How to Start a Tote Bag Business

Pinterest Facebook

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

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

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.

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.

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.

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

Strength

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)

Weakness

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

Opportunities

Online market, new services, new technology, and of course the opening of new markets
Increase in population within our target market area.

Threats

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

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

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.

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.