These days, it's easier than ever to start a clothing business. Many talented clothing entrepreneurs have successfully turned their ideas from just a dream into profitable businesses – and you can too, with the right preparation and planning.
Having launched a few of my own small businesses, I’m all too familiar with how daunting starting from scratch can seem at first. However, I speak from experience when I say that the process is a lot simpler than you may think, and I'm here to help.
In this article, I’ll walk you through the key steps you need to take in order to start your own clothing business.
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9 Steps to Start a Clothing Business
Going in with a solid plan is the best way to boost your chance of being successful. Here are some steps you can take toward building that plan.
1. Find Your Market Niche
The first step is to figure out what exactly you want to sell, and then, make sure it’s something that people actually want to buy. One of the most common reasons new businesses fail is because of a lack of demand.
An easy starting point could be diving into Facebook Analytics or Google Trends, searching specifically for similar clothing to what you plan on selling. You can also gain a little insight into your competition by researching some of their online stores.
Your next step is to perform an analysis of your current and future competition. This is essentially a process where you identify other businesses selling similar products to what you plan on selling and analyze the way their products are positioned in the market.
A few things worth looking at are their products’ price points, whether they’re part of a current fashion trend, and whether there are gaps or opportunities in this specific market; particularly those that you think you could fill.
2. Identify Your Target Market
Ask yourself who exactly your main target audience is, meaning the demographics you think are most likely to want to buy your products. Understanding your target audience is key to opening a successful clothing business.
Who is your potential customer, and what kind of clothing do they generally tend to buy? Are you hoping to target customers looking for luxury fashion brands or those looking for more affordable, everyday clothing?
Thinking about these questions early on in your business’s life will help you build your brand identity, and consistently sell clothing that your target audience is more likely to want to buy.
Remember that your target audience, your brand’s identity, and its marketing strategy are not set in stone – you should review them from time to time and adapt down the road when you feel it’s needed.
3. Choose a Name and Register Your Business
Before you can register your business, you need to choose a name. You want to pick one that’s simple and catchy yet still tells the story you want it to. Make sure it’s not overly complex and obscure and that it's something people will remember.
Once you’ve chosen a name for your brand, it’s a good idea to check that the domain name is available and register it as soon as you can. This way when it’s time to set up your website, you’re ready and have your domain name reserved.
Registering your business is a process that varies by state, but typically you register it with your state’s Secretary of State. New clothing businesses that plan on starting out small usually tend to register as a Limited Liability Corporation (LLC) – however, if you’re unsure, check with the U.S. Small Business Administration.
You also need an Employer Identification Number (EIN) for tax purposes before you can start accepting payments for your products. This applies even if you’re starting out without any employees. As an added benefit, this will also let you work with wholesalers and source cheaper materials.
4. Create a Business Plan
Many successful businesses start off with a well-thought-out business plan. Your business plan will form your clothing brand’s roadmap and will guide the decisions you make for your business moving forward.
A good business plan will be extensive and thorough, and will cover several aspects, for example:
- An executive summary of your business
- An analysis of your competitive landscape
- Your plan for sales and marketing
- Your financing needs – do you need to secure funding before you can launch?
- Financial projections for your first few years following the launch
If you do choose to seek out funding – either before you launch, or to grow your business a few months down the line – your business plan is what you’ll need to show banks or investors before they consider granting you funding.
5. Source or Manufacture Your Products
Regardless of whether you hope to sell your own designs or you plan to partner up with a manufacturer, you need to decide how to do this before you get started.
Keep your chosen market niche and target audience in mind when you’re choosing your manufacturer or retail supplier.
For example, if you’re hoping your brand will be considered high-end, you’re not going to want to cut corners on your production costs – the quality of your product will suffer and your customers will spot this from a mile away. On the other hand, if you’re trying to establish an affordable everyday-wear brand, make sure your costs are reasonable so you can keep your prices low.
Starting out with a small inventory can be a great strategy – this will allow you to test the waters and get a sense of the kind of inventory you may need on a regular basis moving forward.
If you’re planning to start a dropshipping business, you won’t need to pre-purchase any inventory; however, you should get familiar with the suppliers you’re going to use. Understanding their delivery costs and timeframes will allow you to make realistic promises to your customers about when their orders will be fulfilled.
6. Price Your Products
Pricing your products is all about striking a fine balance between the total costs involved with producing each piece of clothing – this is often referred to as the cost of goods sold (COGS) – and a price point that your customers will actually be willing to pay.
One pricing method that’s commonly used by clothing brands is called the keystone markup strategy, where you calculate the total cost of production of each piece of clothing you produce and then double it. Some luxury brands take this a step further and mark up the price by a factor of four or five. This is up to you and depends on your vision for your business.
You can also use your competitor research to guide your pricing.
7. Set Up Your Sales Channels
When you’re just getting started, selling on third-party digital marketplaces like Amazon or eBay could be an easy way to get your products out there. However, these platforms come with drawbacks, like stiff competition and added fees.
You can also build your own online store. These days, it’s easier than ever, even if you’ve never built a website before. With Pay.com, you can easily accept a variety of payment methods on your website, including credit cards, digital wallets, and more.
You could also look into the possibility of selling your garments at local fairs or boutiques.
8. Set Up Your Payment Infrastructure
Regardless of where you choose to sell your clothing, you need to set up an account with a payment service provider so your business can accept credit card payments. Pay.com is a simple, friction-free way to accept online payments. The onboarding process is quick and approachable, even if you’re a first-time business owner.
Once you sign up, you can choose which payment methods you’d like to accept, and incorporate a customized checkout page into your website.
9. Market Your Brand
Once you’ve launched your business, your next step is to get the word out about your brand so you can attract new customers! Allocating a budget for a marketing campaign is a great way to go about this. Here are a few ways in which you can market your brand:
- Social media marketing – Having a strong social media presence on visual platforms like Facebook, Twitter, Instagram, TikTok, etc. can be invaluable in helping spread awareness of your brand, especially when paired with high-quality photography. It might also be worth considering paid ads on these platforms.
- Search Engine Optimization (SEO) – Making sure your website is search-engine-optimized is key to being easy to find.
- Influencer marketing – Finding emerging fashion influencers on platforms like Instagram and TikTok to create some buzz around your brand can go a long way in spreading the word about your products.
- Email and SMS marketing – A mailing list and text message marketing can be great ways to grow your audience and keep your followers informed of new products and special sales and deals.
- Print advertising – If you have a brick-and-mortar location, it can be helpful to advertise In local newspapers, fashion magazines, brochures, or even on billboards.
The Pros and Cons of Starting Your Own Clothing Business
Starting your own clothing business can seem like a daunting task, but it's not that hard, and it can be very rewarding when done right. Let’s examine some of the pros and cons of starting your own clothing business.
- You are your own boss and can work your own hours.
- Running a clothing business can build your understanding of the fashion industry.
- There's a lot of variety and potential in the fashion industry.
- If you're selling your own designs, you can put your creativity to good use and let the world see them.
- Startup costs can be high and it can take a while before your business is profitable.
- As your business grows you may need to invest more time and money into it in order to meet growing demands.
- The fashion industry is ever-changing, so you may need to switch up your products every so often.
The Bottom Line: Is Starting a Clothing Business Right for You?
Hopefully, this article has given you a good idea about some of the practical steps involved with setting up your own clothing business. I hope it seems less complicated now!
There will always be a market for a good clothing business, so you can succeed as long as you understand your audience and your competition going into it. It also helps to have a well-thought-out and actionable strategy to achieve your vision for your business.
It may take a little time to get there – but once you find your footing and grow your business, it can be a very rewarding journey.
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