If there’s one thing people always need beyond food and shelter, it’s shoes. Shoe sales in the U.S. top a whopping $85 billion annually. Those are no small potatoes, and ecommerce has made it easier than ever for entrepreneurs to open their own shoe stores.
In recent years, we’ve seen a number of creative shoe retailers pop up and succeed beyond our wildest expectations. This includes membership services like ShoeDazzle, which grew to sell over $100 million worth of shoes since its launch in 2009, and the charity-focused TOMS Shoes, which expected to make its 100 millionth shoe donation by the end of 2020. The truth is that this field has a lot of room for innovation, particularly if you have an eye for style. If you’re wondering how to open a shoe store, these steps can help you get started.
It’s true that the shoe store industry is slowly shrinking year-over-year. From 2015 to 2020, revenue fell at an annualized rate of 1%, but that number is a little deceiving. Like most retail industries, shoe stores perform well when consumers have more disposable income. The better the economy is doing, the higher the sales. The worse, the fewer the sales.
Despite this minimal downturn, the industry has seen growth in the world of ecommerce. In 2020, the online shoe market grew by 4.7% in the U.S. and sales topped $15.4 billion. Per the Bureau of Labor Statistics (BLS), shoe store managers and top executives still make a median wage of more than $70,000 per year. Beyond that, this type of business has a relatively low bar of entry and a low level of risk compared to other startups.
The first thing you should think about when launching a shoe store business is whether you’re going to franchise or open your own independent store. Some retailers like Red Wing and The Athlete’s Foot offer franchise options, which can require a minimum investment of as little as $50,000 to as much as $715,000. Launching an independent shoe store is generally a lot cheaper, but you don’t have the instant brand recognition, built-in consumer base, and franchise support.
Either way, there are few steps you need to take before you can launch your own shoe store. This checklist can help you get your business affairs in order.
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.
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.
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.
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.
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.
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.
Opening your own shoe store can be whatever you make it. If you play your cards right, it can be a scalable business with relatively low startup costs. It can be done on a shoe-string budget (pardon the pun) if you stick to an online store. The bigger the store and the more designer the duds, the more funding you’ll need. Nonetheless, this is a solid industry with increasing opportunities in the ecommerce space.
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