How to Start a Clothing Business in (2024): Step-by-Step Guide

Are you passionate about your dream of starting a clothing business? But breaking into the fashion world can be tricky, given how fast-paced it is. That’s why putting the first step right is essential.

In this article, let’s walk you through a simple, step-by-step guide on how to start a clothing line business.

Whether you’re a fashion blogger, a social media influencer, or a newbie in the industry, we’ll help you get started on the right path toward creating your successful fashion venture.

How much money do you need to start a Clothing line?

The average cost to start an online clothing business in the USA generally varies between $5,800-$17,000. The same will vary between $64,500-$131,300 for a retail store. These costs are greatly influenced by factors such as location, size, concept, material of fabric, market niche, etc.

How much can you make from a Clothing Business?

The profit potential for a clothing business varies widely and can range from 10-100% depending on various factors such as brand recognition, fashion design, pricing strategy, marketing efforts, location, and many more.

However, the average net profit margin for a small clothing brand typically falls within the 10-30% range. Thus, fashion businesses are rewarding, especially when you establish a strong brand, loyal customers, and a better understanding of the target audience.

To better understand the market, let us go through the upsides and downsides of the fashion industry.

Pros and Cons of Starting a Clothing Line

Owning a successful clothing business is a dream come true for many aspiring entrepreneurs. However, like any industry, it has its own set of advantages and disadvantages:

aspiring entrepreneurs. However, like any industry, it has its own set of advantages and disadvantages: As a new fashion line owner, you must consider the cons and start your business with the aim of success.

Understood the advantages and disadvantages? Let’s move to our step-by-step guide for how to start a clothing line.

Step-by-step Guide to Start a Clothing Line

1. Understanding the Clothing Industry and Market

The fashion industry is ever-changing depending on societal norms, technological breakthroughs, and customer preferences. In this dynamic field staying on trend is important to drive your business toward success.

Here are some clothing industry statistics and trends you need to know in 2023:

• Growth forecast: Statista predicted the apparel market is going to increase by 1.6% in 2024. The current market size of the apparel industry is to reach $1334.90 billion.

• Non-luxury goods: By 2023, non-luxury products will account for 94% of apparel market sales. Therefore, you have the option to cover the streetwear and trendy market of the industry.
• Environmental commitment: Since 2017, the number of Google searches and consumer mentions around sustainability and fashion has gradually increased. If the current trend continues, it appears that ethical and sustainable fashion will be more significant than ever in 2023.
• Gender-fluid clothing: Brands that embrace gender diversity in their clothing are attracting a wider audience and making the fashion world more inclusive.
• AR/VR: Augmented reality and virtual reality are used to make online shopping better by showing how clothes fit and look.

Now you have a fair idea of industry trends, let’s further discuss the types of apparel.

2. Pick clothing items for your fashion brand

After having a brief idea about the fashion world, you need to choose a particular niche for your business. You need to list the items you will sell and identify the age group you want to cater to.

Thus, before starting your sewing machine ask yourself some questions:

• What do you want your label to sell?
• Do you want your brand identity to be chic or basic?
• Is it going to be for men, women, or gender-neutral?

Remember, you can not serve everyone and produce every clothing item. So, be very specific about what you will produce. To give you a rough idea, here are some niches you can choose from:

• Women’s formal wear
• Men’s formal wear
• Activewear
• Swimwear
• Casual wear for both genders
• Gender-neutral wear
• Sleepwear

Apart from the above main segments, there are various niches to choose from like:

• Trousers
• Leggings
• Lingerie
• Socks
• Belts
• T-shirts
• Hoodies
• Ties

Choose your niche wisely, stick to it, and maintain the quality of all your products. You can begin with 2 niches and then expand to cover the entire segment.

3. Choose an ideal business model

There are several business models to choose from for your own clothing line, but choosing the best one depends on your business goals and needs.

Here is a detailed explanation of various business models for a fashion business:

Dropshipping

The main advantage of the dropshipping business model is that you don’t need to hold inventory, resulting in much fewer losses due to unsold inventory. It also reduces storage costs, making it an ideal model for beginners.

Here, when someone buys something online or from your store, the product is directly shipped from the supplier.

Print-on-demand

If you are creative in customizing clothing designs, then this model is the best. In this model, you can create unique custom clothing patterns, get printed, and then shipped when ordered. Print-on-demand is a low-risk business for any start-up or solopreneur.

Here, you don’t need to invest in bulk inventory or worry about storage. If you are a startup, then start from a print-on-demand model.

White-label or private-label manufacturing

This model allows you to create your clothing line using existing clothing designs from manufacturers. You can change the branding and labels, making it appear as your own clothing brand.

White labeling is a good choice, but it needs a large initial investment to manufacture the clothes in bulk.

Set up your own clothing line manufacturing

Entrepreneurs who need complete control over their fashion brand can choose this model. It involves producing clothing items from scratch (you get to design all items yourself) with local manufacturers.

This model offers the most liberty and space but requires the most capital too.

Consider all the factors like target audience, available capital, the niche you are going to work in, and others before you decide on one fashion business model.

4. Brainstorm a business name

The business name for the clothing line describes your business identity. So, choose a name that is catchy and resonates with your clothing brand.

First, understand what your own clothing line represents, whether it is trendy, formal, or casual. Here are some points to remember before you name your clothing brand:

• Keep it In sync with your products: Make sure the name aligns with the type of clothing, brand packaging, and the experience you want to offer customers.
• Don’t be too specific: While reflecting on your products is important, try not to pick a name that’s too specific. You want the name to be flexible enough if in the future you expand your offerings and explore any new segment.
• Check availability: Before you get too connected to a name, check its availability as a domain name of your website, and user IDs on social media platforms. Also, check if it’s trademarked or not from the website of the US Patent and Trademark Office.

Your brand name is one of the key differentiators between you and your competitors. Therefore, make sure it is trendy, easy to remember, unique, and available.

5. Write a clothing line business plan

After considering what name you are going to give your business, let us move forward to the business plan.

A well-structured clothing business plan is a roadmap for your business, which will also help you impress potential investors and partners.

Thus, before you open the doors of your clothing line business, write a business plan.

Sections to include in your clothing line plan are:

• Executive summary
• Company Overview
• Market analysis
• Products and services
• Marketing and sales strategies
• Organizational structure
• Supply chain and operations plan
• Financial projections

Writing all these sections with accuracy is not a stroll through a garden. It necessitates long hours, careful consideration, and consistent work.

6. Find a clothing manufacturer

Now that you are sure of the business model and type of your clothing brand, it is time to search for an existing clothing manufacturer with whom you can partner.

You will have to search for a manufacturing firm that caters to all your specifications and designs.

Start with researching all the manufacturers that particularly work in your niche. Consider all the factors like location, retail price point, production capacity, experience, etc.

Request samples from the manufacturers based on your designs, and check the finishing and quality. Only after sampling, take any kind of decision.

Once you have samples from all the manufacturers, shortlist and select the best fit according to your requirements. Also, negotiate the terms to make the deal in your favor.

However, do not forget to take quality-control tests and steps to build trust among your customers and maintain the quality of your clothing brand.

7. Design your first collection

Once you are done with all the basic steps, give a pat to yourself, and start sketching your first design. Sketching is like visualizing all the designs before launching them in the market.

Make your debut collection the way that it showcases the value, vision, and mission of your clothing brand.

To begin with sketching, take inspiration from all around, from fashion magazines and streetwear to fashion shows. After that, select the fabric colors and materials that you want.

Provide varieties as much as you can, and do not forget to include plus sizes too. Now, it is time to give these clothing items to your friends and take feedback from them.

Once you receive the feedback, make alterations accordingly, and voila, your collection is ready for the launch.

8. Choose a sales channel

The main question is which sales channel to choose because choosing the sales channel will determine how you will reach your target audience.

The foremost step is to decide where to start a clothing business; an online clothing store, a physical store, or listing it on an online platform.

Here are some examples of various sales channels:

Online sales

You can achieve success in online sales through various e-commerce platforms like Shopify, Woocommerce, BigCommerce, social media accounts through social media advertising, and others. These digital channels offer a broad reach and are ideal for the tech-savvy target market.

Traditional retail

You can explore options like physical stores, pop-up stores, collaborating with existing boutiques, participating in local events, etc. It will help you build trust because of the physical location and increase visibility for locals.

Online clothing store

You can make your own website and start selling your clothing products through it. You can also perform SEO and reach local customers with the help of it. Apart from selling products, you can also provide the option of customization if you want to. Remember to develop a website that is user-friendly and easy to navigate.

Consider wholesaling

Wholesaling your clothing line to retailers with a huge physical presence at wholesale price is a great option too. This can help you reach a wider audience.

Many successful clothing line brands use an omnichannel approach incorporating more than a single sales channel to widen their reach and spread brand awareness.

You need to evaluate timely to know which sales channel is working for your own clothing line and which is not.

9. Determine your product pricing structure

Selecting the best prices for your clothing brand is crucial because you want to offer good deals to customers while making a good profit.

First, calculate all your business startup costs including materials, transporting, manufacturing, overhead expenses, etc. It will help you know the actual cost of your collection.

Now, do thorough market research to know what similar clothing products are selling for, ensuring your clothing company does not get pricier.

Next, set profit margin, generally the gross profit margin in the fashion industry is around 52%. Consider your competitors and set competitive prices to reach potential customers.

Brand positioning plays a vital role; decide whether you want your brand to be perceived as premium or budget-friendly, as this will influence your pricing strategy.

Testing and adjusting your prices can be beneficial. Start with a few items, experiment with different price points, and evaluate customer responses.

Based on feedback and sales data, fine-tune your pricing strategy.

Regularly review your costs and pricing as your business grows to ensure a healthy profit margin.

10. Register your clothing business

You did all the creative tasks like designing your first collection and contacting manufacturers, now it is time to indulge yourself in the legal requirements and documentation for your clothing brand.

Here is how you register your clothing company:

Select the business structure

Choosing a business structure is necessary for your clothing brand registration. A business’s liability, taxes, filing fees, maintenance, and other regulations depend on the business entity you choose.

There are various business structures for a clothing brand, that include:

• Sole proprietorship
• General partnership
• Limited liability company
• Corporation
• Franchise

However, Forbes advises choosing a limited liability company as a business entity for your fashion brand.

Go for a registered agent

All LLCs and corporations are required to appoint a registered agent. A registered statutory agent accepts and promptly responds to legal mail and official communication on behalf of your clothing business.

The registered agent can be a person or an agency with a physical address in the US so that they can receive legal documents on your behalf.

Register with the state & obtain business EIN

Register your fashion brand with the Secretary of the State’s Office. The process and requirements vary state by state. You may need to file articles of incorporation or organization for LLCs or corporations.

Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is a unique identifier for your business and is needed for tax purposes.

Apply for tax registration

Register with the appropriate tax agencies for federal and state taxes. If you have employees, then you need to register for employment taxes too along with sales and income tax.

Business registration requirements differ state-by-state which is why having a registered agent by your side will help you get through the process without any hustle.

11. Apply for business licenses and permits

Running a fashion brand requires various licenses and permits to ensure compliance with local, state, and federal regulations.

Here are certain licenses and permits you should apply for clothing brands:

Business License 

A general business license is required to operate any business, including fashion brands. This license is obtained from your local city or state government’s website.

Sales tax permits

If your clothing brand sells all items directly to customers, you’ll need a sales tax permit or resale certificate. It allows you to collect and pay sales taxes on your sales. You can apply for this permit from your state’s Department of Revenue or Taxation.

Home occupation permits 

If you’re running your clothing business from home, you might need a home occupation permit, especially if local zoning laws regulate home-based businesses.

Health Department Permits

If your clothing line involves any form of apparel production or alteration, you may need health department permits to ensure the safety of your products and compliance with hygiene standards.

Import/export licenses 

If you’re importing or exporting clothing products, you may need specific licenses or permits related to international trade. Check with U.S. Customs and Border Protection for guidance.

Online Business Permits

If you’re operating an online business, you may still need to obtain the same licenses and permits as brick-and-mortar stores, especially sales tax permits.

To determine the exact licenses and permits you need, it’s advisable to consult with your local business regulatory agencies and check the specific requirements for your state and locality.

12. Get business insurance

The next essential step is securing insurance for your clothing line. Business insurance is vital for shielding your venture from unexpected financial hardships, allowing you to focus on growth.

Before choosing insurance, understand the specific risks your clothing line might face, such as property damage or liability claims. Then, pick the right insurance type that suits your clothing line’s needs.

Considering the risks you might face; choose one of the types of insurance coverage that are commonly recommended for the clothing line firm:

General liability insurance 

It provides coverage for property damage, bodily injury, or any claims made by customers, suppliers, or any third party. This is a must-have insurance for all clothing line firms.

Product liability insurance

For any customer who experiences an injury due to a defect in your clothing product, this liability insurance will protect you from legal claims and damages.

Commercial Property Insurance

This insurance covers damage or loss of your business property, including inventory, equipment, and the physical store or office space. It typically covers events like fire, theft, or vandalism.

Business Interruption Insurance

If your clothing business is temporarily unable to function due to any unexpected event, business interruption insurance can help replace lost income during those emergencies.

Workers’ Compensation Insurance

Workers’ compensation insurance is typically required if you have employees. Employees hurt in the workplace are compensated for their medical costs and lost pay through this insurance.

Firstly, evaluate the coverage limit you need considering the clothing brand’s size, location, revenue, and potential liabilities. Then contact an insurance agent or broker.

13. Fund your clothing business

After getting insurance, it is time to take all your finances seriously. Without finances or at least operating costs in hand, no business is going to start, and a clothing brand is no exception.

So, here are some ways to raise money for your clothing line firm:

• Business loans: Many banks and money lenders may help you get your business up and running through small business loans. You will need to pay back business loans with interest, so calculate your startup costs and capital before applying for business loans.
• The USA Small Business Administration loans: SBA 7(a) loan is popular in the fashion world. It can be utilized for expenses like real estate, working capital, or equipment.
• Friends or family: Ask your family and friends if they can invest in your business or borrow money to help you get started.
• Crowdfunding: The process of supporting a project or business by getting a lot of people to invest in your business, usually online is crowdfunding. This a low-risk option, in which various investors take interest in your clothing brand.

Self-funding your clothing brand is always one of the best options apart from all the above options. However, small business loans and SBA loans are also preferable.

14. Prepare to launch your business

Efficiently managing a growing business can be a challenging task. However, with the right selection of business software and tools, you can streamline your operations and ensure the smooth functioning of your day-to-day activities.

Here are some essential software and tools that clothing line small businesses should consider:

1. Design Software: Illustrator, Photoshop, or CorelDRAW
2. Inventory management Software: Zoho or QuickBooks
3. Accounting Software: Freshbooks, Quickbooks, Xero, ZohoBooks.
4. eCommerce platform: WooCommerce, BigCommerce, or Shopify
5. Point of Sale (POS) system: Square or Lightspeed

Having these software and tools at your disposal will help you navigate the challenges of business growth more effectively.

Set up your online store

Once you’ve finalized your business name, search for available domain names and purchase one from providers like GoDaddy, Bluehost, or Hostinger.

Consider using WordPress for website development, or explore user-friendly alternatives like Weebly, Wix, or Squarespace.

Once your website is live, focus on optimizing it for search engines (SEO), set up a Google My Business profile, and implement Google Ads. Ensure your eCommerce store is user-friendly, with high-resolution images, detailed product descriptions, and a seamless checkout process for a top-notch shopping experience.

Develop a marketing plan

Promoting your brand is crucial, but you’ll need a solid marketing plan in place to achieve this. Start by conducting market research and addressing important questions:

1. What’s your marketing budget?
2. Where will you advertise (e.g., billboards, social media, TV, print)?
3. Which social media platforms are most popular among your target audience?

By creating a marketing plan that covers these key aspects, you’ll be well-prepared to launch your clothing company and establish a strong presence in the fashion industry.

15. Scale up your clothing line

After successfully launching your new clothing line, the next step is to focus on scaling your business. Scaling doesn’t mean rushing into adding numerous new products or overwhelming yourself with too many tasks.

It’s about carefully considering the direction you want your brand to take and how you can steadily grow as an entrepreneur.

Before diving into your next plan of action, take some time to reflect on your business’s progress. True success isn’t about a big business idea; it’s about having a clear and meaningful purpose.

For instance, instead of immediately hiring a large team to support your brand, consider finding a few individuals who genuinely understand your clothing brand identity and its vision. Once you hire a small team, you can always expand it according to the demand and necessity.

Think deeply about your designs and how you want people to feel when they wear your clothes. Incorporate this sense into any new collection you launch in the future.

Start small and grow in a way that aligns with your brand’s mission and values.

How to Market Your Clothing Brand?

You don’t need a massive marketing budget to get your brand off the ground. With the right strategies and a creative approach, you can successfully launch your own clothing brand and connect with the target audience, even if you’re starting from scratch. Let’s explore the tactics that can help you turn your fashion dreams into a thriving reality:

Build a Strong Online Presence

Clothing brands should be active on social media platforms and maintain a professional website. It is necessary to engage with your audience, showcase your clothing line products, and encourage customer reviews and feedback to build trust.

Create a strong brand identity

Before you put any marketing plan into action, establish a compelling brand identity. It includes your brand’s name, logo, colors, and overall style. A strong brand identity helps you stand out in the industry.

Reach out to your existing network

Ask your friends, family, and coworkers to advertise your products on social media platforms and assist in promoting your clothing line. Many new clothing businesses start with the people they know.

When you first launch your clothing line, you may also provide rewards for recommendations, such as discounts or free merchandise, to entice potential customers and reach your target market.

Start blogging

Create a blog on your website and provide informative and interesting articles about your clothing line and the market there. Search engine optimization (SEO), can assist in positioning your business as a thought leader and draw in potential customers.

Influencer collaborations

To have a successful fashion brand, collaborate with fashion influencers who match your brand’s style and have the same target audience as yours. They can promote your clothing line products to their followers increasing your brand awareness and credibility.

Partner with other brands

By partnering with other fashion brands; you can reach the target market sooner. You can partner with any fashion designer to get that wider reach in no time.

Remember that marketing is an ongoing process. Continuously assess your marketing efforts, stay updated with fashion industry trends, and adapt your strategies to meet changing customer preferences.

Conclusion

Now that you know the steps to start your clothing line business, you’re ready to begin this exciting venture. With a clear vision, a solid clothing line business plan, and an effective marketing plan, you have the tools for success.

Whether you’re into fashion design, sustainability, or niche markets, your dedication can lead to a thriving brand. We wish you all the luck for the new fashion journey.