How to start a shoe business: find your footing

Starting a shoe business is a rewarding venture that combines an eye for design and a passion for footwear with sharp business acumen. It's a massive, multi-billion dollar industry with consistent demand for everything from performance athletic shoes to formal dress shoes and everyday casual wear.

This guide will take you through the practical steps of validating your business concept, building supplier relationships, acquiring inventory, and securing funding to help you launch a successful shoe business in the U.S.

Step 1: Plan your business and validate your idea

Research your market and competitors

First, define your niche. Use Google Trends to compare search interest for styles like "sustainable sneakers" versus "luxury loafers." For broader industry data, reports from Statista or IBISWorld offer valuable market size and growth projections. This helps you find a profitable corner of the market.

Next, analyze your direct competitors. Use a platform like Semrush to see their online traffic and top keywords. Also, study their product pages, pricing strategies, and customer reviews. This shows you what works and where you can offer something different or better.

Estimate your startup costs

Your initial investment will vary, but you can create a solid budget. Many new owners misjudge inventory costs. You might want to start with smaller test orders of 50-100 pairs per style. This prevents you from tying up cash in slow-moving products.

Here is a typical breakdown of first-year expenses for an online shoe business:

• Initial Inventory: $5,000 - $25,000
• E-commerce Website (e.g., Shopify): $1,000 - $10,000
• Business Formation & Licenses: $300 - $800
• Initial Marketing & Branding: $2,000 - $7,000

Here are 4 immediate steps to take:

• Draft a one-page business plan that outlines your target customer and shoe concept.
• Use Google Trends to check demand for three different shoe niches.
• List five direct competitors and analyze their pricing.
• Create a preliminary budget based on the cost ranges provided.

Step 2: Form your legal entity and secure licenses

Most new shoe entrepreneurs find that a Limited Liability Company (LLC) offers the best starting point. It protects your personal assets if the business faces debt or lawsuits. For tax purposes, an LLC allows profits to pass through to your personal return, which simplifies filings.

A mistake to avoid early on is mixing personal and business finances. Once your LLC is registered, open a separate business bank account immediately. This maintains your liability protection and makes tracking expenses much easier.

Get the right permits and licenses

You will need a federal Employer Identification Number (EIN) from the IRS, which is free and available online instantly. At the state level, secure a seller’s permit from your department of revenue. This allows you to collect sales tax and typically costs between $0 and $50.

Your city or county will also require a general business license, which can cost $50 to $200 annually. Also, be aware of the U.S. Consumer Product Safety Commission (CPSC) for footwear safety standards and the Federal Trade Commission (FTC) for labeling rules.

Here are 4 immediate steps to take:

• Choose a business structure and register it with your state.
• Apply for a free Employer Identification Number (EIN) from the IRS.
• Secure a seller's permit from your state's tax agency.
• Open a dedicated business bank account for your new company.

Step 3: Secure insurance and manage risk

Protect your business with the right coverage

Your first policy should be General Liability insurance. This covers customer injuries or property damage. A $1 million policy is standard and typically costs between $400 and $900 annually.

Some owners mistakenly stop there. You also need Product Liability insurance. This specifically covers you if a defect in your shoe causes harm. Expect to pay $1,000 to $2,500 per year for this protection, often bundled with your general policy.

If you have a physical storefront or warehouse, you will need Commercial Property insurance. Once you hire your first employee, Workers' Compensation is a legal requirement in most states.

You might want to get quotes from providers familiar with retail, such as The Hartford, Hiscox, or CoverWallet. They understand the specific risks of selling physical products directly to consumers.

Here are 4 immediate steps to take:

• Request a quote for a $1 million general liability policy.
• Confirm that product liability coverage is included in your quote.
• Ask about commercial property insurance if you plan to lease space.
• Compare rates from at least two providers that specialize in retail.

Step 4: Set up your location and get equipment

Find your operational base

For an online store, a 150-square-foot space in a garage or spare room can work at first. If you lease, look for small warehouse spaces zoned for light industrial use. Many new owners get locked into a five-year lease too soon. You might want to negotiate a 1-2 year term instead.

A physical retail shop needs at least 1,000 square feet in an area zoned for commercial retail. During lease talks, ask for a tenant improvement allowance. This could provide $20-$40 per square foot from the landlord to help build your displays and stockroom.

Get your equipment and find suppliers

Your initial setup does not demand a huge investment. You can begin with industrial shelving units, which cost about $150-$300 each. A thermal label printer from a brand like Zebra or Dymo will run you $200-$400 and save you time with shipments.

With your space ready, you can find suppliers. Platforms like Alibaba connect you to overseas factories, but expect minimum order quantities (MOQs) of 200-500 pairs per design. For domestic options, explore directories like Thomasnet to find smaller batch producers.

Here are 4 immediate steps to take:

• Calculate the square footage needed for your initial inventory.
• Research local commercial zoning for retail or warehouse space.
• Price out three industrial shelving units and a thermal label printer.
• Ask a potential landlord about a tenant improvement allowance.

Step 5: Set up your payment processing

For your online store, you will need a payment gateway. E-commerce platforms like Shopify include options such as Shopify Payments or allow you to connect PayPal. These let you accept all major credit cards and digital wallets from day one.

You should pay close attention to transaction fees. Many providers charge between 2.5% and 3.5% plus a small fixed fee per sale. Some new owners overlook these rates, which can reduce profit margins, especially on lower-priced shoes.

If you plan to sell at pop-up shops or local events, you also need a way to take payments in person. This is where a mobile payment solution becomes valuable for your business.

For a shoe business that needs to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone - just tap and done.

At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful for sales at artisan markets or trunk shows. This rate is competitive, as many other providers charge higher commissions.

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers.

Here are 3 immediate steps to take:

• Compare the transaction fees for two major payment gateways.
• Decide which payment methods to offer on your website.
• Download the JIM app to explore its features for in-person sales.

Step 6: Fund your business and manage finances

Secure your startup capital

You might want to explore an SBA Microloan. These government-backed loans offer up to $50,000, often with interest rates between 8-13%. They are a good fit for new businesses that need capital for inventory and equipment.

A business line of credit is another option, perfect for managing inventory purchases. You draw funds as needed and only pay interest on what you use. Lenders typically want to see a credit score of 680 or higher to qualify.

Also, look for grants from organizations like the National Association for the Self-Employed (NASE). While competitive, these grants provide funds you do not have to repay. Local economic development agencies are another source for small business grants.

Plan your working capital

Many new owners focus on initial startup costs but overlook the cash needed for the first six months. You should budget for operating expenses beyond your launch. This ensures you can restock popular sizes and styles without delay.

For the first six months, a typical online shoe business needs $15,000 to $40,000 in working capital. This covers inventory replenishment, ongoing marketing campaigns, shipping supplies, and platform subscription fees. Plan for this from the start.

Here are 4 immediate steps to take:

• Check your credit score to see if you meet the 680+ threshold for many loans.
• Research the SBA Microloan program requirements on the official SBA website.
• Calculate your estimated working capital needs for the first six months.
• Search the NASE website for current small business grant opportunities.

Step 7: Hire your team and set up operations

Define your first hires

You will likely handle most jobs yourself at first. Your first hire should solve your biggest bottleneck, which is usually order fulfillment. You might want to bring on a part-time Warehouse Associate to take over packing and shipping.

Expect to pay around $15-$20 per hour for this role. As sales increase, you could add a part-time Customer Service Representative, typically earning $16-$22 per hour, to manage inquiries and returns. No specific certifications are needed for these entry-level positions.

Some new owners hire a full-time manager before the revenue is there to support it. A good benchmark is to aim for $150,000 in annual revenue per full-time employee. This metric helps you decide when it is truly time to expand the team.

Streamline your workflow

To keep things organized with a small team, you can use scheduling software. Platforms like Homebase or When I Work are great for managing part-time staff schedules without much hassle. They simplify payroll and communication.

Here are 4 immediate steps to take:

• Draft a job description for a part-time Warehouse Associate.
• Calculate the monthly cost of one part-time hire at 20 hours per week.
• Explore the features of a scheduling app like Homebase.
• Set a revenue target for your first full-time hire based on the $150,000-per-employee benchmark.

Step 8: Market your business and acquire customers

Launch with paid ads and influencers

You should focus your initial marketing budget on one or two channels. Many new owners make the mistake of spreading their funds too thin. Instagram and Facebook ads are a good place to start. Aim for a Customer Acquisition Cost (CAC) between $30 and $60 per customer.

You might also want to work with micro-influencers who have 5,000 to 20,000 followers. They often have high engagement and may charge $100 to $500 per post. This can be more effective than a single, expensive campaign with a large influencer.

Build an email list from day one

In addition to paid ads, you should build an email list immediately. You can offer a 10-15% discount on the first purchase in exchange for an email address. This simple tactic helps convert visitors who are not ready to buy on their first visit.

Email marketing consistently delivers a high return. Industry benchmarks show an average return of $36 for every $1 spent. It is a direct line to your most interested customers, perfect for announcing new arrivals and promotions without extra ad spend.

Here are 4 immediate steps to take:

• Set a target Customer Acquisition Cost (CAC) for your ad campaigns.
• Research five micro-influencers who align with your shoe brand.
• Create a 10% discount offer for new email subscribers.
• Draft the welcome email for your new subscribers.

Step 9: Set your pricing strategy

Choose your pricing model

Most shoe brands start with cost-plus pricing. You calculate your total cost per pair, including manufacturing and shipping, then add a markup. A common strategy is keystone pricing, which is a 100% markup. If a shoe costs you $40 to land, you sell it for $80.

This approach aims for a gross profit margin between 40% and 60%. You might also consider value-based pricing. If your shoes offer a unique feature like custom orthotic support, you could justify a price 20-25% higher than competitors without that benefit.

Analyze competitor prices

You should not set your prices in a vacuum. Create a simple spreadsheet and list the prices of 5-10 direct competitors for similar shoe styles. Note their materials, features, and any sales or discounts they offer. This gives you a market baseline.

A mistake to avoid is pricing too low just to win initial sales. This can devalue your brand and make it difficult to raise prices later. Your price should reflect your brand's quality and position in the market, not just undercut others.

Here are 4 immediate steps to take:

• Calculate the landed cost for one of your main shoe styles.
• Create a spreadsheet to track the prices of five direct competitors.
• Decide on a target gross profit margin for your business.
• Choose between a cost-plus or value-based model for your launch.

Step 10: Maintain quality and scale your operations

Establish your quality standards

You should create a quality control checklist for every production run. Inspect for consistent stitching, proper sole adhesion, and material uniformity. Aim for a defect rate below 2% per shipment. This protects your brand reputation and reduces costly returns.

Many new owners make the mistake of only spot-checking a few pairs. A better approach is to inspect a random 10% sample from each batch. If you find issues, you can address them with your supplier before the products reach customers.

Know when to grow

Once you consistently hold over 1,000 pairs, it is time to move beyond a garage setup. You might want to look for a small warehouse space. For team expansion, stick to the benchmark of $150,000 in annual revenue per full-time employee.

As you scale, manual spreadsheets become inefficient. You can use inventory management software like Skubana or Cin7. These systems integrate with your e-commerce platform to automate order routing and prevent stockouts, which is a big help as you grow.

Here are 4 immediate steps to take:

• Create a quality inspection checklist for your main shoe style.
• Set a target defect rate of under 2% for all incoming inventory.
• Define an inventory threshold (e.g., 1,000 units) for leasing a warehouse.
• Research an inventory management system like Skubana for future use.

Starting a shoe business is about more than just design, it's about smart execution. Remember that a great product and happy customers are your best assets. You have the roadmap, now go build your brand one pair at a time.

And when you make those first sales, a simple payment solution helps. JIM turns your phone into a card reader for a flat 1.99% fee, no hardware needed. It keeps things simple so you can focus on your customers. Download JIM to get started.