Opening A $102K/Month Boutique Business (See What It Takes)

have you ever wanted to open up your own exclusive clothing boutique store but you just don't know where to start well today we're talking to lee smith the founder of urbanity who started this beautiful store six months out of college in this episode we're talking to lee about how he started this boutique clothing store and the business now generates more than a hundred thousand dollars a month we will give you guys an inside look into the clothing industry the boutique side of things and what it takes exactly to run a successful clothing store lee let's talk about the cost it takes to run a boutique store what are the advantages of having a brick and mortar store you know versus e-commerce that's always been it from day one get the most exclusive brands the hardest to get brands the top tier brands i know trends that are happening way before they hit that's a big tip for you guys her vanity has also been featured in gq when the rapper jay-z wore one of lee's t-shirts courtside at the nets game is this boutique business seasonal what does that translate to dollars it's important like that's your first step into the showing people who you are my phone hasn't rang like that ever in my life and it can run us you know between 50 70 000 a month 50 percent is standard in retail it's called keystoning we'll talk more about what it really takes to run a successful clothing boutique store in terms of locating the brands that you want to carry how to make those decisions when you're first starting out how to properly allocate your budget where to spend money and so much more so you guys without further ado let's go talk to lee before we do that we would appreciate if you hit the like button subscribe to our channel and hit the bell so you don't miss any of our videos guys we have an incredible offer from our sponsor shopify anybody selling products online has to jump on this opportunity so stay tuned for that [Music] all right you guys we're here with lee smith the founder and ceo of urbanity the clothing boutique store here in bellevue lee thanks for joining us appreciate it uh let's start with your story when and why you opened urbanity and did you have prior experience in the clothing industry yeah so in man probably 2007 um my sister was living in new york i went to new york and i saw all these clothing boutiques and all these one-stop shops that you get a pair of shoes a pair of pants a shirt and a hat in one location and ever since i took that trip it just sparked this idea like seattle doesn't have this true one-stop shop because at the time you'd have to go to nike town to get shoes nordstroms get jeans zoomies to get a t-shirt and lids to get a hat and i was like this is kind of ridiculous like clearly this concept works in other places like let's bring it here where did the word urbanity come from what's the inspiration there yeah so i sat down for two months and put together a 75-page business plan like as detailed as possible i mean i didn't know what i was doing you know but i knew that this was an important part right and i put urbanity on the title page i saw the name somewhere um and i looked it up and it said an urban state of being and i was like okay and i just put it there just kind of as a placekeeper and i started to kind of show my family and friends the business plan and everyone's like that name like it just stuck with us yeah like anna actually had meaning behind it you know people definitely remember it i mean they don't know how to pronounce it but once they do they remember it curious to know what the investment looked like for you when you first got started 11 years ago how much did you need and how was that broken down break it down was 10 grand what how was it spent to get going yeah so i went and got a loan at 23 for a quarter million dollars well yeah what kind of loan was it it was um just from i went to a local bank with that 75 page business plan they called me back said it was one of the best they've ever seen asked me if i had professional help that was the initial loan we got and we put a large amount of it way too much towards the build out because i wanted the store to have a very specific look the rest of it basically went to inventory because i was the only employee there for the first seven months seven days a week um and yeah just went to you know having the cash flow to run the business monthly man talk about a great payoff on a business plan that you have no idea what you're doing i had no idea what i was doing but i knew i was detailed and i knew i did a really good job because one thing i can do is i can write okay writing is an important skill writing is a very important skill so what were you all in then did you get a 250 loan plus you ended up going over that number so for that was the original location okay and then we got a new one another 250 for this location gotcha so you have two total yeah nice okay yeah the first year in business what was your revenue and how long did it take you to break even i would say first year probably like 150 000 for the year yeah wow okay so a little bit of difference from that change compared to math yeah but and to break even honestly took a while man i mean with loan payments and everything we probably actually were profitable after a couple years but um it's good to know yeah but i mean obviously those payments go down and then you know you get to a point where you pay them off and you know things become a lot more profitable so this business is different we interviewed some businesses where their break even point was like after the first gig so yeah this is completely different you gotta it takes a lot of money to get it going you know and to make it because your brand's the most important part so the build out and the inventory it's important like that's your first step into the showing people who you are you know so i think it's worth it to spend the money but just spend it smartly you're creating an experience right because that's how i feel here any tips advice to our viewers in terms of getting the financing securing financing on that note yeah so i mean really like i said with the business plan that was really important like detail business plan monthly costs what you expect revenue wise obviously we know it's going to be somewhat of a guess but they just want to see that to feel comfortable and i think going in there confident i mean this was a pretty new concept when i brought it to them but i think it it was interesting and they believed in me and that's what they told me so i obviously did something you know and i think it was just being confident because i knew it was going to work i never doubted it man that's pretty cool you shared something with me off camera that we or lee will share with you guys later in the video it's an incredible hack that'll help you in this particular business so keep watching [Music] let's talk about monthly revenue where are you at today is this boutique business seasonal do you have high months low months what time that is what does that translate to dollars yeah so it's definitely seasonal i would say at times right because you know let's say right now we're in october okay you just head back to school then you have holiday coming up so you know october is going to be a little bit slower after holiday january and february right pretty slow but then it'll kick back up in spring and into summer so it's you kind of have to you definitely need to plan for those months right plan your inventory know how much you've made the previous year kind of year over year know where you're going and buy your inventory according to that where's your revenue today on a monthly basis so it can go anywhere between from 125 to let's say like a slow month could be 80 or 90. okay yeah averages out to somewhere in the hundreds yeah that's a pretty pretty good numbers for those watching and want to get into this industry what would your advice be in terms of when they should get in like should they time it or it doesn't matter just start it start it during the slowest season in october for example it depicts your advice if they're just starting do not open in december november and december are always going to be your craziest so you need to get a couple months under your belt field things out say okay i kind of know what i'm doing let's ramp this up because otherwise you're just going to be swimming man it's going to be like thrown into the fire give us one piece of advice for someone just starting in the boutique store on how to find brands okay so what i did before i even had the store officially was i went to a trade show with about 200 business cards and just walked up to whatever brands i liked or knew introduced myself said what i was trying to do and got their contact the big thing is get these brands contact information whether it's sold through an agency or wherever it's being sold by go and introduce yourself let them know what you're doing and that's your interest in their brand and just start that communication you know even if you get rejected at least they know who you are the next trade show you go and see them again and eventually you build up that rapport in that relationship that's awesome that's really good advice quick note for you guys you can find more incredible advice on the podcast that we just launched upflip.com forward slash podcast we interview incredible people such as lee to give you guys all the insights on how to be successful in the business and everything else you need to know what's the typical profit margin that i guess in general average you want to operate under and then second question is different inventory what's got the highest profit margins what's got the lowest how do you operate through that yeah so it's more so um brands that change because certain brands may have less or more but 50 is standard in retail okay called keystoning and then you'll get some brands that maybe a bigger brand might be a little bit below that like 47 but then a smaller brand will be at 60 percent i mean we have brands that are at 70 so it really just depends on the brand specifically but you usually don't want to go below 50 unless you're working with a huge brand you know and you're saying that's called keystoning correct yeah interesting the 50 yep um do you mind sharing which uh your products here are the high profit margin products maybe which uh brand or yeah independent labels okay so ones that basically are small and they'll give you more because they want to be in your store whereas a big brand doesn't you know they're like we're the man you know where this is our profit margin but and that's another thing is you know smaller brands need the revenue so they're going to give you a better profit margin is there one that you focus on more particularly than the other or you try to have a balance things of inventory wise balance for sure yeah you got to have a little bit of everything you know you want some low priced you want i try to give price points for every product for every customer i think that's really important and smart how much of your revenue comes from an e-commerce site let's start there so we can't sell a lot of our products online our main brands um pretty much 90 of it because it's so exclusive i see they don't allow us to sell online yeah so but you do have a website talk to us about that a little bit how it's built and how are you using it yeah so we have a website um that directs to our instagram which is where we sell most of our products we just because we can post everything on there and people can message us and it's built on shopify okay would you recommend to someone who has a store with products that they're selling to use shopify or what platform etc yeah i mean shopify has been great for us it's very easy to use pretty self-explanatory and it's always been solid okay so you're taking traffic from your website and driving it to instagram correct yep so they can they see all the images and we post everything we get on instagram so we actually social media is free you know use it take advantage take advantage of it and just engage and post all your new products on there and you'll see if you do it consistently that your customers will all follow um and write as you post if they want it i'll send you a message and boom awesome okay well i wanted to mention you guys since we mentioned shopify shopify is actually the sponsor for today's video they are the number one trusted e-commerce platform for businesses trusted by more than 1.7 million people around the globe if you have a business where you sell products give shopify a try the link is in the description below try them for free for 14 days and see how it goes [Music] let's talk about inventory that doesn't sell right what do you do with it we luckily don't have a lot barely at all but what we'll do is you know i wouldn't give a specific timeline on it but when i feel something's gotten like it's not moving we can move it we'll move it to half off okay um and that usually gets it going pretty quick so you just last the price yeah just slash the price after like you know x amount of time that you kind of feel that it's getting a little stale so that's it nothing to it like no special advertising marketing on social media just for the stuff that needs to move not really because um luckily like i said we're a very exclusive boutique so all the clothes we get are usually in and out really quick that's why we turn over inventory so quickly um because we always want new stuff we don't do deep size runs we want it in and out and that's what our customers want as well so okay i don't get what left over with too much stuff what's a deep size run you've mentioned that i'm not familiar with that term yeah so like um a small through double x right is the size run and then i mean if you're nordstroms you'll do a thousand of each you know if you're us we only want to do one or two of each because we want it to keep it exclusive get it get it out and that's what our customers appreciate as well let's talk about social media you mentioned instagram what else are you using and what are you doing there specifically technically to just continue to promote your brand and build your customer base and revenue yeah our instagram is our main um just because pictures right pictures people want to see the product i think taking good pictures of the product is important lighting's important but also a lot of brands don't ever answer questions they're kind of standoffish but we're very attentive to our customers and we'll show them more pictures will help them you know put i get messages all the time hey i have 300 can you pick me on an outfit nice okay cool you know so um yeah social media wise i mean it naturally goes on facebook from instagram but we don't get any engagement from facebook you spend money on instagram or facebook or we have if we need to promote something specifically but we get so much engagement on our post anyways it's we don't really need to since our stuff sells so quickly it's you know i don't feel a need to spend some money just to push something that's gonna sell out anyways who takes the time to respond because i don't have any social media but i remember days when man just people constantly writing and do you have a designated person for that how does that work yeah so honestly it's me or any of the employees at any given like whoever sees it will respond but i'm a very like kind of ocd with my messages and my email so i don't like anything outstanding like i like to take care of everything clean respond to everyone like i'm pretty on top of it i know what that's like okay yeah so lee you're pretty exclusive small boutique store you mentioned that a couple times i'm curious um how that evolved did you know from the inception that you want to be exclusive and this is the target audience or did that evolve over time like can you elaborate on that process and how you came to this point yeah so we always wanted to be exclusive because that's what makes us different from the big block stores right if you can go into a big block and get something that a thousand other people are gonna buy it's not exclusive our customers want something that one or two other people may have you know and that's what really drives our business is a fashionable customer that wants things that not everyone has access to right so that was part of your original business plan right yeah that's always been it from day one get the most exclusive brands the hardest to get brands the top tier brands that only want to be in one store in this area and we're the only place i can get them for people watching you right now who have a passion for the clothing industry they want to get into the boutique side of things what can you tell them in terms of how to determine the customer right you've got the skateboarders you've got the snowboarders you've got all kinds of industries that you could be exclusive to right how do you make that decision how would you do that well it has to be an offset of you you know what i mean like i said i've been collecting shoes since i was 13 waiting in line like this is what i always loved i always loved the street wear the sneakers so whatever clientele you want to go after you have to be that clientele yourself how did you choose your first location lee and why did you have to move after the first four years yeah so my first location was obviously i was six months out of college i just wanted a brick and mortar retail store and i i lived right around that areas right by university of washington lots of college kids and it was a brand new development so it was a great place to just get started and get my feet wet and then after four years we moved over here which was a huge jump you know one of the top malls in the country and the rent price you know what went up tenfold um but i had to do that first door first because if i would have tried to open this first there's no way it would have been way too much i couldn't have handled it so crawl before you walk you know yeah sure inventory management what software are you using what tools are you using to help you manage all that yes so we use light speed which we do all of our inventory and sales through it's really complicated they just switched over and took away all their old servers so all of our old sales were gone no way yeah so i don't uh it's not my favorite um and it's you know roughly i think 150 bucks a month or so um but i think there's better options out there for sure have you looked into some of the options yeah it's just we just made this what they just made us switch over and we already had all of our inventory in there so we kind of had no choice but i definitely a big thing is credit card processing i think a lot of people get screwed on credit card processing because they'll just use it straight from their square um which the fees are crazy so my i highly suggest going and finding a local company we use gravity payments that will give you the best rates possible and they and you can show them all the rates and make them give you the best one because they'll guarantee that they will okay so again focus on something local first if you could find someone definitely definitely because the bigger companies they don't care how do you stay ahead of the trends how do you stay ahead of your competitors per se right let's let's talk about that aspect of this business i mean you just always have to have your ear to the street right people always ask me why why do you still work at the shop like you don't need to and i'm like because i hear everything i hear what the customers are coming in and asking for i do the buying so i want to know what they're feeling and what they're not feeling and those kids and those people those trend setters will tell you what's what they want right and then you buy off of what they're talking about i mean obviously social media things like that okay but it's really your customer you listen to your customer be in your store work on the floor listen you know so they're the biggest input for you yeah i mean i could i know trends that are happening way before they hit any news article or social media because i'm here i'm living like in it right i mean [Music] let's talk about the cost it takes to run a boutique store and just roughly where would rents be for this space here in bellevue yeah so it totally depends on the mall and like what city you're in um but roughly if you're in a you know really good mall between you know 15 20 000 a month okay and then what does it cost for you monthly to run the store um you know what's the biggest expense biggest expense is getting the inventory after rent is by far the biggest expense but yeah inventory and it can run us you know between 50 70 000 a month wow okay so this store particularly today is averaging somewhere right between the 50 70.

when you first opened up what did you do to get customers to walk through the door what strategies did you implement uh let's talk about that this was back in the day i literally did flyers i hired someone to go and put flyers on every single person's car in the neighborhood um this is like super street tactic um but no i did a lot of actually like community events so i did like had like rappers come had producers come to like beat battles and like cool stuff like that and then i worked with a lot of local brands too to kind of just spread the word and let them know we're there and did you just matter of reaching out and saying would you guys come in and do this with me and collaborate and that's it yeah i mean since it was you know like one of the first urban stores it kind of brought like a lot of the artists in there and a lot of athletes in there so we did a ton of stuff with athletes because they just would hear about it and come in and then we'd talk and figure out some cool marketing stuff to do with them what else contributed to you strengthening and building that reputation from day one um well actually designed a u-dub t-shirt for the college um that was actually nordstrom's number one tee ever at that time and so that like blew it up um so you made a tea that ended up being selling yeah so the brand we did it with was big in nordstrom's gotcha and so they took that design went in there and it had our tag on the back of it so i mean this was like huge um big big t-shirt and that really helped out you go look for the biggest guys in that industry local wise right go to them come up with your own idea of what you think would be cool and if they're feeling it they're gonna you know want to support and it's kind of a win-win you know you design a cool t-shirt with a great brand you get exposure it works out really well for both of us that's pretty cool you guys i want to ask you to comment below and tell us and lee what you're doing what kind of strategies you're taking to get customers to the door and build your reputation especially if you're just starting out we'd love to see your comments [Music] what are the advantages of having a brick-and-mortar store you know versus e-commerce and what do you get that you wouldn't get in the e-commerce world right you went that route so to me it's experience right you want to go in i mean most people don't know how clothes are going to fit on them if you're shopping online you have to know exactly what you're buying or else then it sits in the back of your car for a month before you finally return it but mainly just people coming in needing help picking out outfits people enjoy talking to people for the most part they enjoy buying cool stuff and you know having an actual experience versus sitting on a computer and just clicking and hoping something that will will fit them you know [Music] i just want to follow up on the 250 that you got you said you spent a little too much on a build out and the rest was inventory can you give us more specifics on where the numbers were and then if you do anything different if you could go back yeah so i definitely spent way too much i think the build out section was about 150 they reimbursed us for half of that so let's say i was out about 75 100k yeah you mean the landlord yeah the landlord for tis and then i would say roughly about 40 to 50 000 went to inventory immediately so you know that didn't leave me a ton of working capital that i should have kept the build out was just i just wanted to go all out because i didn't understand i was 23 years old i just want everything to look amazing right the bathroom had tile all over it i mean it was ridiculous it was stupid but you know that's how i learned that's why this one was way different that's why the next one will be way different you know there's ways to save money and cut costs on your build out to make things look nice but not pay for the crazy expensive stuff like just be smart about it and look for other options so three things that you would do differently go to ikea find stuff seriously find stuff that looks nice people don't know the difference between a custom made table an ikea table like little things like that like there's so many little things i mean we have stuff mixed and matched that cost a ton of money and that didn't and no one's ever been able to tell the difference second thing is don't waste money in places people aren't going to see you know like a bathroom and i was ridiculous um that was a big one i still still pissed me off to this day and then i would say the third thing is if you're working with a contractor and they're subbing people you know like really understand where the money's going because you'll give a contractor a budget but he's not necessarily breaking it down like really pay attention to where this is all going that it makes sense okay [Music] lee tell us about the biggest challenges that you're faced with today as a business owner currently it's for sure supply chain getting inventory it's been we've been super busy and it's tough you know if the biggest you know suppliers that you deal with can't provide product then you have to go looking for any brand basically that fits the store that can ship you so i'm constantly looking for new brands just to fill our shop up and it's tough because it needs to fit our aesthetic as well guys so i was going to ask how are you shifting or how are you you know overcoming that challenge yeah it's basically finding brands that fit the store that can ship immediately and so we've been constantly i've just been constantly looking you know and trying to find brands that we can bring in to fill the voids and just to have enough product to meet the customer demands so in terms of that collaboration with the local brand nordstrom did you set up a contract was it just a conversation handshake what would you do different yeah it was just you know this was my i was brand new to the scene eager didn't know anything about contracts um i didn't sign anything didn't end that well for me so i definitely now knowing what i know would have signed a contract first and foremost um with a guarantee on how we're going to you know split the profits interesting yeah i mean i guess it's a red flag if you're trying to collaborate with somebody and they're not willing to sign something that's yeah it was more so i didn't even ask because i didn't even know right now i was just excited to work with that brand i didn't think it would go the way you know and get as big as it did how am i did you leave a lot on the table because of that mistake i was told i left a lot on the table and that's when i heard the nam browse ouch okay that's a big tip for you guys when you collaborate make sure you got that on in documents [Music] i wanted to ask you one thing you told me off camera and that's a shirt that you designed and it was worn by somebody can you just share that story real quick that was pretty cool yeah so i had a brand um a couple years ago and we had literally every celebrity you name it uh lil wayne mcmilla ludacris everyone but the cool i did a one-off sweatshirt for jay-z and he wore it twice quartzite at the nets game that's pretty cool so there's a painting of it up on the wall right there yeah which is natural picture so that was pretty cool and gq featured it it was on every blog espn you name it so that was definitely my phone hasn't rang like that ever in my life and probably never will once they showed that on espn but yeah it was so definitely a booster for the business oh yeah just that type of brand it was surreal too because that's like for me that's kind of who you know i look up to as a businessman um to have him actually wearing like my own that i made specifically for him and it was like a year after we gave it to him so it just popped up out of nowhere like what what's going on so yeah that was that was cool man thanks jay-z we appreciate it [Music] how many employees do you currently have and then what key traits do you look for when hiring for this industry okay so we have five well six including myself and the main thing is really i don't care about your resume i don't really care about anything it's just i can tell if it's gonna be the right fit when i sit down and talk to you for a small business owner trust is always the main thing right the number one and then it goes to do they fit the vibe of whatever your business is are they knowledgeable about that and then it's how do they treat and interact with customers that's it yeah so those are really my main things um and the trust one's important for sure [Music] what's one thing in as a business owner that you just hate a lot and you wish you wouldn't have to do i'm sure that's real for all of us yeah i hate accounting more than anything i like to look at the numbers but i don't like to figure out you know all the in-between luckily we have someone that is amazing at that and very uh detail-oriented um but i like to look at the bigger picture see the bigger things not be in the weeds in excel and you know figuring that out so you solve that problem by doing what hiring by yeah hiring someone who daily costs down to the scent i can open it up anytime any day it's updated every day so i know exactly where we are i know exactly how much money is coming in how much is going out it's to a t and like i said i like to look at it i don't like to be the one inputting it [Music] how are you finding brands clothing to get into your store what tools are you using well i use i mean a lot of social media but i also have young employees that are really into this obviously they work here they're really into this stuff so they're you know young and know all the new and upcoming brands so they will say hey lee look at this we like this okay cool so i trust them i know they know what's going on i know you know they're good employees so they help me a lot to bring in different stuff and unique stuff that i wouldn't even have seen okay so besides social media it's really again the people the employees the customers yep definitely people that employees that you trust their opinions and you know that they want what's best for the shop [Music] in terms of being an owner of a boutique store what skills do you think would really contribute to your success i mean do you have to be fashionable to do well in this industry or what does it come down to i think fashionable uh definitely is a must um you know because you can't be selling clothes looking like you don't know how to dress it's a good start that's a very important one but you have to be ready to go with the flow like you need to you know when something else pops up be ready when a new brand pops up be ready um so it's constantly changing and moving and you just have to be ready for that and also you have to be able to deal with the rough months because retail is different every single day you could have a terrible day and a great day a terrible day but don't pay attention to that like you have to know the end month goal where you want to be and if you go day by day it's like it'll drive you nuts right like it's just too much you know so you have to just have faith and know what the number is that you want to hit at the end of the month look at it a little long term right yeah definitely now we talked about a hack earlier in the video lee this is your opportunity to share that hack with our audience and we appreciate that yeah so a hack for sure would be when you're starting out find local brands smaller independent brands that you guys can both promote each other because they're gonna have a following you're trying to gain a following hype them up they will hype you up kind of find a community and that naturally leads you to other brands in that community because they all know each other and then locally that's what makes you bubble as opposed to as opposed to just opening a store like you know just the big brands that are not even yeah i mean you're not gonna open and get some crazy account like it doesn't work like that like all these brands that you want that are the highest of the high you have to have a serious track record to be there even location wise like to get where we are now there's no way i could have done it from the beginning like i said you have to have your reputation so use what's around you that's not gonna cost you a ton of money but will make you bubble up locally and then once you're established you can start reaching out to the big dogs and say hey this is what we're doing this is what we got going on and then you can kind of get in the door that way well this has been incredible i want to wrap this up with maybe if you have two three four pieces of advice in general to all the entrepreneurs looking at this video i would say you know know yourself like get to know how you react in adverse situations when your back's against the wall how like how do you react and and it's okay if you know you're not if you crumble if you can't handle the pressure like but you need to know that about yourself before you get in that situation you need to know how you're going to react to it um because in business that's what's going to happen you're going to be at you know looking at your bank account at midnight with tears in your eyes and saying how am i going to pay like i've been there like that's going to happen right so you just really need to know how you're going to react if you're a problem solver and if you you have to be whatever industry you can't go into whatever you're doing just like hey i'm going to make a bunch of money like it's all about the money like you don't want to spend your whole life doing something that you hate just because you're making some money like it's terrible right yeah like i could do this for so many years with barely making anything because i enjoy doing it so i think you know as cliche and corny as it is like you have to be passionate about what you're doing and if you put in the right work and the long work in the end when you're successful it's super sweet and worth it you know that's awesome lee this has been good thank you so much appreciate you likewise well that's a wrap with lee smith the founder of urbanity what an incredible story 11 years in the business i hope that the questions we asked and the answers you guys heard will greatly benefit you in your business comment below we read all of them we want to respond we do this for you guys so please take a second like this video if you haven't already hit that bell button so that you don't miss anything and subscribe to our channel thank you so much

2021-11-04 20:08

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