How to Start a Clothing Business

2. Develop a solid business plan

Your business plan should be able to answer the questions you could be asked about your business by a potential investor, or even a friend or customer. It should solidify what your business will be, the goals of your business, and exactly how you plan on achieving those goals. A business plan is essential to guide your company as it grows and is necessary for securing a loan.

A business plan should include a variety of information. Of course, some things will take longer to figure out, but once your business plan is complete, it should detail the following: 

• Your business concept: Determine your products and services, who your customer is, and define your business’s unique selling point.
• Current finances: What’s your current financial situation, and what are your startup costs? Estimate your projected sales and profits for the first year and the next five years.
• Investment requirements (if applicable): The amount of capital you need to start the business, and how will that money be used if you secure a loan.
• Business information: Declare who owns the business, when it was founded, and name other stakeholders.
• Operational information: Outline how and where you will sell your goods and day-to-day operations are. Create a multifaceted marketing strategy to promote it.

3. Create your branding and logo

Which should come first, the branding or the logo? If you haven’t worked on either yet, we suggest you think about how you’d like to brand your company first. Building your clothing brand is all about establishing the personality behind your business – your values, mission, and story. You should allow your branding to shine through in your aesthetic (i.e., how you present your clothing, how your website is designed and how you communicate with your audience).

To figure out your branding, market research is a must. Look at the websites of potential competitors and companies you admire. Think about what stands out to you – why do they stand out, and is it a good thing?

Your branding can help to dictate your logo and how your website looks. Before you budget for a designer, it’s not necessary to outsource the work, especially if you’d like to retain creative control. Nowadays, online logo makers are quick and easy to use – some are free, too.

4. Consider operational factors and associated costs

What’s your business model? There are several different ways to operate a small clothing business, depending on how you want to source and manufacture your products. Each business model has its benefits and drawbacks:

• Print-on-demand: Using preexisting clothing and printing your unique design on it (generally via a third-party printing company). Each piece can be created on-demand when ordered, so start-up costs are low. However, you don’t have much control over clothing styles.
• One-of-a-kind and handmade: Sourcing the material and creating each piece yourself. This model gives you abundant creative freedom, though it’s timely to create each piece so that ROI can be low (depending on your pricing structure).
• Customized wholesale clothing: Buying pre-made clothing in bulk and customizing it to make it unique. This model allows you to use your creativity. However, you may need to buy clothing in bulk, meaning inventory costs can be high.

Where do you plan on selling your product? Most small businesses will start online by building a website, using a third-party marketplace like Amazon or social media platforms. However, it’s also possible to showcase your clothing in person without the enormous costs of opening a brick-and-mortar storefront:

• Getting a booth space at craft fairs or clothing markets.
• Subleasing a retail space to show off your product – look for local, small business boutiques that will host the products of other small businesses.
• Being a vendor at events or conventions relevant to your brand.

Think of your startup costs. How you create and sell your clothing will determine a lot of the variable costs associated with your business. There are other costs to consider, such as material costs, third-party production, shipping, marketing, advertising, and equipment. Starting a clothing business can vary from costing $1,000 for a small, print-on-demand clothing business to tens of thousands of dollars for larger, inventory-heavy companies.

Lastly, consider your pricing model. The hard truth is you may not break even for at least a couple of years. For a business to be successful, you need to manage your cash flow and ensure your overall costs and pricing strategy ensure you’re making a profit. Consider a markup of at least double the overall cost of each piece you sell.

5. Protect your business with insurance

When running a clothing business, or any business, protecting it with an insurance policy is an absolute must-have. Here are a few of the risks and liable events you may face as a clothing business that you could be covered for with a clothing retail insurance policy:

• Someone is injured by a product you sell and sue you for their medical bills.
• You face allegations of slander from a local competitor after sharing your thoughts online.
• Someone slips over a loose tie-down rope from your vendor tent at a local and sues you for their injury.
• You’re sued for copyright infringement over a design that’s too similar to another business.

It’s always best to be prepared. With Zensurance, you can get a free quote for your business insurance needs by answering a few simple questions in our online application. After submitting your application, our licensed brokers will search more than 50 insurance providers to find the right coverage options for you.