How to Start a Clothing Line

ON THIS PAGE

• How to Start a Clothing Line
• 15 Steps To Start a Clothing Line Business
• How Big is The Clothing Line industry?
• What are the Key Segments of the Clothing Line Industry?
• What External Factors Affect the Clothing Line Industry?
• What are the Key Customer Segments in the Clothing Line Industry?
• What are the Key Financial Metrics and Costs in the Clothing Line Industry?
• What are the Typical Startup Costs for a New Clothing Line?
• Additional Resources in the Clothing Line Market

 

How to Start a Clothing Line

If you’re looking to start a clothing line, you’ve come to the right place. Since we’re going to show you exactly how to do it.

We’ll start with key clothing line industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.

Then we’ll discuss keys to not only starting a clothing line business, but succeeding in it!

Before we continue, here’s where you can access your clothing line business plan template since having a plan will be key to your success.

Download our Ultimate Clothing Line Business Plan Template here

15 Steps To Start a Clothing Line Business:

Starting a clothing line can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful clothing line.

1. Choose the Name for Your Clothing Line Business

The first step to starting a clothing line is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your clothing line:

1. Make sure the name is available: Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also, check to see if a suitable domain name is available.
2. Keep it simple: The best names are usually ones that are easy to remember, pronounce, and spell.
3. Think about marketing: Come up with a name that reflects the desired brand and/or focus of your clothing line.

 

2. Determine the Type of Clothing Line Business You Will Launch

When determining the type of clothing line you will launch, it’s crucial to consider your passion, target market, and unique selling proposition.

Here are several types of clothing linees you can consider:

1. Athletic Wear: Design and sell activewear and athleisure clothing for fitness enthusiasts, athletes, and those seeking comfortable yet stylish sportswear.
2. Casual Streetwear: Create a line of trendy and urban-inspired clothing, including T-shirts, hoodies, and sneakers, appealing to a youthful and fashion-forward demographic.
3. Eco-Friendly and Sustainable Fashion: Develop a clothing line committed to using environmentally friendly materials, sustainable production processes, and ethical labor practices to attract environmentally conscious consumers.
4. Children’s Clothing: Design and manufacture clothing for infants, toddlers, or older children, focusing on comfort, durability, and style.
5. Workwear/Uniforms: Specialize in work attire or uniforms for specific industries, such as healthcare, hospitality, or construction.
6. Designer Fashion: Create high-end, luxury clothing lines featuring unique and artistic designs for fashion-forward customers who appreciate exclusive styles.

 

3. Develop Your Clothing Line Business Plan

One of the most important steps in starting a clothing line is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your clothing line.
2. Company Overview – this section tells the reader about the history of your clothing line and what type of clothing line you operate. For example, are you a athletic clothing line, casual streetwear clothing line or designer fashion clothing line.
3. Industry Analysis – here you will document key information about the clothing line industry. Conduct market research and document how big the industry is and what trends are affecting it.
4. Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product: Determine and document what products/services you will offer
• Prices: Document the prices of your products/services
• Place: Where will your business be located and how will that location help you increase sales?
• Promotions: What promotional methods will you use to attract customers to your clothing line? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
7. Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
8. Management Team – this section details the background of your company’s management team.
9. Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your clothing line make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

You can download our clothing line business plan PDF template here. This is a business plan template you can use in PDF format.

 

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4. Choose the Legal Structure for Your Clothing Line Business

Next you need to choose a legal structure for your clothing line and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the clothing line and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a clothing line together. The partners share in the profits and losses of the business. The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a clothing line include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a clothing line is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your clothing line, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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5. Secure Startup Funding for Your Clothing Line Business (If Needed)

In developing your clothing line business plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a clothing line to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a clothing line that they believe has high potential for growth.
 

6. Secure a Location for Your Business

When searching for the right space for your clothing line, consider the following factors to ensure that the location aligns with your brand and business goals:

• Demographics: Understand the demographics of the area, including age, income level, and lifestyle of the potential customer base. Choose a location where your target market is present.
• Foot Traffic: Look for areas with high foot traffic, as this can increase visibility and potential sales. Commercial districts, shopping centers, and popular streets are good options.
• Competitor Proximity: Assess the proximity of competitors and similar businesses. Consider whether their presence complements or competes with your clothing line.
• Accessibility: Ensure that the location is easily accessible by both pedestrians and vehicles. Check for nearby parking options, public transportation access, and walkability.
• Visibility: Choose a location with good visibility to attract passersby. A storefront with large windows or street-facing signage can help showcase your clothing line.
• Zoning and Permits: Verify that the location is zoned for retail or clothing businesses, and check if any specific permits are required for your type of retail operation.

 

7. Register Your Clothing Line Business with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
 

8. Open a Business Bank Account

It is important to establish a bank account in your clothing line’s name. This process is fairly simple and involves the following steps:

1. Identify and contact the bank you want to use.
2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address).
3. Complete the bank’s application form and provide all relevant information.
4. Meet with a banker to discuss your business needs and establish a relationship with them.

 

9. Get a Business Credit Card

You should get a business credit card for your clothing line to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
 

10. Get the Required Business Licenses and Permits

Starting a clothing line typically involves various licenses and permits to operate legally and compliantly. The specific requirements can vary depending on your location and the nature of your business.

Here’s a general list of licenses and permits often required:

• Business License: A general business license is usually required to operate any business legally. You can obtain this from your city or county government.
• Sales Tax Permit: If your state or locality collects sales tax on retail sales, you’ll need a sales tax permit to collect and remit the tax. Check with your state’s Department of Revenue or Taxation for specific requirements.
• EIN (Employer Identification Number): If you have employees, you’ll need an EIN from the IRS for tax purposes. Even if you don’t have employees, an EIN may be required for opening a business bank account.
• Trademark Registration: Consider registering your clothing line’s brand name, logo, or designs as trademarks with the U.S. Patent and Trademark Office (USPTO) to protect your intellectual property.
• Permit for Custom or Screen Printing: If you’re involved in custom clothing printing or screen printing, you may need a special permit or registration due to environmental and safety regulations.
• Import/Export License: If you plan to import clothing materials or export your products, you may need an import/export license or permits from relevant agencies.

Depending on the type of clothing line you launch, you will have to obtain the necessary state, county and/or city licenses.
 

11. Get Business Insurance for Your Clothing Line Business

Operating a clothing line requires several types of insurance to protect your business, assets, and customers.

Here are key insurance policies to consider:

• General Liability Insurance: This insurance covers third-party claims for bodily injury, property damage, or personal injury that occur on your business premises. It’s essential for retail businesses to protect against accidents and potential lawsuits.
• Product Liability Insurance: If a clothing item you sell causes harm or injury to a customer, product liability insurance can protect you from legal claims. This is especially important for clothing manufacturers.
• Commercial Property Insurance: This insurance covers the physical assets of your clothing line, including inventory, equipment, fixtures, and the building itself if you own it. It provides protection against events like fire, theft, vandalism, or natural disasters.
• Business Interruption Insurance: If your clothing line is unable to operate due to a covered event (e.g., fire, flood), business interruption insurance can help cover lost income, rent, and ongoing expenses during the closure.
• Commercial Auto Insurance (if applicable): If you use vehicles for your clothing line, commercial auto insurance can cover accidents, damage, or liability related to those vehicles.
• Cyber Liability Insurance: If your clothing line conducts online sales or stores customer data electronically, cyber liability insurance protects against data breaches, cyberattacks, and related legal expenses.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

 

12. Buy or Lease the Right Clothing Line Business Equipment

Running a clothing line primarily involves designing, manufacturing, and marketing apparel. While you may not need extensive machinery or equipment, here’s a list of key equipment and tools that can help you operate and manage your clothing line efficiently:

• Design Software: Invest in design software such as Adobe Illustrator or CorelDRAW for creating clothing designs, patterns, and digital sketches.
• Sewing Machines: If you manufacture your clothing items in-house, sewing machines are essential. Industrial sewing machines are often preferred for their durability and speed.
• Cutting Tables: Cutting tables provide a large, flat surface for cutting fabrics accurately. They often include cutting mats and measurement guides.
• Fabric Cutting Tools: Scissors, rotary cutters, and fabric shears are necessary for precise fabric cutting.
• Pattern-Making Tools: Pattern paper, rulers, and curve templates are used in pattern drafting and customization.
• Heat Press Machine: If you create custom designs, logos, or graphics on clothing, a heat press machine is essential for transferring images onto fabrics.
• Screen Printing Equipment (optional): For larger-scale custom printing, you may need screen printing equipment, including screens, squeegees, and exposure units.
• Embroidery Machine (optional): If you offer embroidery services or embellished clothing items, an embroidery machine is necessary.

 

13. Develop Your Clothing Line Business Marketing Materials

Marketing materials will be required to attract and retain customers to your clothing line.

The key marketing materials you will need are as follows:

1. Logo: Spend some time developing a good logo for your clothing line. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
2. Website: Likewise, a professional clothing line website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
3. Social Media Accounts: Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn, and/or other social media networks will help customers and others find and interact with your clothing line.

 

14. Purchase and Setup the Software Needed to Run Your Clothing Line Business

To run a successful clothing line, you’ll need various software solutions to manage different aspects of your operations.

Here’s a list of essential software for a clothing line:

• Design Software: Invest in graphic design software such as Adobe Illustrator or CorelDRAW to create clothing designs, patterns, and digital sketches.
• Product Lifecycle Management (PLM) Software: PLM software helps manage the entire product development process, including design, production, and distribution. It streamlines collaboration among team members and suppliers.
• Pattern-Making Software: Use pattern-making software like Optitex or Gerber AccuMark to create and digitize patterns for your clothing designs.
• Sourcing and Supply Chain Management Software: To manage your suppliers, track orders, and monitor inventory levels efficiently, consider using supply chain management software.
• Manufacturing Software: If you handle production in-house or work closely with manufacturers, manufacturing software can help streamline operations and track progress.
• Inventory Management Software: Software like Stitch Labs or TradeGecko can help you track and manage inventory levels, reducing the risk of overstock or stockouts.
• Retail Management Software: If you have a physical store, use retail management software (POS systems) like Shopify POS or Square to handle sales, inventory, and customer data.

 

15. Open for Business

You are now ready to open your clothing line. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
 

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How Big is the Clothing Line Industry?

According to IbisWorld, there are 13,449 fashion designers in the US, and the fashion designers industry
generated $1.4 billion in revenue in the United States alone last year. This represents an annual growth rate of 3.2% over the past 5 years.

What are the Key Segments of the Clothing Line Industry?

The two main product segments of the fashion industry are clothing and footwear. Jewelry, accessories, textiles and costume design make up the remainder of the industry’s revenue.

 

What External Factors Affect the Clothing Line Industry?

A number of factors affect the performance of the clothing line(fashion designers) industry. These drivers
include:

• Per capita disposable income: Per capita disposable income determines the amount of money that
  consumers have to spend on products designed by this industry.
• Demand from shoe and footwear manufacturing: Footwear manufacturers’ demand for design services
  affects industry revenue as this market accounts for about 10.0% of total industry revenue.
• World price of cotton: The price of cotton ultimately affects the price of the end product. As the price of
  this input rises, so does the price of the clothing or shoes made based on this industry’s designs, which
  can drive down consumer demand.
• Demand from jewelry stores: Demand for trendy and fashionable jewelry determines the need for design
  services within this segment. As consumers increasingly place more value on modern designs over
  classical pieces, demand for design services will grow.

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What are the Key Customer Segments in the Clothing Line Industry?

The clothing industry’s key customer segments are apparel manufacturers, fashion houses, boutiques and department stores.

 

What are the Key Financial Metrics and Costs in the Clothing Line industry?

The key financial metrics in the clothing line market are as follows:

Profit-Profit has increased over the past five years as a result of the recovering economy and a rebound in overall spending on discretionary purchases.

Wages-Wages account for almost half of total industry revenue, spending on labor represent the largest expense for industry operators, emphasizing the highly skilled and labor-intensive nature of the industry.

Purchases-Purchasing costs are the second-largest industry expense, but are significantly less than wages. For the past five years, purchasing costs have inched up as a result of increasing prices from upstream suppliers.

Rent and Utilities-Rent and utilities are low, accounting for just 5.0% of total revenue.

Other costs-Because the industry is highly labor-intensive, depreciation only accounts for about 1.6% of revenue. Other costs include marketing and advertising.

 

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If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

What are the typical startup costs for a new clothing line?

The cost of starting a clothing line is dependent upon size and a host of other factors. However, for a small home-based clothing line, you would need about $500, for a medium sized clothing line, anything from $1,000– $5,000 would be sufficient to start with while for a large sized clothing line, you would need between $25,000– $50,000.

 

Additional resources in the clothing line market

For additional information on the clothing line market, consider these industry resources:

• Council of Fashion Designers of America – www.cfda.com
• Dexigner News – www.dexigner.com
• Fibre2Fashion News – www.fibre2fashion.com