The clothing industry is experiencing rapid growth in the United States and globally. Experts predict that the U.S. apparel market will grow by 7.11% annually between 2021 and 2025. This figure represents significant market opportunities for both established fashion companies and small businesses.

To start and run a profitable clothing label, therefore, it's important to identify a lucrative market gap and satisfy the target market's needs. This means you'll need to research current market trends. You'll also need to figure out other important aspects of your business, like its structure, name, and how much you'll charge for your products.

If you're interested in joining the clothing industry with your own business, this step-by-step guide can help you get started.

Brainstorming Your Clothing Business

Meticulous planning is an essential part of starting a clothing business. It can help you evaluate various operational aspects and determine the right approach to creating a successful business.

Some key aspects to examine include:

  • Viable pricing
  • Narrowing down clothing line offerings
  • Identifying your target audience
  • Startup and ongoing operating costs
  • Clothing label insurance
  • Drafting a business plan

Make a Business Plan

A business plan outlines operational strategies based on specific aspects of your new business, including print on demand, sourcing, Amazon sales, and drop shipping. Drafting this document is helpful if you plan to attract investors. Additionally, a business plan can enhance operational efficiency by allowing you to anticipate potential issues and viable solutions - leading to a stronger business idea.

A business plan provides clear guidelines on how operations should commence, grow, and scale over time. Additional topics covered include an overview of your target audience, your business model, market conditions, and your competitors. The business plan also covers the management setup, the product range, your branding approach, and your marketing strategy. Potential investors typically scrutinize the financial aspect of the plan. Therefore, you'll want to outline your clothing business's growth potential and how external funding helps achieve specific objectives.

Choose the Clothing Label's Product Range

To give your business a distinct advantage in the market, you'll want to identify a suitable product range for your brand. This approach can help you plan sales and marketing activities more effectively.

A well-chosen product range makes a significant difference by helping your brand identity stand out. The trick lies in narrowing down the options to a specific style. In fact, highly focused businesses are more likely to attract a loyal customer base. This might mean providing high-quality fashion items, such as customized T-shirts and hoodies, to suit your target audience or a specific demographic.

Determine the Average Price Range

The cost of making clothing items (or manufacturing process costs) influences how you'll set retail prices for customers (your pricing strategy). To make the right decision, you'll need to calculate materials, labor, and other expenses. After establishing the overall cost for new clothing items and running the business, you'll then want to add a profit markup to the final retail price.

The aim is to set the price point between 30% and 50% higher than the overall cost. Also, consider setting pricing for wholesale and retail. This step helps prepare your business for future growth.

Determine Operating Costs

Calculating operating costs enables you to plan more effectively, allowing you to identify priority areas. Additionally, it can make it easier to find ways to cut production costs.

Some examples of startup costs for clothing businesses include:

  • Shop rentals for retailers
  • Clothing materials (fabrics, buttons, etc.)
  • Basic equipment (sewing machines, fabric printers, etc.)
  • Administrative costs (accounting software, point-of-sale systems, etc.)
  • Marketing plan implementation costs
  • Permit fees

How to Set Up a Clothing Business

To start operations, you'll need to register your clothing business with the government, both federally and locally. This process may involve choosing a suitable business structure. You'll also need to identify the required permits and licenses for your business. Finally, make sure you have adequate insurance coverage, a business bank account, and a tax identification number.

Get Your Clothing Business Legally Formed

Your clothing business can operate under several business structures, such as a limited liability company (LLC), partnership, sole proprietorship, or a corporation. The right option just depends on tax benefits, liability protection, and other operational considerations. Opting for a sole proprietorship is the easiest business to set up but it won't allow you to separate your personal finances from the business.

An LLC is one of the most popular options for startups in the fashion industry due to its tax flexibility and liability protection benefits. This structure enables you to open a business bank account, build a credit record, and co-own the business. If you're looking for more information on the different business structures, the Small Business Administration (SBA) provides a helpful resource.

Choose and Register a Business Name

Your clothing label's name is a key component that requires careful selection. A well-chosen name enables potential customers to recognize your brand easily. Before picking the final choice, check whether the preferred name is available. A Google search or a visit to your Secretary of State's website can reveal a particular name's availability.

Your ideal name should resonate with your target audience's interests and values. A good clothing company name acts as a selling point. If your brand name is available, the best approach is to trademark it so that no other business can use it.

Obtain Licenses and Permits

Companies in the apparel industry need to adhere to various regulations, including local license and permit requirements. Your business will also require adequate insurance coverage to comply with regulatory requirements and ensure worry-free operations.

Some examples of permits and licenses that may apply to your clothing businesses include:

  • Sales tax licenses
  • Sign permit
  • Apparel registration certificate
  • Fire department permit
  • Zoning permit

Sales tax licenses enable business owners of clothing brands to collect tax on clothes and other items. The license also allows your business to purchase various products without paying sales tax.

Business Bank Account Requirements

To open a business bank account, you'll need to provide a number of required documents. This paperwork may include company formation documents, a Social Security number (for sole proprietorships), an EIN confirmation or verification letter, and ownership agreements. Although these requirements may vary between banks, it's a good idea to obtain all the documents before applying for a checking account or business credit card.

Get Your Clothing Business's Name Out There

Well-planned marketing campaigns can help your business generate a steady stream of purchases. Clothing line businesses need to employ wide-ranging marketing strategies to maximize their results. Building a clothing business website and setting up social media pages are key aspects of showcasing your brand's product range.

Build a Website and Set Up Google My Business

Your own clothing business website can serve as a product catalog, online store, contact platform, and your brand's news bulletin. Therefore, you'll need to build a quality site that meets your customers' specific needs. Thankfully, platforms like Shopify (an e-commerce platform), Squarespace, WordPress, Wix, and Weebly allow you to build a website yourself.

To build a highly functional (complete with SEO optimization) and professional-looking site, take advantage of these free and paid tools. You may also want to set up Google My Business and a profile on customer review platforms like Yelp to boost visibility for your brick-and-mortar or online clothing store.

Social Media Marketing Basics

The fashion industry has readily embraced social media marketing due to the visual nature of interactions. Social media networks like Pinterest and Instagram are ideal for marketing clothing items. Also, consider engaging with customers via Facebook and Twitter using video, text, and images. Many fashion brands also employ third-party influencers to boost lead generation.

Explore social media opportunities to maximize your results while engaging with potential customers through regular posts. Eye-catching images can attract more followers to your pages, generating website traffic.

Create Branded Media (Logo)

The ideal fashion label logo is unique and attention-grabbing. A well-designed logo generates brand personality, making your business easier to recognize. To create stunning designs that resonate with potential customers, consider hiring professional designers via freelance marketplaces like Upwork.

Alternatively, you can create the logo yourself using sites like Canva. The platform also provides access to intuitive tools that you can use to create social media graphics and other visual content.

Maintaining Your Clothing Business

Keeping track of receipts and handling packing slips for shipping might be essential functions for your clothing business. Therefore, you need quality software and templates to make the job easier. Skynova's all-in-one accounting software and business templates can help you streamline various accounting tasks, such as creating invoices and keeping all your financial records in one place.

If you have an online business, having customizable invoice, receipt, and order confirmation templates can be especially helpful. Not only can they help you create the right impression when billing customers, but they can also help your business portray a professional image.

Take Your Clothing Business to the Next Level With Skynova

Starting a successful clothing business requires proper planning. This means choosing the right business structure for your plans and conducting comprehensive market research before choosing your own clothing line and product range for your clothing store.

It also means having resources at your disposal that can make your day-to-day operations easier. You chose a clothing business because you wanted to be creative - not stuck dealing with paperwork. That's where Skynova's software products can help. With all-in-one accounting software and a variety of business templates, you can focus less time on bookkeeping and more time running your fashion business.