Steps-to-Success for Clothing Industry Start-ups

While it’s not easy to break into any industry, apparel is especially difficult. One reason for the higher rate of business failure is the amount of competition. Clothing businesses also have lower overall success rates among businesses.

To be successful, the business owner has to learn how to run a business, market the products, and keep the customers happy.

Understand the commitment

Any potential business owner has to know the amount of time and money commitment that is required to succeed in making a clothing line.

There is no way to escape the hard work. There will be a touch of luck, and there is a requirement for creativity and hard work. You will have to think outside the box to set your path on the right track.

Plan the business

Experienced entrepreneurs know that a company without a business plan is like a fish without water. The plan can be short at first and doesn’t need to be more than one or two pages. But you still need to make sure to identify the key elements of the clothing line’s business strategy.

The General Company Description should describe the company’s name and any other owners, that it is in the clothing line industry, what specific product the business will sell, and the business’s main goals.

The Products Overview space allows you to specify your current and future product lines. The Operational Overview shows details about the company’s operations and manufacturing options.

The Executive Summary will sum up the key components of your business model. An executive summary is both a description of the company's mission statement and future plans and is a way to lure in potential investors. This summary is something required for all businesses, but clothing lines especially need it to gain the required outside funding.

The company description gives the reader a good concept of what the clothing line will be about, what makes it different from competitors, and the markets the clothing line wants to enter.

Clothing line entrepreneurs should work toward a complete business plan as the business further develops. New entrepreneurs can find templates for business plans online that include significantly more detail.

The business plan must outline how the owner is going to manage the line. Be as realistic as possible when writing your plan and it is better to underestimate the profits and be pleasantly surprised than to overestimate the abilities and be disappointed.

Before producing and selling the products, take time to learn everything about the fashion industry.

Knowing where to produce the clothing line is an extremely important decision. The initial quality of the product will be what the business' reputation is based on, for better or for worse. Also, place top priority on the company's projected financials.

You must also figure out how much money the company will need to launch the clothing line. You may consider an SBA loan, or find another type of loan to get the business started. To get a loan, the company might need to have collateral. Before applying for the loan, make sure you have a list of all of the anticipated costs such as materials, manufacturing, supplies, equipment, advertisement, marketing, overhead, etc.

You have to imagine how long you can continue with the business without being paid a salary. Once the business is up and running, the owner might be able to expand with funding from angel investors, celebrities, and pre-orders with store accounts.

Do research on the rest of the market as well. It can be a good idea to get a part-time retail job at a store that caters to your target market. See what the store is buying and what the customers are buying. Find examples of clothing that is similar to what you will be designing and selling, then learn where and for how much the other clothing line sells.

Finding sample clothing lines will give you a leg up in the industry – no pun intended. The fashion market is crowded, and that will require you to stand out in some way, whether through your designs or by doing something else unique. If the clothing line is selling the same things that everyone else is making, no one is going to buy the new brand – they are going to purchase the existing brand they know.

Straighten out legal obligations. You will need to decide on the business structure (LLC, partnership, corporation, etc.). In the U.S., the business will need a tax ID number, a business license, and a DBA (doing business as) form at a local bank so that the business can accept checks written out to the company's name.

Organize the business

Consider whether the company will need employees. You should also decide what sort of help the store will need, how many hours per week will it require, and what the payment methods will be.

If the store is to be more like a boutique, then the owner may be able to do all the sewing requirements for assembling the clothes. If you are planning to start on a more large-scale, then you will want to hire employees to help.

To start building your brand, choose a name that will represent the clothing line. It should be unique and recognizable so that people will remember you. You should check your state’s business licensing website to check for business names that already exist. The brand name and company name should be different as well. This will be better for the future.

One way you can come up with a name is to use your initials, or some take off of your name. The name of the clothing collection could be something more creative and representative of the style the clothing line is.

You’ll also need to design a logo. Try out a lot of different ideas and even have brainstorming sessions with people you know. Customers are going to recognize the clothing line by its logo, and it might confuse people if the business keeps changing the logo. So, make sure it is what you want from the beginning.

Make a prototype of your clothing items or designs to get started. Show the design to potential customers to do a test market. Prototypes aren't cheap, though. Prices are different depending on the materials you are using, but it is worth the cost to get an accurate idea of your market.

Make sketches of the clothes, get more feedback, and choose which designs are going to be your best. Include those in your first collection. Choose the right fabrics and materials, which are ones that are cost effective and current with the times and trends. Ask whomever is producing your line if there are any restrictions with colors or stitching patterns.

The devil is in the details. When doing sketches, make a layout that shows every detail clearly and uses the proper terminology. Learn the industry terminology and be prepared to properly identify the fabric to use by weight (yield), content, and construction.

After you have created your designs, you should create a pattern of your product. The pattern will be the structure of your clothing as you construct them and will be used by the people producing your clothing to mass-produce the designs.

Prepare for manufacturing

Knowing where to produce the clothing line is an extremely important decision. A small business may choose to manufacture its products, but outsourcing should also be considered. The clothing line’s initial quality will be what the business’ reputation is based on, for better or for worse.

Manufacturing is the stage where expenses really add up. The initial investment will range from a few hundred dollars to several thousands, depending upon inventory and quality. You can secure capital through investments from others, like loans or your own personal money that you have saved.

Find your manufacturers by searching on the internet for "manufacturers of clothing" or "design clothing." There are also online platforms available that help fashion brands to connect to manufacturers. Many people use garment manufacturers overseas because the costs are lower.

Keep in mind that many overseas manufacturers only do large quantities, so ask about minimums before proceeding. Talk to as many manufacturers as you can and be sure to nail down turnaround times. Also, ask for samples before the designs are finalized for production.

Another way of finding suitable suppliers is through trade fairs. Bear in mind the conditions of manufacture, consumers are much more conscious about sweat shop labor than in the past and will penalize clothing lines that uses the products.

Establish a pricing model

To build up initial inventory, you will need money to get started. If you want to produce in-house, it could take as much as $10,000 to get started. Five hundred dollars to $2500 is usually where most indie brands land. Indie clothing is one industry that that produces high-quality products and plans to expand in the future once the brand grows.

To ensure a profit, the entrepreneur must establish wholesale and retail rates higher than the expenses. A target for rates would be to earn a profit margin 30 to 50 percent higher than associated expenses. Making a profit off the clothing line is necessary to the business’s success. Profit comes from making more revenue than the fixed and variable costs combined.

Fixed and variable costs include equipment purchases or buying a facility for the business. In contrast, variable costs are expenses that can vary from one period to another. To ensure profit, you must establish wholesale and retail rates higher than the expenses.

Market the clothing line

A clothing line is identified by its company name and logo, so getting those right is essential to your business. Also, identifying the target audience is the main need in any marketing plan. Clothing lines designed for business women need to target business women, for example. A business without an online marketplace misses too many opportunities as well, so be sure to have a website.

Provide contact information so that stores or other merchants can get in touch with you. If you want to give people the ability to buy clothing from your website, then be sure to set up a shopping cart and merchant account so the business can accept credit card payments online.

Establish relationships with other websites and blogs that can promote your brand and website. Sell clothing line through auction sites and arts and crafts sites that allow clothing sales. Relationships drive sales, both by word-of-mouth and helpful quid pro quo, so be sure to pay attention to who you build relationships with and maintain them.

Write a press release and send it to local newspapers and magazines. There are free online services that can do this for you. Also, try to purchase ads in papers and on websites that people in your target audience read.

If you need help with any issues surrounding how to start a clothing line, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.