How to Start a Clothing Brand

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.