Do you spend hours scaling second-hand shops for beautiful, one-of-a-kind leather jackets, bags, wallets and belts? Is your passion for bespoke leather pieces so strong that you'd like to share them with others? If so, you may have decided to open your own leather goods shop.
From learning about market trends to creating the recruitment plan for your leather goods shop and choosing its legal form - there are many factors to consider before embarking on your entrepreneurial adventure.
In this guide on how to open a leather goods shop, you'll find everything you need to know about how to kickstart your venture, including tips for how to write a stand-out business plan to attract investors. Want to see your leather goods shop succeed? Then read on!
Conducting market research to open your leather goods shop
The very first step in our guide to open a leather goods shop is carrying out market research to ensure that there's an unmet demand for this type of business in the area you'd like to open your store.
To do so, you'll need to:
- Analyze the trends in the sector: is the sector growing? Are new trends emerging? Are customer's buying habits changing?
- Carry out a detailed analysis of the competition: identify the direct competitors (other shops selling leather goods located close by) and indirect competitors (websites or apps such as Depop)? What are their products? What services do they offer in addition to these products and for what price?
- Study the expectations of your future customers: what types of products do they want? Are they looking for services in addition to products? What is the typical profile of a customer (age, socio-professional category, income, etc.)?
The leather goods market
Although a fairly niche sector (there are around 147 leather goods wholesalers in the UK), the leather goods industry was valued at £401 million in 2020.
On a wider scale, Mordor Intelligence cites the role of the fashion industry in leading the leather market. With an increased demand for leather shoes amongst young working professionals within Europe, footwear accounts for 41% of production share in the leather industry.
Another interesting trend to note is the rising demand for eco-leather products, as increasingly more consumers scope out leather products that align with their ethics in an environmentally-conscious world. This demand, according to Mordor Intelligence, is likely to contribute to market growth between 2021-2026 and presents an opportunity for entrepreneurs looking to successfully break into the modern leather market.
Opening a leather goods shop: franchise or independent?
Once you've carried out the market research, the next step in our guide to open a leather goods shop is to decide whether you'd prefer to join a franchise or develop an independent store.
Both options have advantages. By going independent, you'll have all the freedom and autonomy in the world when it comes to setting out the vision for your new business. If you decide to join a franchise network, you'll be able to benefit from the reputation of a well-known brand, marketing support, and a network of suppliers.
Scoping out a location for your leather goods shop
Location is the key to a successful business when opening a leather goods shop. A good or bad location will have a significant impact on your turnover, so ensure you approach this stage with care.
The ideal location of your store will depend on its concept and the type of goods being sold. A relatively cheap or mid-range leather goods shop would fit in well within a shopping centre or city centre high street, for example. A high-end leather goods store, however, would be better placed in an upscale residential area.
Keep in mind that the rent will be higher for a downtown location than somewhere just outside the city. It's up to you to find the right balance, especially in terms of how much room you'll need to display your products and store your stock.
Choosing the legal structure of your leather goods shop
Once you've found the premises of your future leather goods shop, you need to decide its legal form.
Choosing your store's legal form is a vital step when opening your leather good shop as it will impact:
- How much your business is taxed
- Your taxation at a personal level
- Your responsibility for the company's debts in the event of bankruptcy
The choice will depend on your preferences and personal situation (e.g. the number of partners involved in your venture, the amount of start-up capital at your disposal, etc.).
Several legal forms are possible, so they should all be carefully considered before making your decision.
The staffing and equipment needs of a leather goods shop
The next stage in our guide on how to open a leather goods shop is to look at the staff and equipment required for the smooth running of your business.
A leather goods shop must, first of all, have display cabinets that showcase your products. Since such products can range from compact cardholders to overnight travel bags, you'll need display cases that are large enough to hold your whole leather goods range.
You'll need to think about decorative elements such as mood lighting and attractive wall hangings so you can create the sort of aesthetic that makes customers feel at ease in your store. Next up is, of course, all the items required to facilitate sales, including a few tills, a card machine and a security system to prevent theft.
You'll also need to allocate a significant chunk of your budget to purchase your initial stock.
When developing the financial forecast to open your leather goods shop, you must also carefully consider your staffing needs.
This means estimating how many salespeople you'll need based on the size of your store and your operating hours.
It's essential to recruit people who, like you, are passionate about leather goods and can share their love and knowledge of the industry with customers. So hire friendly staff with experience in either the retail world or, better yet, the leather retail world, or who at least can pair strong customer service skills with an enthusiasm for leather goods.
Extra administrative costs
You'll also need to consider several additional services when opening a leather goods shop, including a marketing agency (if necessary) or the hiring of a chartered accountant for the proper maintenance of your accounts and administrative management tasks to open your leather goods store. You may also need to enlist a cleaning company to help maintain your store or workshop, or purchase a premise license so you can play music in-store.
In any case, don't forget to account for these services in your financial forecast. To ensure you estimate these expenses as accurately as possible, get in touch with several professionals and ask them for quotes.
Setting out the marketing plan for a leather goods shop
Opening a leather goods shop means attracting new customers. They're the key to any successful business launch and you will need to build customer loyalty following a strong marketing plan.
Having a strong website is a key element for any incoming leather shop. It should showcase the striking aesthetic of your pieces through eye-catching photography, inform site visitors about the quality of each product and, above all, place a spotlight on what makes your brand unique and more desirable than your competitors.
Social media is also a great way to build up a community of those who appreciate your brand, solidifying a base of loyal customers. You can use Instagram to share the best pieces from your line, as well as using the stories and post features to offer interactive advice on how to dress well and advertise discounts.
You should also consider handing flyers out to make yourself known amongst local residents.
Writing the business plan for a leather goods shop
Once you have gathered all the information in the previous sections, you can start writing the business plan for your leather goods shop.
The business plan is made up of two major components:
- A financial forecast that aims to highlight the potential profitability of the project and the need for initial financing.
- A written part that presents, in detail, your project, the team, your business strategy, and your medium-term objectives.
The business plan is the document with which you will try to attract funding from your bank or potential investors, so you need to make it impeccable.
If you are not used to writing business plans, a good solution would be to use online business plan software.
There are several advantages to using specialized software:
- You are guided through the writing process by detailed instructions and examples for each part of the plan.
- You can be inspired by already written business plan templates
- You can easily make your financial forecast by letting the software take care of the accounting aspects for you.
- You get a professional document, formatted and ready to be sent to your bank.
If you are interested in this type of solution, you can try our software for free by clicking here.
Securing funding for a leather goods shop
From purchasing stock to marketing your products, launching a leather goods shop requires significant investment.
First of all, you must estimate the amount of money that you and your potential partners can personally devote to your project. Even if the sum seems very modest in comparison to what you need to raise, it's important that you don't neglect equity contribution. It's highly regarded by institutional investors as they see it as tangible proof of your dedication to the venture.
You can also apply for a professional loan from a bank to finance part of the start-up costs, whether that involves purchasing bespoke leather pieces online or kitting out the premises with cool furniture. Remember to submit applications to different banks so that you can compare offers and pick whichever one works best for you.
Crowdfunding is another option. Crowdfunding allows you to collect donations or raise equity from family members or kind strangers who believe in your project.
You can even raise awareness of this initiative by awarding donors with ‘counter-gifts’, including a wallet or a discount on their first purchase.
Finally, also think about state aid for business creators and buyers. This may enable you to benefit from a low interest loan, for example.
Now you know everything there is to know about how to open a leather goods shop. We hope you found this article useful. If you have any questions or queries at all please do not hesitate to contact our team.
Also on The Business Plan Shop
- How to open a clothes shop without money
- How to open a shoe shop
- Business plan template for a leather goods shop
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