Do you want to start a handbag making company? If YES, here’s a complete guide to starting a handbag manufacturing business with NO money and no experience plus a sample handbag making business plan template.
A handbag making business is a business that is creatively fulfilling and can be lucrative when done right. It’s a business that will give you the chance to leverage modern arts and also showcase your passion for fashion and designing.
But first you will have to decide on your short-term goals so you can keep the business going in the direction. Start by creating a design that is uniquely yours. It’s advisable you don’t use someone else’s pattern for handbags that you plan to sell unless you have entered into an arrangement with them.
Take your time to design and create a handbag that you personally like, that has a specific style and that you will feel comfortable talking about and selling. Remember to make a small initial stock of handbags. You don’t want to make too many as early customer feedback may lead you to make changes to your design.
It’s advisable you make enough bags so you can test the market through events like arts and craft shows or through postings on Etsy, an online auction site for handmade items. After making the bags, ensure you take good, professional photos of your handbags.
You will need photos for every handbag if you plan to sell online. If you plan to sell through consignment stores and arts and crafts shows, you’ll need three to five photos that show your best work. No matter how excited you are to start this business, do not forget to get the necessary paperwork for running a business in your state.
This might include filing “doing business as” paperwork, sales tax licenses and securing a federal tax ID. In some states, you may have to obtain a business license, though many states may not need that for a home business.
When it comes to your product prices, always make sure you cover all your direct and indirect costs and figure in compensation for your labor and a profit. Meanwhile, you also don’t want to be priced out of the range of your competition or higher than what the market will bear.
It’s advisable to research your customers by attending shows that you plan to sell at, visiting boutiques and looking online. Find handbags that are comparable to the ones you are making and take note of their prices. Do not make the mistake of not marketing your business or not having a marketing plan.
If you are going to sell exclusively online, your marketing material will include compelling and accurate descriptions of your handbags and possibly business cards to include with your handbags when you ship them. If you are going to be selling your handbags at boutiques or at shows, you’ll want signage that tells a story about your handbags, a business card and possibly a catalog or product brochure.
Also if you plan to sell online, set up a merchant account with PayPal or other online payment merchants. If you are going to take credit cards, set up a merchant account with a credit card provider.
Research vendors near you and set up an interview to find a merchant that will accommodate small-volume sales or who has worked with handicrafters in the past. Continue reading as we lay bare the procedures to start a handbag making business at home.
19 Steps to Starting a Handbag Making Business from Home and Sell Online
1. Understand the Industry
Businesses in this industry make handbags and handbag accessories, such as purses, wallets, tassels and other articles typically carried in a pocket or handbag. Note that this industry also includes businesses that produce luggage and other travel bags, as well as a variety of smaller-sized leather containers.
According to industry data, handbags made from leather, synthetic fibers and other materials remain the industry’s largest product segment, accounting for an estimated 43.7% of total industry revenue in 2017. Handbags are typically large bags carried on the shoulder or in hand, and these products are often designed to accommodate a large amount of contents.
Report has it that the four most popular handbag styles, in terms of the number of internet search queries, are totes, clutches, saddlebags and satchels.
Statistics has shown that this segment’s share of industry revenue has expanded over the past five years as demand for luxury handbags has heightened in most regions of the globe, including strong demand from developing nations like China and india.
According to reports, the global exchange brought the world market for handbags to $101 billion. Stateside, the U.S. market for handbags, luggage, and accessories climbed to $9.6 billion, up 3.3% annually from the five years to 2014. Industry experts expect the U.S. handbag market to reach $11.8 billion by 2019, increasing 4.3% year-over-year.
A strong growth for men’s handbag has been projected to boost industry sales and grow revenue. Male gender norms are softening, allowing American men to follow their European counterparts to carry bags without fear of being mocked. This increased acceptance has allowed the men’s bag market to explode, with male bag purchases increasing to 26% in the last year.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Note that this business is ideal for people who enjoy creating fashion and helping people achieve their fashion dreams. Depending on the style of your bags, your customers may be young hip teens and women in their early 20s, or they may be career women in their 30s and 40s. You could branch out and make large baby bags for mothers or tote bags for beach-goers. You could even create messenger bags for men. It all depends on your vision.
Have it in mind that making awesome designs and utilizing uncommon materials can be your competitive advantage in this industry, and completed products can be wholesaled to fashion retailers or placed on consignment in local retail shops. You can also sell directly to consumers by displaying the products at fashion or craft shows or selling them online.
3. Decide Which Niche to Concentrate On
You need to understand that bags have different kinds and a lot of usage in our daily life; this makes a bag making business a profitable business to start. Choosing a specific niche in this business might present you with a clear path to success. This is because by choosing a specific niche, you find out and know your specific market and you can then plan strategically how to reach them.
- Leather bag
- Non woven
- Paper bag
- Muff etc.
The Level of Competition in the Industry
According to reports, the handbags and accessories market in the U.S. has continued to grow, but what could worry businesses in the industry is the slowing growth rate for this market. Competition is strong in the industry, with a number of players operating in this segment.
The company “Coach” was the pioneer and established new ground in the American affordable luxury industry. But even with a growing handbags and accessories market, the company’s market share has declined consecutively, from over 35% in fiscal 2008, to 23% in fiscal 2014.
A number of new entrants, such as Michael Kors, Kate Spade, and Tory Burch, are cutting into its share. One of the main factors attributed to slowing sales by Coach is the shift in consumer preferences from larger bags to smaller ones, which are sold at lower prices. Also sustained low levels of gas prices have resulted in extra income for U.S. consumers.
However, instead of incurring expenditure on goods like clothing and accessories, shoppers are spending more on entertainment and on other services, especially those they had to forgo during the recession. Then when consumers finally decide choose to spend on bags and accessories, they tend to shy away from big brands, and moving towards more distinctive ones.
Note that as businesses in the industry cater more to millennials, and not baby boomers or Gen Xers, they face huge risks, as millennials don’t spend as much money. They are encumbered with more debt and less wealth, as a result of student loans and protracted effects of the recession, and choose to spend their money on expenses like rent, mobiles, and services.
Baby boomers, on the other hand, are the biggest spenders due to extra cash from decades of saving and investing. Also note that with continued high levels of discretionary income, a rebound on luxury spending might be inevitable. A recent trend that has been emerging is that with a rise in disposable income, consumers are spending more on affordable luxury products than on premium luxury products.
Statistics has shown that online sales of handbags are also on the rise in the country. Improving rates of Internet penetration are also stimulating a demand for e-commerce. So, sales of luxury bags and accessories could see a boost in the next couple of years, on the back of continuously rising incomes, with customer spending biased more towards the relatively affordable luxury items.
4. Know Your Major Competitors in the Industry
- Jimmy Choo
- Dooney & Bourke
- Michael Kors Corporation
- Dolce & Gabbana
- Kate Spade
- Marc Jacobs
- Yves Saint Laurent
- Coach, Inc.
- Christian Louboutin
- Bottega Veneta
- Christian Dior S.A.
- Louis Vuitton
Understanding exactly how much money you need to start a handbag line is a hard task. That is a hard question to answer especially when you don’t know the specifics of how big you want your line to be and which channels you want to sell your product.
All accessories brands are different– different materials, different approaches, and different goals. But for the sake of this article, let’s put take a look at this little scenario: This new handbag line will have 3 silhouettes with 2 colors offered per style, the line will be made of leather and the samples will be made domestically, so you don’t have to worry about import taxes or pricey shipping bills.
Note that an average sample maker in the USA (LA or NYC) will charge $300 to make the sample and pattern. (Of course, if the designs are super complex, they can be much higher. Sample makers can charge $800-1000/style!). But, let’s use $300 as the average.
- $300 x 3 styles = $900 sampling fees
- 4 (remaining colors) x $100 (reduced sampling cost for additional colors) – $400
- leather costs – $500
- lining – $100
- custom hardware (zipper pullers, logo plates)- $200
- hangtag – $100
- professional looking product shots – $300
- Total $2,500
Have it in mind that this is a very generic example which does not include any sales outreach beyond the mandatory marketing materials. If you were to decide to do a trade show in Oregon, it would run another $6000 before any booth decorations or furniture.
Also note that this is simply an idea of the cost to create the samples. Website design, editorial photography, line sheets, Facebook ads…. there are additional expenses involved in actually selling your handbag designs. The additional fee for sampling the other colors offered in the samples is because it’s difficult to sell what you have not sampled, and it is often better to have more samples than not enough. But you may decide to only sample one colorway for each style, which would reduce costs.
5. Decide Whether to Buy a Franchise or Start from Scratch
First and foremost, this business is a terrific business enterprise to start right from the comforts of home, as not only can the business be run on a part-time basis, but there are also almost no operating overheads to bite into monthly profits.
Note that creating unique designs and utilizing uncommon materials for the making of the handbags can be your competitive advantage, and completed products can be wholesaled to fashion retailers or placed on consignment in local retail shops.
You also have to note that handbags can also be sold directly to consumers by displaying the products at fashion or craft shows or selling them online. All these goes to say that if you’re starting this business from home, there is no need of buying a business franchise.
Instead you can seek big market opportunities by building joint business with established handbag manufacturers that can produce and wholesale your handbag designs under a split revenue agreement.
6. Know the Possible Threats and Challenges You Will Face
The attention being paid to fashion has brought about new trends and innovative products. This has also created enough awareness that handbags are an important asset in both men and women’s wardrobe. These accessories promote growth in the fashion industry, and designers are including handbags in their collections more often to increase revenue.
Also the fashion and luxury market has a direct impact on the different designs that come out of the handbag industry, as one complements the other. Starting this business would surely give you the opportunity to make money from what you enjoy doing, but you will also get ready to face a few threats as you venture into the business.
Price Point Will Determine Feasibility
It’s advisable you figure out your retail price point before starting to sell homemade handbags, as this will determine the materials you can use. Many aspiring handbag designers want to make a luxury leather bag collection that retails for under $200. They then inculcate this into their business plan before they do their homework and realize that leather costs $5.00-$10.00 per square foot and an average bag uses 6 to 8 square feet of leather.
Manufacturing abroad vs. domestically
You have to understand that start-up costs are much higher for making patterns and samples in the USA, but on the other hand, producing overseas needs high minimums, which very few startup businesses can afford. To succeed in this business, you have to educate yourself as much as possible about the difference between producing domestically or in Asia.
Choosing between leather and fabric
You will also need to decide if your bags going to be leather, fabric, vegan leather or a combination of the two? Note that most leather factories cannot produce fake leather goods or fabric. The machines are different for leather and fabric. Once you decide what type of materials you are going to use, then you can start to source the right factory.
Handbag metal fittings/hardware
When producing in the United States, note that you will have to source your own metal fittings/hardware. If you are designing a luxury line of leather bags, this is very important. You can decide to research online or hire a professional to help you through the process of getting high quality handbag hardware, most likely from overseas as there are no handbag metal fittings companies in the United states and the ones that exist just import.
Once again do your homework or hire a consultant. Your customers will want good quality metal fittings if they are paying a premium price for your bags.
You should note that most factories have their own pattern maker on site. Most times aspiring handbag designers hire outside pattern makers that may not be well versed in handbag pattern making. Note that this is sometimes not necessary as a good well established handbag business would have their own onsite sample and pattern maker.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
You will have to consider a lot of factors when choosing the best legal entity for your handbag making business. Have it in mind that the type of business structure you choose can have an impact on multiple aspects of your business, including taxes, liability, and your exit strategy.
In starting your home based handbag making business, we suggest you start as a sole proprietor then change to an LLC as you grow and expand. A sole proprietory business is managed by an individual who is responsible for all business transactions. As the owner, you are responsible for all debts and liabilities incurred by the business.
A sole proprietor can own the business for any duration of time and sell it when he or she sees fit. As the owner, a sole proprietor can even pass a business down to his or her heirs. In this type of business, there are no specific business taxes paid by the company. You’re expected to pay taxes on income from the business as part of your personal income tax payments. Benefits of forming a sole proprietorship may include:
- No corporate tax payments
- Minimal legal costs to forming a sole proprietorship
- Few formal business requirements
- Complete control and decision-making power over the business.
- Sale or transfer can take place at the discretion of the sole proprietor.
8. Choose a Catchy Business Name
- Lamar touch
- Curve Top
- Froggy’s Handbag
- Sinister bags
- Berry baggy
- Granny’s bag
- Leather Fusion
- Humphrey fabric
- Vintage island
- Off The Wall
- Comfort bags
9. Discuss with an Agent to Know the Best Insurance Policies for You
Starting a home based Handbag making business is not an inexpensive process, and once you enter the business world, you just have to protect yourself. Homeowners insurance may provide a limited amount of coverage for business equipment, but most standard homeowners’ policies exclude coverage for businesses operating in the home.
They don’t cover lost data, lost income or liability. But the policy you choose will depend on your business size and type, how often you have business visitors to your home and your exposure to liability, among other factors. The two types of insurance policies you should consider are:
Rider to a homeowners or renters insurance policy
This policy is a low-cost option that provides limited additional coverage. It may offer protection for a small amount of business equipment and liability coverage of a third-party, such as a delivery person is injured in your home. Note that this may be a good choice for a one-person operation with limited liability exposure, minimal amount of valuable equipment and no business visitors or deliveries to the home.
Business owner’s policy (BOP)
This policy provides the most comprehensive coverage for home-based enterprise. It protects against unexpected business interruption, damage to business equipment or data, and malpractice or professional liability claims. Businesses that stock inventory, manufacture products, conduct business inside and outside the home or carry a high risk professional liability may want to consider a business owner’s policy.
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
As you progress in a competitive business industry, you will ultimately understand that the creation, exploitation and protection of intellectual property (IP) rights are crucial to the success of your business. In the Handbag making industry, intellectual property protection and Trademark are needed to serve as;
- Brand and image rights
- Protection and registration of designs
- Enforcement and dispute resolution
- Anti-counterfeiting and piracy
- Patents laws
- Trade mark filing and opposition
- Brand audits and watching services
- Securing trademarks and passing off
- Domain name strategies and disputes
- Data and database rights
- Competition law
- Protection of technology and innovation
- Advertising and marketing issues
11. Get the Necessary Professional Certification
It is believed that this industry has no specified certifications for new entrants or existing designers, but if you plan to start your own handbag making business or if you are currently majoring in marketing or information systems, you could benefit from earning a few certifications which may include retailing certification. These certifications include;
- Customer Service and Sales Certification (CSCS)
- Advanced Customer Service and Sales Certification (ACSSC)
- Retail Management Certification (RMC)
- Retail Business Credential (RBC)
12. Get the Necessary Legal Documents You Need to Operate
Finding out the licenses and permits needed for your home based handbag making business can be very stressful and confusing. But you have to approach this stage carefully and patiently. It takes time, energy and paperwork to obtain the proper registrations.
As unpleasant a task as it may be, don’t skip it. Running your business without the adequate licensing is a criminal offense in some states, while others hand out hefty fines. Here are some legal documents needed for a home Handbag making business.
- Federal tax identification number
- Insurance certificate
- Alarm system permit
13. Raise the Needed Startup Capital
A small single-person handbag making business can earn an annual income ranging from between $20,000 and $52,000, depending upon experience, location, and the type of marketing. With one or more employees, a handbag making business can earn much more, and some become successful enough to provide enough to provide franchise opportunities.
But all these process and growth require funding. Every business needs adequate funding from the start to be able to do the necessary things and become profitable. Ways of getting funds may include…
- Raising initial capital from family and friends
- Getting small business loans
- Getting funds through Crowdfunding
- Bank overdraft
- Finance your Business Expansion with Equipment Leasing
14. Choose a Suitable Location for your Business
Even though you may be starting from your home, your location can still dictate the success or failure of your business. That is why it’s advisable that you conduct a research to ascertain if it’s the best place to locate your business. You should also find out if your business would have a retail component. This can fetch you a large volume of small profit sales, but you will need more investment costs.
Visit shopping malls, outdoor marketplaces, downtown areas and locations that receive heavy foot traffic due to the proximity to restaurants, movie theaters, stores and local entertainment, such as theme parks or miniature golf courses. But since you will be starting this business from your home, you can’t do much but to focus your strength on proper marketing strategies and supply network.
15. Hire Employees for your Technical and Manpower Needs
It’s advisable that you don’t only thoroughly research your local competition, but ask for advice from successful designers in other locations. Have it in mind that being well-informed about industry trends is important to the success of a handbag making business. In the age of the personal brand, one of the best ways to promote your new bag business is by modeling your work in public with your own wardrobe.
Nothing demonstrates your skills and talents—and attracts compliments and potential new customers– more than wearing your own unique, finely manufactured handbag. Note that this type of business usually cannot accommodate a high volume of customers.
As such, when demand exceeds capability, businesses of this type benefit significantly from the addition of qualified workers. Other valuable additions to your company’s resources can include industry organizations. Meanwhile the equipment you should consider getting for your handbag making business includes;
- Sewing machine
- Travel Iron with steam function
- Some good tunes to sew to
- Fine sewing scissors and dressmaking shears
- Long dressmaking pins
- Sewing clips
- 1/4in Basting tape – essential for zippers, appliques, pockets, tabs etc. etc. Etc.
- Pinking shears
- Finger presser – ridiculously useful for pre-creasing (and staying at your desk creasing)
- A sleeve ironing board (great for getting into small bags)
- Ironing glove/tailor’s ham
- Table top ironing board
- Strong fabric glue
- Loop turner
- Walking machine foot
- Fine adjustable zipper foot – to get real close solid items such as metal fasteners
- Ironing cloth
- Bodkins – for fast and easy threading of elastic, cord, handles etc.
- Dot + cross paper for pattern making
- Disappearing marker
- Hera marker
- Tape measure
- Pliers for purse chain and metal rings
- Tailor’s tapered awl
- Cutting mat for rotary cutter
- Rotary cutter
- Quilt ruler
- Stitch ripper
The Service Delivery Process of the Business
To manufacture a bag, you have to first create and print out your design template, if necessary, enlarge on a photocopier until it is the correct size. Then draw a 2cm seam allowance all round each template and cut out to make the patterns.
Carefully pin the main bag pattern on to the fabric and cut out for bag front. Remove the pattern and repeat to cut out bag back. Making use of the same pattern, cut out two pieces from interlining and two from lining fabric. With wrong sides facing, tack bag front to one interlining piece. Tack bag back to the other piece of interlining.
Then use a pencil to transfer the fold marks that are on the top edge of the main bag template on to the back of the interlined pieces. After that, use the Bag Top pattern to cut four pieces from the fabric and two pieces from interfacing. With wrong sides facing, tack interfacing to two strips.
Then with the right sides together and matching the side edges, pin the bag front to the top piece. The bag front will be wider than the top piece, so pin them together at the sides only. While on the back, pinch the top edge of the embroidered fabric at the marks to create two small pleats.
Do not forget to make sure the folds at the back of the pleats are facing towards the centre of the bag and that the bag front is now lying flat against the contrast top. Pin the folds in place. Then with right sides together, machine-stitch the bag front to the bag top along the top edge, sewing the pleats in place as you do so. Also assemble the bag back in the same way.
Then press seam on both pieces, towards the top and topstitch close to the seam, catching in the seam allowance. After that and with the right sides facing, pin the bag front and back pieces together matching the side edges and base, machine-stitch round edges leaving the top edge open. Turn bag right side out.
Making the Handles
Going back to the template, lightly mark the handle positions on the front and back top edges of the bag with a pencil. Carefully pin the fabric handle piece to the appropriate piece of interfacing. Along the long sides of the strip, press 1cm towards the middle. Then fold the strip in half so that raw edges are concealed and press. Then top stitch close to the long open edge and long closed edge of handle strip.
Cut in half to give pair of handles. After that pin ends of one handle to the wrong side of the bag front, matching the markings from the template. Ensure that the handle seam is facing towards the bag side seam on both sides and that the handle isn’t twisted. Attach the other handle to the back of the bag in the same way.
Then sew each end of each handle in place, stitching about 1cm from the raw edge, and stitching along the previous top stitching line. Sew backwards and forwards over each end a few times to make sure that each handle is firmly secured. Turn 2cm in to the wrong side along the top edge of the bag. Tack in place.
Making the bag lining
Making sure that its facing the right sides, join bag lining pieces and top facings together as, reading bag front as bag front lining, bag back as bag back lining and bag top as bag facings. Leave bag lining wrong side out and turn 2cm over to the wrong side along the top open edge. Tack in place. Going back to the template, mark the position of the magnetic clasp on the right side of one facing.
Insert clasp, following the manufacturer’s instructions, making sure that it is flush to the fabric and that the clasp is aligned accurately on both sides. Then slip lining inside the bag, with wrong sides facing and matching top edges. Topstitch in place along the top edge catching in bag handles. To finish, carefully sew the oversized corn-coloured button to the top centre of the bag front, using red sewing thread.
16. Write a Marketing Plan Packed with ideas & Strategies
It is a great idea to provide potential customers with some physical media for your business, such as flyers and business cards. You should have a business logo that is consistent on all your marketing materials. Note that having a website is a crucial aspect of any business.
Most potential customers search online for products and services and having a website is very necessary. Placing an ad in the local paper, especially before social events such as prom or Valentine’s dances, is a timely way to let people know about your services. Other ways to market your home based handbag making may include:
Market Your Business on Craigslist
No money for advertising? No problem. Sites like Craigslist allow you to post an ad; you can even include your business logo and link to your website and social networks. The best thing about Craigslist is that it actually receives a lot of traffic, so your business will get exposure.
No matter what you hear or feel, face-to-face networking is not dead and having a memorable business card to hand out is very important. But ensure that your business card conveys an image of professionalism, and secondly, it reminds people of your business.
Your business card should look professional and include your logo if you have one. A great way for your business card to retain some of its life is to add some additional value to it; such as displaying a calendar, tip chart, or appointment reminder of the back.
Leverage Social Networking
In this age everyone, everywhere is involved in some type of social networking. This is great news to any focused business owner because you can create a profile on any social network and promote your business for free. You can also write about your area of interest and include links to your website, or feel free to create or join a group that revolves around your particular niche.
- Participate in Charity Events
You should consider doing some good for the community and promote your business at the same time. You can select your favourite charity and volunteer for one of their events or offer to plan/host one for them. Gather your family and friends and get them to join in the action.
A lot of organizations will include your company’s logo on brochures, tee-shirts, and their website. This is an excellent way to get exposure for your business and build new relationships.
If you have a website, a newsletter is an amazing way to bring customers back to your site and remind them of your product. Do not forget to include interesting content in your newsletter that is related to your topic; some good approaches are to write product reviews, tips, or even invite your subscribers to send in questions and answer them in the newsletter.
Having a blog is a fantastic way to keep customers coming back to your site. For a blog to be a successful marketing tool it will need to be updated on a regular basis, usually 2 – 5 times per week. You will also need to have interesting and thoughtful content about your subject. Have it in mind that immediately your customers know that you provide regular articles of interest, they will stop by more frequently to see what the latest news and happenings are.
17. Work Out a Reasonable Pricing for your Services & Products
The competition in the handbag making industry is expected to keep growing, that is why to remain in this industry you have to make consumers aware of your product, especially when your home based. Have it at the back of your mind that each community is different and some marketing tactics will work in some areas and others will not.
The key is to try different things and find what works for you. And remember that what worked yesterday, might not work tomorrow. The only limit to your marketing is your own creativity. Some ideas can be expensive, but there are plenty that are not.
- Create a design contest
- Loyalty programs
- Group contest
- Coupon mailers.
- Daily deal websites
- Street marketing
- Sponsor or advertise at local races
- Social marketing
- Cross market with local businesses
- Online marketing
18. Brainstorm Possible Ways to Retain Clients & Customers
Visiting local fashion shops is an excellent way to spread the word about your services to those with an interest in making and buying bags. Inviting people to participate in creative activities that benefit the world as well as the local community is one of the best ways to attract and keep new customers. There are many ways to retain and maintain your customers and make them to always want to come back. These ways may include
- Satisfy your customers
- Patronage discount and coupons
- Loyalty and reward programs
- Be lenient
- Customer feedback survey
- Light personalization
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
You need to understand that market place identity and brand affinity serves several objectives for manufacturing businesses seeking to increase sales in the marketplace and it can do same for your home based handbag making business. Ensure you make your brand awareness campaign direct and flexible enough to grow with the business and adjust if needed.
Ways to promote brand awareness and create a corporate identity in your handbag making business may include holding an event, exhibiting yourself, sponsor something, create an experiential stunt, take to social media, organize a public relation campaign, invest in promotional merchandise, join forces with other businesses etc.