How to start a clothing company is a regular question which can easily be answered if you type those exact words in the internet these days. However, if you dig deeper and go a bit more technical by trying to know costing factors and scaling of a clothing company then the expected answers would be scarce. In this wiki guide, we will give you a thorough costing guide on how to start a clothing company. Here are the determining factors when starting a clothing line.
Costing Factors to Consider when Starting a Clothing Line
1. Manufacturing costs
This is the main costing factor in which the bigger part of your capital will be spent on. Manufacturing cost is the central focus of your business plan and this could dictate the size of your business along with your target market. First off, there are sub-factors to consider from the general factor which is the manufacturing cost.
Manufacturing cost decreases as order quantity increases and this applies in all of manufacturing, not only in garment or apparel manufacturing. Factories always charge lower when you are ordering in large quantities. If you are planning to print 50 shirts then you would obviously save a lot of money off of manufacturing cost if you decide to increase the quantity to 500 pieces. While some custom clothing manufacturers can still realize such small quantities, the economics of scale are still not as good.
However, the quantity you would like to produce is also crucial to the outcome of your business which is why it is important to consider the number tightly as part of your business plan.
Manufacturing cost will largely depend on your manufacturing location because of the labor fees involved which is different for each country. When it comes to small production manufacturing, this would not be much of a factor. But for large scale manufacturers, it is a major consideration. This is also the reason why countries like China, Taiwan and Philippines are manufacturing-friendly compared to the US and other European countries. Product development consulting and product design consultancy still commonly take place in Western countries.
It is advisable to start a clothing line in phases to determine whether you are suitable to move up in terms of quality and scale. For DIY clothing businesses, the following sub-factors aren’t relevant but could be major considerations when moving up.
4. Material costs
The costs of raw materials you will use for your clothing business is a major costing factor. Expenses for materials such as fabric, packaging, labels etc. should be summed up for the materials cost.
5. Marketing costs
A lot of businesses take advantage of social media as a form of free marketing since it will not cost you anything to sign up for social media accounts. However, if you want your clothing brand to compete with other established brands out there then you have to spend money for your marketing schemes. Allot a few dollars for ads be it online or traditional ones. You can also give out shirt samples to a few friends and target customers to spread awareness of your brand.
No matter how you advertise yourself, shell out some money for your marketing campaign and do not simply rely on free marketing which the internet can provide. Spending on marketing is a necessary thing to do on how to start a clothing business.
6. Designing costs
Your shirt designs are a crucial factor when starting a clothing line. This serves as the backbone of your products. A lot of people simply purchase shirts because of its print and only bother about the garment quality or comfort later. This does not mean you have to compensate quality and comfort for design, but it only goes to show you need to spend for your designs to sell your products.
If you have graphic design skills and do all of your shirt designs personally, then you would not have to pay for professional graphic designers or garment product design agencies to do it for you. But in the long run, you cannot do it alone and you will eventually need the help of other graphic designers for a helping hand. Designing costs is inevitable when starting a clothing line.
7. Licensing or business permit
Registering your business is a must to legalize your business operation. There would definitely be some expenses involved in processing the business permit and as well as pay for taxes involved when starting a clothing business. You must have a budget for the license acquisition and not allow this to become a hindrance on how to start a clothing company.
8. Labor costs
No one will advise you to become a one man wrecking crew on how to start a clothing company. You need to have a staff working with you including third-party individuals who will be part of your operations. Pay these employees for their worth to expect quality work from them. Employees who are underpaid are the ones who will not work up to the right level expected out of them.
9. Start a website
E-commerce is already the way to go for any form of businesses these days. The mileage and reach the internet can give is its biggest advantage as it allows you to have customers which are beyond your store location. If you are starting a clothing line, might as well consider to start a clothing business online. Building a website will not cost you a fortune and with the availability of online stores like Amazon or eBay then it will be more convenient to connect with them for your clothing business.
The costs of starting a clothing line depends on the scale and business size you are planning. For small batch clothing production, you can already jump start with $500. If you are thinking of a medium sized clothing company then $1,500 up to $5,000 should be sufficient enough.
However, if you are thinking of a major clothing business then $20,000 to $50,000 is a perfect investment amount. These numbers could vary depending on the costing factors involved but they generally give you an idea of the amount you need to prepare when starting a clothing business.