If you want a new look for your life and finances, then a clothing brand may be your style. But where do you begin? What steps should you take, and how will you get customers? Knowing how to start a clothing brand is key before you make the leap.
The potential is there. In 2019, U.S. clothing and footwear sales topped $368 billion. In fact, the U.S. is the largest apparel market in the world. And globally, the clothing market was valued at $1.5 trillion in 2020.
You can grow your clothing brand locally, digitally, and globally. Let’s walk through the step-by-step process you’ll typically follow to start a clothing business.
Benefits of Starting a Clothing Brand
Starting a clothing brand is all about freedom. When you start your own brand, you’re free to express yourself artistically, and to make your own choices. Starting a new clothing brand can also lead to financial freedom as you build a customer base and a dependable revenue stream.
Another big benefit to starting a clothing business is that production doesn’t have to be part of the equation. A brand is your artwork, philosophy, and name recognition, but you can outsource production to established manufacturers and focus on marketing and selling. From high-end fashion designer labels to bargain basics, and timeless clothing designs to trending fashion, brand identity can lead to profits.
Apparel brands become known for their design, innovation, and price point, but also for evoking feelings, values, or attitudes. The more someone associates their individuality with your apparel, the more they want your clothes in their closet.
How to Start Your Own Clothing Brand Checklist
As you plan and begin your clothing brand, you’ll need to think through how you’d like the business to run, consider your goals for growth, and know how the work will fit into your life. You’ll also need to understand practical considerations, state and local requirements, business insurance, and trends that could affect the business.
We’ve got you covered: Get your new clothing line business off the rack with the checklist below.
1. Create a Business Plan
A business plan can seem intimidating, but it doesn’t have to be. Writing a business plan sets you up for success by helping you think through all aspects of your business model. That doesn’t mean you have to work up a War and Peace-sized book though. A business plan can be as short as a couple of pages, as long as it has the right level of detail to guide your business as you get underway.
Your clothing brand business plan helps you:
- Specify your business idea: How big or small a business? What will you emulate in the apparel world — and how will you stand apart?
- Identify what need your clothing brand can fill: Customers seek out fashion for specific purposes. How will your clothing brand fill that need better than any other?
- Set SMART goals: It will be difficult to succeed if you don’t know where your business is strong and where it needs improvement. SMART business goals are Specific, Measurable, Attainable, Realistic, and Timely. A clothing brand might measure sell-through rate, markdowns, store capacity, product lifecycles, or stock availability.
- Outline financials: How much money do you need to start? When do you think the business can break even financially? What will it take to scale the business?
- Relationships are key in the fashion industry: Review your network and think through how you’ll expand it to make sure you have the right contacts in the right places.
- Anticipate roadblocks and problems: Your business will face setbacks. You’ll make mistakes, but that’s part of business. Some problems will be unexpected, but some you can plan for in advance. Think through potential problems and solutions.
- Measure progress: Your time management skills can help you list out the metrics you’ll measure, how often you’ll look into your progress, and how you’ll measure the state of your business and make changes.
2. Choose a Business Structure
Two common entities for a clothing company are single-owner sole proprietorship (“sole prop” for short) and starting an LLC (limited liability company) with an operating agreement. If your business will have multiple owners, consider creating an LLC or, depending on the scope of your business plan, forming a corporation.
Sole props are easy to set up. However, a sole prop could also make it trickier to minimize taxation. Review potential business taxes and structuring implications for your self-employment income.
LLCs can shield your personal assets from business liabilities. That means if your business goes into debt, or someone sues your clothing brand, your personal assets are off limits. The degree of protection varies, so be sure you know how to establish an LLC in your state.
How do you plan to fund your startup? Small Business Administration (SBA) resources are often more accessible to sole props. Private funding sources such as venture capital and commercial banks may prefer to work with LLCs.
3. Determine Your Business Costs
Every business has to effectively manage expenses and cash flow in order to stay open. Thinking through anticipated costs will help you price your clothing brand and manage cash flow:
For starters, estimate the price to start a small clothing business.
Establish your fixed costs. These expenses recur monthly, quarterly, or annually, and you know what you’re spending. Long-term, there may be changes, but in the short-term these costs are stable, such as mortgages, commercial or industrial leases, and utilities.
What are your variable costs? These fluctuating expenses may include payroll, taxes, fabric, decorative materials, equipment, travel, and trade shows.
Understand your target audience. How old are your customers? Where do they live? What matters to them? What is their typical apparel budget? What clothing brands do they currently buy? The better you know your market, the better you can design the clothing they’ll want.
Other considerations include:
- Estimate costs for transportation, supplies, and equipment, such as scissors, sewing machines, pattern makers, rulers, printing accessories, templates, fabrics, notions, and other embellishments. Also estimate a budget for maintenance, supplies, replacements, and upgrades.
- Outline your production and distribution models. Are you selling direct, via an online store, at in-person events, or both? Are you aiming to ink private label or distribution deals through major retail brands? Will you open your own locations?
- What price points work for your profit margins and what your customers will spend for your clothes?
To give you a general idea, here are some common startup expenses for a clothing brand:
- Business license and permits: $100 to $500 to register as an LLC
- Insurance: Varies depending on type and scope of business. For example, a clothing store location‘s annual insurance costs may include $400 for a General Liability policy and $800 for a Business Owners Policy (BOP).
Other costs will vary depending on the nature of your clothing brand, such as whether you are making clothes yourself or mass manufacturing abroad.
Don’t forget about advertising, marketing, and labor costs. Invest in print and online marketing assets, such as business cards and a basic business website. Examine labor and other costs in different countries of production too.
How will you fund your clothing business’s startup costs?
No matter how large or small your business will be, starting it up will cost money. How you fund your clothing brand startup costs is a crucial decision:
- Government resources: These include SBA loans and other options.
- Commercial loans: Available from banks or credit unions, these provide funding without you giving up interest and decision-making, but you’ll need a solid business plan, good credit, and collateral.
- Venture capital: Private equity firms and private investors can be powerful sources of funding. Just be prepared to give up some level of control.
- Business credit cards: These can boost your spending power, but be strategic. Otherwise, the higher interest rates could be crippling.
- Crowdfunding: Sourcing funding through crowdfunding sites can both amplify your brand and raise money. However, some platforms are all-or-nothing, and building your case for backing can be time-consuming.
- Friends and family: Your personal relationships may also be willing to fund your business with large sums or multiple small amounts. However, make sure there are clearly understood contracts. Lack of a contract or repayment problems could damage your personal relationships.
4. Name Your Business
Every clothing business needs a name. A sole proprietor can trade under their own name, and many fashion brands are built around a name. However, most clothing brands will want to come up with a good name. If you’re forming an LLC, follow the rules for how to name your LLC.
- Does the name match your brand?
- Are other businesses in your industry using this same name?
- Are web domain names available that match your business name?
- Once you’ve selected a business name, register it with relevant offices in your state and/or municipality.
5. Register Your Business and Open Financial Accounts
Once you’ve registered your business name, set up a business checking account. This helps you keep your business income and expenses separate from your business, especially if you’re operating as a sole prop.
You’ll need your Employer Identification Number (EIN). For sole proprietorships, this is usually your personal Social Security number. LLCs will need a dedicated EIN from the IRS, and any business can apply for an EIN.
6. Purchase Equipment for Your Clothing Brand
In order to start your operation, acquire the right equipment, supplies, and training sessions for your clothing brand, which may include:
- Sewing equipment such as sewing machines and sergers
- Clothing patterns
- Fabric testing machine
- Cloth and other materials
- Accessories, such as clasps, buttons, and zippers
- Classes or other training to improve techniques
If you’ll outsource production, your equipment can be minimal. If you’ll in-house everything, see this great guide to clothing brand equipment setup from Online Clothing Study.
7. Market Your Clothing Brand
The continued global growth in the apparel industry is proof that people want more clothing options that suit their bodies and personalities. The right marketing helps potential customers find your business:
- Print materials: Business cards, brochures, and postcards can raise brand awareness.
- Google My Business: Use your business profile to showcase your brand to your target market.
- Social media: Consider presences on Facebook, LinkedIn, Pinterest, and Instagram. Not only can people connect with you, but the visual nature of Pinterest and Instagram helps people spread the word.
When it comes to getting new business, your current customers are the best source. Word of mouth is one of the best ways to get new business, so be sure to ask customers to refer you to people they know.
Your clothing brand also needs to be visible at live and online events. Events can be crucial in getting your brand in front of the right people.
A search-engine-optimized website is also key. Today’s robust online platforms and drag-and-drop design tools can help anyone set up a basic business website. Make sure your site explains who you are, what your brand stands for, showcases your apparel, and has ways for customers and potential business partners to contact you. Including keywords relevant to your brand can help people find you through online searches.
Examples of Clothing Brand Businesses to Start
Clothing brands can take many forms.
- Women’s dress clothes
- Men’s dress clothes
- Women’s casualwear
- Men’s casualwear
- Mass market high street
- Low to mid level high street
- Fast fashion
- High street
Start Your Clothing Brand
A clothing brand can be your ticket to a profitable business. The market is there, and once you have a solid business plan, a business registration, the right financing, and a marketing strategy, you’ll be well on your way to running your own clothing company.