Starting A Clothing Line Business

Apparel manufacturing is one of the most in-demand businesses today.

Find out how to start and run a clothing business.

by Jenny Fulbright

Apparel manufacturing remains one of the most in-demand businesses today. According to the American Apparel and Footwear Association (http://www.americanapparel.org), apparel sales for 2000 reached $315 billion, representing a 90% growth from its 1990 levels.

Starting a clothing business is just like any other business: you need to have the resources to jumpstart your vision, skills and know-how in managing the business, and marketing savvy to promote the business. You must also have a business plan that will serve as your detailed guide that will walk you through your first couple of years in business. Having gone through the process of thinking through a plan for your business will enable you to always know what steps to take next.

However, there are a number of unique factors that a would-be apparel manufacturer needs to know about the clothing business. Small businesses face an increasing competition from big firms given their marketing muscles and economies of scale. In the United States, at least, the industry is reeling from a shrinking availability and high cost of skilled labor (hence, big companies can outsource the manufacturing of their apparel to contractors in developing countries).

There are also a growing number of small manufacturers that significantly tightens the competition. Plus, small companies need to have the resources to cope with the rapid changes in apparel trends and styles.

Despite these problems, a number of small businesses are able to overcome these difficulties, and even grow to become powerhouses in their segments. Here is a comprehensive guide to help you successfully start and run a clothing business.

The First Step

The first step you must take is to determine what kind of clothes you want to manufacture. Ascertain if there is a market for your proposed product. You must be able to define your specialty, both in line and price category.

The market for clothes is as varied as the demographic segmentation of the population. Will your focus be based on gender (girls or boys; and women and/or men) or age (baby clothes or granny clothes)? Are you planning to create clothes for infants or apparel for large women? Do you intend to create apparel for pre-teens, career professionals, or school clothes? The market is so wide and varied.

You can design clothes for a specific niche market. You can venture to create apparel for sports enthusiasts and athletes. Even then, you still have to decide whether you will design golfing apparel, tennis outfits or swimwear. With the increasing popularity of yoga, yoga clothes are very hip nowadays.

The scope of your product line also needs to be considered. Are you planning on designing a full product line, separates or coordinates?

The type of distribution will also dictate the kinds of clothes you will offer. Note that where you sell your products will depend largely on who your customers are. Will you sell your clothes exclusively or will you use other distribution methods? Are you planning to sell your products exclusively in pricey boutiques or will you sell it in discount stores? Are you aiming for the middle-income market and mass-producing low-cost apparel? Your pricing will be an important factor that will dictate your marketing strategy.

You also need to consider your capacity and supplier deals that you can get. If you will offer clothes of limited quantity, will you be able to find sewing contractors who are willing to deal with small production orders? Or will the costs be too prohibitive for your operations? Also, will the fabric suppliers be willing to give you small cuts of the textiles you need?

Knowing Your Market

Once you have a clear idea as to what clothes to manufacture, your next step is to determine if there is a market for your product. Crucial to your start-up phase is the information about potential customers and your target market, as well as how you will reach them with your product.

There are two ways to go about this: (a) check with retail store buyers; and (b) talk with customers who will ultimately wear your clothes. These are the two sets of customers that you need to please; unless you intend to exclusively distribute your apparel and skip other distribution means from boutiques to department stores.

In your specialty field, find out everything you can about your competition. Check out how other small businesses, and even the big ones, fare in terms of craftsmanship, quality of fabric and styling. Can you do better, or at least approximate their levels? If not, you must rethink your business strategy.

To get the information that you need, investigate from retail sources, such as owners of boutiques, buyers or textile suppliers. These groups of people can provide you with first-hand information about businesses in the area that are already producing the same kind of apparel. They may also be able to tell you about customer buying patterns for couture clothes, baby outfits, or your clothing specialty. More importantly, they can give you valuable ideas of what kinds of clothes they want and think will sell for your market.

Other sources of information you should check out are trade papers, industry directories, trade associations, buying offices and other salesmen. They can likewise provide useful market information for you.

How To Enter The Market

Before you begin creating a sample product, you must first identify your potential clients and how are you going to sell to them.

There are several ways of meeting potential buyers for your new clothing line. Seek out sales agents and buyers of retailers, major department stores or boutiques. Talk to them, ask what kinds of clothes they are looking for, and determine if there is a fit between your product and their design philosophy. You can also travel to market weeks in New York, Chicago, Los Angeles, and Atlanta to meet buyers, get ideas, and check out your competition.

Once you have surveyed the market landscape, decide on how best are you are going to distribute your products. Your distribution channel can dictate the quality, quantity and costing structure of your clothing line.

You can start small, and sell the clothes you’ve created in flea markets, community and church fairs during weekends. Once people starts to notice your products and demand begins to grow, you can slowly expand your business until you have enough capital to go full-time into the venture.

If you want a larger scale approach, the easiest method of entry is to find a specific retailer who agrees to buy the designs you intend to produce. This approach allows you to cautiously start with comparatively low risk. With your sales assured, you can begin to think of the production aspects of your business to make sure that you are able to meet your client’s delivery schedule.

A variation of this approach is to sell through consignment. You bring your clothes to a retailer or shop owner, and the shop owner gets a percentage from the sale of your items. Make sure, though, that the terms of agreement with the shop owner is well-laid out and written, if possible.

You may also wish to go about it alone and sell your products in your own store. This however requires more capitalization as you would need a small retail space to display your items. You must be able to get a location that is accessible to customers, as well as convenient to buyers, textile suppliers or their sales agents. You must also be near the fashion district of your area to enable you to see the trends that are shaping. Should you choose this route, you need to develop a solid merchandising plan that includes creating the right look and feel for your store.

The Question of Production

How much you think you can sell will drive the quantity with which to order your raw materials and negotiate with the contractors who will produce your designs (if you will subcontract it). This requires a balancing act: ordering too many raw materials is an unwanted cost that you should avoid at this point.

The decision to outsource or do production in-house will depend on several factors: the kind of clothing you are doing, the quantity of items, the equipment you need, cost, and your expertise. For example, hand-painted shirts are easier to produce and require lesser equipment than evening gowns.

If you are going to do in-house production, the basic equipment you will need include a cutting table, a cutting machine, sewing machines, pressing equipment, and facilities for inventory storage and shipping. You must also have the space and equipment to store the finished products.

Financing the Business

There are stories of entrepreneurs who started their clothing business with nothing and then earn a million in their first year of business. However, success stories like these are more the exemption than the norm.

How much you need to start a clothing line depends on many factors whether you will buy or rent your equipment, subcontract production, hire a designer, rent a retail store, and hire a salesman to push your products.

The creation of your first set of samples alone can cost as much as $10,000 from design to finished product, depending on the clothes that you are creating. Restored vintage clothing can cost less to produce. Printed shirts may also require minimal start-up capital. But a line of an upscale career outfits for women may cost more.

If you are creating a pre-teens wear line and one sample alone costs $30 to produce and you need 50 items for each of the four seasons, your production cost for your first year will be $6,000. But if your sample costs $100 per item, your production costs will significantly increase to $20,000 for your first year.

While you may be able to start your business with less, keep in mind that you still need resources to keep the business going and growing. Unless you hire a savvy PR company to market your business and put your brand on every magazine, expect a couple of years at least to acquire a reputation for fit, delivery and customer acceptance. The apparel industry is a tricky business you will never know what will sell from one season to the next.

Having your own clothing business is not an easy task. You need to have the management know-how of running a business and a thorough understanding of the industry. You must be able to juggle well three basic functions: design, production and sales. To top it all, you must keep abreast with the introduction of new fabrics. You need to be savvy that in a lot of things to successful in the garment industry, from finding salespeople to sourcing fabric, hiring contractors, and managing your receivables.

Resources:

Associations:

Professional Apparel Association http://www.proapparel.com

American Apparel Producer’s Network http://www.usawear.org/

Worldwide Responsible Apparel Manufacture http://www.wrapapparel.org/

American Apparel and Footwear Association http://www.americanapparel.org/

National Association of Fashion and Accessory Designers http://www.nafad.com/

Fashion Group International http://www.fgi.org

Apparel News http://www.apparelnews.net/

Books:

Sew to Success : How to Make Money in a Home-Based Sewing Business by Kathleen Spike

The World of Fashion Merchandising by Mary Gorgen Wolfe