Perhaps the idea and dream of your own clothing line has been percolating for years or maybe it is a new passion; either way, you are ready to take the plunge and bring your vision to fruition. Before you start your own clothing line, the reality of costs and money need to be detailed.
The amount of money needed to start a clothing line ranges from $1000 to $50,000. Print on demand clothing lines can be started closer to the $1000 estimate. If you are starting a full line of clothing sold through wholesalers, a budget nearer $50,000 will be needed.
Many people will choose to begin this venture on a small scale. This will minimize your risks and provide an opportunity to gradually grow your business. Others are ready to create a sizable brand. Regardless of the size of your venture, continue reading for the details to include in your cost estimates.
Business Expenses
An often-forgotten part of the budget, maybe because it is not as exciting as designing or creating, but business expenses are necessary for success.
- Permits
Each state and town will require different permits and licenses. Your first step is to check with your local land use office. If you will be operating your clothing from your home, make certain that it is permissible under your town’s regulations. You may have to present your plan before a land use board. These boards meet on a preset schedule, so this step could be more time consuming than costly.
Typically, you need to budget a few hundred dollars for your permit application(s).
- Business License(s)
Again, this can vary by state and then within a state, the requirements for a business license can differ from one town to another. Another variable is how you are setting up your business. Will you be a sole proprietor, partnership, corporation, or an LLC? Sole proprietors can register their business with a DBA, doing business as. Regardless of your decision, you need to register your company.
Then you can apply for a general business operating license. Budget around five hundred dollars for this license.
- FEIN
A Federal Employer Identification Number, FEIN EIN, is needed for corporations or LLC. There is not a cost for this online application. If you are a sole proprietor or partnership, you can use your social security number.
- Sales Tax License
States vary on what is taxed and how much the tax is. If your state taxes the sale of clothing, you need a license to collect those taxes. The maximum fee for this application is one hundred dollars.
- Accounting and Bookkeeping Software
You need a method to track your expenses and sales. Software that can help you perform these tasks range from free to a fee of two hundred dollars a month. The size of your business and your financial knowledge will be determining factors in the software that you select. Consider software that will manage your accounts payable and receivable. Additionally, you need to be able to send invoices and collect payments from customers.
Software that synchronizes with your bank account(s) and credit cards is another important consideration. As your business grows, you need to think about the preparation of financial statements. Do not forget that you need to manage sales tax collection and disbursements as well as income tax. There are a multitude of programs and people who can help.
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- Banking
Many, if not all of these, are free, but they should be on your ‘to do’ list for business items. You should have a bank account that is just used for your business and separate from your personal accounts. Use your EIN to open this account.
A credit card in your business’s name should also be opened. This should only be used for business. Again, your EIN should be used to open this credit card. Look for one that gives you the best value. Both of these should make tracking your expenses easier.
- Your Website and Domain Name
A unique domain name that is the same as or complements your brand name is essential for your internet presence. Once you have a domain name, you need to set up a website. This step of opening your business can range from one hundred dollars to $10,000. The vast range in costs depends on how complex you want your website to be and how much you can do on your own. There are a multitude of vendors who have online support available. Take the time to research which company best meets your needs.
Product Design
Before you launch your business, you need to select the clothing that you will initially feature. For budgeting purposes, you will need from five hundred to six thousand dollars. Design complexity, material costs, threads, zippers, and other notions, and any patterns that are created. If you are starting with applying your designs on tee-shirts, the cost to replicate the design, tee-shirts, and production costs need to be calculated.
During this step of the process, creating samples is your focus. While you are doing this, you need to stay aware of how much fabric, etc. you use. From this experience, analyze the time it takes to make the clothing and waste in the sample production. These will need to be added to your costs.
Production
This will be the largest part of your budget. Costs will vary greatly depending on the scope of the business. If you are going to print on demand, you can estimate five hundred dollars for your budget. However, if you are planning to have a manufacturing facility produce your garments, the costs will range from $10,000 to $25,000.
Use a spreadsheet to assist with this step. Each time you alter one of the variables, your production cost estimates will fluctuate. Elements to factor into your budget estimate include –
- Your choice of fabric – the material itself and any patterns on the fabric
- Trims – buttons, zippers, threads, beads, lining, etc.
- Size ranges and the split of how many of each size
- The quantity of each style and color
- Size of the order
Be sure to take your samples to several different manufacturers. You want to solicit a number of bids to find the best fit for you. Pricing is a key element; however, timing will be crucial for your product launch as well. Make sure you get a commitment on how long each production run will take. You do need to budget to pay a deposit, which is usually about half of the total cost.
Marketing
Before you sell your first garment, you should begin a marketing campaign. In the pre-launch segment of your business, budget $500 to $5,000. You already set aside money for your website. Now, you need to create your brand. In this step, think about how you want your customers to view your product line. Weave together the following ideas.
- Packaging – will you have bags or boxes with your brand logo and colors?
- When your clothing is in the package, will you use tissue paper?
- What will your business card look like?
- Who will take pictures of your product for the website?
Social media should be used to show the steps along the path to your actual launch. You want to create a following who wants to purchase your product as soon as it is available.
It is time for your opening day. Set aside money for a launch event. Invite friends, family, and potential customers. Budget for food, champagne, and flowers. You can hire a professional photographer or have a friend take pictures. Use the same idea for modeling your clothing line, hire models or have family and friends show off your garments. Post all the great pictures of the launch.
Take out advertisements to create ways to add to your customer base. Again, budgets will vary greatly. Anywhere from $500 to $5,000 can be spent on your opening day celebration. Congratulations!!
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Related Questions
What does MOQ mean?
MOQ is an abbreviation for minimum order quantities. Before you sign a contract for materials, trims, clothing samples, or production runs, be sure to ask the manufacturer or supplier if they have MOQs. When your business is in the initial stages of growth, low MOQs will be important for you.
What is a trademark?
Trademarks are identifiers of your brand. These can be a single word, a group of words, a symbol or design. You can also combine all of those elements into your trademark. Your customers will associate your trademark with your product line.
Do clothing lines need trademarks?
Trademarks are not required for clothing lines; however, a trademark provides legal protection for your line of clothing. By safeguarding your clothing line, you can defend your brand against anyone who would mimic your clothing line by copying your brand and ideas.
How do I get a trademark?
Trademarks are available through your state’s U.S. Patent and Trademark Office. Search online to verify that your trademark is not being used. Then complete an application with the state to obtain ownership rights. After that, fill out an application with the U.S. Patent and Trademark
To learn more about how to start your own fashion clothing line check out my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Meet Shawn Chun: Entrepreneur and Fashion Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a designer or boutique owner at a craft fair, farmers market, retail location or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Fashion Business Boss: I want to help fashion business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.