How to Start a Clothing Business | What You Need to Know for a Successful Venture

The fashion and clothing line businesses are the most thriving businesses globally. We all wear clothes and most of all, we love being trendy. This cycle means there will always be demand if you ensure the products you supply are high quality and per the current market trend. There are many ways to go about owning a successful clothing line.

If you want to learn how to start a clothing business, consider clothing line by custom making your design from scratch or resale clothing brands directly already available in the market.

You can also customize the readymade clothes from a famous fashion designer or other independent designers.

When selling, ensure you consider some of the many available selling channels easily accessible to you in the fashion industry.

How to Start a Clothing Business: A Step-By-Step Guide

You may already know what you want or even have a new clothing line business idea about what you want to sell and how you want to showcase your fashion brand. That’s fantastic news, but don’t rush in before getting a clothing line business plan.

When all prices are considered, the actual profit earned by the clothing company is much lower. However, clothing retailers must strive to sell a high merchandise volume to get their targeted profit margins to stay in business.
Woman holding clothes

Identify the Gap in the Market You Need to Satisfy

The most common reason new business people fail is a poor marketing strategy.

Ensure you conduct thorough market research and benchmarking within an established brand beforehand. You can also attend fashion school to gain more insights help you start your own clothing business.

When conducting market research, there are two steps.

First is the primary market research, which involves collecting the relevant data by observing the market, talking to people, and taking surveys, among others. The second is Secondary Market research that collects data from other people found on online journals, books, and websites related to the clothing industry.

Identify a Target Audience for Your Own Clothing Line

The products you sell will be desired by a specific group of people in the community. To satisfy this, you are required to have a sale strategy that includes identifying a target audience and precisely what they need.

These are the people you will spend your days attempting to engage, connect and deal with. Understanding those people gives you a better chance of gaining and keeping their business, leading to referrals and business growth.

Women shopping clothes


To learn the tricks to set up a genuinely successful online clothing store, you must fully understand your target audiences’ needs, keeping in mind the changes that occur.

Do thorough research and ensure you fully understand the target audience’s psychographics. Some demographics include gender, age, income, geographic location, marital status, etc.

The psychographics include interests, lifestyle, purchasing behaviors, including their current shopping locations and what attracts them to shop there. Understanding these issues will give you a great idea of what your target market desires, especially in the retail industry.

Create a Business Plan

A great business plan should have a company’s mission statement, what the company sells, the team behind the brand, and who you are as a fashion start-up. Also, outline what you plan to accomplish by briefly stating your business’s actionable and measurable goals.

Ideally, the business plan should cover the first three to five years of your operation. Remember that things rarely go as per the laid-out plan. But, you must set a goal and keep working towards it. You will also need something to compare your progress to.

This will act as your business model and guide on whether you are on track or if you need to revise your original plan.

Furthermore, the plan will present funds to potential investors and partners. If the goal is strategic and specific, you will be much more likely to have support leading to business growth.

Building the Brand is Crucial to Help Your Clothing Line

By now, you have made an informed decision of whether you want to custom make the clothes you are selling or you will resale the readymade ones. At this stage, one is required to come up with a creative brand name, a logo, brand theme color, and product photography to attract your target clientele.

It might be an expensive process for a start-up, especially if you know nothing about designing and branding. However, you don’t need to involve professionals at this stage if you don’t have the budget for it. We have several free and easy-to-use resources, even for beginners, which will affordably help you with the branding process.

Brand


Have a Price Point for Your Clothing Brand

When setting up the prices for your products, ensure you know about manufacturing costs. It is known as the cost of goods sold (COGS), which includes expenses such as materials, production, and labor involved.

The clothing manufacturer should also consider the business’s overheads which have how warehouse rent, shipping costs, and employees’ salaries, to mention a few.

Pricing strategy helps you know the costs of running a successful business. The manufacturing partner then sets a retail and wholesale price that covers those expenses and leaves you with a reasonable future profit.

The keystone mark-up is a standard pricing method to double the price point. Therefore, if it costs $20 to produce a t-shirt, you could sell it for $40.

Alternatively, you may sell the t-shirts to small businesses or a more extensive online store selling wholesale for $40 and in your online store for $80, making you even more profitable.

However, consider how much the target clientele can pay when deciding on the higher price point for your store. You may conduct a trial-and-error method to find the target price point to help you set realistic sales.

Price tag

Begin the Marketing and Build an Online Presence

Marketing is the most critical aspect of any business. You need to ensure you reach out to all your potential customers and give your small business a brand’s voice. Intelligent business owners even start their marketing strategies before launching the clothing line. We mentioned all that when talking about a bed and breakfast business which deals with customer expectations, where the most important thing for you is to pass the right message to your customers.

You can start by setting up marketing campaigns and online advertisements from various social platforms like Facebook. Social media engagement guarantees a high reach of your target clientele, for instance, if your fashion line deals with clothing and apparel products for the young generation.

Influencers can be a great asset in your fashion line in the current market trend as they provide diverse sales channels. They also come in cheap as you can offer them some of your clothing items, and in return, they will mention your name to their massive following across various social media platforms.

Set Up Sales and Distribution Goals

Sale price tags

Most start-ups go through a lot of trial and error. Most people see these as a bad thing, but it’s not. It helps them learn a lot. A business owner will test and make several tweaks to their manufacturing process or sales strategy until they get them right.

However, it’s crucial to make realistic and achievable goals for the clothing business. If you are dealing with wholesale distribution, ensure you research what fashion line other stores carry.

This will help you find the most suitable partners to maintain your fashion line and your future expansion and growth plan.

Finding Partners and Investors for Your Clothing Brand

Saving money for future growth is a common challenge for many start-ups. In an ideal world, each of us could start our own business without the help of others. However, in reality, most people cannot do so independently.

In such a case, a business partner can make significant changes and help your business realize its goals.

How Much Does It Cost To Start A Clothing Business?

Several factors influence the capital required to start a clothing business, and each Start-up costs differ significantly. Some factors include the location intended for the company, legal requirements, and marketing budgets, among others.

However, the high price depends on which clothing line or type of fashion line you choose to carry. For instance, some prefer to own a small online store, while others go to a large physical store with several distribution points.

But to start a small clothing line will cost you an average of $600 to $1,000. For a medium-sized clothing manufacturer, you will require your starting capital between $500 and $5,000.

Woman on a laptop with clothes in the background

How Do I Legally Start a Clothing Line?

To legally start a business, you need to have a solid business plan to help you maneuver the saturated market. The first thing to do is define your brand meaning and make sure it’s unique to just you, which will give brand identity. Your fashion brands should be unique, with fairly original ideas and ways of doing things to ensure they satisfy a particular gap in the market.

Register your new clothing business with the relevant government entities and ensure you are not running your operations illegally (see also how to open a laundry business).

Also, consider opening a business bank account and credit card separate from your personal accounts and finance department. It will help you smoothly run all the business operations.

Get the required permits in advance to ensure you don’t get into any trouble with the authorities. Some of the commonly needed for a business include the fire department permits and the sign permits, mentioning a few.

Also, consider getting a business insurance plan for your online store. There are several uncertainties in the fashion business, and having an insurance plan will help you get covered in case of any accidents or incidents in your industry.

Clothes on a hanger


Now, if you don't feel up to setting up the business on your own, or have more questions, you may want to seek  legal help from some of the best formation services and registered agent services out there. Here are some of the most trusted:

Reliable Business Formation Services

Swyft Filings

Despite only doing business since 2015, their 100% positive reviews are speaking for themselves. Swyft Filings offers one of the best refund policies in the industry. On a bonus side the company also has no processing or cancellation fee for your refund. It is a great company to consider when looking to designate a registered agent service for your business.

BizFilings

BizFilings takes you through the whole process from quality check to post-incorporation and also offers on-going support. You can choose various payment plans based on the features you want and your budget. The features in the higher-end packages are also available in the lower-end packages but at an additional fee. With an A+ rating with the BBB, BizFilings is a trusted online formation service. 

SunDoc Filings

When compared to other formation services, SunDoc Filings provides volume discounts for multiple states and entities and equally amazing customer support. However, if you want a service that will save you money, you may find other services in the market that cost less. Also, you may not choose SunDoc Filings if you are looking for a service with payment packages with tons of features and free registered agent service.

Inc Authority

This is one of the most reputable companies you can pick as your registered agent service. Inc Authority has enough experience in the field, having been founded in the 1980s. Its free payment package stands out in what they offer. Loads of positive customer reviews speek for themselves how satisfied and happy with their services and their LLC formation speed their clients are. 

My Corporation

MyCorporation is known for offering a fast LLC formation process. If you wish to speed up the process turnaround time, you can use their expedited service, reducing the process from weeks to a few days, thoug for a fee. Nonetheless, MyCorporation is an excellent pick as your registered agent. It offers numerous payment packages with various features depending on your budget.

Is a Clothing Business Profitable?

According to analysts, retail clothing brand profit margins typically range between 4% and 13%. Mark-ups often appear excessive compared to the cost of goods sold, another term for variable expenses.

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