Start an online t-shirt business 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 step guide to starting your online t-shirt business. 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 an online t-shirt business?
The costs for opening an online t-shirt business are minimal. With a website and a few integrated apps from an online e-commerce business platform like Shopify, even without an initial investment, you can have a business up and running in a matter of hours. You can also easily connect your business to a t-shirt printing company and a shipping company within minutes. There are also companies that combine both services.
What are the ongoing expenses for an online t-shirt business?
Ongoing expenses for an online t-shirt business include:
- Employee Salaries
- Packaging and Shipping Costs
- Advertising and promotional deals
- Royalty, license, and sublicense fees for the use of designs created and copyrighted by others. Some are flat-fee contracts, while others may charge a set price for a specified number. Royalties are often paid as a percentage of gross receipts from sales of the product design.
Who is the target market?
Preferred customers are all people who enjoy wearing t-shirts.
How does an online t-shirt business make money?
An online t-shirt business makes money by advertising and selling t-shirts on a business website. Many t-shirt businesses also make money by creating and selling original artistic designs as well as custom designs or wording requested by individual customers. The price charged usually allows for a profit margin of between 50 and 75 percent after the expenses of materials, printing, and shipping are deducted.
How much can you charge customers?
The average price consumers pay for a custom t-shirt averages between $20 and $40 dollars.
How much profit can an online t-shirt business make?
An online t-shirt business can become profitable enough to offer franchise opportunities. Online businesses can also expand into the retail market. For example, the well-known Life Is Good brand of T-shirts, hats, and other merchandise is now sold by more than 4,500 retail stores in the U.S. alone. Partnering with other companies such as Hallmark and Planet Dog, they have achieved annual sales of over $100 million dollars.
How can you make your business more profitable?
After establishing a brand and gaining popularity online, many online t-shirt business owners decide to establish a physical business location as well. It is often easier to follow and cater to local trends with a physical location, even if it is only a temporary pop-up shop or a rented kiosk. Some owners also expand their businesses to include other types of clothing to increase revenue. Once you have registered and copyrighted a number of designs, you will also receive additional revenue from copyright and royalty fees. Businesses that have earned sufficient operating capital can also reduce printing costs and increase profits by investing in their own printing equipment. Once they have, they can earn additional income by contracting with other businesses to provide printing services.
What will you name your business?
Choosing the right name is very important. 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 online t-shirt business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
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: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
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 custom t-shirt business. 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.
A custom T-shirt businesses may may also wish to look into applying for a resale certificate, which enables wholesale purchase of t-shirts intended for resale without paying sales tax.
In addition, certain local licensing requirements may apply. 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.
Protecting Your Logo and Designs
To prevent competitors from knocking off their brand or designs, custom t-shirt printing businesses should strongly consider trademarking their logo and applying their designs for copyright protection.
- Learn more about trademark and copyright protection for your online t-shirt business
Love a design that you didn’t create? You can contact the rights owner or manufacturer and negotiate a sublicense to use the image under a royalty or fixed fee arrangement. It is never a good idea to use a design without authorization from the rights holder as this could have serious legal ramifications for your business.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 an online t-shirt business
Posting your original designs on social networks like Facebook, Twitter, and Reddit is a good way to build your brand name. Reddit is especially helpful because one of the paths to success for online t-shirt businesses is finding a niche, something Reddit specializes in through the use of subreddits. Subreddits are sub-categories within larger categories. You can even use social media to conduct market research by administering polls to your target demographic to test their responses to your designs before producing them.
How to keep customers coming back
There are a number of ways to attract customers to your online store. One effective strategy is offering a free item with each customer’s first purchase. Another is hosting a competition with prizes. Effective e-mail marketing can be helpful, but more than 93% of consumer purchases are influenced by social media. Positive customer reviews are among the most powerful advertising tools available today, especially in competitive businesses like t-shirt sales. Providing high quality materials and workmanship combined with great customer service is still the best way to gain repeat customers who will be happy to spread the word.
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 An Online T-Shirt Business 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?
Those who enjoy keeping up with current trends do exceptionally well in this business. A single timely slogan or artistic design that becomes popular can generate substantial profits. The ever-popular smiley face is a good example.
What happens during a typical day at an online t-shirt business?
- Market research to track competitors’ offerings and pricing and ensure that copyright laws are not violated
- Graphic design and customization
- Pricing merchandise
- Negotiating with vendors for the best prices on materials and services
- Creating sales promotions and advertising campaigns
What are some skills and experiences that will help you build a successful online t-shirt business?
Some of the top skills and abilities that can help someone build a successful online t-shirt company include:
- Artistic design skills
- Basic math and accounting skills
- Knowledge of screen printing, heat transfer, and direct-to-garment printing methods
- Interpersonal communication skills for negotiating with vendors and maintaining relationships with customers.
What is the growth potential for an online t-shirt business?
Online businesses can also expand into the retail market. For example, the well-known Life Is Good brand of T-shirts, hats, and other merchandise is now sold by more than 4,500 retail stores in the U.S. alone. Partnering with other companies such as Hallmark and Planet Dog, they have achieved annual sales of over $100 million dollars.
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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.
How and when to build a team
You will need to have a team in place before your online store opens for business. Initially, your team will consist of a material vendor, a printing supplier and a shipping company.