How to Start a Clothing Line

The First Step: Setting Up Your Clothing Line and Business Structure

Every fashion brand has an origin story that starts from humble beginnings, including yours. In this in-depth guide, you will discover how to turn your passion for design into a sustainable and successful clothing line.

Starting a small business is a huge undertaking, especially if you want it to be more than just a side business. When it comes to launching a small business within the fashion sector, a passion for design and entrepreneurial flair are both strong starting foundations.

Having a flair for style plus an understanding of business principles will contribute to your initial successes and longevity. A foundational understanding of business is a vital ingredient because you will need to produce a business plan and allocate time and financial resources to bring your business idea to life.

Writing a business plan for your clothing business and why it’s important

Your business plan will map out your entire journey before you even begin, and help you answer vital questions about the product you are about to bring to market.

• Do you want it to be a premium brand?
• What goals do you want to achieve and what are the challenges that stand in your way?
• How much money do you have and what are you going to need to start your business and how are you going to raise funding?
• Who will be your target market?

Tackling all these questions beforehand allows you to assess the level of commitment you will need to make to your new business.

From ideas to selling products - how long will it take?

Having a realistic timeline and an estimation of how long it is going to take to bring your first product to market is crucial for a clothing business owner.

Underestimating the amount of time needed to launch a new business is one of the most common mistakes many people make on their entrepreneurial journey.

If you are new to the fashion world, it is a steep learning curve to understand the inner workings of the industry. If you are not a designer yourself, you will need to hire one, source materials, find a manufacturer, create samples, distribute your products, and set up your own ecommerce store or brick-and-mortar location.

What does a realistic timeline look like for starting a clothing line and getting the first product to market? You will need the following key pieces of information to get a fair estimation of how long it will take:

• Create a comprehensive list of all the tasks you need to complete in the right order
• Assign a date for completion of each task
• Estimate how long each activity is going to take to complete
• Add up the completion times for each task to get an overall picture of how long the entire project will take

We recommend doubling or tripling this estimation to take into account unforeseen delays and complications that always creep into any type of project.

Registering your clothing business

Whether you intend on selling your clothes online or open a physical store, a formal legal structure is essential for your business.

You will have to decide whether to operate as a sole proprietorship or register a Limited Liability Company (LLC). The benefits of structuring as an LLC include protection from liability for business liabilities or debts. Also, there are fewer hurdles when securing funding or a business loan as an LLC compared to operating as a sole proprietor.

Before you go ahead and register your business, you will obviously need a name. You can use business name generators for some ideas if you are struggling to come up with unique names.

You’ll also need to think about opening a business bank account, website domain name, registering a trademark for your brand or business name as well as appointing an accountant. Some of these things are not essential when you are starting up but the sooner you get them done the better.

How much does it cost to start a clothing line?

It is nearly impossible to come up with a specific cost figure because of the varied breadth of business models you can pursue. However, starting a clothing business on a low budget is possible. Depending on your model of choice (like being home-based), you can start with a handful of designs and sew made-to-order clothing by yourself.

One thing that’s certain is that you should be prepared to invest thousands of dollars upfront before your first creations come to market.

Other expenses to consider include shop premises, licenses and permits, payroll, employment tax, fixtures and fittings, payment gateways and business administration software.

While creating on demand products can have lower overheads, it may not be sustainable if your clothing line begins to grow rapidly.

Getting funding for your new clothing line

Most start-ups fail because they run out of money before becoming profitable. A lack of cashflow will hamper the growth of established businesses and a start-up stands no chance if it cannot generate capital to pay suppliers and finance day-to-day expenses.

Financing options should be a part of your business plan because you will need capital to finance the growth of your business. Here are several funding sources to consider:

• Business loan- there are a wide range of institutions which specialize in loans for small businesses. Many of them will offer loans based on your business plan, hence the need to create a detailed one. Start-ups present a higher risk to lenders so the interest rate for business loans may be higher. You can read our guide on loans to buy a business for more options.
• Small business grants- local, state, and federal government grants are available to support businesses and stimulate economic growth. Grants are very specific and require a rigorous research and application process. While you may have to complete mountains of paperwork and jump through hoops to fit the funding criteria, the beauty of grants is that you don’t have to pay them back. You can explore our guide on small business grants for more information on how grants can help your clothing line.
• Angel investors and crowdfunding- although these two sources differ slightly, they both involve raising capital from a number of investors, usually in return for a stake of the business or equity. Many founders have successfully secured funding through these types of investments. If you are comfortable with surrendering some equity in return for capital, then this is a viable option.

Understanding pricing structures

How you price your products will determine the profitability of your new venture. Choosing your target audience and understanding them intimately will help you arrive at the optimized price point. Profit is the name of the game and selecting the right pricing structure that earns you money (while not pushing potential customers away) will help your business succeed.

What is your cost per unit and what is the profit margin you are comfortable with? What volumes do you project you will sell and what are the costs of running your business? Take this into account, while keeping an eye on what your competitors are charging so that you can price your clothing competitively.

Adhering to clothing line regulations

As a registered business you must adhere to local, state, and federal government regulations. In most countries, you must make sure you have a taxation license as a Limited Liability Company (LLC) or S- Corp, and insurance (online business seller insurance, public and employer liability, building insurance etc).

In the United States, filing your accounts with authorities and settling any personal and corporation tax obligations due to the IRS is expected of every business and should be a priority. Having an accountant and tax attorney to provide advice from the beginning will ensure you set up your business structure correctly and adhere to the relevant legislation.

Designing and Manufacturing

If you are a creative person and well-versed in fashion design, then this part of the business may be your favorite.

Bringing your designs to life on paper or screen is the first step in a lengthy process that may take weeks or months. You may want to consider digital sketching software like Adobe Illustrator to help transform your designs into a digital format that is easier to distribute and manipulate.

Creating your garment technical pack is the next step once your designs are locked down. This vital information provides your manufacturer with all the information they need to manufacture your clothing item. Technical specifications to mention include material, design sketches, measurements, colorways, accessories, construction details, and care instructions.

When it comes to manufacturing, you have several options depending on the size of your business. There is nothing stopping you from creating all your designs in your own home. Keeping sourcing, cutting, and sewing in-house will negate the need for a manufacturing partner.

Working with domestic or offshore manufacturers will have an impact on the pricing of your finished clothing line. Countries like Sri Lanka, Bangladesh, China, and Vietnam are garment manufacturing giants.

If you have the time and capital, you can find a manufacturing partner who will source material, cut and produce your entire collection under your direction.

This aspect of the process involves vetting manufacturers either in person or using an in-country agent. It’s worth stressing that finding a capable manufacturer and partner will free up your time to focus on the design and marketing aspect of the business.

Marketing Plan For Your Clothing Line

We are living in a more connected world, so having an online presence is crucial to the success of your business. A clothing line will reach a much wider audience through the various online marketplaces. Here are a few areas to consider:

• Creating a web presence - platforms such as Wix and WordPress provide a drag-and-drop functionality, making creating a website possible without knowing code. Shopify and BigCommerce take it a step further by providing functionality that allows you to set up an online store with minimal coding experience.
• Online fashion marketplaces - selling on Amazon can help your brand reach a wider ready-to-buy audience who are looking for stylish items. Getting a new clothing line into the hands of new customers becomes much easier if you leverage online ecommerce platforms.
• Department stores and boutiques - department stores may be an old model in some respects but getting stocked in the leading stores will give your new business a massive boost. Having the commercial acumen to approach buyers in these organizations is key to getting your brand into stores and boutiques
• Fashion industry trade shows - if you aren't a regular at trade shows then now may be a great time to research and identify the leading trade shows in the fashion industry. You will get the opportunity to meet with individuals and businesses in every aspect of the fashion supply chain. Whether it's networking with fellow fashion designers or checking out potential manufacturing partners, you can also learn a lot about starting up as most trade shows offer lectures from industry experts. In the US, the California Market Centre hosts the annual L.A Textile tradeshow while Asia’s leading show is the China International Fashion Fair - CHIC. In Africa, the All Fashion Sourcing trade show in Cape Town is one of the highlights of the year.
• Leveraging social media - marketing your clothing line through social channels is one of the most affordable and easiest ways to strengthen your brand positioning. TikTok and Instagram are some of the best platforms to show off new fashion styles because they are visual media. You can also consider working with influencers to get more visibility on your brand, especially when you’re in the early stages.

Conclusion

If starting a clothing line from scratch seems like an overwhelming task, you do have the option to buy an existing clothing line.

The most significant benefit of buying an existing business is that it comes with a loyal following and proven track record. A proven track record is vital if you wish to borrow money to grow the business further. Be sure to read our buying a business guide to learn more about the buying process and the steps you will need to follow.

Starting a clothing brand or buying an established clothing business offers many opportunities and challenges. If you feel lost along your journey or would like some support and guidance, we are always available to help.

Feel free to reach out to us on our website and we will do our best to support you. Wishing you the very best of luck on your journey into business ownership!