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How to Start a Tote Bag Business

A tote bag business is a business that designs and produces a collection of tote bags for a target demographic or market. These tote bags are sold in retail locations and/or through online stores. Totes bags are the category of bags that have parallel handles that emerge from the inside of the bag.

They are usually large and are either open (most common) or fastened at the top. Examples of tote bags include canvas bags, jute bags, woven bags, cotton bags, and much more.

The projected growth for the tote bags market share in the United States from 2021 to 2026 is USD 7.47 billion at a progressing CAGR of 6.37%. The Global Tote Bags Market is expected to grow at a CAGR of over 5.5%, and the market size is anticipated to reach USD 5.81 billion during the forecast period.

Steps on How to Start a Tote Bag Business

  1. Conduct Market Research

The first step in the market research process for your tote bag business is to develop market-based research questions in line with your overall business goal and objective.

In this regard, you should source information that will help you maximize your business, information that will give you reliable data on what your potential market will be looking out for from a tote bag business, the designs and styles that people will spend a premium on and also to help you operate your tote bag business with less stress and of course, build the business to profitability.

a. Who is the Target Market for Tote Bag Business?

If you are thinking of opening a tote bag business then you should make target demographics all-encompassing. It should include boutiques, bag stores, male and female, corporate executives, socialites, students, migrants, entrepreneurs, business people, celebrities, and every adult in the neighborhood where your tote bag business will be located and of course on the internet.

b. Is Tote bag business a Profitable Business?

Yes, the tote bag business is profitable all across the globe. Statistics show that the tote bag market is projected to reach $7.47 billion.

c. Are There Existing Niches in the Industry?

Yes, there are existing niches when it comes to the tote bag business. Here are some of them;

  • Regular tote bags (mass production)
  • Customized (craft) tote bags
  • Luxury and high-end tote bags.
d. Who are the Major Competitors?
  • LBU Inc.
  • GFG Bag Manufacturer
  • Troy Sunshade, Inc.
  • Bags USA Mfg.
  • Bags Express
  • Appalachian Stitching Company.
  • Clava American
  • The Custom Bag Company
  • Portchester USA
  • Duro Bag, A Novolex Brand
  • Giggle Handbag
  • Rays Jade
  • Paul Mueller Company
  • Twin Oaks
  • Jarrett Industries, Inc.
  • Allied Specialty Co., Inc.
  • BHS International, Inc.
  • Langbehn & Co., Inc.
  • Robinson Windword, Inc.
  • UniversalPromo, Inc.
  • Landes Inc.
e. Are There County or State Regulations or Zoning Laws for Tote Bag Business?

Yes, there are county or state regulations and zoning laws for tote bag businesses, and players in this industry are expected to work with the existing regulations governing such business in the county or state where their business is domiciled.

f. Is There a Franchise for Tote Bag Business?

Yes, there are franchise opportunities for the tote bag business, and here are some of them;

  • Handbag Clinic International
  • Couture Traders
  • Prakriti Maitri.
g. What Do You Need to Start a Tote Bag Business?
  • A Feasibility Report
  • Business and Marketing Plans
  • Business Licenses and Permits
  • A Good Production Facility and Showroom
  • EIN (Employer Identification Number)/Federal Tax ID Number.
  • A Corporate Bank Account
  • Equipment, Machines, and Raw Materials
  • Employees
  • Startup and Working Capital
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.

Some of the catchy business name ideas suitable for a tote bag business are;

Creative Tote Bag Business Name ideas
  • Flip Side® Tote Bag, Inc.
  • Classic Woman® Tote Bag, Inc.
  • Bag Nation® Tote Bag, Inc.
  • Julia Couture™ Tote Bag Brands, Inc.
  • One Pack® Tote Bag, Inc.
  • Shammah Designs® Tote Bag Business, Inc.
  • Brown Label® Luxury Tote Bag Company
  • Silver Line® Tote Bag, LLC
  • High End® Luxury Tote Bag, Inc.
  • Maureen White® Tote Bag, Inc.
  • Rita GAP® Tote Bag, Inc.
  • Stella Morris ™ Tote Bag, LLC
  • Martha Martins™ Tote Bag, Inc.
  • Broadway™ Tote Bag, LLC
  • Mariah Fe® Tote Bag, Inc.
  • Yvonne Jones® Tote Bag, Inc.
  • Ola McKim© Tote Bag, Inc.
  • Joy McPherson™ Tote Bag, LLC
  • Aliya Signature™ Tote Bag, Inc.
  • Kate Henry® Tote Bag Brand, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for Tote Bag Business?

Even though there are several options when it comes to the business structure of a tote bag business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Tote Bag Business?
  • General Business License
  • Seller’s Permit
  • Fire and Safety Permit (Fire certificates)
  • Federal Export Licenses
  • Zonal Permits
  • Signage Permit
  • State Occupational Licenses
  • Operational State Facility Inspections (Building Permits)
d. What Type of Certification is Needed to Open a Tote Bag Business?

You don’t need any certifications to open a tote bag business.

e. What Documents are Needed to Open a Tote Bag Business?
  • DBA
  • EIN
  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit and Building Approval
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document
  • Contract Document
  • Company Bylaws
  • Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a tote bag business, you may need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to challenge people in court for illegally making use of your company’s intellectual properties especially as it relates to your designs or logo et al.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Tote Bag Business?

When it comes to starting a tote bag business, the startup costs will vary. It can range from $10,000 to over $250,000.

b. What are the Costs Involved in Starting a Tote Bag Business?
  • The Total Fee for Registering the Business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the tote bag business – $3,580.
  • Insurance premium – $2,400.
  • Cost for payment of rent for 12 months at $1.76 per square foot in the total amount of $123,300.
  • Cost for facility remodeling (construction of racks and shelves) – $5,000.
  • Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for equipping the production factory – $45,000
  • The cost for start-up inventory (materials, sewing supplies, packaging materials et al) – $55,000
  • Storage hardware (bins, rack, shelves, food case) – $3,720
  • Cost for store equipment (cash register, security, ventilation, signage) – $3,750
  • The cost for the purchase of furniture and gadgets: $7,000.
  • The cost of Launching a website: $600
  • The cost for our opening party: $3,000
  • Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Tote Bag Business?
  • The size of the tote bag business
  • The choice of location
  • The required licenses and permits
  • The type of tote bag business (mass production or handmade)
  • The cost for branding, promotion, and marketing of the tote bag business
  • The cost of furnishing and equipping the tote bag production facility
  • The cost of insurance
  • The cost of registering the business
  • Source of your supplies and ongoing expenses
  • Cost of recruiting and training your staff
  • The cost for the purchase and customizing of uniforms
  • The cost for the grand opening of the tote bag business.
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

If you have the required finance, it will pay you to build a facility for your tote bag production business. The truth is that building or reconstructing a production facility for your tote bag business will help you come up with a facility that will perfectly fit into your overall business goals and vision.

e. What are the Ongoing Expenses of a Tote Bag Business?
  • Rent and lease
  • Supplies and inventory (materials, sewing supplies, and packaging supplies et al)
  • Utility bills (internet subscriptions, phone bills, signage, and software renewal fees et al)
  • Maintenance of machines
  • Salaries of employees
f. What is the Average Salary of your Staff?
  • Chief Executive Officer (President) – $55,000 Per Year
  • Factory Manager – $35,000 Per Year
  • Merchandise Manager – $32,630,000 Per Year
  • Tote Bag Designers – $32,000 Per Year
  • Accountant (Cashier) – $30,500 Per Year
  • Marketing and Sales Executives – $28,000 Per Year
  • Tailors (Bag Makers) – $26,100 Per Year
  • Customer Service Executive – $26,000 Per Year
  • Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Tote Bag Business?
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Joy McPherson® Tote Bags Manufacturing Company, Inc. is a US-registered tote bag manufacturing business that will be located in Pearl City – Hawaii. We have been able to lease a facility that is big enough (a 20 thousand square foot facility) to fit into the kind of standard tote bags manufacturing company we intend to establish.

Joy McPherson® Tote Bags Manufacturing Company, Inc. will be involved in the manufacturing of a wide range of tote bags for both business and individual clients. We are set to service a wide range of clientele not just in the United States of America, but also in all parts of the world.

b. Products and Service
  • Regular tote bags (mass production)
  • Customized (handmade craft) tote bags
  • Luxury and high-end tote bags
c. Mission Statement

Our mission is to build a highly successful tote bag manufacturing business whose brand will be known all around key cities in the United States of America and around the globe.

Vision Statement

Our vision is to be among the top 3 tote bag manufacturing companies in the United States of America.

d. Goals and Objectives

The goals and objectives of a tote bag business are to produce different types and designs of tote bags for the general public.

e. Organizational Structure
  • Chief Executive Officer (President)
  • Factory Manager
  • Merchandise Manager
  • Tote Bag Designers
  • Accountant (Cashier)
  • Marketing and Sales Executives
  • Tailors (Tote Bag Makers)
  • Customer Services Executives
  • Security Guard

Marketing Plan

a. SWOT Analysis
  • Ideal location for tote bag production business
  • Highly experienced and qualified employees and management
  • Access to finance from business partners
  • Excellent customer testimonials.
  • A wide range of tote bags (unique designs and styles)
  • Financial Constraints
  • A new business that will be competing with well-established tote bag business brands.
  • Inability to retain our highly experienced and qualified employees longer than we want
  • Online market, new services, new technology, and of course the opening of new markets
  • Increase in population within our target market area.
  • The arrival of a new tote bag manufacturing business within our market space
  • Unfavorable government policy and regulations
  • Economic uncertainty
  • Liability problems
b. How Do Tote Bag Businesses Make Money?

The tote bag business makes money by selling a wide range of tote bags.

c. Payment Options
  • Payment via bank transfer
  • Payment with cash
  • Payment via credit cards
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
d. Sales & Advertising Strategies
  • Place adverts on both print (newspapers and fashion magazines) and electronic media platforms
  • Sponsor relevant community-based events/programs
  • Leverage the internet and social media platforms like; Pinterest, Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
  • Install your Billboards in strategic locations all around your city or state
  • Distribute your fliers and handbills to target areas
  • List your tote bag business in local directories/yellow pages
  • Advertise your tote bag business on your official website and employ strategies that will help you pull traffic to the site.
  • Position your Flexi Banners at strategic positions in the location where your tote bag business is located.
  • Ensure that all your staff members wear your branded shirts and that all your vehicles and trucks/vans are well branded with your company logo et al.

Financial Projection

a. How Much Should You Charge for your Product?

The price of tote bags depends on the type, size, and brand of the product. Made in USA Tote Bags sell from $3.96 to $8.00.

b. How Much Profit Do Tote Bag Business Owners Make a Year?

It depends, but the available report shows that the national average earnings for tote bag business owners are approximately $51,000 per year. Tote bag business profits can average between $23,751 and $140,935, depending on your location, line specifics, expenses, marketing efforts, and company size.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the tote bag business
  • The location the tote bag business is covering
  • The management style of the tote bag business
  • The business approach of the tote bag business
  • The advertising and marketing strategies adopted by the tote bag business
  • The number of years the tote bag business is in business
d. What is the Profit Margin of a Tote Bag Business?

Margins usually range from 20% to around 60-70%.

e. What is the Sales Forecast?
  • First Fiscal Year (FY1): $340,000
  • Second Fiscal Year (FY2): $450,000
  • Third Fiscal Year (FY3): $750,000
  1. Set Up your Shop 

a. How Do You Choose a Perfect Location for a Tote Bag Business?
  • The demography of the location
  • The demand for tote bags in the location
  • The purchasing power of businesses and residents of the location
  • Accessibility of the location
  • The number of tote bag businesses and other bag manufacturing companies in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What State and City are Best to Open a Tote Bag Business?
  • Green Bay, Wisconsin
  • Dallas, Texas
  • Green Bay, Wisconsin
  • Passaic, New Jersey
  • Los Angeles, California
  • New York City, New York
  • Brattleboro, Vermont
  • Tucson, Arizona
  • Silver Spring, Maryland
  • Rowland Heights, California
  • Portland, Oregon
  • Richmond, Virginia
  • Plano, Texas
c. What Equipment is Needed to Operate a Tote Bag Business?
  • Industrial sewing machines
  • Pattern makers for crafting designs
  • Scissors
  • Hole punchers
  • Straight and curved rulers
  • Pencils
  • Measuring tapes
  • Notchers for marking seams.
  • Pins
  • Slopers
  • Dotted pattern paper
  • Sewing machine needles
  • Hand sewing needles
  • Threads
  • Sketching books
  • Drapings tools
  • Bagmaking Stick pins
  • Muslin
  • Style tapes
  • Leather shears
  • Soft lead pencil
  • Marking pen
  • Pattern plotter
  • Pattern-making software
  • Computer
  • CAD tools for designs
  • Digital drawing tools
  • Digitizer board for pattern scanning
  • Heat transfer machines
  • Print tables
  • Hangers
  • Labels and Tags
  • Packaging materials
  • Supply of bag materials
  1. Hire Employees

When it comes to hiring employees for a standard tote bag business, you should make plans to hire a competent chief executive officer (president), factory manager, merchandise manager, accountant (cashier), marketing and sales executives, tailors (tote bag makers), tote bag designers and security guard.

  1. Launch the Business Proper

No tote bag business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.

With the proper launching of the tote bag business, you will officially inform people in your city that your tote bag business is open for business.

a. What Makes a Tote Bag Business Successful?
  • Choose a good location and showroom facility to launch the business
  • Make sure your tote bags are unique and the finishing is topnotch
  • Throw an open house grand party before officially opening the tote bag business
  • Be deliberate with your marketing sales approach
  • Encourage the use of word of mouth to promote your tote bag business
  • Leverage all available online and offline platforms to promote your tote bag business
b. What Happens During a Typical Day at a Tote Bag Business?
  • The production factory is open for the day’s work
  • The facility is cleaned and well-arranged
  • Factory swings into action
  • Deliveries of orders are made
  • Stocks are taken and reports are written and submitted to superior officers
  • The business is closed for the day
c. What Skills and Experience Do You Need to Build a Tote Bag Business?
  • Good bag and fashion design sense
  • Excellent tailoring and bag-making skills
  • Excellent customer service skills
  • Interpersonal skill
  • Accounting and bookkeeping skills
  • Business management skills
  • Bargaining and bidding skills
  • Work experience in a tote bag manufacturing business environment
  • Experience in managing people
  • Experience in business administration.