choose whether you’re launching a brick-and-mortar location and/or an online store, but beyond that, what you sell is completely up to you. Some shops focus on trendy, designer sneakers (a pair of Yeezys can go for a couple hundred bucks). Others opt for more affordable, fast-fashion options (Old Navy famously sells $1 flip flops). Whatever your choice, make sure it serves your target market.