How to Start a Clothing Brand

Benefits of Starting a Clothing Brand

Starting a clothing brand is all about freedom. When you start your own brand, you’re free to express yourself artistically and make your own choices. Starting a new clothing brand can also lead to financial freedom as you build a customer base and dependable revenue stream.

Another big benefit to starting a clothing business is that production doesn’t have to be part of the equation. A brand is your artwork, philosophy, and name recognition, but you can outsource production to established manufacturers and focus on designing, marketing, and selling. From high-end fashion designer labels to bargain basics, from timeless clothing designs to trending fashion, brand identity can lead to profits.

Apparel brands become known for their design, innovation, and price points, but also for evoking feelings, values, or attitudes. The more someone associates their individuality with your apparel, the more they want your clothes in their closet.

How to Start Your Own Clothing Brand Checklist

As you plan and begin your clothing brand, you’ll need to think through how you’d like the business to run, consider your goals for growth, and know how the work will fit into your life. You’ll also need to understand practical considerations, state and local requirements, business insurance, and trends that could affect the business.

We’ve got you covered: Get your new clothing line business off the rack with the checklist below.

1. Create a business plan

A business plan can seem intimidating, but it doesn’t have to be. Writing a business plan sets you up for success by helping you think through all aspects of your business model. That doesn’t mean you have to work up a War and Peace-sized book though. A business plan can be as short as a couple of pages, as long as it has the right level of detail to guide your business as you get underway.

Your clothing brand business plan helps you: 

• Specify your business idea: How big or small of a business do you want to operate? What will you emulate in the apparel world — and how will you stand apart?
• Identify what needs your clothing brand can fill: Customers seek out fashion for specific purposes. How will your clothing brand fill that need better than any other?
• Set SMART goals: It will be difficult to succeed if you don’t know where your business is strong and where it needs improvement. SMART business goals are specific, measurable, attainable, realistic, and timely. A clothing brand might measure sell-through rate, markdowns, store capacity, product lifecycles, stock availability, and more.
• Outline financials: How much money do you need to start? When do you think the business can break even financially? What will it take to scale the business?
• Relationships are key in the fashion industry: Review your network and think through how you’ll expand it to make sure you have the right contacts in the right places.
• Anticipate roadblocks and problems: Your business will face setbacks. You’ll make mistakes, but that’s part of running a business. Some problems will be unexpected, but some you can plan for in advance. Think through potential problems and solutions.
• Measure progress: Your time management skills can help you list the metrics you’ll measure, how often you’ll look into your progress, and how you’ll measure the state of your business and determine when to make changes.

Making a business plan can be complicated. But you don’t have to worry about creating one all on your own! Our handy business plan template makes the entire process much easier.

2. Choose a business structure

Two common entities for a clothing company are a sole proprietorship and starting an LLC (limited liability company) with an operating agreement. If your business will have any liabilities, consider creating an LLC or, depending on the scope of your business plan, forming a corporation.

Sole proprietorships are easy to set up. However, a sole proprietorship does not protect your personal assets, so even one small mistake in your company’s operations could cost you your house, car, personal bank accounts, and more. Remember to review potential business taxes and structuring implications for your self-employment income as well.

LLCs can shield your personal assets from business liabilities, which gives it a huge advantage over a sole proprietorship. That means if your LLC goes into debt, or someone sues your clothing brand, your personal assets are off limits. The degree of protection varies, so be sure you know how to start an LLC in your state.

How do you plan to fund your startup? If you need some help, the Small Business Administration (SBA) offers grants and loans to help small businesses get off the ground, so we’d recommend at least checking with them. Private funding sources such as venture capital and commercial banks may also be options for LLCs.

If you need some more information about the different business entity types available to you, our helpful guide should have the answers you seek.

3. Determine your business costs

Every business has to effectively manage expenses and cash flow in order to stay open. Thinking through anticipated costs will help you price your clothing brand and manage cash flow.

• For starters, estimate the price to start a small clothing business.
• Establish your fixed costs. These expenses recur monthly, quarterly, or annually, and you know what you’re spending. Long-term, there may be changes, but in the short term, these costs are stable, such as mortgages, commercial or industrial leases, and utilities.
• What are your variable costs? These fluctuating expenses may include payroll, taxes, fabric, decorative materials, equipment, travel, and trade shows.
• Understand your target audience. How old are your customers? Where do they live? What matters to them? What is their typical apparel budget? What clothing brands do they currently buy? The better you know your market, the better you can design the clothing they’ll want.

Looking for some further information about how to calculate your small business costs? We wrote a guide to help you figure it out. Other considerations include:

• Estimate costs for transportation, supplies, and equipment, such as scissors, sewing machines, pattern makers, rulers, printing accessories, templates, fabrics, and other embellishments. Also estimate a budget for maintenance, supplies, replacements, and upgrades.
• Outline your production and distribution models. Are you selling direct, via an online store, at in-person events, or a combination of these? Are you aiming to ink private label or distribution deals through major retail brands? Will you open your own locations?
• What price points work for your profit margins and what will your customers spend for your clothes?

To give you a general idea, here are some common startup expenses for a clothing brand:

• Business registration, licensing, and permits: Depending on your state, it can cost up to $500 or even more to register as an LLC. Also, check with your state and county to see which licenses and permits you need (and how much they’ll cost) to operate your business in compliance with all applicable statutes and laws.
• Insurance: This varies depending on the type and scope of your business. For a rough example, a clothing store location‘s annual insurance costs may include $500 for a general liability policy and another $500 for business property insurance. Look into a Business Owners Policy (BOP) to save money by bundling these types of policies.

Other costs will vary depending on the nature of your clothing brand, such as whether you are making clothes yourself or mass manufacturing abroad. Don’t forget about advertising, marketing, and labor costs. Invest in print and online marketing assets, such as business cards and a basic business website. Examine labor and other costs in different countries of production too.

To make it easier to estimate how much money you’ll need to make to break even, check out our break-even calculator. Simply fill in a few details and you’ll get an idea of how your revenue and expenses balance each other out.

How will you fund your clothing business’ startup costs?

No matter how large or small your business will be, starting it up will cost money. How you fund your clothing brand startup costs is a crucial decision. Here are some places you can look for assistance.

• Government resources: These include SBA loans, grants, and other options.
• Commercial loans: Available from banks or credit unions, these provide fast funding in exchange for regular principal and interest payments, but you’ll need a solid business plan, good credit, and collateral.
• Venture capital: Private equity firms and investors can be powerful sources of funding. Just be prepared to give up some level of control. Also, keep in mind that it’s exceptionally rare for venture capitalists to invest in sole proprietorships.
• Business credit cards: These can boost your spending power, but be strategic and pay off your balance monthly. Otherwise, the high interest rates could be crippling.
• Crowdfunding: Sourcing funding through crowdfunding sites can both amplify your brand and raise money. However, some platforms are all-or-nothing, and building your case for backing can be time-consuming.
• Friends and family: Your personal relationships may also be willing to fund your business with large sums or multiple small amounts. However, make sure there are clearly understood contracts. Lack of a contract or repayment problems could damage your personal relationships.

Still have questions? Our guide to funding your new business has the answers you’re looking for.

4. Name your business

Every clothing business needs a name. A sole proprietor often conducts business under the owner’s personal name, and many fashion brands are built around a name as well. If you’re forming an LLC, follow the rules for how to name your LLC. You should also ask yourself the following questions:

• Does the name match your brand?
• Are other businesses in your industry using a similar name?
• Are web domain names available that match your business name?
• Once you’ve selected a business name, register it with relevant offices in your state and/or municipality.

Need some help coming up with business name ideas? While these aren’t directly related to the clothing world, we compiled lists of business name ideas for makeup companies and Lipsense businesses to provide inspiration.

5. Register your business and open financial accounts

If you haven’t already done so, you can officially register an LLC for your business in this step. Once you’ve registered your business, set up a business checking account. This helps you keep your business income and expenses separate from your business.

You will probably also need to acquire an Employer Identification Number (EIN), which allows you to open business bank accounts, hire employees, file taxes, and more. The vast majority of LLCs will need a dedicated EIN from the IRS, and any business can apply for an EIN for free. Learn more about EINs, why you need one, and how we can help.

6. Purchase equipment for your clothing brand

In order to start your operation, acquire the right equipment, supplies, and training sessions for your clothing brand, which may include:

• Sewing equipment, such as sewing machines and sergers
• Clothing patterns
• Fabric testing machine
• Cloth and other materials
• Accessories, such as clasps, buttons, and zippers
• Classes or other training to improve techniques

If you’ll outsource production, your equipment can be minimal. Our guide to buying assets and equipment for a new business can be a great help when starting your clothing brand.

7. Market your clothing brand

The continued global growth in the apparel industry is proof that people want more clothing options that suit their bodies and personalities. The right marketing helps potential customers find your business.

• Print materials: Business cards, brochures, and postcards can raise brand awareness.
• Google Business Profiles: Use your business profile to showcase your brand to your target market.
• Social media: Consider presences on Facebook, LinkedIn, Pinterest, and Instagram. Not only can people connect with you, but the visual nature of Pinterest and Instagram helps people spread the word about your clothes.

When it comes to getting new business, your current customers are the best source. Word of mouth is one of the best ways to get new customers, so be sure to ask customers to refer you to people they know.

Your clothing brand also needs to be visible at live and online events. Events can be crucial in getting your brand in front of the right people.

A search-engine-optimized website is also key. Today’s robust online platforms and drag-and-drop design tools can help anyone set up a basic business website. Make sure your site explains who you are and what your brand stands for, showcases your apparel, and has ways for customers and potential business partners to contact you. Including keywords relevant to your brand can help people find you through online searches.

Wondering how to market your business effectively? Our guide on this topic can help guide your efforts.

Examples of Clothing Brand Businesses to Start

Clothing brands can take many forms.

Apparel categories:

• Sportswear 
• Women’s dress clothes
• Men’s dress clothes
• Women’s casualwear
• Men’s casualwear
• Swimwear
• Sleepwear
• Lingerie

Types of clothing brands:

• Mass market high street
• Low to mid-level high street
• Designer
• Luxury
• Fast fashion

Find even more concepts in our guide to 75 great fashion business ideas!