Do you want to start a handbag manufacturing company? If YES, here is a complete guide to starting a handbag manufacturing business with NO money and no experience.
Okay, so we have provided you an in-depth sample handbag manufacturing business plan template. We also took it further by analyzing and drafting a sample handbag manufacturing business marketing plan backed up by actionable guerrilla marketing ideas for handbag manufacturing companies. In this article, we will be considering all the requirements for starting a handbag manufacturing business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Handbag Manufacturing Business?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Handbag Manufacturing Business?
First and foremost, it is very important to state that a purse is a small bag used for holding coins. In British English, it is still used to refer to a small coin bag. Handbag is used to describe a larger accessory that holds objects beyond currency, such as personal items. Note that American English typically uses the terms purse and handbag interchangeably.
History has it that handbags began appearing in the early 1900s, but then it was most often used to refer to men’s hand-luggage. Women’s bags grew larger and more complex during this period, and the term was attached to the accessory. This particular accessory is valued for their stylishness as visual accessories as well as for their function for those who use them.
So, if you can design stylish handbags that make your friends and family gloat and if you are ready to share your talents with the rest of the world, starting a handbag manufacturing business may be the ideal business for you. Starting a Handbag Manufacturing Business is without doubt creatively fulfilling and very profitable.
But note that you will need to start up your business in a way that will work for you if you want to succeed. You need to choose what you want out of the business and create both long and short-term goals so as to keep the business going in the direction you want it to go, whether it is growing into a larger enterprise or simply earning you extra money from home.
Starting a Handbag Manufacturing Business – A Complete Guide
1. Understand the Industry
Reports in this business shows that demand in the Global Handbag and Purse manufacturing industry reduced drastically in 2008 and 2009 as consumers in recession-hit countries held off on nonessential spending. But the demand for higher-priced luxury products rose in countries such as China. A lot of Europe-based companies such as LVMH, are placing a greater focus on the Asian market as incomes in the region rise.
That is the reason why experts believe that the industry revenue will grow at an annualized 2.2% over the five years through 2016 at $95.5 billion. Also reports showed that revenue grew marginally in 2016 at 0.3%, reflecting the slow recovery and constrained economic growth in developed countries.
But note that Europe and Asia account for a large share of handbag and accessories manufacturing revenue. Accessories made in Europe (Italy and France in particular) are seen as high-quality luxury products that command a higher price in the global handbag market.
But have it in mind that businesses that operate in developed economies are increasingly sourcing accessories and handbags from manufacturers in China, where production costs are lower. But as wages in China rise, production is shifting to lower-cost producers in Asia, such as Vietnam, which means that international trade accounts for a large share of revenue. Experts believe that international trade will increase at an annualized 2.5% over the five years through 2016 to $61.0 billion, or 63.9% of industry revenue.
This industry attracted entrepreneurs with its increased revenue in recent years due to mergers and consolidation among industry participants. Research has shown that concentration is also expected to increase slightly in future years as this trend continues in a saturated and mature industry. We believe that the very high labour intensity of most of the industry’s production lends itself toward many small operations.
While large-scale manufactures operate in China and Europe, newly industrialized countries also have a large number of small businesses that manufacture apparel accessories and handbags. Well noted financial experts have stated that the size of the industry will increase over the five years to 2016. Also the number of businesses in Europe and the united states is expected to reduce. Also businesses in developed nations are steadily shifting their operations from manufacturing to design and wholesaling.
We believe that the demand for handbags and accessories will rise over the next five years as conditions in the global economy strengthen. Also note that as disposable income grows and consumer sentiment recovers, consumers will make purchases that they postponed during the recession. Have it that international trade will remain a key feature of the industry as production continues to shift to low-cost countries in the industry.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Indeed manufacturing designer handbags is a great business venture 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.
Making awesome designs and utilizing uncommon materials for the making of the handbags 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. Also in the industry, these handbags can also be sold directly to consumers by displaying the products at fashion or craft shows or selling them online.
Also to succeed in this business, you need to look out for big market opportunities by building joint ventures with established handbag manufacturers who can produce and wholesale your handbag designs under a split revenue agreement.
Your prospective clients in this business will depend 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. Note that you can also reach 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.
3. Decide Which Niche to Concentrate On
To really succeed in this business, your product idea needs to be desirable, this simply means that you need to have a target market and selling point. This is why is advisable to do trend/market research when first designing your line in order to make sure that there is a customer for your product.
Once you see a gap in the market, you will get a better understanding of the type of product you should create. You can decide to do general bags and sell them; you can also choose to design to particular bags which you can be known for. They may include;
- Baguette: a small, narrow, rectangular shaped purse resembling a French loaf of bread (baguette)
- Barrel: shaped like a barrel or closed tube, usually with shoulder-length straps
- Bowling bag purse: a popular 1990s “retro” style for younger women, modeled after American bags used to carry bowling balls
- Bucket bag: shaped like a bucket, medium-size or large, with shoulder straps and a drawstring closure
- Clutch: a handbag without handles with detachable chain strap, rectangular in shape, often an evening bag but used during the day as well
- Doctor’s bag: modelled after a Victorian era doctor’s bag for making house calls
- Drawstring: a purse that closes with a drawstring at the top, may have wrist or shoulder-length straps, popular as an evening bag style
- Half-moon: shaped as a half-moon
- Hobo: medium-size crescent-shaped bag with a top zipper and often a slouch or dip in the centre; a modern, casual silhouette
- Kiondo: a hand-woven handbag made from sisal with leather trimmings. It is indigenous to Kenya
- Lighted: a handbag with a lighting system which has been attempted since the 1950s without success until recently when in 2011 the first successful lighted handbag was brought to the market.
- Messenger bag: one long strap worn across the body, inspired by bags worn by urban messengers to deliver business mail, a modern silhouette
- Minaudière: a small rectangular evening bag, usually hard-bodied, sometimes held inside a soft fabric bag that serves as a sleeve
- Muff: a winter bag made of real or faux fur, wool or velvet that has zippered compartments and a slip opening for hands
- Pocketbook: small purse, rectangular shape
- Pouch: small bag such as a pocket, teabag, money bag, sporran, etc.
- Saddle purse: shaped like a horse saddle, may have equestrian motifs and hardware to emphasize the design
- Satchel: a soft-sided case usually of leather
- Tote: medium to large bag with two straps and an open top
- Trapezoid: shaped as a trapezoid, usually made of stiff material
- Wristlet, a small handbag with a short carrying strap resembling a bracelet
The Level of Competition in the Industry
Prospective clients in this business are shaking off the recession as per capita disposable income grows, indulging in frivolous purchases again and traveling–with new bags and luggage to jet set in style. Market Feasibility and Research has shown that 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.
Experts say the U.S. handbag market is expected to reach $11.8 billion by 2019, increasing 4.3% year-over-year. We believe that there will be a strong growth in men’s bags. Male gender norms are softening, allowing American men to follow their European counterparts and carry bags without fear of being mocked. This sociological allowance has allowed the men’s bag market to explode, with male bag purchases increasing to 26% in the last year.
Before you start this business, you should know that half of all new businesses survive five years or more and only one-third will survive over a decade. The odds, unfortunately, are not in your favour. Building a handbag manufacturing business is more than just creating amazing and stylish bags. It is your job to understand the operations of a dynamic fashion industry and how your new handbag brand will grow and thrive in the future.
It is an important that you write a business plan, organize cost sheets, develop order forms and finally, network with industry connections to help you accomplish your sales goals. Research has shown that new entrants in this industry fail because management teams become overwhelmed with death-by-paper-cut administrative duties on top of creative direction. Also with growing debt and unforeseen business expenses, failing to keep a fickle buyer and conscious consumer interested in your product will sink even the most on-trend of fashion vessels.
4. Know Your Major Competitors in the Industry
- Christian Dior S.A.
- Michael Kors Corporation
- Kate Spade
- Marc Jacobs
- Yves Saint Laurent
- Coach, Inc.
- Dolce & Gabbana
- Jimmy Choo
- Dooney & Bourke
- Louis Vuitton
- Christian Louboutin
- Bottega Veneta
In this our modern age, handbags and purses are commonly bags that come in different forms and sizes and are a product of certain fashion designs. Individuals employed within this industry are designers and manufacturers of handbags and purses, and specialty retailers whose primary market is in selling handbags.
Due to the attention being paid to fashion, handbags have become an important accessory, and are often used as completion pieces for a woman’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.
Note that as more designers have started to open their own stores, competition in the handbag industry has become intense. Premier handbag companies will sell not only their own designer pieces, but luxury brands and private labels as well. We believe that the designer handbag brands that come out of Europe make up the largest market in the industry.
They sell their handbags through independent retailers and specialist chains. Outside of Europe, other countries are on the rise in their creation and distribution of handbags with new strategies and initiatives. Have it in mind that businesses in this industry are also beginning to adjust their distribution practices so they can provide more effectively for the needs of their consumer, as well as reducing their operational costs.
5. Decide Whether to Buy a Franchise or Start from Scratch
Handbag manufacturing franchises give a new entrant into the industry an excellent opportunity of molding their creativity into a profitable business more than what they can achieve if they start from the scratch. Just like with any new business startup, franchise opportunities have their pros and cons.
If you have a creative streak coupled with an entrepreneurial spirit then opening a handbag manufacturing franchise may be an option worth considering. We believe there are plenty of franchising opportunities available, and with so many options available, chances are you can find something that fits perfectly with your business.
Have it at the back of your mind that buying a franchise involves a significant investment. While the initial expense may range from a thousand to a few hundred thousand dollars, many people find that the investment is worthwhile. Many handbag manufacturing franchises offer name brand recognition that can be very challenging to obtain on your own as a home grown business.
Also we believe that deciding to go the franchising route does have its benefits. It provides you with a turnkey system to work with that eliminates the need for costly trial and error. For those without a business management background, a franchise can provide not only the supplies you need to get started, but also the training you need to handle the business end of the franchise.
In this competitive industry, making a product that is both marketable and profitable is a difficult task, and that is before you try to calculate your time into the equation. Choosing one of the successful handbag franchises mean that the market has already been tested, and if people were not buying the product, it is safe to assume the company would not have grown to the point of offering franchises.
6. Know the Possible Threats and Challenges You Will Face
Starting and building a handbag-making company can be exciting because you are passionate about handbags. Indeed it entices to make something fashionable and unique. People are now giving more attention to how they look, which creates an unquenchable demand in this business. Here are few threats you might face when starting your Handbag manufacturing business:
- Learning how to make handbags
- Deciding on the type of handbag you would be making
- Doing your feasibility research
- Choosing your work area
- Registering your business
- Choosing a price model
- Simplifying your marketing plans
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
When planning the legal foundation and route of your handbag manufacturing business, you have two viable options to choose from- sole proprietorship and the LLC. Indeed for you to understand the tax liabilities for each, it is important to understand the definition of the terms.
The first which is the sole proprietor business structure is, as the name suggests, a company with a single owner. This structure is used by three-quarters of all businesses. It keeps the owner in control of the company and has the simplest initial setup-while the limited liability corporation, or LLC, is often formed for partnerships when the business has grown significantly. The advantage of an LLC is more options for growth and tax advantages.
Note that a lot of people would rather create an LLC than a sole proprietorship because of liability issues, but it takes money to prepare the articles of incorporation. Payment options need to be considered, a bookkeeping system has to be in place, and this all takes additional money that takes away from the funding necessary to purchase the materials to make the products.
8. Choose a Catchy Business Name
- Fashion Candy
- Bags Unlimited
- Zionsville bags
- Beautiful Bags
- Celebrity Bags
- Fashion Express
- Bag fashion
- Leather World
- Purse addict
- Halo Handbags
- Purse king
- Hand Bag Utopia
- Manny Handbags
- Max Purse
- Lyon Handbags
- NYC Purses
- Smooth Purse
- Picture Purses
- Acura Purses
- Purses & More
- Savvy Bags
- Tommy Handbags
- Leather Styles
- Peacock Purse
9. Discuss with an Agent to Know the Best Insurance Policies for You
In this business, insurance can provide protection for a variety of risks within a manufacturing business. Indeed some of the most common areas of coverage for manufacturers insurance include Commercial Auto Insurance, Workers Compensation and General Liability. The idea behind having insurance is to protect the business from things like lawsuits, loss of personal and commercial property, and even damage to buildings. Things you will need may include;
- Public and Products Liability
- Stock and Contents for Fire, Burglary and Business Interruption
- Professional Indemnity (if advice is given for a fee)
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Have it at the back of your mind that Intellectual Property in the United States has become increasingly more important in the last decade. This is because the right to own one’s genius is not a new concept. But with the arrival of the digital age, it has become much harder to remain in control of one’s intellectual property.
Intellectual property has grown from the need to protect one’s new invention, such as soap, to the need to protect a slogan or a colour. This means that intellectual property rights no longer protects only a trade secret; it is now preserves one’s monetary gain. Designing a product is hard work – the result of training, experience and the creative process.
Indeed after taking so much time in bringing your idea to life, it is vexing beyond belief when you discover your arts/crafts, design or promotional copy is stolen. In the creativity world, imitation is not the most sincere form of flattery; it is a potential drain on your gross income and your ability to support yourself. Get the help of a lawyer who is experienced in this field to help you understand the necessary ways to protect yourself.
11. Get the Necessary Professional Certification
Handbag makers are trained solely on the job where they learn skills from experienced workers or from a manual. New handbag makers start from basic tasks such as weaving and joining. But as they gain experience, they make awesome bags by adding their own innovation. Education is important because it can be a huge determinant between your cost of production and your profits.
The first place to start your research is on the internet because there are many handbag manufacturing forums where seasoned handbag makers are willing to assist you. What you have to do is to gather as much information as you can, but make sure that the information gathered is aligned with your aims and objectives. If your aim and objective is to make purses, you need to search for the specific information.
12. Get the Necessary Legal Documents You Need to Operate
No matter how you see it, note that before you can start your handbag manufacturing business even from your house, you need to get the appropriate permits and licenses from both your state and local government. This is because you wouldn’t want the government closing you down for illegal business operations.
We strongly advice that before you start your handbag manufacturing business, speak to an attorney or an accountant. You need to get advice on tax structures and insurance. You will need it for future purposes. To legally start a Handbag Manufacturing Business, you will need business documentation; exactly what permits and licenses you need will vary depending on where you live.
Take for example; in Harris County you can start a manufacturing business with an assumed name certificate (DBA), sales tax permit and a tax resale certificate, if you want to purchase handbag manufacturing supplies or wholesale bags without paying taxes. To find out what you need to get your handbag manufacturing business started, contact your local small business development centre or Small Business Administration office, or better still an attorney.
13. Raise the Needed Startup Capital
Research has shown that cost will be much higher for making patterns and samples in the USA, but on the other hand producing overseas requires high minimums, which very few start up brands can afford to produce. This is why you need to educate yourself as much as possible about the difference between producing domestically or in Asia.
But in all, you need funds to be able to finance the manufacturing and buying of all necessary equipment. You can finance your handbag manufacturing business through many ways.
- Personal savings
- Bank overdraft
- angel investor
14. Choose a Suitable Location for your Business
Handbags can be sold in a variety of places, and the venue you choose mainly depends on how much money you have to start your handbag manufacturing company. The cheapest handbag manufacturing selling venues include flea markets, e-commerce stores, online auction websites, online artisan marketplaces and craft shows.
Mall kiosks, stores and booths, brick and mortar stores, fashion houses, and fashion shows are the most expensive places to sell handbags; most companies start with a smaller venue, wait until their handbag manufacturing company is established and then branch out into a more organised fashion show. Note that it is a good idea to sell your handbags though different venues to make sure that you are generating a steady income.
Just like many other fashion products, the type of handbags that sell well are often determined by trends. Fashion trends are beneficial to watch when selling handbags. Also joining a handbag manufacturing business association or subscribing to a handbag manufacturing industry publication will help you stay abreast of upcoming colour trends to maximize your profits.
15. Hire Employees for your Technical and Manpower Needs
When starting your handbag manufacturing business, you will have to source your own metal fittings/hardware. If you are designing a luxury line of leather bags, this is very important. It is also possible to do research online or hire a professional to help you navigate the process of getting high quality handbag hardware for your bags, most likely from overseas as there are not handbag metal fittings companies in the United States.
This brings us to the fact that you need to do your homework or hire a consultant. In this industry, your customers will want good quality metal fittings if they are paying a premium price for your bags; also note that the job in this industry is enormous and management intensive. You can’t handle it alone. Take full advantage of outsourcing.
Also immediately you have defined the factory that you want to make your collection, you will have to understand that most factories have their own pattern makers on site. This is because a well-established handbag factory would have their own onsite sample room and pattern maker that would put your idea/design together and know how to translate your vision into a great product. Equipment you will need may include;
- Sewing machine
- Walking machine foot
- Fine adjustable zipper foot – to get real close solid items such as metal fasteners
- Ironing cloth
- 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
- Travel Iron with steam function
- Some good tunes to sew to
- Fine sewing scissors and dressmaking shears
- Pinking shears
- Strong fabric glue
- Long dressmaking pins
- Sewing clips
- 1/4in Basting tape – essential for zippers, appliques, pockets, tabs etc. etc. Etc.
- Loop turner
- 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
Using an eye-catching bag made with chunky wool knitting yarns to create the oversized daisy flowers, created in contrasting, bright colours of magenta, lilac and sable on the sumptuous deep red wool fabric, highlighted with smaller fuchsia-coloured flowers and finished off with bright, olive-toned leaves and lavender sprigs, we will live to explain the production process of handbag manufacturing.
- Print out the bag template above and then, if necessary, enlarge on a photocopier until it is the correct size (use the measurements marked on the template as a guide).
- Draw a 2cm seam allowance all round each template and cut out to make the patterns. Pin the main bag pattern on to the red fabric and cut out for bag front. Remove the pattern and repeat to cut out bag back.
Note: This is the time to embroider the front of your bag if you would like a pattern. You can embroider anything you like.
- Using 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. Using a pencil transfer the fold marks that are on the top edge of the main bag template on to the back of the interlined pieces.
- Use the Bag Top pattern to cut four pieces from velvet fabric (two are for the facing) and two pieces from interfacing. With wrong sides facing, tack interfacing to two velvet strips.
- With right sides together and matching the side edges, pin the bag front to a velvet top piece. The bag front will be wider than the top piece, so pin them together at the sides only.
- On the back, pinch the top edge of the embroidered fabric at the marks transferred in step 2 to create two small pleats. 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.
- 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. Assemble the bag back in the same way. Then press seam on both pieces towards the velvet top and topstitch close to the seam, catching in the seam allowance.
- With 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
- Referring to the template, lightly mark the handle positions on the front and back top edges of the bag with a pencil.
- 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. Top stitch close to the long open edge and long closed edge of handle strip. Cut in half to give pair of handles.
- Pin ends of one handle to the wrong side of the bag front, matching the markings from the template. Make sure that the handle seam is facing towards the bag side seam on both sides and that the handle isn’t twisted. Pin the other handle to the back of the bag in the same way.
- 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
- With right sides facing, join bag lining pieces and top facings together as for steps 4 to 7 above, 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.
- Referring 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.
- 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, 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
A well drafted marketing plan is simply a document that gives a clear vision of what you want to achieve in your business, at a given time and with the required financial resources necessary to achieve the objectives and strategies of the business. The well detailed promotional strategies gotten from the marketing plan, could determine the success or failure of your business. Ways to market your handbag manufacturing business may include;
- Creating an attractive website
- Business networking and partnership
- Leveraging social media platforms and traditional advertising strategies
- Using marketing materials
- Using satisfied customers testimonies
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
The first step in branding your handbag manufacturing business is to make a name for yourself.
- Let your name and logo be creative
- Print out business cards
- Gain industry expertise
- Patronize local papers
- Sell online
- Use keywords and hashtags to your advantage
- Join handbag manufacturing Associations