How To Start A Clothing Business?

Be it a recession or boom, the clothing industry is always in demand. According to IBIS World, there are 153,855 clothing boutiques in the united states as of 2021. So this article is a perfect guide for someone who wants to open clothing stores.

Cost to Consider while Starting a Clothing Business

Here are a few costs that are involved mostly while opening clothing stores.

• Manufacturing Cost

The most capital needed while starting a clothes store or business is for manufacturing. For any business, the central focus is the manufacturing cost. It dictates the target market and business size. The target price and the production cost should always line up.

• Quantity

Quantity and manufacturing are inversely proportionate to one another, i.e the higher the quantity, the lower the manufacturing cost, and vice versa. Despite this, it is still recommended to manufacture smaller quantities at the start of business clothing stores to see the market reaction to it.

• Location

Manufacturing location is something that impacts manufacturing cost as well as the labor cost for each region differs. In western countries, the cost for smaller countries is so high that it is not feasible. Hence, most of the clothing production firms are situated in Bangladesh, the Philippines, and China rather than in Europe or the USA

• Material Cost

The major cost factor involves the raw material used in the clothing business.  Be it packaging cost, label cost, fabric cost, etc all comes under material cost and take a huge part of the capital.

• Marketing Cost

In today’s world, most start-ups prefer to market through social media as there is no cost involved. But for a clothing firm that is starting out to reach par with its competitors, it is mandatory to use different marketing schemes.

• Business Permits or License Cost

Any business must register legally to start its operations. For registering to any license or permits, a certain processing fee is involved, depending on the business and the area of operation.

• Labor Cost

Any firm without labor is handicapped. From stitching to packing, everything needs labor. So it is necessary to pay the staff or the wages and salary of the labor. The amount paid should be viable to both the labor as well as the firm owner.

• Website Cost

Today, to make a maximum profit, e-business has become very crucial. To set up an e-business, a website is needed which further needs to be updated and taken care of. 

A firm can start from USD 500 as well and there is no upper limit to the cost involved as it all depends on the firm’s size and capacity.

Various Permits & License Needed to Start a Clothing Business

The cost involved in permits and licenses when opening a clothing business is on average between USD 800 to USD 1500 on an average.

• Sole Proprietor

Newyork and California are two states where one does not have to register. But if the business is under a different name, there is a need to register with the state or county. It is registered typically as a “fictitious” or “assumed” name.

• FEIN Number

A federal Employer ID Number is needed to run any business. It can be registered in various ways such as in California, EDD assigns the number whereas, in Newyork, the state tax department assigns the FEIN automatically

• Collect and Sell Permit Tax

Under the list of taxable goods, apparels are also there. A “certification of authority” and “sellers permit” are needed to sell clothes as well as the latter for buying raw material with an exemption to sales tax. It further gives authority to the owner to collect tax from clients on the items bought by them, to pay to the government.

• Apparel Registration Certificate

It is mandatory in many states in the US, to register with the state government if manufacturing goods. Pressing, assembling, sewing, cutting fabric, etc are a part of the manufacturing process.

• Fire Department Permit

When having a manufacturing space or retail shop, it is mandatory to have a permit from the fire department. Building permits, alarm merit, occupational permit, etc are needed if the retail space is owned by the business owner.

Apart from the above list, there can be a need to apply for a sign permit or various insurance as well.

How to start a clothing business?

Whether designing one’s own clothing line, taking a franchise, customizing wholesale ready-made clothes, or starting from scratch, etc, starting a clothing business has become easier than ever. Here are a few steps that can be considered when wanting to open a clothing store.

• Choose the Brand Strategy

The Unique selling proportion, niche, mission, online/offline business mode all need to be decided and chosen initially.  The mission of the company should be customer-oriented and should have something unique about it when compared to other clothing brands. It is very important to find out who the competitors are as well as the targeted audience.

• Create a Brand Identity

A reputation of a brand depends on the brand name, brand style, and design, price, and quality. One can take inspiration from all the brands they look up to. The style, design, and name should be unique and define one’s brand. Whereas the price should not be too high and should do justice to the quality.

• Decide what Clothes to Sell

After deciding the niche and analyzing the market, it is important to decide the type of cloth one wants to sell. One can select the style to be funny, quirky, gothic, sporty, comfortable, preppy, modern, or classic. One can choose to deal with a high-end or luxury product, sustainable product, or low-cost product.

• A Business Model needs to be Chosen

There are many business models available that one can choose from when it comes to a clothing line that includes taking a franchise, printing on demand, custom clothing line, custom wholesale, or unique and private clothing line. To decide the same one can read online reviews, or talk to other people in the same line or with some experience.

• Review the Cost

As discussed above, there are various costs involved when starting a clothing business and it is very important to review and evaluate the same. It is very important to know what investment is needed in total for setting up the business.

• Create a Business Plan

A business plan should be created. It should include the name, mission, and background of the firm, its core products, and the further categories of the same, targeted audience, operation, and marketing strategy, etc. Having a business plan has many benefits such as showing it to investors.

• Arrange the Funds

After determining the cost involved as well as having a solid plan, it is necessary to arrange the funds. Funds can be arranged through various means such as crowdfunding, taking loans from banks, borrowing money from family/friends, angel broking, etc.

Before opening a clothing store/ business, it is further important to know the market strategy that one is going to use. If opting for e-business, it is important to create and design the website prototype and start to build a website with the domain name being reserved.