Start a clothing line by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your clothing line. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a clothing line?
If you only want to sell a few hand-painted shirts through an online boutique, you may not need much more than $1,000 to get you up and running if you own a sewing machine and computer. However if you are planning on going further, be ready to look for a minimum of $500,000 for the initial investment for a small clothing line. This number includes the costs of the design, branding, incorporation, manufacturing facility, marketing and other expenses. Should you wish to compete with the big-name brands and appear in every mall across the country, don't be shocked at the start-up price tag.
What are the ongoing expenses for a clothing line?
Marketing, design, and manufacturing will run hand in hand competing for your operational dollars.
Who is the target market?
This is possibly your most important part of the design process. Who are you crafting clothes for? Do you want to build a line of clothes individually tailored to wealthy individuals and only sell a few pieces a month? Or would you prefer to see your T-shirts hung on the racks of every bargain department store across the country? Before you begin to cut cloth, you must determine if you need to make a million pairs of shorts, or just one.
How does a clothing line make money?
Each individual piece of apparel designed for the line must earn the cost of its entire manufacturing process back through retail sales of the design. For most profitable clothing lines, this means creating thousands of the same shirt, pair of jeans, or socks through a mass manufacturing process. The elite boutiques found in Hollywood or in Paris cater to a very select clientele who eagerly pay a premium for their unique fashions.
How much can you charge customers?
A fun graphic T-shirt can run from $8 to $30. A one-off designer gown created for the red carpet can run up to $10,000. You will price your apparel according to the customer you wish to sell it to.
How much profit can a clothing line make?
Your pair of pants sold to a large national retailer may see a profit of one or two dollars per unit. The tailored suit sold on Fifth Avenue will profit a thousand dollars. You may sell a thousand pairs of the $2 pants, but only twenty of the suit. In both cases, volume will determine your final profit.
How can you make your business more profitable?
It is a business and expenses must be controlled. You will need to ensure that your payroll doesn't spiral out of control and that you are purchasing quality fabrics at the best possible price to create your beautiful designs.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your clothing line is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a clothing line. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
Trademark & Copyright Protection
Since you are developing a unique product, concept, brand, or design, it is prudent to protect your rights by registering for the appropriate trademarks and copyrights. Here you can learn more about trademark and copyright protection.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a clothing line
Your customers will want to see your designs in use before they will ever buy one at the store. You will need to complete some major photo shoots and place large full-page ads in popular fashion magazines targeted at your demographic. You may wish to hire familiar models or celebrities to help spread the word about your new look. Social media can be used to create buzz about the brand, inserting the name into everyday conversation. Target television ads to appear during peak viewing hours and top-rated shows that are viewed by your target audience.
How to keep customers coming back
Of course your clothes have to look great! That will draw your first customers to the racks. When they discover the quality of the construction and performance of the materials, they will buy your products again.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Clothing Line In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The person who starts a clothing line has a passion for fashion. This person sees clothes as a way each person expresses themselves. Most often, clothing line founders have an artistic vision and see clothing as their medium. They see clothing as a way to allow others to tap into their own expressive selves. If you have this type of artistic vision, a passion for clothing and design, and a desire to help others express themselves, then starting a clothing line may be just the right business for you.
What happens during a typical day at a clothing line?
When you're involved in opening a new clothing line, you may be asked to:
- Review or design new looks for the upcoming season
- Determine your target demographic through matching proposed color and design of the new apparel
- Source materials for new designs that provide the feel and look desired at a price that will turn a profit
- Establish a brand and ensure it is aggressively marketed to ensure the best return on your investment
- Source the manufacturing process for your new clothing and determine if the quality of the end product will be best when produced in a large facility or in-house by your devoted crew
- Follow the designs of competitors in the industry
- Plan for future year designs through constant research
- Balance the cost of materials against the target price
What are some skills and experiences that will help you build a successful clothing line?
Even if you are not handling all aspects of the business yourself, somebody will need to know how to:
- Design attractive and functional clothing items and translate the design into a pattern for the manufacturing process
- Fully understand the market demand for each piece of apparel you are including in your line
- Know how to make the most out of social media for promotion purposes and utilize it
- Creating a solid business plan with realistic projections for start-up costs over a 5 to 10 year period
- Be able to determine if large scale or boutique approach is best for manufacturing your items
- Have excellent accounting knowledge
- Develop contacts throughout the retail industry to help introduce your line and build recognition among buyers
- Maintain knowledge of changing fashions and adjust your styles to meet the new demands
- Plan ahead for at least a year to be able to keep up with the industry
What is the growth potential for a clothing line?
With a savvy designer creating unique looks and a killer marketing machine, it is possible to break out on the international scene and earn millions with your clothing line. It is much more likely that your creations will appear in your online store and on the racks of a decent assortment of retail stores across the country.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a clothing line?
You need a brand that everybody will recognize and love. This is why so many Hollywood and athletic superstars add their names to a clothing line--shoppers know who they are, like them, and will be more willing to spend money on that familiar brand. Consider using a popular location or even hiring a celebrity to help establish and advertise your brand name before the first shirt ever hits the racks.
How and when to build a team
Your design team must be in place and producing creative looks long before you buy the first shipment of fabric. Your marketing team should be in place as the first pieces are being tested. Your manufacturing team will fall into place when you are prepared to make the first run.
Read our clothing line hiring guide to learn about the different roles a clothing line typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.