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According to Small Business Administration (SBA) data, the median cost to start a restaurant in 2018 was $75,000. A survey from restaurantowner.com found that pre-opening expenses range from $10,000 to $50,000, with total costs ranging from $175,500 to $750,000.

But what exactly do these startup costs include? And how can you accurately estimate and manage them for your own restaurant?

Up-front startup costs for your restaurant. 

Your up-front startup costs are the costs you’ll incur before you even open the doors on the big opening night. Before customers start flooding in, you need a physical space, tables, menus, ovens, employees, and much more. Let’s start with what are typically the most expensive assets of all—the location and property.

Typical startup costs for a restaurant

Here is a list of some common startup costs you'll likely encounter as you prepare to open your restaurant:

1. Lease or purchase of property - The cost of leasing or buying a property can vary widely depending on location. Prime real estate in popular areas will be more expensive. According to restaurantowner.com, the median monthly cost for leasing a restaurant space is $5,000.
2. Renovation and interior design - Making the space fit your restaurant's theme and ensuring it meets health and safety codes can be a significant expense.
3. Kitchen equipment and furnishings - This includes everything from ovens and stoves to commercial refrigerators and dishwashers. Tables, chairs, bar stools, and other furniture will be needed to make your guests feel comfortable.
4. Licenses and permits - Various permits and licenses are required to operate a restaurant, such as a food service license, liquor license, and health department permit.
5. Initial inventory - This includes food, beverages, and other consumables you need to start serving.
6. Staff wages and training - Before opening, you'll need to hire and train staff. This cost includes their wages and any training materials.
7. Marketing and advertising costs - To attract customers to your new restaurant, you'll need to invest in marketing and advertising.
8. Technology - A point of sale (POS) system, payment terminal, cash drawer, employee scheduling software, kitchen display system, and reservation tool are all basic technology to acquire.

Remember, these costs can vary significantly based on your location, the size of your restaurant, and the concept you've chosen. Be sure to do your homework to accurately estimate these costs.

1. Location and property

Location is a crucial consideration in the restaurant business. Choosing a back-alley spot with low foot traffic may be cost-effective, but a prime location in a busy area comes with a higher price tag. Unlike brick-and-mortar restaurants, food trucks have the advantage of mobility.

Before opening a restaurant, assess the market value of the planned location using tools like LoopNet. This will help you find a space that aligns with your budget and goals. Keep in mind that most spaces require some remodeling, which can range from a simple paint job to a full-scale renovation.

Consider the needs of your restaurant and the available space. Will you have enough room for a kitchen, serving area, and seating? Prioritize customer seating, if necessary. Take into account the costs of renovations, both inside and outside the restaurant. Don't overlook branding expenses like logo design and signage, as they can add up quickly.

Buying vs. leasing a property

One of the first decisions you'll encounter when setting up your restaurant is whether to buy or lease your property. Both options come with their own pros and cons.

Purchasing a property can be a significant upfront expense, but it means you own the space and have complete control over it. You can customize it to your heart's content without having to get a landlord's approval. However, it may tie up a large amount of capital that could be used elsewhere in the business.

Leasing, on the other hand, often involves a lower initial outlay, leaving more funds for operational expenses and growth. It also offers more flexibility if your business needs change. However, you're at the mercy of your landlord when it comes to rent increases, renovations, and lease renewals. When making this decision, consider factors such as your budget, long-term business goals, and the real estate market in your desired location.

2. Renovation and interior design

An essential element of your restaurant's startup costs is the renovation and interior design. This process makes the space align with the theme and vibe of your restaurant, giving it a unique personality and creating an atmosphere that resonates with your target audience. It's not just about aesthetics—your restaurant's interior design should also prioritize functionality and comply with health and safety standards.

The cost of renovation can vary dramatically depending on the scale of changes needed. If your space previously housed a restaurant and the layout suits your concept, you may need to do little more than a paint job and some minor updates. However, if you're converting a different type of space into a restaurant, you could be looking at extensive plumbing, electrical, and construction work.

When budgeting for interior design, also consider the cost of hiring professionals, if needed. For example, an interior designer could help bring your vision to life, while a contractor will oversee the construction work.

3. Equipment and supplies

Now that you have the location, you’re going to need the equipment to get cooking and serving. There’s a lot to consider:

• Tables and chairs - Whether you’re splurging on chic restaurant chairs or going homely with long wooden benches, you’ll need to budget accordingly.
• Commercial cooking equipment - Your typical kitchen oven isn’t going to do the trick when you’re cooking for a room of 75 to 150 people. You’re going to need commercial-grade ovens, stovetops, blenders, deep fryers, and much more.
• Specialty cooking equipment - Don’t forget to incorporate the cost of specialty equipment. For example, if you need a stone oven to make your signature pizza, you’re looking at a $10,000 to $20,000 investment, at minimum.
• Plates, cutlery, and cooking utensils - You’ll need to supply everything from the napkin your customer uses to the spatula your chef wields to flip pancakes.  

4. Licensing and paperwork

This is probably the least fun part—sorry! To avoid the government kicking down your doors, you’ll need to obtain all the necessary licenses and permits.

Toast provides a handy checklist of all the licenses and permits you’ll need. Here’s a quick list for reference:

1. Business license
2. Employer identification number (EIN)
3. Certificate of occupancy
4. Food service license
5. Sign permit
6. Music license
7. Resale permit
8. Building health permit
9. Employee health permit
10. Seller’s permit
11. Liquor license
12. Valet parking permit
13. Dumpster placement permit
14. Live entertainment license
15. Pool table license

The cost of any individual license can range from $100 to $5,000 or more, depending on your state.

5. Initial inventory

When estimating how much food you’ll need and how much it’ll cost, try working backward. Look at your menu first and determine what ingredients you’ll need for each dish. Then, figure out the price of the amount of ingredients in that single dish. Once you know how much it costs to produce that meal, multiply that by the number of meals you plan to serve in your first week.

6. Dream team hiring and training

Before your restaurant can open its doors, it's crucial to assemble a team that will help deliver an exceptional dining experience. The number of employees you'll need can depend on factors such as your restaurant's size, layout, and service style. For instance, a small cafe may only require a handful of staff members, while a large fine dining restaurant may need a significant team across various roles, including kitchen staff, waitstaff, bartenders, hosts, and managers.

Budgeting for staff involves not only their wages, but also the costs associated with recruitment, training, and employee benefits. When determining how much to budget for staff, start by considering the roles you need to fill and the industry's typical pay rates for these positions. Then, factor in additional costs, such as uniforms, training materials, and payroll taxes. Also, keep in mind that labor costs can fluctuate and may increase during peak times when you may need additional staff.

7. Marketing and public relations

Regardless if you’ve secured a prime location in the heart of the city or if your to-die-for burrito is absolutely irresistible, you’re going to need a healthy marketing budget to gain momentum. Don’t make the mistake of thinking social media and word of mouth will suffice—there’s only so much a few tweets and your best friends’ network can do.

Signage, ads, PR services, and digital marketing could cost you thousands of dollars, even before the grand opening. You don’t want to get talked into an expensive, lengthy contract with a marketing agency before you’ve seen the ROI (return on investment), but you also don’t want the opening night to be a penny-pinching ghost town. You’ll need to find the delicate balance and decide how much you’re willing to invest in marketing your restaurant.

Do some market research and see what similar businesses and competitors did for their initial marketing efforts. What do you feel went right? What went wrong? A basic analysis like this will help you decide where (and where not) to invest your valuable capital. 

8. Technology stack

Lastly, you’ll need to consider the cost of the technology you use. This stack is everything from your POS system to your reservation management tools to your kitchen display systems.

Different options for a POS system

Choosing the right POS system is pivotal in the smooth operation of your restaurant. The POS serves as the central component for your business, where sales, inventory, and customer management merge. Here are a few options to consider:

1. Square POS - Square is a popular choice for small businesses, including restaurants. It offers a free software option and affordable hardware with a unique pay-as-you-go payment processing system. A square payment reader can cost as little as $10.
2. Toast POS - Designed specifically for the restaurant industry, Toast offers features like tableside ordering, menu management, and real-time reporting. It also comes with a robust kitchen display system. The pay-as-you-go model provides all of the software and hardware up front at no cost with a slightly higher processing fee than if you pay for the hardware up front.
3. TouchBistro - TouchBistro is an iPad-based POS system designed for restaurateurs. It provides tableside ordering, floor plan and table management, and the ability to process cash, card, and mobile payments. Pricing starts at $69 per month.
4. Upserve - Upserve by Lightspeed offers an all-in-one restaurant management system that includes an intuitive POS, inventory tracking, and detailed analytics—all aimed at improving your bottom line. Pricing starts at $69 per month.
5. Clover - Clover offers both small handheld devices and larger countertop setups, making it a suitable option for various types of restaurants. It's a versatile system with an app market for customization. Pricing starts at $100 per month.

Reservation systems for restaurants

Managing reservations effectively is crucial to the smooth running of your restaurant. A reliable reservation system can help you manage your tables efficiently, reduce no-shows, and enhance your customer experience. Here are a few options to consider:

1. OpenTable - OpenTable is one of the most widely used reservation systems worldwide. It allows customers to make online reservations and reviews, and it offers a rewards program for frequent diners. Its comprehensive features include table management, reservation management, and guest management. Pricing starts at $39 per month.
2. Resy - Resy is a robust platform that offers not just reservations, but also waitlist management, table management, and ticketing for events. Resy's system is designed to give restaurants greater control over their dining rooms and a direct line to their guests. Pricing starts at $249 per month.
3. Yelp Reservations - Yelp Reservations comes with table management, waitlist management, and a reservation system. It's perfect for small to midsize restaurants looking for a straightforward, user-friendly solution. Pricing starts at $99 per month with the first 60 days free.
4. EatApp - This system is a comprehensive restaurant management software that provides online booking, table management, sales analytics, and more. EatApp also integrates with other systems, including POS and delivery platforms, making it a fitting option if you prefer an all-in-one solution. Pricing starts at $0 per month.
5. Tock - Tock is a more expansive platform that offers pre-paid reservations, deposit reservations, and traditional reservations. This system is ideal for restaurants that offer unique dining experiences or host special events. Pricing starts at $249 per month.

Upkeep expenses for your restaurant. 

Once the doors are open, you’ll also need to plan for how you’re going to keep them open. Some of your upfront startup costs will suffice, but you’ll need additional cash on hand to handle the upkeep.

1. Cost of goods sold

The cost of goods sold (COGS) is the total direct costs of producing the products or services you sell. It includes all expenses related to purchasing and manufacturing your menu items, such as ingredients, packaging, and labor. Tracking your COGS is essential for managing costs and setting prices that will help generate a profit. You’ll need to watch inflation, supplier cost fluctuations, and demand to make sure you’re adequately stocked and correctly pricing your menu.

2. Ongoing hiring and training

Unless you magically solve the restaurant turnover problem, you’re going to need to account for ongoing hiring and training. With most restaurant employees lasting less than a year, you’ll be continually hiring and training new employees—it’s a never-ending process. Plus, you’ll need to keep current employees’ skills and discipline fresh, as well.

Investing money into training your staff can also help you avoid costly mistakes. Trained staff may be more expensive, but they’ll also work more efficiently and improve the customer experience.

3. Building and equipment maintenance

No matter how new or nice your equipment is, it’ll eventually break—it always does. Instead of waiting for your equipment to die so you can replace it, invest money to regularly clean and maintain your existing machines and devices. If disaster strikes and your necessary equipment kicks the bucket without much notice, look into getting equipment financing to help cover the immediate fixes.

An unexpected burnt-out oven can put a real dent in your financial forecasts—plan ahead! Make sure to include building and upkeep costs in your monthly and annual budgets. 

4. Permits and licensing renewal

Remember all those fun permits and licenses we talked about before? Unfortunately, you’re going to need to renew most of these licenses at one point or another—and some you’ll need to renew annually. While it’ll only cost you a few hundred dollars here or there, keep these expenses in mind when doing your budgeting.

5. Ongoing marketing

Marketing is far from a one-and-done deal. After your grand opening and as time goes on, you’ll secure (or hopefully you’ll secure) a favorite place in the hearts of a select few. You can count on these people to be your regulars. Not only will these individuals feed themselves on the regular at your restaurant, but they’ll also advocate for you and occasionally bring in some new business. 

But unless you’re being featured as a top restaurant in town—or you have a gigantic fluorescent sign that everyone in a highly foot-trafficked location can see—you’re going to need to further market your restaurant. Digital ads, social media, email marketing, review sites, local news coverage—anything will help! Try new ideas, drop old ones, and continue experimenting to see what works best. But whatever you do, never stop marketing your business…ever.

6. Utility costs

You can expect to spend around 5% of your total costs on utilities, and while that might seem tiny, it’s an expense you have to plan on month after month. Depending on the size of your restaurant, you could be paying anywhere from $5,000 to $20,000 annually. Here are the utilities you’ll need to budget for:

• Electricity
• Water
• Natural gas
• Internet
• Cable

These are the major ongoing expenses you can expect, but your unique restaurant will likely have unique expenses. Don’t forget to budget for those, too.

7. Professional services

As a small business owner, you’re likely tempted to go it alone and wear all the hats: owner, floor manager, baker, waiter, accountant, lawyer, and more. Don’t get stuck in this trap—learn early on to delegate, delegate, delegate. Starting day one, consider who you can pay to help you and if they’ll be worth it:

• Attorneys - There are permits to be had, licenses to be acquired, and regulations to be followed. Instead of sifting through mountains of paperwork and legal jargon, think about paying for some help.
• Accountants - From your taxes to your bookkeeping to your business strategy, accountants can help with it all. Don’t wait until tax season to finally get some financial help.
• Construction contractors - We all want to be Chip and Joanna Gaines, but this desire could lead your restaurant construction to drag on like your unfinished garage project. Let the pros do it right from the start.
• Marketers - The physical and digital marketing landscapes are tricky beasts to navigate. If you don’t have any marketing experience, consider hiring a freelancer or an agency to lend you a hand. 

8. Insurance

Insurance is an indispensable part of operating a restaurant business. It safeguards your investment against unforeseen circumstances like property damage, employee injuries, or customer lawsuits. Here are the types of insurance you should consider:

• General liability insurance - This broad insurance coverage protects your restaurant from claims such as bodily injury, property damage, or personal injury. It's essential in handling customer injury or property damage claims.
• Property insurance - This policy covers your restaurant building, the property inside it, and loss of income due to a disaster. It's vital if you own your restaurant building or have invested heavily in kitchen equipment.
• Workers' compensation insurance - It's mandatory in most states if you have employees. This policy covers medical treatment, disability, and death benefits in the event an employee is injured or dies as a result of work with your business.
• Liquor liability insurance - If your restaurant serves alcohol, you'll need this policy. It covers your legal fees and damages if you're sued over a patron's actions after they consumed alcohol at your restaurant.
• Food contamination insurance - This covers your losses if you have to close your restaurant temporarily due to a contagious disease outbreak or if a power outage spoils your food.

The cost of insurance varies based on your restaurant's location, size, and offerings. It's advisable to work with an insurance agent who specializes in restaurant insurance to get the most suitable coverage.

9. Payment processing fees

Every time a customer pays with a credit or debit card, your restaurant will incur a payment processing fee. These fees are charged by the card networks (like Visa, MasterCard, and American Express) and your payment processor. The exact amount varies, but it typically ranges from 1.5% to 3.5% of the transaction amount.

Keep in mind that premium cards and online transactions usually have higher fees. Also, don't forget about PCI compliance costs and any fees associated with your POS system. To manage these expenses, shop around for a payment processor that offers competitive rates and fully understands the needs of your restaurant business.

Raising funds for your restaurant.

Raising funds for your restaurant can be a challenging task, but with the right approach, it's attainable. Here's how to secure funding for your gastronomic venture:

1. Personal savings and friends and family - Personal savings are often the first source of funding. You might also consider reaching out to friends and family who believe in your vision and are willing to invest in your restaurant. Make sure to formalize all agreements to avoid any misunderstandings in the future.
2. Bank loans - Traditional bank loans are a common source of funding for restaurants. You'll need a solid business plan, a good credit history, and possibly some collateral. The SBA offers loan programs that can make it easier to qualify for a bank loan.
3. Online lenders - Online lenders can be a good option for restaurant owners who need funds quickly or don't qualify for traditional bank loans. These lenders often have less stringent criteria and faster approval times, but their interest rates can be higher.
4. Angel investors and venture capitalists - These are individuals or firms who provide capital to start-ups in exchange for equity. They are typically interested in high-growth businesses, so you'll need a compelling business proposal and a clear path to profitability to attract these types of investors.
5. Crowdfunding - Crowdfunding platforms like Kickstarter and GoFundMe allow you to raise money from the general public. This can be a great way to generate funds and create buzz for your restaurant, but it also requires a strong marketing strategy.
6. Equipment financing - Equipment financing allows you to borrow money specifically for buying restaurant equipment, often with the equipment itself as collateral. This can be a good option if you need expensive kitchen appliances or other equipment.

Remember, every funding option has its pros and cons, so it's crucial to thoroughly research and consider each one before deciding. Professional advice from a financial advisor or accountant can also be beneficial in making your decision.

Put it all together.

After researching and selecting options for each of the categories discussed, create a final budget for your restaurant.

1. Building rent or mortgage
2. Renovations
3. Equipment and supplies
4. Reservation system
5. Cost of goods sold (COGS)
6. Hiring and training
7. Building and equipment maintenance
8. Permits and licensing
9. Marketing
10. Utility costs
11. Professional services
12. Insurance
13. Payment processing fees

Looking for funding for your restaurant? Learn more about restaurant business loans.

If you own or run a restaurant, you know all about the disruption in the industry. Digital technologies are opening up new avenues for customers to purchase food, and shifting consumer tastes are leading to demand for more varied menu items. While this kind of change can bring uncertainty, it also creates possibilities. Regardless of how much you want your business to evolve in the coming year, boosting restaurant sales is a priority for everyone.

Whether you’re looking to revolutionize your menu, open a new location, or increase local awareness, here’s a look at 15 tried-and-true strategies to help you grow your restaurant.

1. Attract new customers to your restaurant.

The best marketing options for many restaurants involve hyperlocal promotions that bring nearby residents through the doors. Digital advertising via the web, email, and social media is also critical in broadening your audience. When it comes to boosting sales, blending email marketing, classic options like direct mail, and online relationship-building through social media can drive brand awareness and help get the attention of the locals.

Building your Yelp community by engaging with reviewers and venturing into similar online sites can also help you gain recognition from locals and also attract visitors from out of town, boosting restaurant sales in the long run. While these tactics are powerful, they also come with costs. Strategic small business loans can give you the jolt of funding necessary to get off the ground in this area. Online lenders can offer short term financing options that let you launch new projects without risking significant debt.

2. Use retention strategies to build loyalty.

Retaining existing customers is often less expensive than attracting new ones. Launching a customer loyalty program that rewards regulars can help you keep customers coming back. You may also want to consider giving customers an opportunity to voice their opinions about your menu or ambiance through online surveys or similar feedback tools.

3. Offer diverse purchasing options.

Technological advances have made it possible to give restaurant customers a choice in who and how they patronize. Boosting restaurant sales is easier if your patrons can make purchases however they prefer. Digital sales platforms, however, come with a caveat. Many online food ordering apps are popular among consumers, but they also take a cut of sales. Building your own online ordering system and mobile app lets you provide convenience without losing a portion of the sales. A small business loan can help you upgrade your web systems and build a smartphone app.

In addition to enhancing your digital offering, keep in mind that delivery, prepared dishes, and similar services can also diversify customer ordering options, boosting restaurant sales. A small business loan can provide funding for you to hire delivery drivers or purchase in bulk from suppliers to create those ready-to-go meals.

4. Maximize table turnover rate.

Moving more customers through the restaurant—without adversely affecting their experience by making them feel rushed—is a great way to increase revenue. A few options to improve efficiency include:

• Deploying self-service kiosks at tables.
• Implementing fully integrated kitchen management and point-of-sale solutions to ensure that kitchen workers get orders as quickly as possible and simplify operations for servers.
• Hiring more front-of-house staff to ensure prompt, efficient service.

Whether you’re making equipment investments or trying to cover salaries while you try new things, small business funding can position you to improve your table turnover rate.

5. Train your staff.

Ensure your staff is well-trained and knowledgeable about your menu items. Customers appreciate recommendations, and good service can create loyal patrons. Offering ongoing training can also keep your staff motivated. Happy employees make for happy customers and ultimately result in increased sales.

To maintain high-quality service and keep your team well-informed and motivated, consider implementing one or more of these restaurant staff training programs:

• Product knowledge training - This program focuses on educating staff about the details of your menu items, including ingredients, preparation methods, and ideal pairings. It helps waitstaff offer informed recommendations and answer customer queries with confidence.
• Customer service training - This training focuses on enhancing communication skills, managing customer expectations, and resolving complaints effectively. It can help improve customer satisfaction and loyalty.
• Health and safety training - Essential for all staff, this program teaches hygiene practices, safe food handling and preparation, and emergency procedures.
• Certification programs - These can include ServSafe Certification for food handling or Sommelier courses for wine knowledge. They provide professional growth opportunities for staff and improve the dining experience for your customers.
• Leadership training - For staff who are either in or moving into management roles, this program focuses on team management, conflict resolution, and leadership skills. It can help maintain a positive and productive work environment.

Remember, investing in staff training can lead to better customer experiences and increased restaurant sales in the long run.

6. Leverage social media.

Social media is not just a platform for social interaction, it's a powerful marketing tool. Properly utilized, it can be an effective element in your strategy to increase restaurant sales.

Promote user-generated content

Encourage your customers to share their dining experiences on their social media platforms. You can run contests where customers post pictures of their favorite dishes with a unique hashtag related to your restaurant. User-generated content not only increases your online presence but also builds trust and authenticity.

Collaborate with influencers

Consider partnering with food bloggers, influencers, or local celebrities who can promote your restaurant to their followers. This kind of promotion can dramatically boost your restaurant's visibility, especially if the influencer's audience aligns with your target demographic.

Share behind-the-scenes content

Customers appreciate transparency, and providing behind-the-scenes content can help humanize your brand. Share images or videos of your kitchen staff in action, the journey of your dishes from prep to plate, or even your team's fun moments. This gives your audience a glimpse into your restaurant's operations and showcases your commitment to quality and service.

Utilize Instagram stories and highlights

Use Instagram's Stories feature to promote daily specials, events, or limited-time offers. You can also showcase customer testimonials or positive reviews in your stories. Further, make use of the Highlights feature to permanently showcase important stories like your menu, special events, and customer experiences. This helps new followers quickly understand what your restaurant has to offer.

7. Offer special promotions.

Regularly run special offers or promotions to encourage more visits. This could be a happy hour, a discount on certain days of the week, or a seasonal offer.

Here are some steps to create an effective promotion:

Identify your goals

Firstly, define what you hope to achieve with the promotion. Do you want to attract new customers, encourage repeat visits, or perhaps generate more sales during a particular time slot? Understanding your objectives will guide you in creating a promotion that yields the desired results.

Know your audience

Understand who your customers are. What kind of deals would attract them? Are they more likely to respond to a discount on a specific meal or a 'buy one get one free' offer? Your promotion should be tailored to appeal to your target demographic.

Design your promotion

Craft your offer to be tempting to customers and profitable for your business. The design of your promotion should also be aligned with your brand. Keep the offer simple and ensure the terms are clear and easy to understand.

Promote your promotion

Spread the word about your promotion using various channels. Send emails to your mailing list, post them on your social media platforms, and display them prominently on your website. Consider using local advertising or even word of mouth to reach people in your community.

Analyze the results

After running the promotion, evaluate its effectiveness. Was there an increase in sales? Did you attract new customers or increase repeat visits? Analyzing the results will help you understand what worked and what didn't, and this information can be used to improve future promotions. Remember, the goal is not just to increase restaurant sales, but to also provide value to your customers and foster loyalty.

8. Optimize your menu.

Your menu is a critical marketing tool. Make sure it's well-designed and highlights your special dishes. You can also use upselling techniques on your menu to increase the average spend per customer.

Use strategic pricing

Strategic pricing can greatly influence a customer's decision to order a particular dish. Place your higher-profit items near cheaper ones to make them seem like a better value. Consider using bundle deals or "meal deals" to encourage customers to spend more.

Highlight seasonal items

Customers appreciate variety and are often drawn to limited-time offerings. Promote seasonal dishes or drinks to create a sense of urgency and entice customers to order them before they're gone.

Offer health-conscious options

With the growing trend towards health and wellness, offering healthy menu items can attract a new demographic of customers. Clearly mark these items on your menu to make it easy for health-conscious individuals to find them.

Create a well-organized menu

Group related items together and use clear, readable fonts. A well-organized menu improves the customer experience and makes it easier for them to make a decision.

Use mouth-watering descriptions

Good food descriptions can make a dish more appealing. Use evocative language to make your menu items sound irresistible.

Remember, your menu is often the first point of contact between your customers and your food. Making it as appealing and easy to navigate as possible can go a long way in boosting your restaurant sales.

9. Host events

Hosting events such as trivia nights, live music, or cooking classes can attract new customers and create a vibrant atmosphere.

How to host an event at your restaurant

1. Understand your customer base

Before planning the event, take a moment to understand your customers. What interests them? What type of events are they likely to attend? Use this information to decide on the type of event that would resonate most with your target audience.

2. Plan the event

Once you have decided on the type of event, it's time to plan. What will be the theme? How will you decorate the restaurant? What food and drink specials will you offer? Remember to consider the logistics, such as the date, time, and number of staff needed.

3. Promote the event

Start promoting your event well in advance. Use all available channels—your website, social media, newsletters, in-house posters, local newspapers, and even word of mouth. Provide clear information about the event—date, time, cost, special offers, and what attendees can expect.

4. Prepare your staff

Make sure your staff is well-prepared. They should understand the timeline of the event, their responsibilities, the menu changes, and to expect a higher-than-usual volume of customers. This preparation can help ensure smooth operations on the event day.

5. Create a festive atmosphere

On the day of the event, make your restaurant feel special. Decorations, music, and lighting can all contribute to the atmosphere and make your guests feel excited and welcomed.

6. Capture the moments

Consider hiring a professional photographer or encouraging your staff to take photos. These images can be used later for promotional purposes and to share on social media, creating anticipation for future events.

7. Gather feedback

After the event, take the time to gather feedback from your customers and staff. This will help you understand what worked well and what could be improved for future events.

Hosting events in your restaurant is a great way to bring in new customers, delight existing ones, and create a vibrant, community-oriented atmosphere. With careful planning and execution, these events can significantly boost your restaurant's reputation and sales.

10. Partner with local businesses.

Collaborate with local businesses to cross-promote each other. This can be a great way to reach new potential customers in your area.

Consider partnerships like hosting a joint event with a local business that complements your services—such as a wine tasting with a local vineyard or a dessert pairing with a local bakery. You might also consider partnering with nearby hotels or tourism companies to offer special deals or packages for travelers.

Additionally, cross-promotion can be as simple as trading promotional materials—leaving your menus or coupons at a local retailer, while displaying their flyers or products in your restaurant.

Engaging in community events, such as local festivals or markets, can also facilitate beneficial partnerships and increase visibility. Lastly, consider a loyalty program that integrates rewards from other local businesses, motivating customers to support not just your restaurant, but your local business community as a whole.

11. Upselling and cross-selling.

One way to increase restaurant sales is through the techniques of upselling and cross-selling.

Upselling involves suggesting higher-priced items or add-ons to customers to increase the overall value of their orders. For example, offering premium sides, encouraging a move from a regular to a large size, or suggesting superior-quality beverages can enhance the customers' dining experience while increasing your sales.

Cross-selling is the practice of suggesting related but different items. For instance, if a customer orders a steak, suggest a suitable wine pairing or recommend a complementary dessert. However, it's essential to train your staff appropriately so that upselling and cross-selling feel like excellent customer service, rather than pushy sales tactics. These strategies not only boost your sales, but also allow customers to discover new favorite items on your menu.

12. Provide excellent customer service.

Excellent customer service can turn first-time visitors into loyal customers. Ensure your staff is attentive, friendly, and professional.

Train your staff for personalized service:

• Get to know regular customers, remember their preferences, or even their names.
• Build a strong customer service culture to significantly boost customer satisfaction and increase sales.
• Implement a comprehensive employee training program to enhance skills in dealing with different customers and situations.
• Empower staff to make customer-centric decisions for improved satisfaction and loyalty.

Assess and improve service quality:

• Consider conducting customer surveys to assess service quality and identify areas for improvement.
• Handle customer complaints promptly and professionally.

13. Update your décor.

The ambiance of your restaurant can contribute to your customer's overall dining experience. Consider updating your décor to make your restaurant more appealing.

Lighting

This includes considering the lighting, which should enhance the mood of the restaurant. Soft, warm lighting can create a cozy and intimate atmosphere, while bright, cool lighting can make the space feel energetic and lively.

Music

The choice of music can also significantly impact the ambiance of the restaurant. Choose music that matches the theme of your restaurant and the preferences of your clientele.

Seating

Comfortable seating arrangements and high-quality furnishings also add to the overall experience.

Decor

Consider showcasing local art or cultural elements to give your restaurant a unique character and a local touch.

14. Implement a reservation system.

If you don't already have a reservation system in place, consider implementing one. A reservation system provides numerous benefits that can increase restaurant sales.

Firstly, it allows for efficient table management, ensuring that you can maximize occupancy and serve as many customers as possible.

Secondly, it provides a convenient way for customers to ensure they have a table, increasing their likelihood of choosing your restaurant over others.

Thirdly, having advanced knowledge of reservations can help with staff scheduling and inventory planning, reducing operational costs and waste.

Finally, a reservation system can also provide valuable customer data, allowing you to understand peak times and customer preferences, and enabling personalized marketing.

15. Offer catering services.

Expanding your business to offer catering services can significantly boost your restaurant's revenue. Catering allows you to serve large groups at once and exposes your food to new potential customers.

However, successful catering requires careful planning and execution. Consider investing in high-quality equipment and training staff to handle larger orders efficiently. Additionally, be sure to market your catering services through various channels such as social media and word-of-mouth advertising.

Catering can also lead to repeat business as satisfied customers may choose to host more events with your restaurant's food.

Funding holds the key to boosting restaurant sales.

Boosting restaurant sales is easier when you have capital on hand to support operations. The good news is that small business lending is changing. Restaurant owners today have more options than ever to seek a variety of loan types, so their financing strategies align with their growth strategies. Learn more about restaurant business loans.

When it comes to starting your own business, restaurants aren’t exactly the easiest choice. Luckily, foodie culture has hit its stride, and restaurant sales have been on the rise for several years now.

It will be a challenge, but as long as you come to the table fully prepared for success, the odds are in your favor. Here’s everything you need to know about starting a restaurant business.

How to open a restaurant.

Let's dive into the step-by-step roadmap of opening a restaurant, addressing everything from securing startup funds and choosing the ideal location, to devising a standout menu.

1. Decide what kind of restaurant to open.

You’ll want to consider many factors when deciding what type of restaurant to start. Pay attention to your target location and what kinds of restaurants find success there, while also avoiding oversaturated markets. Ultimately, you want your restaurant to fill a need.

Your budget is also important to consider. Some types of restaurants require bigger initial investments due to expensive machinery or the space required to execute the idea. Be realistic about what you can afford.

Franchise vs. independent restaurant

For some prospective restaurant owners, a franchise is the way to go. While you may have less creative control and need to pay fees, franchises already come with built-in brand recognition. On the other hand, independent restaurants allow for full creativity and uniqueness, but require more work in terms of establishing your name.

Pros and cons of opening a franchise

Pros and cons of starting an independent restaurant

Consider these factors to decide whether a franchise or an independent restaurant is the right choice for you.

Fast food vs. casual dining vs. fine dining

Each type of restaurant—fast food, casual dining, and fine dining—serves a distinct market and has its own unique set of considerations, pros, and cons. It's crucial to understand these differences when deciding what kind of restaurant you want to open.

Fine dining

Consider opening a restaurant in an area where people enjoy and can afford fine dining. This type of restaurant typically offers high-quality food, a sophisticated ambiance, and a higher price range. Fine dining establishments often come with significant startup costs.

Fast food

If your restaurant is located in a youth-oriented area (Ex: near a college campus) fast food or casual dining might be a better fit. Fast food restaurants serve food that is ordered and served quickly, targeting customers who prioritize convenience over a fine dining experience.

Fast-casual

Fast-casual restaurants, like Chipotle or local food trucks, offer a balance between fast service and higher-quality food, compared to traditional fast food chains like McDonald's or Taco Bell. This concept combines the efficiency of fast food with a more casual dining experience.

Fast-fine

Fast-fine dining is a newer concept that combines the elements of fine dining with more accessible prices and shorter wait times. These restaurants offer creative and elevated dishes, such as gourmet burgers or elevated pizza. Starting a fast-fine dining restaurant is more affordable compared to traditional fine dining establishments, making it a viable option for entrepreneurs with limited investment capital.

2. Create your menu.

Your menu is a crucial element of your restaurant, as it will ultimately determine the type of experience you provide for your customers. It's essential to strike a balance between creativity and practicality when devising your menu.

• Consider incorporating popular dishes and ingredients that appeal to a wide range of tastes.
• Be creative and offer unique items that set you apart from other restaurants in your area.
• Keep in mind the cost of ingredients and equipment needed to execute your menu items efficiently.
• Remember to consider dietary restrictions, such as vegetarian or gluten-free options.

3. Develop a restaurant business plan.

Once you’ve nailed down your idea, you’ll need to create a business plan. This step can feel like a lot of work, but it’s necessary. You’ll need to do extensive research regarding your restaurant’s concept and menu, the market for your restaurant, competitors, your management and employee team, marketing, financial projections, location, and more.

Here are the main components of most restaurant business plans.

1. Introduce your restaurant brand, which includes your logo, colors, and sign
2. Provide an overview of your restaurant concept
3. Give a sample menu with prices
4. Explain your management and employee plan
5. Lay out your restaurant design
6. Analyze your industry and target market
7. Investigate your competitors
8. Offer an analysis of your location
9. Write out a marketing plan
10. Create financial projections

You will rely on this document throughout the creation of your business, and you’re welcome to amend it as time goes on and your goals and projections shift. If you need to raise money from investors for your restaurant or apply for a business loan, your business plan will come in handy.

4. Obtain funding for your restaurant.

There are many options when it comes to finding money to start your restaurant. Whether you want to borrow from a bank, fund the restaurant yourself, or seek out investors, it’s important to explore all of your options before deciding on a funding method.

Bootstrapping

Bootstrapping is a startup funding method that doesn't involve external investors or credit. It aims to self-fund, starting with a small amount of initial "seed money" from personal savings or a friend/family. The business quickly generates revenue and reinvests it for growth.

The benefits of bootstrapping include avoiding debt and maintaining control and equity. However, seed money is limited, resulting in a small initial operation.

Business term loans

Business term loans are a traditional type of commercial loan where a lender provides a lump sum of cash up front, which is then repaid over a set period (the term) with a fixed or variable interest rate. These loans are incredibly flexible and can be used for various purposes, including working capital, business expansion, or purchasing equipment. However, they typically require a solid credit history and demonstrated ability to repay.

SBA loans

The Small Business Administration (SBA) doesn't lend money directly to small business owners. Instead, it sets guidelines and partners with lenders, community development organizations, and micro-lending institutions to provide these loans. SBA loans are renowned for having some of the best rates and terms available, making them a desirable option for many small businesses. They can be used for most business purposes, including long-term fixed assets and operating capital. However, the process for applying and qualifying can be lengthy and complex.

Equipment financing

One of the most significant upfront expenses for restaurant owners tends to be kitchen equipment, from pizza ovens to industrial refrigerators and POS systems. Many business owners use equipment financing to pay for these expensive pieces of equipment so they can maintain their restaurant’s cash flow.

Crowdfunding

Crowdfunding, a funding method where you accept small contributions from many people (like Kickstarter and Indiegogo), is similar to bootstrapping. It allows you to maintain control over your business and avoid debt. This funding is popular with startups selling physical products, as they can offer the product as a reward. Restaurants typically don't use crowdfunding, but it's possible. If you have a decent following or people who support your idea, crowdfunding might work for you.

Finding an angel investor

Startups often struggle to secure funding initially. Traditional banks typically require a couple of years in business before considering a loan, while investors demand proof of viability. This is where angel investors step in. They fund early-stage startups, even if they're risky because they believe in the idea and the people behind it. While accepting their money means giving up ownership, it doesn't need to be repaid if the business fails. However, angel investors may push for rapid growth. Learn more about the pros and cons of angel investors here.

5. Choose a location.

The most important factor when it comes to location is making sure that there’s a market for the type of restaurant you want to open in the place where you want to open it. However, that’s not the only factor.

Central vs. off-the-beaten-path

Typically, building a restaurant in a central, highly trafficked location means more business for you but also far higher rent prices. You may only be able to afford a location that’s a little off the beaten path. This location doesn’t mean you can’t succeed, but it does mean you’ll want to choose wisely. Consider whether this location is in a quieter area that’s easy to get to or a place that’s truly out of the way for most people. Don’t forget that hungry patrons value convenience heavily.

Parking

You might be tempted to snag a prime spot in a downtown area, but if parking is a hassle, that central location could actually hurt you. Consider first whether there’s any space for you to build parking into your restaurant’s design. 

Some restaurant types can get away with little to no parking—for example, food trucks, windows, and restaurants located at or very close to public transportation—but for the most part, no parking is a no-go. Again, this goes back to convenience.

Size

You need to make sure that the size of the lot or building you’re considering is appropriate for the business you want to open. The more involved your food, the bigger your kitchen will need to be. If you’re serving alcohol, you’ll need space for a bar. The equipment you’ll need is very important to keep in mind, as restaurant equipment can eat up more square footage than you’d think.

Clientele

You’ll need to consider the type of people who frequent the area you want to start your restaurant in, which includes both their taste in food and their purchasing power. You can have the best food in the world, but if the people in your neighborhood can’t afford it, you’ll never be successful. On the other hand, if you’re serving fast food burgers in a neighborhood that’s hyper-health-conscious and mostly vegetarian and vegan, you’ll struggle.

Design

The ambiance of your space depends largely on the location you choose. You need to pay attention to detail when browsing potential spaces to rent. If you’re opening a brunch spot or a cafe, natural light is a must, and a patio or outdoor space doesn’t hurt. If fine dining is your thing, you’ll want a space that’s impressive at first glance, whether for its modern features, its historic charm, or its vaulted ceilings.

Building code

You probably don’t want a space that’s going to involve lots of renovations before you can even get started. Make sure the space you’re looking at is up to code and safe. Also, assess whether or not it’s accessible to people with disabilities. Not only is this the right thing to do, but there are also a number of accessibility guidelines restaurants legally have to meet in order to be ADA-compliant.

6. Licenses and permits for opening a restaurant.

The restaurant business is one of the most highly regulated industries, and as such, you’ll need to secure a number of different licenses and permits before you can open your doors. The exact requirements vary by state, and it’s best to get a lawyer involved to make sure you have everything squared away.

Some of the more common licensing requirements include:

• Business licenses - These are issued at the state level.
• Food handler’s permit - All employees should obtain this.
• Liquor license - This is only for restaurants serving alcohol.
• Music license - This gives you permission to play copyrighted music in your establishment.

The U.S. Small Business Administration is a great resource for more information on applying for business licenses.

7. Designing your restaurant space.

Designing your restaurant space is just as important as crafting your menu. The ambiance and layout of your restaurant can greatly influence your customers' dining experience. Here are some key factors to consider:

• Dining area layout - Your dining area should be spacious and comfortable. Arrange the tables in a way that makes it easy for customers to move around and for staff to serve.
• Kitchen design - The kitchen should be designed for efficiency and safety. You'll need enough space for cooking, food preparation, storage, and dishwashing. The layout should facilitate a smooth workflow.
• Color scheme - Choose a color scheme that matches your restaurant's theme. Different colors can evoke different emotions—for example, reds and yellows are warm and appetizing, while blues and greens are calming.
• Lighting - Good lighting can set the mood for your restaurant. Consider using a mix of ambient, accent, and task lighting to achieve the desired atmosphere.
• Furniture - Invest in quality furniture that is durable, comfortable, and fits your restaurant's style. Remember, comfort can significantly enhance a customer's dining experience.
• Decor - The decor of your restaurant should reflect its concept or theme. This includes art, accessories, and table settings.
• Music and acoustics - The right music can enhance the ambiance of your space. However, it's also important to consider acoustics. Good acoustics can reduce noise levels and make the dining experience more pleasant.
• Restrooms - Don't forget about the restrooms. They should be clean, well-stocked, and accessible to all customers.

Designing your restaurant space is a great opportunity to express your restaurant's identity and create an environment where customers will enjoy dining.

8. Hiring management and employees for your restaurant.

This step is crucial for your restaurant's success. Your team can make or break your startup. Avoid common hiring mistakes like rushing the hiring process, overlooking contract workers, and not accepting support and delegation throughout.

Some tips for hiring include:

• Recruit talented and committed individuals by offering competitive pay and benefits.
• Don't skimp on compensation or hiring quality.
• Match industry rates and provide benefits.
• Identify potential rather than proven success to find valuable contributors without high costs.
• Offer non-monetary perks like upward mobility, employee incentives, and profit-sharing.
• Get creative by partnering with local businesses for discounts.

Common restaurant staff requirements

Running a restaurant requires a diverse set of skills. Depending on your restaurant's size and concept, you may need to hire for several different roles. Here's a quick overview of some common restaurant staff requirements.

• General manager - The general manager oversees the entire operation of the restaurant. They're responsible for hiring and training staff, ensuring customer satisfaction, and managing the restaurant's finances.
• Chef/cook - The chef or cook in your restaurant is responsible for preparing meals. They must be skilled in food preparation and knowledgeable about food safety standards.
• Kitchen staff - This includes various roles such as sous chefs, line cooks, and dishwashers. They assist the chef in food preparation and maintaining kitchen cleanliness.
• Server - Servers interact directly with customers, taking orders, serving food, and handling payments. They should be friendly, attentive, and have excellent communication skills.
• Bartender - If your restaurant serves alcohol, you'll need a bartender. They should have knowledge of a variety of drinks and excellent customer service skills.
• Host/hostess - The host or hostess greets customers as they arrive, escorts them to their table, and manages reservations.
• Busser - Bussers clear tables once customers have finished their meals, making the table ready for the next customers. They often assist servers and host/hostesses with various tasks.

Remember, each of these roles plays a crucial part in your restaurant's success. Therefore, it's important to take the time to find the right people for each position.

9. Finding suppliers for your restaurant.

A key aspect of running a successful restaurant is having reliable suppliers. From food ingredients to kitchen utensils, the quality of what you purchase impacts the overall experience you offer to your customers. Here are some types of suppliers you'll need, and some tips on where to find them.

Types of suppliers you'll need

• Food and beverage suppliers - These are perhaps the most crucial suppliers for your restaurant. You'll need to secure a steady supply of fresh produce, meat, dairy, baked goods, and beverages.
• Equipment suppliers - Your kitchen will need professional-grade cooking equipment, utensils, and appliances. This includes ovens, grills, refrigerators, cutlery, pots, and pans.
• Furniture suppliers - To create a comfortable and inviting environment, you'll need quality furniture. Suppliers can provide tables, chairs, booths, and outdoor seating.
• Cleaning supplies suppliers - Hygiene is paramount in any restaurant. Suppliers of cleaning products and sanitary equipment are therefore vital.
• POS system suppliers - A reliable point of sale (POS) system is crucial for managing orders, receipts, inventory, and sales data.
• Uniform suppliers - If your staff will be wearing uniforms, you'll need a supplier for these as well. The uniforms should be comfortable and stylish, reflecting your brand image.

Where to find suppliers

• Industry trade shows - These events are great opportunities to meet potential suppliers, see their products firsthand, and negotiate deals.
• Online directories - Websites, such as ThomasNet or Alibaba, list thousands of potential suppliers for all kinds of restaurant needs.
• Local farmer's markets - If you're committed to serving fresh, local produce, farmer's markets can be an excellent source for suppliers.
• Wholesale retailers - Stores like Costco or Sam's Club can provide bulk goods at discounted prices.
• Industry associations - Joining a restaurant association can provide you with access to their list of vetted suppliers.

Finding the right suppliers requires time and research. It's important to consider not just the cost, but also the quality of products, reliability, delivery schedules, and communication skills of the supplier. Remember, your suppliers are partners in your business, and their performance can impact your restaurant's success.

10. Launching and marketing your restaurant.

Once everything is in place and you’re finally ready to launch your restaurant, it’s time to publicize and spread the word! You’ll probably want to host a big event for the day or weekend your restaurant opens its doors to bring in new customers, but you should start marketing your restaurant and that launch date far in advance.

Online presence

Digital marketing is huge, and you should have an online presence that includes a website and at least a couple of social media channels. Facebook and Instagram are two of the most popular social media platforms for restaurants.

Spread the word

Consider offering a taste test to local food writers, bloggers, and influencers so they can spread the word. Also, contest marketing is highly effective and a great way to gain new followers. It can be wise to contract a digital marketing specialist to help you with this project.

On-the-ground marketing

While social media is important for publicizing your restaurant, on-the-ground marketing within your community is critical. Hang flyers around the neighborhood and inside other local businesses, and ask your friends to tell everyone they know.

Offer incentives

Spreading the word only goes so far. You have to offer an incentive for people to come and try something new. Host a launch party that’s packed with freebies, like samples, a live DJ, a giveaway, and more. Team up with local artists or artisans to host a pop-up in your restaurant. The more you collaborate, the further your network will spread.

Customer loyalty

You can also consider implementing a customer loyalty program, so that all of these new people feel compelled to come back to your restaurant. Most casual dining spots go with punch cards, whereas more upscale establishments might consider starting a points system of some sort. Opening a restaurant is an enormous task. However, with proper planning and preparation, it’s possible to make all of your culinary dreams come true. Looking into funding for your restaurant? Learn more about restaurant business loans.

With 10 million new small businesses opening their doors in the U.S. in 2021-2022—the highest years on record—a Lendio study reveals the top industries for starting a business. 

As the U.S. experiences this small business boom, Lendio analyzed which industries are most likely to grow and succeed in the next decade, helping to answer the question: What industry should new entrepreneurs explore?

Key findings

Lendio analyzed four metrics to determine the best industry to start a business, gauging the growth potential, ease of getting started, and longevity of the opportunity. Specifically, Lendio explored analysis on employment projections, production rate, 10-year survival rate by industry sector, and overall startup costs.

Our key findings include: 

• Healthcare opportunities remain hot. Five of the top industries that made the list are within the healthcare sector. Real estate, software publishing, office administration, print publishing, and manufacturing also made the cut.
• Agriculture, manufacturing have the best survival rates. Commodities, healthcare, and real estate rounded out the list with the highest survival rates compared to others.
• Professional, scientific, and technical services come in at the lowest cost of entry. Not far behind are construction and agriculture, clocking in with the lowest cost to start or acquire.

Top industries to start a business.

1. Home healthcare services

With the percentage of Americans over the age of 65 projected to reach over 20% of the population by 2040, it’s no surprise home healthcare is an industry with a big growth trajectory, expected to grow at an accelerated rate over the next 10 years. There are many factors that are driving this growth, including an increasing demand for medical services and home care benefits for Medicare recipients.

2. Outpatient care centers

Similar to home healthcare, an increase in the aging population is driving demand for outpatient care, which normally includes healthcare services that don’t require hospital admittance, such as X-rays, bloodwork, and routine checkups. For the population in general, technological advancements in the medical industry are producing a faster and more accessible patient experience for all ages. Moreover, demand for more local outpatient facilities has grown significantly in the post-pandemic period.

3. Individual and family services

Welfare assistance for individuals and families is a growing necessity. The U.S. market was valued at $233.6 billion in 2022, and the global market is expected to reach $2 trillion by 2030, at a compound annual growth rate (CAGR) of 10.8%. According to the U.S. Department of Health & Human Services, nearly half of the U.S. population lives in what is called a “health professionals shortage area,” with an estimated 8,326 mental health practitioners needed. 

4. Software publishers 

In today’s tech-powered world, software and software as a service (SaaS) are in high demand, especially at the enterprise level. Businesses are continuously looking for ways to streamline data and processes, which often leads to high payouts for publishers and developers. And demand for software is only expected to grow in the coming years, with revenue forecasts for the software industry are expected to reach more than $414 billion by 2028.

5. Computer systems design and related services

Staying on the tech train, these services help design, support, and update computer hardware and software for other businesses. Evolving applications of software and a need for robust technological systems in a number of industry sectors contribute to the forecasted growth of this industry, which is estimated to be around 26% over the next 10 years.

6. Office administrative services

Any business owner can attest to the need to—and importance of—effectively running day-to-day operations. Tasks such as bookkeeping, hiring and logistics, to name a few, are often immediate needs. It’s expected that this industry will grow up to 10% year over year in 2023, with continued growth forecasted in the years beyond. As businesses expand and tap into new markets, having the right service provider for everyday tasks becomes a necessity, as advanced technology and interconnectivity across the globe lead the charge.

7. Medical and diagnostic laboratories 

The U.S. medical and diagnostic laboratory services market is increasingly competitive among large and small providers. People need to know if they’re healthy, and these facilities provide the necessary analyses of bodily fluids, genetic testing, and more for healthcare professionals to determine this. Rising rates of chronic illnesses, such as diabetes, cancer, and heart disease, are increasing demand in this industry. Industry revenue in the U.S. reached up to $71 billion in 2022 and is expected to grow to $141 billion by 2030. 

8. Physician offices

The height of the pandemic exposed many points of weakness in the medical industry, including a shortage of physicians, nurses, staff, and equipment to handle the sudden influx of patients. Looking towards the future here, improved accessibility and a greater influx of in-person visits will drive an explosion in demand for more private practitioners, such as family medicine, internal medicine, and pediatrics. 

9. Publishing industries

Reading is power, and increasing numbers of consumers like to read on the go, making digital print a growing medium. But physical print still remains an important part of the industry and the preferred outlet for readers. Textbooks also continue to create consistent growth for the printed word. However, transitioning to digital media, at least partly, has expanded revenue streams for publishers. Audiobooks in particular have increased their share of the U.S. book market over the past 10 years, reaching $1.8 billion in 2022, making it the fastest-growing segment within the industry. 

10. Management, scientific, and technical consulting services

Running a business can get complicated, so across different sources, companies turn to the experts more often than not. From improving processes to lowering maintenance and operational costs, these providers help drive efficiency and develop strategies. The market value was valued at  $316.6 billion in 2021, and that is expected to more than double by 2031, to $814.6 billion.

Runners up

1. Real estate

The current housing market is muddied with rising interest rates. But it’s beginning to rebound, forecasted to grow at a CAGR of 4.7% from 2023 to 2028. While this industry encompasses both residential and commercial real estate, residential real estate accounts for the largest share of revenue in the United States, with a market volume projected at around $88.91 trillion for 2023. Although this industry is highly competitive, it’s relatively easy to break into—required courses and certifications take around four to six months, on average, to complete. However, reaching high earnings will take a lot of hard work and dedication. 

2. Motor vehicle manufacturing

Even though the automotive industry was one of the most affected by the pandemic, the lack of sales ultimately led to an increase in inventory. More cars means more sales opportunities, so the market is expected to go up and to the right. That—coupled with advances in technology, rapid urbanization, and a push toward electric vehicles—will lead to greater opportunities for revenue generation. 

Methodology

We used publicly available data from a variety of federal government sources to identify the best industry in which to start a business in 2023. Our examination included:

• Projected growth in output and employment by industry from 2022 to 2032. Selected industries must have a positive projected growth in output. (Bureau of Labor Statistics)
• Ten-year survival rates of businesses starting in 2012. (Bureau of Labor Statistics)
• Amount spent to start or acquire a business excluding costs of $1 million+ Census.gov 

Final thoughts

Your chosen industry can have an effect on your day-to-day operations, revenue projections, and timelines, as well as growth over time. As you choose your business venture, consider crucial aspects of running a business, such as overall production costs, location, and consumer demand.

Regardless of the industry you’re in, a business owner faces a unique set of challenges. If you work through these with a solid plan in place and the right amount of capital to give you a financial lifeline, you’ll be in a better position to achieve long-term success.

Are you wondering how to start a clothing boutique? Boutiques are small retail stores with specialized lineups of high-quality items that are sold at above-average prices. 

For example, you may find a clothing boutique that sells a variety of high-end designer jean brands, trendy hats, and handmade candles. As you walk in, you’ll likely be greeted by the employee on duty and engaged in small talk. This kind of unique, intimate shopping experience is the hallmark of a clothing boutique. 

While clothing boutiques were traditionally brick-and-mortar stores, the concept has now been transferred online, too. So, what’s required to get one up and running? Here are 11 key steps you need to follow.

How to start a clothing boutique in 11 steps.

Starting a clothing boutique is an exciting venture. Although, like any business, it requires time, effort, and dedication. Here’s what you can expect from ideation to launch.

1. Choose your boutique's concept.

Before starting a clothing boutique, you’ll need to perform market research and strategize how to set your shop apart. Aim to attract a specific audience with a specialized lineup of niche products. For example, if you’re a designer who’s passionate about ethical and sustainable fashion, all of your items could be ethically made and environmentally friendly to target others who share your concerns. 
Sandhya Garg, the founder of a luxury womenswear boutique and a season 13 Project Runway contestant, recommends thinking about the age group you want to sell to, their pain points, and their daily lifestyle. “Creating a customer profile around your ideal buyer is very helpful,” she explains.

2. Pick a business name.

Once you have an understanding of your store’s concept, start brainstorming a business name. It should be catchy, memorable, on-brand, and something that can stick with your business as it grows. Additionally, the name needs to be available everywhere, including:

• On the most prominent social media platforms (e.g. TikTok, Instagram, Facebook).
• The domain (check using Go Daddy).
• In the U.S. trademark database.
• In your state government website (most state government websites have a business name search tool, like the California Business Search page). 

3. Get an EIN.

Next, you’ll need to get an Employer Identification Number (EIN) from the Internal Revenue Service. You can request it online for free, which only takes a few minutes. The number will be used to identify your business, similar to how a Social Security number identifies an individual. You’ll use it to file taxes, apply for business credit, open a bank account, and more.

4. Register your business.

With a business name and an EIN, you’ll be ready to register your business on the state level. You’ll need to choose the state you want as your business’ home and then follow its registration process. 
The steps typically involve selecting a business legal structure and registering your business name. If you select a sole proprietorship or partnership, you’ll need to file an assumed business name—also referred to as a fictitious business name or DBA.

5. Get licenses and permits.

As a person or business selling tangible property to the public, you’ll usually need a seller’s permit from your state that identifies you as a collector of state sales tax. Additionally, if you plan to buy wholesale products and resell them in your boutique, you’ll need a resale certificate to avoid double taxation.   
Depending on your local laws, you may also need to apply for a business license with your city clerk’s office. Be sure to research the federal, state, and local laws that apply to you.

6. Open a business bank account.

Ready to get to the clothing part? You’re almost there. But first, it’s important to open a business bank account to keep your business and personal finances separate. To do so, visit the bank of your preference and request a new business checking account. You’ll often need to have your EIN, state business registration documents, and licenses/permits on hand. 

7. Set up your clothing boutique's storefront.

With all of the above in order, it’s time to set up your storefront. Clothing boutiques can be online, brick-and-mortar, or both. The best route will depend on factors like your budget and preferences. 

Some owners start online and then reach a point where they expand into a physical location. Others start brick-and-mortar and then expand online. Here’s a closer look at how to get set up either way. 

Online clothing boutique.

The quickest, easiest, and most affordable way to set up an online clothing boutique is through an e-commerce platform like Shopify or SquareSpace. These user-friendly platforms enable non-techie individuals to set up and customize e-commerce stores, upload products, accept payments, charge for shipping, manage inventory levels, market, track results, and more. 

In exchange, you’ll be charged a monthly subscription fee, as well as fees for processing credit cards. For example, Shopify’s plans range from $39 to $399 per month, and the online credit card fees range from 2.4% to 2.9% of the transaction amount, plus $0.30 per transaction. 

While you could have your own website built or build a site and add a store, the e-commerce platforms are hard to beat in terms of ease, convenience, and low upfront costs. 

Brick-and-mortar clothing boutique.

If you decide you want a physical retail clothing boutique, you’ll need to rent or buy a commercial space that suits your needs and wants. 

When choosing a location, consider where your ideal customers live, work, and play. Boutiques will benefit from areas with foot and/or road traffic that are convenient for customers to visit. For example, spaces near other popular boutiques, national restaurant chains, salons, or other attractions. However, higher traffic often equals higher rent or prices, so you’ll have to find a balance. 

As the owner, you’ll be spending a lot of time at your boutique, so you’ll typically want to find a location that’s not too far from your home. 

Additionally, it’ll need to fit into your budget, be the right size, and be in decent condition. If renting, landlords may ask for the first and last month’s rent, a security deposit, and coverage of ongoing bills like water, electricity, and snow shoveling. 

And don’t forget the other costs of getting your store up and running, including:

• Outfitting the space to create an inviting, on-brand environment for your customers.
• Filling the store with inventory. 
• Hiring employees to staff the store.
• A point-of-sale system in-store to process payments. 

As you shop around and explore retail properties, it can help to talk to neighboring business owners. Ask them how they like the building, if they see steady traffic, and if they’re happy with the property management company (if applicable). 

8. Make or buy clothing inventory.

Once you have a clothing boutique storefront, you can begin filling it with clothes. But how do you do that, exactly? 

Buy from wholesalers.

One way is to go to fashion trade shows, which happen every season in many major cities. Hundreds of vendors attend these events and set up booths, showing off their clothing products. You can check out the wares, take note of vendors you like, exchange information, and place orders. This can be a great way to stock your boutique and make industry connections. 

You can also scout out the online equivalent of fashion trade shows on sites like AliExpress and Alibaba. These sites feature hundreds of thousands of vendors from all around the world who sell items wholesale. You can shop around, read reviews, and vet vendors to find those that you think would be a good fit.

When considering partnerships with wholesale suppliers, it’s important to look for those that provide quality products that align with the needs of your target audience. “Check your samples for fits and finishing so you are not surprised about production stock,” advises Garg.

You’ll also want to find out about their production time and shipping turnarounds to ensure they align with your schedule and supply chain strategy. Keep in mind, international suppliers may offer lower prices or more variety but can be more difficult to work with if you need to return bulk shipments or contact someone over the phone. 

Design and manufacture yourself.

Another option is to design and manufacture your clothes. If you’re a designer, you may want to take creation into your own hands. Going this route can be labor-intensive, but gives you full creative control over your product line and its quality. As sales increase, you could transition into gradually outsourcing manufacturing. 

Dropship (for online clothing boutiques).

If you’re going the online route, you can opt for a dropshipping service where you select the items you want to sell and a third-party company fulfills the orders on your behalf. In this case, you don’t have to worry about investing in inventory, storing it, photographing it, shipping it, etc.

However, you will be entrusting all of the steps to a third party which comes with risks and costs. You’ll have to ensure that the partner can meet your brand’s standards at a competitive price. “With order fulfillment, if you have a certain way of packing orders, share printouts of the packaging process and have a clear return policy process,” says Garg.

9. Stage your clothing.

After you’ve found great clothing products to feature in your store, you’ll need to show them off. If you have a brick-and-mortar store, this will involve planning out your store’s layout. Most purchase and style mannequins. You can also select a combination of retail display unit types. 

If you’re opening an online store, you’ll need to take high-quality photos of your clothing items and feature them on your website. For those just starting out on a tight budget, you can model your clothes (or ask friends or family to) and use a cell phone to take photos. 

Well-established operations may hire models, rent studio space, and hire professional photographers. No matter where you are on the spectrum, it’s important to ensure the photos look professional.

A few tips:

• Make sure the photos aren’t blurry.
• Choose a place with a clean background.
• Choose an area where there’s plenty of natural lighting.
• Take multiple photographs of each item and pick the best ones.

10. Set prices

A key factor that can make or break your clothing boutique is pricing. You need to ensure you set your prices in a way that covers your costs, earns you a profit, and fits into the budget of your ideal customer. “Start with the cost of making goods, add shipping, taxes, duties, profit, advertising, trade show expenses, and any other overheads,” Garg says. 

From there, you will add your profit margin to get your retail cost. The industry standard ranges from 2.2 to 2.5x markup, according to Emily Farra, a senior fashion news writer at Vogue. The right price point for your boutique will depend on factors like your location, ideal customer, store concept, and market positioning. For example, luxury and sustainable brands will have higher profit margins than more thrift-oriented brands.

11. Market, market, market.

With the foundations of your clothing boutique in place, it’s time to get the word out. Build active social media accounts across the most popular platforms such as TikTok, Instagram, and Facebook. You should be creating consistent content to raise awareness of your brand, store, products, and upcoming launches. You can create organic content, partner with influencers, and run paid ads. 

Additionally, you can build an email list and launch an email marketing campaign, network with other business owners, build a following on YouTube, plan launch day events, and advertise offline in your local area (for brick-and-mortar stores). 

A key to gaining traction is consistently spreading awareness, so you can stay top of mind with your target audience.

Launch your new clothing boutique.

Are you ready to bring your clothing boutique dream to life? These 11 steps can help you get there. It all starts with deciding on a concept and getting to know your target customer. From there, you’ll have to jump through a few legal hoops. However, once that’s done, you can get to work on opening your storefront, sourcing clothes, setting prices, and sharing your boutique with the world. 

Whether you’re on a shoestring budget or have a lump sum to invest, there’s a way to open a clothing boutique. Plus, if you need an injection of capital along the way, you can always look into a small business loan. 

Learn more about Lendio’s retail financing options.

Wholesale businesses have been a staple of the supply chain for a long time and for good reason. They have provided retailers everywhere with a consistent flow of the goods we buy on a daily basis, and they remain an essential part of the economy today. 

If you're thinking of starting a wholesale business, there are a few important decisions and steps you’ll have to make to get started. In this article, we'll go over how to start a wholesale business, how to select your products and how to sell them, and what legal requirements you may be subject to.

Choosing Your Business Model

Choosing Your Business Model

When starting a wholesale business, you have a few different business models to consider. The model you choose will depend on your goals, resources, and target market. For instance, you may wish to conduct your business as an e-commerce wholesaler or to focus on a brick-and-mortar storefront. But whether you’re solely online or operating as a traditional vendor, here are three common wholesale business models to consider:

1. Distribution Model

In the distribution model, you purchase products from manufacturers and resell them to retailers. This model typically involves a large product line, with a focus on volume sales. Distributors often have a sales team and a warehouse to store products.

2. Broker Model

In the broker model (aka agent model), you will act as an intermediary between manufacturers and retailers. You won’t directly purchase products, but rather you will earn a commission on sales made to retailers. This model requires less capital, but you'll need to build relationships with manufacturers and retailers to be successful.

3. Import/Export Model

In the import/export model, you can source a wide variety of unique products from overseas manufacturers and sell them in your home market. This model may require knowledge of international trade, as well as local import/export regulations and procedures.

Creating Your Business Plan

Creating Your Business Plan

Once you've chosen your business model, the next step is to create a business plan. Your business plan will outline your goals, strategies, and financial projections. Here are some elements to include in your business plan:

1. Executive Summary

Your executive summary will provide an overview of your business, including your mission statement, products, and target market.

2. Market Analysis

A market analysis should describe your target market and your competitors. You'll need to research your industry and identify trends and opportunities.

3. Products and Services

Make sure to include details on your product line and how you plan to differentiate yourself from competitors.

4. Marketing and Sales

Outline your intended marketing and sales strategies, including how you plan to reach your target market and generate consistent sales.

5. Financial Projections

Finally, include your projected revenue, expenses, and profits. You'll want to create a detailed financial forecast for at least the first three years of your business to manage expectations, set goals, and understand your business’ viability.

Selecting Your Wholesale Product

Selecting Your Wholesale Product

Selecting the right product is crucial to the success of your wholesale business. You'll need to consider factors such as demand, competition, and profit margins. Here are some steps to follow when selecting your wholesale product:

1. Research Your Market

Identify products that are in high demand, but experience low competition. Use online tools, such as Google Trends or AMZScout, to determine search volume and popularity. Make sure you are aware of items that have a seasonal demand like summer swimwear. Seasonal products sell better during their respective time of year, allowing you to charge higher prices and increase your profit margins.

Here are some of the most popular and highest margin items wholesale vendors are currently selling:

• Clothing and apparel
• Luxury and designer items
• Jewelry
• Electronics
• Beauty and self-care products
• Pet supplies

It is not uncommon for these items to have profit margins anywhere between 50% and 78%, depending on the wholesaler. 

2. Determine Profit Margins

Calculate the profit margins for each product you're sourcing. Consider the cost of goods sold (COGS), shipping, and other expenses.

3. Choose Your Niche

Choose a product niche that aligns with your interests and expertise. This will help you stay motivated and passionate about your business.

Where To Find Your Product

Where To Find Your Product

Once you've selected your product, you'll need to find manufacturers and suppliers. Here are some ways to find the right manufacturer or supplier for your business:

1. Trade Shows

Attend trade shows to meet manufacturers and suppliers in person. This is an excellent opportunity to network and become aware of the newest products.

2. Online Directories

Use online directories, such as Alibaba or WholesaleCentral, to find manufacturers and suppliers. These directories allow you to search by product type and location.

3. Referrals

Ask for referrals from other wholesalers or industry professionals. This will help you find the most reliable manufacturers and suppliers.

Selling Products

Selling Products

When selling products wholesale, setting minimum order quantities (MOQs) is a common practice. MOQs are the smallest quantity of a product that a supplier is willing to ship in a single order. They ensure that the costs of production and shipping are covered and help wholesalers manage their inventory and operate at a profit. Here are some tips for setting MOQs:

1. Consider Your Profit Margin

Set MOQs that ensure you're making a profit. Consider your cost of goods sold, shipping, and other expenses when setting MOQs.

2. Consult With Your Suppliers

Ask your suppliers what their minimum order requirements are. This can help you set your MOQs and negotiate better pricing.

3. Consider Customer Demand

Consider the demand for your products when setting MOQs. If a product is in high demand, you may be able to set higher MOQs.

Obtaining Licenses And Meeting Legal Requirements

Obtaining Licenses And Meeting Legal Requirements

Starting a wholesale business requires some legal and licensing requirements that vary depending on your country and state. It's important to research and comply with all legal requirements that you may be subject to in order to avoid complications down the line. 

Here are some common legal and licensing requirements:

1. Registration And Business License

You may want to register your business name with your state and local government to take advantage of legal and tax benefits, as well as liability protection. You may also need to obtain a business license or permit to operate a wholesale business in your area. Check with your local government to determine what licenses and permits are required.

2. Sales Tax License

You'll need to collect sales tax from customers, which requires a sales tax license. You'll need to register with your state's department of revenue to obtain this license.

3. Resale Certificate

You may also need a resale certificate to purchase products from manufacturers without paying sales tax. This certificate allows you to prove that you're a legitimate reseller.

If you’re in the United States, the Small Business Administration can help answer any particular questions you may have.

Bulking Up Your Business

Starting a wholesale business requires careful planning and research. Choosing the right business model, selecting the right product, finding reliable manufacturers and suppliers, setting minimum order quantities, and complying with legal requirements are all important steps to take when starting a wholesale business. By following these steps and making informed decisions, you can build the foundation for a successful and prosperous wholesale business that generates you profit and meets the needs of your customers.

Give your entrepreneurial undertaking a boost and apply for a small business loan from one of 75+ leading lenders in just 15 minutes, at no cost. Apply now.

Have you always had a passion for fashion? Starting a clothing business can be an exciting and lucrative venture, but it’s not without its challenges. You may be wondering what clothes you should sell, where to turn for manufacturing, and how to attract customers to your store. Well, good news—you’ll learn all of that and more in this complete guide. Read on to discover how to start a clothing business in eight actionable steps. Plus, find tips from entrepreneurs with years of hands-on experience in the fashion industry.

How to start a clothing business in 8 steps.

Whether you are eyeing online or brick-and-mortar, here are eight steps to opening your own clothing store. 

1. Jump through the required legal hoops.

First, before opening for business, you’re going to need to jump through a few legal hoops. Here’s a quick guide:

• Decide on the structure you want (e.g. sole proprietorship, LLC, S-Corp, etc.). 
• Select an available business name.
• Register your business in your desired state.
• Apply for an Employer Identification Number (EIN). which works like a social security number for businesses.
• Register with state and local agencies as necessary.

In short, be sure that you understand all the legal requirements to operate as a business in your city and state. 

2. Identify your ideal customer.

Once you have your paperwork in order, it’s time to start thinking about the audience your clothing store is going to serve. While it can be tempting to be a one-stop shop for everyone, the clothing market is saturated. To attract a loyal customer base, you need to appeal to a specific niche market.

For example, let’s look at the popular clothing brand North Face. North Face is a magnet for outdoor enthusiasts aged 14 to 45 who lead active lifestyles, particularly in areas with colder weather. The brand’s customers are happy to spend more on premium clothing products that stand up to the forces of nature. And, at the end of the day, they not only get the outdoor gear they need, but also wear the logo to communicate to the world that they are active outdoor enthusiasts. 

When thinking about your business’ ideal customer, you need to know exactly who they are, what they do, and how they want to be perceived in the world. Here are some questions that can help you with that process: 

• What gender(s) are they?
• How old are they?
• What are their profession and annual income?
• What is their marital/family status?
• What are their values and belief systems?
• How do they want to be perceived in the world?
• Where do they live and like to travel?
• What is their lifestyle like? What activities do they participate in?
• What’s their view of clothing (necessary, cosmetic, status symbol, etc.)?
• What pain points do they have regarding clothing?
• What style trends do they follow?
• What are their favorite clothing brands?
• Do they shop online, in person, or both?
• What influences the clothes they buy?
• What types of influencers do they follow?
• How much do they typically spend on clothes?
• How often do they buy clothes?
• What items do they buy?

The more specific your ideal target audience definition, the better you’ll be able to tailor your clothing products to their needs. 

3. Develop a brand identity.

Next, when starting any business, branding is going to play an important role in success.

Nathalie Neuilly, Founder and CEO of online couture service Dressarte, says “Before you start designing and producing your clothing, take the time to define your brand identity. What makes your clothing unique? Who is your target audience? What are your brand values? Answering these questions will help you create a brand that resonates with customers and sets you apart from competitors.”

But where do you start? 

“Research the market to see what other companies are doing,” says Neuilly, “Analyze the competition and identify gaps in the market that your brand could fill. This will help you create products that are in demand and differentiate your brand from others.”

Marketing agencies and freelance experts can help you with the branding process, or you can do it yourself with the help of online guides (like these from Shopify, Adobe, and Oberlo). 

The cornerstones of a brand’s identity include:

• A brand name (be sure to check if it’s available)
• A mission statement
• A vision statement
• Core values
• A brand personality description
• Brand voice/tone guidelines
• A brand story
• Buyer personas
• A slogan

Once you’ve defined the foundational elements of your brand, you’ll need guidelines on how to express it through visual and written assets. This requires developing:

• A color palette
• A logo
• Typography 
• Templates
• Graphic style guidelines
• Photography guidelines
• Style guidelines for content

All of your branding elements should be kept together in a single document that functions like the bible of your brand. Anything your company says or does should align to ensure a cohesive, effective presence. 

4. Pick the clothing products you'll sell.

Once you know who your brand is and who you want to sell to, it’s time to decide what clothing products you’re going to offer. You’ll need to decide on various factors, including:

• Clothing purpose - What purpose will the clothing serve? For example, athletic wear, formal wear, casual wear, business attire, etc. 
• Audiences and sizes - Will you provide clothing for various age groups and genders? Which ones?
• Garment types - You’ll also need to decide on the types of garments you’ll carry ( t-shirts, jackets, sweaters, pants, shorts, swimwear, socks, suits, dresses, etc.).
• Clothing style - Will the clothing you carry have a particular style or theme? For example, boho, biker, artsy, casual chic, gothic, grunge rock, haute couture, hip hop, or country. 

Sandhya Garg, a contestant on season 13 of Project Runway and the owner of a luxury online clothing boutique, adds, “Cohesion of the collection is also important—in other words, how products compliment each other so they can be bundled and bought together for the occasion they are meant for.” She adds, “For example, If you have a casual range with bottoms that match tops and jackets.”

To gain insight into what your audience wants, you can perform customer surveys, run ads and analyze the results, perform keyword and competitor research, and even test the waters with a small sampling of different products. 

A forewarning: It can take a bit of trial and error to discover what products your ideal customers like best. “The clothing industry is constantly evolving, so it's important to be flexible and adaptable,” advises Neuilly. “Be open to feedback from customers and be willing to pivot your business strategy as needed to stay ahead of the curve.” 

5. Source the clothes and fulfill orders.

When running a clothing business, a big question is, where will the clothes come from and how will you get them to your customers? Well, there are a few different approaches you can take, and each has its pros and cons. 

Design, manufacture, and fulfill orders yourself.

Are you a seamstress or tailor looking to design and create your own clothing? You can certainly go that route. However, you will still need to source your fabrics and other materials. Then, you’ll be responsible for storage, packaging, product fulfillment, and returns. 

While manufacturing your own clothes gives you the most control over your product and the experience customers have with your brand, it’s also the most labor-intensive. In time, if you’d like to scale, you can gradually outsource the various steps to other individuals or companies. 

Buy from manufacturers.

Clothing manufacturers are individuals or companies that produce clothing for other parties. If you can strike up a deal directly with a manufacturer, you can often get the lowest price point, as there’s no middleman. However, you’ll need capital to invest up front and will often need to buy in bulk to close deals. 

To ensure you buy clothing that your customers want, it’ll be important to have an understanding of their preferences. “One common pitfall of new clothing businesses is overstocking on certain items, which can tie up cash flow and lead to unsold inventory,” says Sophia Jones, a financial analyst at PiggyBank. 

Clothing manufacturers can be found here in the U.S. and overseas. You can find reputable manufacturers by speaking to other business owners at industry meetups, vetting them at tradeshows, searching reputable online directories like Maker’s Row, and performing your own independent research online. 

Buy from wholesalers.

Wholesalers work as a middle party between manufacturers and retailers. If you find a wholesaler that has the clothing products you want, you can buy in bulk to get a discount, and then sell items piece by piece in your store to earn a profit. However, the price will likely be higher than if you go directly to a manufacturer (the wholesaler marks up the price to earn a profit). 

You can find wholesalers by performing your own research, getting recommendations from other retailers, and through online marketplace platforms like FashionGo, Alibaba, and AliExpress. 

With physical inventory comes the need for storage, packaging, and shipping. As the owner, you may opt to handle all three in-house or outsource one or more steps to a third party. Regardless, it will come with costs that should be considered. 

Buying from wholesalers gives you more control over the order fulfillment process, but again comes with the risk of buying inventory up front that you may get stuck with. 

Find dropshipping partners. 

The dropshipping model involves marketing clothing items online and then ordering them from a third party when orders are placed. As a result, you’ll need to partner with a clothing manufacturer, wholesaler, or platform that fulfills orders on an on-demand basis. 

If you’re interested in dropshipping products, you’ll need to locate reliable suppliers that offer the products you want to sell, provide the quality you want, and also provide the order fulfillment service your customers expect. Many turn to online supplier databases like AliExpress and SaleHoo to find partners. Further, if you want to sell clothing items with prints you design, you could use print-on-demand platforms like Printify, Printful, CustomCat, SPOD, or Apliiq. 

Dropshipping requires less upfront capital, as you often won’t need to purchase inventory, have storage space available, pack or ship orders, handle returns, or manage stock levels. You can also access a wide variety of clothing products from many suppliers and test product-market fit without much risk. 

On the downside, the profit margins are typically lower as the competition is high. A low bar to entry means more people come in and offer rock-bottom prices to win sales. You’re also putting a great deal of trust in your suppliers, so it’ll be important to ensure they’re delivering a quality level and service experience that aligns with your brand’s promise. You may also be limited in your ability to deliver a customized brand experience through packaging, tags, and details. Although, some companies do offer private labeling services. 

Buy from other retailers or personal sellers.

Another option is to source items from other retail clothing shops. If you’re going to sell vintage or second-hand clothes, you could turn to thrift shops, consignment shops, estate sales, garage sales, and online marketplaces like eBay. If you’re only selling new items, you could look to stores clearing out inventory to make room for the next season’s items. Some stores sell their items on liquidation sites like Close Out Central while others may be willing to make a deal with you directly. 

6. Decide where to sell: Online, retail store, events.

Next, you’ll need a place to sell your clothes. Nowadays, you can opt for an online-only storefront, a brick-and-mortar storefront, a traveling storefront, or a mix. 

Online

Wondering how to start a clothing business online? It’ll require you to establish a web presence. There are multiple ways you can go about building a website from having a website and store built from scratch, to using a platform to quickly get your store up and running. 

Many turn to platforms like Squarespace, Shopify, or Square to set up ecommerce stores. While they can make the process quick and easy, they do charge fees. However, the costs will be much more affordable than hiring a developer and designer to build a custom store.

Retail store

If you want to open a physical retailstorefront, you’re going to need to scout a location, rent or buy a space, furnish it, fill it with inventory and supplies, staff it, and have security measures in place. This option comes with a much higher bar to entry and many more costs. 

Traveling storefront

You may also want to start by going to events. You could put together a booth and attend local farmer’s markets, pop-ups, and other community events your ideal customers attend. 

While opening an online store is often the easiest and most affordable route, any one of these options (or a combination) can be a viable way to reach your ideal customers. 

7. Plan your marketing strategy.

You’ll also need to decide how you’re going to get on the radar of your target audience, attract them to your clothing store, and start making sales. The approach you take can vary a bit depending on where you plan to sell your clothes (online or in a physical store). However, in either case, online marketing is a must.

“In today's digital age, having a strong online presence is essential for any business,” says Neuilly. “Create a website and social media accounts to showcase your products and engage with customers. Consider partnering with influencers or running paid advertising campaigns to increase visibility and drive sales.”

You can also build an email marketing strategy that helps you collect the email addresses of potential customers, so you can guide them through the buyer’s journey. Furthermore, a blog on your website can help you attract customers from search engines.

You may also want to market offline by attending community events, sending direct mail to your local audience, or advertising in local public spaces. 

“One of the most important keys to success that I've learned so far is networking. Networking allows you to build and maintain relationships with people in your industry or related industries. These relationships can help you find new opportunities, learn about industry trends, and gain valuable insights from experienced professionals,” says Neuilly.

Business owners today have no shortage of marketing opportunities. It’s important to take time to create a plan, execute it, monitor the results, and make adjustments as needed. 

8. Determine your pricing method.

Lastly, you’ll need to determine where to set your pricing. To start, figure out your cost per unit (CPU)—how much it costs to manufacture, obtain, store, and deliver each item. From there, you can decide how much you’re going to mark it up. 

Two common retail markup approaches are the Keystone Markup Method and Absorption Pricing. 

With the Keystone Markup Method, the cost per unit (CPU) is doubled to get the wholesale price and doubled again to get the retail price. 

The Absorption Method is a bit more complex and takes your overhead costs into consideration. Once you have your CPU, divide your overhead costs by the number of units you have in your inventory. Then, add that number to your CPU. From there, you can determine your desired profit margin and add it to your overall cost per unit to get your wholesale price (50% is common). After that, you multiply the wholesale price by a number between 2 and 2.5 to get your retail price. 

You’ll also need to decide if you’re a budget brand, a luxury brand, or something in between—and consider that when setting your prices. 

“Pricing is vitally important. I suggest a thorough analysis of your competitors and a meticulous cost sheet for your products to figure out the optimal price,” says Cynthia Wylie, former CFO of BCBG Max Azria and current CFO at Bloomers Edutainment LLC.

Open your new clothing business. 

By completing the above eight steps, you’ll be well on your way to opening the doors of your clothing store—whether online, in-person, or both. From there, the entrepreneurial journey of raising brand awareness, earning the trust of your customers, and keeping them coming back will begin. 

“Starting a new clothing business requires hard work, dedication, and a willingness to take risks. By following these tips and staying focused on your goals, you can build a successful brand and achieve your entrepreneurial dreams,” says Neuilly. 

Need help funding your new clothing venture? Check out Lendio’s retail business loans.

The real estate market is always changing. Currently, the threat of a “housing crash,” skyrocketing interest rates, and faltering housing prices is looming. Despite this, however, it’s still a great time to break into the real estate market business.

The past few years have caused many to pursue careers that are steady and stable through economic challenges. Real estate is a great recession-proof career path, as today’s buyers and sellers need help in the current market. Inevitably, they’ll look to experts like you to assist with their real estate needs.

Here are real estate business ideas and tips to consider if you’re looking to start a career in the field.

Real Estate Business Ideas

Real Estate Business Ideas

1. Residential Real Estate

2. Commercial Real Estate

3. Real EstateInvestment

4. Home Cleaning And Staging

5. Property Management

6. Real Estate Development

7. Real Estate Photography

8. Real Estate Coaching

1. Residential Real Estate

Helping others purchase or sell a home, also called residential real estate, is a common real estate business idea. Residential real estate agents assist sellers with marketing their properties to potential buyers and assist buyers with finding the right properties that align with their needs and budgets. The residential real estate industry continues to grow each year and provides great opportunities for experts in the field. 

To become a residential real estate agent, you should be well-versed in administrative work, research, and marketing, and check your state’s licensing requirements to ensure compliance. On average, residential real estate agents earn $50,000 per year.

2. Commercial Real Estate

Similar to residential real estate agents, commercial real estate agents assist with buying, leasing, and managing properties for businesses. Because the commercial real estate market is more data-based, this career involves more research to identify trends. Additionally, commercial real estate deals more heavily with leases than residential real estate does. 

A commercial real estate career is an attractive option for many real estate professionals because of its financial benefits. The average annual salary of a commercial real estate agent is $94,383—almost twice as high as that of residential agents. However, licensing requirements are typically the same as those for residential real estate agents.

3. Real Estate Investment

Another common real estate business idea is investing in a pool of real estate properties through crowdfunding or real estate investment trusts. 

Real estate investors can earn between $70,000 and $124,000 per year—and even more, depending on the number of deals you strike and the time you invest. Salaries also depend on the area of real estate in which you’re investing. 

For instance, rental property investing typically earns a lower salary ranging between $27,500 and $121,000. Home flipping averages at $62,900 per flip. Short-term rentals earn you between $35,120 and $61,097. Wholesaling earns you between $21,500 and $98,500. Essentially, the more work you put into your career, the higher the salary you will reap.

4. Home Cleaning And Staging

Preparing a home to be shown for real estate agents’ clients involves cleaning the home so it is “move-in” ready, as well as making it look presentable for potential buyers to walk through. Home staging aims to transform a house into an appealing and inviting environment in which potential buyers can easily envision themselves living. Those in the home staging industry say home staging can raise seller’s profits by anywhere from $10,000 to $75,000.

On average, a home stager can earn between $300 to $800 for a two-hour consultation at the potential client's home. If the client wants to proceed with home staging services, the potential to earn an additional $1,000 is the minimum threshold. A home staging project can see a price as high as $5,000 to $10,000, depending on the size of the home, its location, and the expertise of the home stager.

5. Property Management

The need for a property manager often comes when the owner does not have the time or expertise to manage their real estate properties. A real estate property manager generally works full-time and is responsible for the daily operation of properties, including but not limited to residential, commercial, or industrial properties. Property managers meet with potential renters and show them properties, collecting monthly fees from tenants, paying bills, arranging for repairs and maintenance, complying with fair housing laws in the area, and more. 

In recent years, the average property manager grossed $54,183 in the United States. Although that is the average, salaries have been as high as $79,000 depending on the manager’s education level, certifications, experience, and the property type they are responsible for managing.

6. Real Estate Development

Real estate developers are responsible for overseeing the new construction or renovation of residential or commercial properties. Job responsibilities may include securing financing, working with construction companies to ensure timely project completion, and marketing the new development to clients.

If you’re interested in real estate development, start by taking on a role as a land development project manager. The average land development project manager salary is $99,100, with salaries expected to increase to $112,100 in the next five years.

If you’re looking to establish your own real estate development company, your take-home income can be largely influenced by both the project and the broader market. Assuming you can sell a property at full occupancy, you can get a return on investment of between 16% and 20%.

7. Real Estate Photography

If you have an artistic eye, you might consider starting a business in real estate photography. A real estate photographer takes high-quality pictures of properties for marketing purposes, working closely with realtors, designers, architects, and other professionals. They are also often responsible for pre-photo and post-photo work—such as staging rooms, adjusting the lighting, and editing photographs—to create the best possible final product.

To get started in real estate photography, you’ll need some background knowledge in photography (whether through a degree program, work experience, or self-study) as well as basic camera and editing equipment. You can make an average of $42,940 each year as a real estate photographer, with increased earning potential for high-end real estate clients or higher volumes of properties being photographed.

8. Real Estate Coaching

For experienced real estate professionals, real estate coaching can be a rewarding and lucrative career path. As a real estate coach, you can help new agents get the best possible start in the industry by providing feedback and professional insights. This career path also offers flexibility—you can take on as many or as few clients as you want.
Real estate coaches typically charge between $400 and $500 per month for individual sessions. Depending on your experience level and how many clients you have, you can make anywhere from $69,337 to $103,606 annually, with an average take-home pay of $86,002.

Why Real Estate Is A Lucrative And Worthwhile Industry For Entrepreneurs

• High Earning Potential: It’s no secret that owning real estate can pay off over time—roughly 90% of millionaires are real estate investors. By purchasing property, you can continue to work on your current business, while letting the investment earn a profit for itself by appreciating value, developing it, or renting/leasing it out to tenants.
• Flexibility And Independence: As an entrepreneur, if you’re looking for a place to house your next business, investing in real estate can offer a cheaper, long-term solution than renting with the added benefit of flexibility. Instead of paying money each month to an outside source, owning a property allows you to pay rent to yourself and make changes/renovations to tailor the property to your business’s needs.
• Tangible Assets With Potential For Appreciation: When you invest in real estate, you own a physical property with the potential to grow in value over time. As inflation rises and areas develop, your property’s value is likely to rise too—when it comes time to sell, your investment will earn you a higher profit than the cost you paid.
• Diversification And Risk Mitigation: By diversifying your portfolio with a real estate investment, you can mitigate risk by having additional assets and ensuring you maintain positive cash flow, even if one of your income streams dries up.
• Opportunity For Personal And Professional Growth: Owning property can lead to opportunities for growth because it offers entrepreneurs a chance to earn passive income through syndication deals, which can help cover mortgage payments or be used to invest in something new. Additionally, should you need an influx of cash down the line for your business (or personal reasons), your investment is a tangible asset with accessible equity for the funding you need.

Tips For Success In The Real Estate Business

Build A Strong Network

Networking is one of the most important aspects of a highly-competitive real estate business. As a real estate professional, connect with colleagues at your brokerage, participate in networking events, and join associations to build a positive reputation. Building relationships with other agents can lead to referrals, increasing your success. 

Additionally, build friendships with other related professionals—such as inspectors, appraisers, and mortgage officers—for advice and recommendations. Having an interdependent relationship with other agents can also provide clients with an elevated level of service.

Develop A Solid Business Plan

A business plan should outline your business’ growth and success and include:

• A mission statement
• An analysis of strengths, weaknesses, opportunities, and threats
• Specific and reachable goals
• Marketing and lead generation strategies
• Income goals
• A timeline for revisiting the plan. 

Defining these elements will help you achieve success by providing a clear path forward.

Continuously Educate Yourself

Real estate agents can differentiate themselves from the vast information the internet provides to homebuyers by becoming an expert in the field. Providing valuable experience and staying current with industry news and trends will set you apart from your competitors. 

Agents must also renew their licenses every one to two years by continuing education hours that cover the laws and required state regulations. Plenty of online real estate schools offer classes to help you fulfill these requirements.

Stay Up To Date With Market Trends And Changes

You’ll want to know the specific market you’re serving by researching and visiting properties in the area and analyzing real estate statistics (Ex: interest rates, price points, inventory, and days on market). Once you have an understanding of current market trends, decide on a real estate farm area to focus on and target the right audience of buyers and sellers with marketing materials.

Provide Excellent Customer Service

Successful real estate agents should prioritize building and maintaining customer relationships, regardless of busy schedules. Going the extra mile and putting in long hours should be the norm for agents striving for higher levels of success. Building lasting relationships with clients is crucial for success in the real estate industry, as it often leads to multiple deals with the same clients and their networks. 

As a real estate agent, listen to each client’s individual needs instead of focusing on only the financial gains.

Embrace Technology And Digital Marketing

Technology plays a crucial role in successful marketing campaigns for new real estate agents. Establishing a strong social media presence and creating a website is essential to reach a larger audience and differentiate yourself from more experienced agents. 

A website allows potential buyers to visualize the services you provide. Additionally, Facebook is a great way to advertise and showcase properties; LinkedIn is ideal for networking with real estate professionals; Instagram can reach a younger audience with visually appealing content; and Twitter can help you share updates and engage with followers.

Obtain The Funding You Need

Assess your financial situation to ensure you have the correct funding while building your business. Consider initial costs, such as education, licensing, and board fees. You are responsible for recording income and expenses, and those expenses will increase as your business grows. If you’re looking to apply for a commercial real estate loan, Lendio details everything you need to know during the process.

Additionally, account for your expenses that might impact profits—marketing, MLS fees, lead generation, and client meals. You can use accounting software like QuickBooks Self-Employed to help you manage expenses, track mileage, calculate tax deductions, and generate reports to allocate money wisely.

Bottom Line

Despite the current threat of a housing crash, high-interest rates, and declining housing prices, now may still be a favorable moment to enter the real estate market. Real estate is a great, recession-proof career path, and, now more than ever, today’s buyers and sellers need help from skilled professionals to navigate the market. 

Although specific salaries and pay per job will depend on expertise and experience in the field,  it’s clear that the real estate market presents a host of lucrative and satisfying business avenues for those ready to jump in.

Interested in commercial real estate financing? Learn more in our guide.