How to Start a Fashion Business | Growthink

How to Start a Fashion Business

How to Start a Fashion Business


How to Start a Fashion Business

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

We’ll start with key fashion 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 fashion business, but succeeding in it!

How Big is the Fashion Industry?

According to IbisWorld, there are 19,295 fashion designers in the U.S., and the fashion industry generated $2.5 billion in revenue in the United States alone last year. This represents an annual growth rate of 6.7% over the past 5 years.

What are the Key Segments of the Fashion Industry?

The largest product segment of the fashion industry is clothing, followed by shoes. Jewelry and textiles make-up the remaining portion of the industry’s revenue.

What External Factors Affect the Fashion Industry?

A number of factors affect the performance of the fashion 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.

Fashion and E-Commerce

What are the Key Customer Segments in the Fashion Industry?

The fashion industry’s largest customer segment is retailers and wholesalers. Individual consumers are their second largest segment, while fashion houses and manufacturers account for the remaining customer segments.

What are the Key Costs in the Fashion Industry?

Wages – 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% of total revenue.

Other costs – Because the industry is highly labor-intensive, depreciation only accounts for about 1.4% of revenue.Other costs include marketing and advertising, which account for about 2.1% of revenue.

Fashion and Marketing

What are the Keys to Launching a New Clothing Line?

How to Start a Fashion Business:

1) Brand Value Proposition
Understanding what will set your brand and your product/service offering apart from the competition is a crucial step. It is important that you are unique and bring something fresh to the market.

2) Have Capital
To build up your initial inventory, you’ll need the money to produce it. Even if you don’t have outside funding yet, it’s important to get your financials in order- How much money will you need in order to launch your clothing line? Do you have money saved up for this, or will you need a bank loan? What are your costs?

3) Do your Research
Make sure you know your market:

  • Who is your competition? What are their strengths? Weaknesses?
  • Who is your target market?
  • How much do you think you can sell your designs for at the retail and wholesale levels?

4) Create a Brand Identity
Create a unique brand identity that people can identify with. You need to know who you are designing for and focus on one direction with specific goals in mind. Be consistent in order to help your brand make an impact. For example, Vera Wang is known for designing fabulous wedding dresses and Christian Louboutin for shoes.

5) Choose your Business Model
Pick a business model for your clothing line. You can either sell it yourself, sell it wholesale-only to retailers, or be a retailer and wholesaler of your clothing line. If you plan to sell your own line, you have the option of opening a brick-and-mortar store or an online storefront.

6) Source your Manufacturer
If you are creating all of your own clothes to start, you will need to find fabrics and materials that meet your budget and creative needs. If you decide to use a manufacturer, you will need to find one. Do some research to locate the best quality and price for your line. Keep in mind that while many overseas manufacturers are exponentially cheaper, they usually only work in large quantities, so ask about minimums before proceeding.

7) Execute a Strategic Marketing Plan
The goal of a clothing line’s marketing plan is to ensure long-term success. Employ an integrated strategy that will reach your target market segments. Utilize marketing, public relations, advertising and sales efforts to gain brand recognition and ultimately drive revenue.

8) Develop prototypes and a look-book
Make prototypes of each piece from your first collection and then take photos. Develop a look-book (a portfolio of each piece from your current collection) and line sheets (a line sheet should contain photos of each piece from your collection, as well as wholesale pricing, fabric content and sizing information).

9) Profits & Expansion
Make sure that you have healthy profit margins. Then utilize profits wisely, in order to expand-invest back in the business, improve processes, hire more skilled people and increase marketing efforts.

What are the Typical Startup Costs for a New Fashion Business?

The cost of starting a fashion business is dependent upon size and a host of other factors. However, for a small home-based fashion business, you would need about $1500, for a medium sized fashion business, anything from $3,000 – $8,000 would be sufficient to start with while for a large sized fashion business, you would need between $25,000 – $50,000.

How much do Fashion Business Operators make?

Fashion business operators and fashion designers receive varied pay amounts based on the success of their product. According to Glassdoor, the national average salary for a Fashion Designer is $60,000.

Careers in Fashion

10 tips for setting up an online Fashion Retail Business

Helpful Videos

Fashion – Trends — Changing Consumer Behaviour

Self-Promotion Ideas for a Clothing Company : Marketing, Branding, & Work Life

Startup Marketing – How to start a clothing line with no experience and no money

Additional resources in the Fashion Industry

For additional information on the fashion industry, consider these industry resources:


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