If you have an eye for fashion and want to share your designs with others, then you might be thinking about starting your own clothing business. Regardless of whether you wish to sell your items exclusively online or would like to open a brick-and-mortar storefront, there are several things you’ll need to do to get your business up and running.
In this article, we outline how to start a clothing business and the steps you can take to overcome some of the potential hurdles that might stand in your way.
Pros and cons of a clothing business
Before you jump in with both feet to start a clothing business, there are a few pros and cons to evaluate. Weighing these benefits and drawbacks can help you decide whether starting a clothing business is the right move for you, both financially and personally.
One of the benefits of starting a clothing business is that you are in control of the designs and products you offer to customers. You can let your creativity flow and roll out fashion lines that match your vision and design styles. Selling clothing also provides an opportunity for free marketing. Specifically, adding your company logo to some of your styles will help spread the word about your products.
With a clothing business, you can also receive “second chances” more easily than with some other products. Every time the seasons change, you can unveil innovative designs and get the opportunity to welcome new customers who may not have been connected with your previous inventory or offerings.
However, as Michael Schmied, the co-founder of Kredit Schweiz, explained, starting a clothing business is “not all smooth sailing.” He added, “You might end up with too much stock because of the many other options out there.” Spending money on designs that don’t hit the mark with customers will cut into your profits and could leave you short on capital for other business needs.
You are the only one who can decide whether the risks of starting a clothing business are worth the potential rewards. Abhi Madan, creative director of AMARRA said, “Like any other business, [your business’ profitability] significantly depends on how well you identify with your target market and how effectively you manage your supply chain.”
Madan added, “With a clear understanding of your customers and a carefully planned production process, a clothing business can indeed be profitable.”
How to start a clothing business, step by step
Starting a successful clothing business will require hard work, dedication and perseverance. Use the step-by-step guide to help you embark on your new pursuit.
1. Research trends and choose a niche
Before launching a clothing business, take some time to research clothing trends and identify areas where there is a need in the marketplace. Choose a niche for your business that offers the opportunity for success.
With so many other clothing manufacturers out there, it can be challenging to entice customers if you aren’t purposeful with your product line. Look for a problem or shortcoming with existing brands and create a plan to solve this issue with your unique clothing designs. Will you improve fabric quality, sustainability or comfort? Or perhaps offer more extended sizes or colors than what is currently on the market?
2. Define your target audience
Defining your target audience is directly related to choosing a business niche. Which customers (or groups of customers) will you be targeting with your clothing line and marketing campaigns?
These decisions will impact how you design, produce, price and market your products. For example, if you’re targeting business executives, the clothing items you design will look drastically different from those you’d design if focusing on families with young children.
After defining this audience, take time to learn more about them. What are their likes and dislikes? What will they want to see in a new clothing brand? How much are they willing to spend? These and other related questions will guide you through the remaining steps of the process.
3. Write a business plan
Having a plan in place is essential when starting any type of business. The plan must be specific, including details of how you will produce, market and sell your products. While you’re likely to make modifications to various aspects of your business once it is up and running, you need a place to begin.
Use the following questions to help you devise a plan for your business:
- How do you define your company? What is your mission and vision statement?
- What are your goals?
- What actionable steps will you take to achieve these goals?
- Who are your competitors? How do they market their products?
- What are the average sales for competitor companies?
- How will you fund your company?
- Will you create a limited liability company (LLC) for your business?
- What business model will you follow? (i.e., made-to-order, print-on-demand, dropshipping, wholesale, etc.)
4. Design your clothes
“It’s crucial to create designs that resonate with your audience and to ensure your products’ sustainability and quality. Without these, even a fundamentally sound and financed business model can fall short,” explained Madan. “From an artistic perspective, visionary design and knowledge of current fashion trends and fabrics are indispensable.”
During the design process, you might also find it handy to keep a notebook or digital design tool on hand wherever you go. This way, you can jot down your design ideas whenever they come to you.
5. Source materials and set up production
When designing your clothing line, choosing the right materials is essential. To encourage repeat customers, you will want to make sure that the fabrics you choose are both comfortable and durable. Keep costs in mind, but don’t skimp on quality. Otherwise, you may end up with a product that your customers aren’t going to be satisfied with. Take time to do your research and evaluate product samples until you find what you’re looking for.
After you’ve selected the best materials for your articles of clothing, you’ll need to partner with a manufacturer to turn your designs into reality. All manufacturers are not identical. The right one for you will vary based on your business goals, your budget and the overall workmanship and quality that you desire.
Identify a few potential manufacturers and reach out to them to learn more about their business practices and what you can expect. Do your due diligence and perform thorough research before making a final decision. Look into their reputation and the ratings provided by past customers.
6. Determine your pricing structure
While you may have a general idea of what you want to charge for your product lineup, you can’t finalize this decision until you’ve selected materials and lined up a manufacturer. Once you have this information, you’ll be able to determine the cost of goods sold (COGS), or how much you will be spending to have each product made.
To price your items, you should consider not only the COGS, overhead costs and your company’s additional expenses but also what your competitors charge for similar products and what you think your customers will likely be willing to pay. Price items at a point that will ensure a profit, but not so high that customers are unlikely to purchase from you.
7. Create an online store
Even if you plan to open a brick-and-mortar location, setting up an online store for your clothing business is essential. So many customers prefer to shop online or might not live near your physical storefront location. Furthermore, online stores allow customers to browse the full breadth of your fashion line and eliminate the potential for popular styles to be unavailable for browsing at your local store location.
The first step in setting up your online store will be to choose an e-commerce platform, such as Shopify or BigCommerce. These platforms can help you build and design your website, set up online ordering options and help you calculate shipping costs for your customers. After choosing a platform, set up your website, enter all the products you will be selling and make sure everything is ready to go live to share with customers.
Be purposeful when designing your website or choosing from the available templates. Your online store might be the first interaction potential customers have with your business. You want to make sure it sends the right message about your brand and what you represent.
It is crucial to ensure that the site is easy for customers to navigate and easy for them to view desired products. Web traffic will also provide valuable insights into your potential customers’ tastes.
8. Launch and market your clothing brand
Once your website is set up, you’re ready to launch your company. To be successful, you’ll have to attract customers to your store and encourage them to place an order. This will involve marketing your products.
Some ideas for marketing involve:
- Building a social media following and having followers share your posts.
- Using Facebook or Google Ads.
- Offering a special promotion by having individuals sign up for your newsletter.
- Working with an influencer to promote your brand.
- Partnering with related companies.
- Holding an open house with exclusive discounts or giveaways.
9. Determine if you need a physical location
You can choose to operate your clothing store exclusively online, or you might decide that you also want to open a physical location. Opening a brick-and-mortar store will cost more than an online-only business, but it could bring in more business from those looking to see and handle items before purchasing them.
If you do decide to open a storefront, be very selective when choosing the location. Choose a space that is large enough to hold the products you wish to offer, that is within your budget and that will be easily accessible by your target audience.
10. Add new clothes to your line and keep optimizing
Your work as a business owner doesn’t stop once you open your online or physical storefront location. You will want to continue to release new designs to continue attracting new customers and encourage existing customers to come back to shop again.
There is no set rule for how often you should release new designs. It will vary based on your current lineup, how many sales you’re making and your available time. However, to keep things current, aim to release at least a few new items with each change of the seasons.
Additionally, you will want to continue to optimize your online store to increase your sales and profits. Learn more about search engine optimization (SEO) and make sure your product pages, home page and other areas of your site include the keywords that your potential customers are likely searching for.
Frequently asked questions (FAQs)
While you could technically start a clothing brand as a sole proprietor, it would be better to set up an LLC. When you operate your business as an LLC and maintain separate business accounts, books and records, your personal accounts and investments are typically better protected against any liabilities or debts that your business accumulates. Without an LLC, your personal assets could be seized to cover business loans and other obligations.
Additionally, there are potential tax benefits associated with setting up an LLC for your business. Depending on the rules in your specific state, you may even have the option to become an S corporation.
As an S corp, your self-employment taxes can be reduced compared to a sole proprietorship because the corporation can pay you a reasonable salary from a portion of your profits, which would not be subject to self-employment tax. You should always consult with a qualified tax professional to determine what the pros and cons of each entity type are before deciding on the best structure for your business.
Clothing businesses have the potential to be profitable, but making money will not always be easy. Schmied explained, “Starting a clothing business is not typically profitable, especially in the initial stages. The clothing industry is highly competitive and saturated, making it challenging to stand out and turn a profit.”
Further, Schmied noted that “high operational costs, inventory management and changing fashion trends add to the complexity. Therefore, while it’s not impossible to make a profitable clothing business, it requires a well-thought-out business plan, a deep understanding of the market and effective strategies to manage costs and drive sales.”
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