How to Start a T-shirt Business

How to Start a T-shirt Business

Step 1: Create a Business Plan

Your business plan helps you map out your T-shirt business’s potential trajectory from concept to day-to-day operations to longer-term growth. Your plan is an opportunity to think through questions such as:

• Who is your market? Both target audience (gender, age, interests, budget, etc.) and psychographics (interests, opinions, values, activities, etc.) can inform what type of T-shirt designs and colors you develop.
• What potential problems could you face short-term and long-term? What are potential solutions?
• Who are your competitors online, and in wholesale and retail apparel sales? How will you differentiate — and appeal to your target market?
• What sort of tees and designs will you specialize in? Examples include buying and reselling pre-printed T-shirts, marketing your own line of custom designs, or selling personalized T-shirts (a market predicted to hit $10 billion globally by 2025).
• What combination of digital, print, and/or physical sales and marketing will you use? For example, companies like Printful and Printify can provide your ecommerce store with the means to not only design and sell your own line of T-shirts or create customized products for customers, but they also handle fulfillment and shipping (as well as dropshipping).
• If manufacturing, how will you source your cotton or other materials, and what will those costs be? Will you align your brand with U.S.-based apparel manufacturing, or will you use overseas T-shirt manufacturers?

It helps to develop your business plan with SMART goals in mind. Tracking Smart, Measurable, Attainable, Relevant and Time-Based objectives can help you grow with purpose.

Be sure not to skip this step. It’s tempting to charge into your exciting idea, but creating your business plan will help you avoid the not-so-exciting mistakes many small businesses make.

Step 2: Choose your T-Shirt Business Structure

Two common choices for structuring a T-shirt business include a limited liability company (LLC) and a sole proprietorship.

A sole proprietorship is typically the simplest form of business. Startup costs are low, there can be only one owner, and usually there are no annual state filings. The downside is that business profits and losses can result in higher personal liabilities.

An LLC requires more paperwork annually and at startup, and they can include multiple business owners. Typical requirements include filing a unique business name and selecting a registered agent. It’s also a good idea to draft an operating agreement. Using an LLC formation service can make the registration phase much simpler.

In the event of lawsuits or debts, LLCs can provide personal asset liability protection. Business loans and venture capital may be easier to secure, and business tax bills can be lower. This “limited liability” and personal protection are why LLCs are one of the most common small business formation types.

Step 3: Name your T-Shirt Business

Threadless, m00nshot, Tees in Time — a solid business name reflects your brand and can convey what your company does. Whatever business name idea you have, first check to make sure it’s available.

Good starting points include your state’s secretary of state website, domain registrars like GoDaddy, and social media platforms. These will help you ensure your creative, unique business name is truly your own.

Step 4: Register your Business

Once you have a name, register it and your business structure with your state. From there, you can also request an employer identification number (EIN) from the IRS, and apply for applicable local or state business licenses and/or zoning permits. 

As for insurance, your needs may vary, so consider working with a local agent to secure the right coverage for your T-shirt business. Some insurance vendors offer dedicated policies for T-shirt companies, including cyber liability, general liability, and worker’s compensation insurance.

Finally, you can also open separate business checking, credit card, and other financial accounts to keep your business and personal finances separate — a good idea for bookkeeping and tax purposes.

Step 5: Determine your Costs

Knowing your equipment, production, administrative, and fulfillment costs helps you figure out how much funding you need to start and maintain your T-shirt business. It’s also a crucial step in determining your company’s break-even point.

One way to lower startup costs and overhead is to sell T-shirts online, such as through an Amazon store, an ecommerce platform like Shopify and Etsy, or your own online store. 

Advances in T-shirt printing technologies have increased your options. Screen printing used to encompass more than 55% of the total market. Over the last few years though, digital printing’s quick turnaround, production time, and single-production (no minimum order) capabilities have changed the landscape.

Your business’s startup, fixed, variable, and one-time costs may include:

• Pricing for T-shirt production equipment and material
• Inventory storage
• Graphic designer, and/or computer and design software
• Website designer (or create and manage your own website)
• Website hosting, domain name, or fees for selling on other sites
• Marketing and advertising
• Copyright and licensing of original and third-party designs
• Packaging materials and shipping
• Office supplies and technology
• Payroll (to yourself and possibly other employees)
• Business insurance and taxes

How do you fund your startup costs?

Some entrepreneurs self-fund, or bootstrap, with personal savings, retirement/investment accounts, or selling personal property. If friends and family are on board, they may be willing to loan funds to help you get going — but make sure the terms are in writing. Also consider small-business grants if you qualify for any.

Commercial bank or Small Business Administration (SBA) loans tend to have more competitive interest rates and don’t require an ownership stake. Finally, a business credit card can help with purchasing power and cash flow management. With these options, be careful about interest rates in general — these add to your monthly costs, and taking on too much debt with interest is a common mistake that can hold back a business’s growth.

Step 6: Equip your Business

Some businesses resell pre-printed shirts; others outsource to contract printers. If you decide to manage printing in-house, here are a few types of T-shirt printing equipment to consider:

• Direct to garment printers (DTG): Mostly for cotton shirts. Machines typically cost $10,000–20,000, plus a $3,000–4,000 pre-treatment machine. Typical monthly DTG cost may be $300–400.
• Sublimation printers: Specialized for polyester. Typical machine cost can range $600–1,600, plus a heat press for another $1,000 to $1,500.
• Automatic silk screen machines: Faster setup and printing time than manual but more costly upfront, typically $30,000 to $80,000.

Step 7: Market your T-Shirt Company

The T-shirt market is competitive, but the right marketing can help you find your ideal customers. Here are three types of marketing to consider:

• Print collateral: Brochures, postcards, print ads, coupon booklets, business cards. Some T-shirt companies do snail mail marketing campaigns with printed postcards.
• Word-of-mouth: Trade shows, networking groups, referrals, partnerships with other businesses
• Online marketing can be a crucial component too, such as claiming listings in business directories like Google My Business. advertising, search engine optimization strategies (e.g., original content on blogs and websites), and building followings on social media (Facebook, Twitter, Instagram, and Pinterest) to help potential buyers find your shirts.

Here are some low-barrier business ideas for you to consider. You may even be able to start some of these from your own home:

• Buy wholesale pre-printed shirts and resell them at a marked-up price
• Print your own line of stock or custom T-shirts with your own equipment
• Print your own line of T-shirts through a third party

As you work through your business model, also consider what inventory you may need to buy up front, and what you can buy later piecemeal. Also, don’t forget to factor in the costs and logistics for inventory storage or shipping needs if you’re taking these on with your business approach.