How to start a clothing business: from idea to launch

Starting a clothing business is a rewarding venture where your creative vision meets business savvy. The apparel market is a multi-billion dollar industry, fueled by consistent demand for everything from daily wear and professional attire to activewear.

This guide will take you through the practical steps of validating your business concept, building supplier relationships, acquiring inventory, and securing funding to help you launch a successful clothing business in the U.S.

Step 1: Validate your business plan

First, define your niche. Instead of trying to appeal to everyone, focus on a specific audience. You could target plus-size activewear or sustainable children's clothing. Use Google Trends to gauge public interest in specific styles and keywords over time.

Once you know your niche, analyze your competitors. Use a platform like Ahrefs to see which keywords successful online boutiques rank for. For trend forecasting, you might explore industry-specific services like WGSN to see what is coming next in fashion.

Estimate your startup costs

A significant portion of your budget will go to inventory, so it is wise to plan carefully. Many new owners overspend on initial stock before testing the market. A typical cost breakdown looks like this:

• Business Formation (LLC): $100 - $500
• Initial Inventory: $2,000 - $10,000
• E-commerce Website: $500 - $5,000
• Branding and Marketing: $1,000 - $3,000

Here are 3 immediate steps to take:

• Define your specific target customer and clothing niche.
• Use Google Trends to compare search interest for three potential product styles.
• Create a draft budget that outlines your estimated startup costs.

Step 2: Establish your legal structure and licenses

You might want to form a Limited Liability Company (LLC). This structure separates your personal assets from business debts. Operating as a sole proprietor is simpler but leaves your personal finances exposed if the business is sued. An LLC offers a good balance of protection and simplicity.

Once you choose a structure, you need a federal Employer Identification Number (EIN) from the IRS. It is free to get online and you will need it to open a business bank account. This number functions like a Social Security number for your business.

Secure your permits and licenses

Next, get a seller's permit from your state's department of revenue. This permit allows you to collect sales tax from customers. Costs vary by state but are typically under $100, with processing times from a few days to several weeks.

A frequent oversight is forgetting local permits. Check with your city or county clerk for a general business operating license. Without it, you could face fines. These licenses usually cost between $50 and $200 annually.

Here are 4 immediate steps to take:

• Decide on your business structure, with an LLC being a strong starting point.
• Apply for a free EIN directly on the IRS website.
• Research your state’s seller’s permit application process and fees.
• Contact your city or county clerk’s office about a local business license.

Step 3: Secure your insurance and manage risk

Your next move is to protect your business. You will want to look at a few key insurance policies. General Liability insurance is the foundation. It covers claims like a customer slipping at your pop-up shop. Expect coverage of $1 million for an annual premium of $400 to $700.

For a clothing brand, Product Liability insurance is non-negotiable. This protects you if a product, like a shirt with a faulty zipper, causes injury. Many insurers bundle this with a General Liability policy, so confirm it is included. Without it, one claim could sink your business.

Protect your inventory and team

Commercial Property insurance covers your stock from theft, fire, or damage. Calculate the total value of your inventory to make sure you have enough coverage. If you plan to hire employees, you must also get Workers’ Compensation insurance as required by your state.

You can get quotes from providers that specialize in retail and e-commerce. Companies like The Hartford, Hiscox, and Next Insurance understand the risks for businesses like yours. They often provide online quotes, which makes the process straightforward.

Here are 4 immediate steps to take:

• Request a quote for a General Liability policy and confirm it includes product liability.
• Calculate the total value of your inventory to determine your property coverage needs.
• Explore online quotes from providers like Hiscox or The Hartford.
• Check your state’s website for its Workers’ Compensation requirements.

Step 4: Set up your location and equipment

For an online store, you can start from home. You will need about 100-200 square feet just for inventory storage. Before you commit, check your local zoning regulations. Some residential areas have rules against running a business that stores and ships physical goods.

Find your suppliers and equipment

You will need suppliers for your blank apparel or finished goods. On a platform like Alibaba, you can find manufacturers with minimum order quantities (MOQs) from 50 to 500 units per style. For domestic options, a directory like Thomasnet can help you find U.S.-based factories.

With suppliers in mind, consider your equipment. A heat press for custom graphics can cost between $300 and $800. A thermal label printer for shipping is a good investment at around $100 to $200. It saves time and money on ink over the long run.

Negotiate your space if you rent

If you decide on a commercial space, try to negotiate a shorter lease term, like one or two years. This gives you flexibility if you outgrow the space. Also, ask about a tenant improvement allowance to help cover costs for things like new lighting or shelving.

Here are 4 immediate steps to take:

• Check your city’s website for home-based business zoning rules.
• Research two suppliers on Alibaba and note their MOQs for a product you like.
• Price out a heat press and a thermal label printer from online retailers.
• If you plan to rent, draft questions to ask a landlord about lease terms.

Step 5: Set up your payment processing

You need a way to accept payments. When you choose a processor, pay close attention to transaction fees. Many new owners don't realize that average commission rates can be 2.5% to 3.5% per sale, plus hardware costs, which can eat into your profits.

Choose your payment solution

For clothing businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone. Just tap and you are done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for pop-up shops and market stalls.

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done, with no waiting for bank transfers.

Here are 3 immediate steps to take:

• Compare the transaction fees for two different payment processors.
• Decide if you will sell in-person at markets, requiring an on-the-go solution.
• Download the JIM app to see how it works on your phone.

Step 6: Fund your business and manage finances

You will need capital to cover your initial inventory and marketing. The SBA Microloan program is a solid option for new businesses. It offers loans up to $50,000 with interest rates that typically range from 8% to 13%.

Online lenders can provide funds faster, but their interest rates are often higher. A common mistake is taking on expensive debt before you have consistent sales. A high interest rate can quickly erode your profit margins on clothing items.

Look for grants and manage your capital

You might also explore grants, which you do not have to repay. The Amber Grant for Women, for example, awards funds to female entrepreneurs monthly. These opportunities are competitive but worth the application effort if you qualify.

With funding secured, focus on your working capital. Plan to have enough cash to cover at least six months of operations. This includes inventory replenishment, marketing, and website fees. A budget of $10,000 to $25,000 is a realistic target for this.

Here are 4 immediate steps to take:

• Research the SBA Microloan program requirements on the SBA website.
• Look into the application process for a business grant like the Amber Grant.
• Calculate your estimated working capital needs for the first six months.
• Open a dedicated business bank account to separate your finances.

Step 7: Hire your team and set up operations

You will likely be the sole operator at first. Your first hire might be a part-time E-commerce Assistant to handle order fulfillment and customer service. Expect to pay between $18 and $25 per hour for this role. This frees you up to focus on design and marketing.

A freelance photographer or content creator is another valuable early investment. Professional product photos can significantly lift sales. A project-based fee for a photoshoot might range from $500 to $1,500. Many new owners make the mistake of waiting too long to delegate, which slows down growth.

Streamline your daily workflow

For your online store, a platform like Shopify helps manage inventory, sales, and customer data from one dashboard. As you bring on help, even freelancers, you can use a project management app like Trello to assign tasks and track progress on marketing campaigns or product launches.

A good benchmark for hiring is when you consistently hit $5,000 to $8,000 in monthly revenue. At that point, your sales per employee (even if it is just you) signal that you have enough cash flow to support a part-time team member without straining your finances.

Here are 4 immediate steps to take:

• Draft a job description for a part-time E-commerce Assistant.
• Research freelance photographers in your area and request their rate sheets.
• Explore the features of a basic Shopify plan for inventory management.
• Set a monthly revenue goal that will trigger your first hire.

Step 8: Market your business and acquire customers

Your marketing should start on social media. Instagram and TikTok are visual platforms perfect for clothing brands. Focus on creating high-quality photos and short-form videos, like try-on hauls or behind-the-scenes content, to build your brand identity.

Collaborate with influencers

You might want to partner with micro-influencers who have 10,000 to 50,000 followers. Their audiences are typically more engaged. A single sponsored post could cost between $100 and $500, which often provides a strong return on your investment.

Run targeted ad campaigns

Once you have organic traction, explore paid ads on Meta. A frequent misstep is to target too broadly. Instead, narrow your audience by specific interests and demographics. Aim for a Customer Acquisition Cost (CAC) under $50 to keep your marketing spend efficient.

In addition, build your email list from day one. You can use a platform like Klaviyo to offer a 10% discount for new subscribers. Email marketing is powerful because you directly own your audience contact list, unlike with social media followers.

Here are 4 immediate steps to take:

• Identify five micro-influencers on Instagram whose style matches your brand.
• Set up a Meta Ads account and define a specific target audience.
• Create a welcome email in Klaviyo that offers a new subscriber discount.
• Plan three visual posts for your primary social media channel.

Step 9: Set your pricing strategy

Calculate your cost-plus price

A straightforward approach is cost-plus pricing. First, calculate your total cost per item. This includes the garment, shipping from the supplier, printing, and packaging. A frequent oversight is to forget smaller costs like credit card fees or a portion of your marketing spend.

With that number in hand, apply a markup. A standard markup in apparel is 2.5x to 3x your cost. If a shirt costs you $12 to land, you would price it between $30 and $36. This aims for a gross profit margin of 60% to 67%.

Research the market and perceived value

Your pricing does not exist in a vacuum. Spend time on your competitors' websites to see what they charge for similar items. You can also use a tool like the Koala Inspector browser extension to analyze other Shopify stores' pricing on specific products.

Also consider value-based pricing for unique pieces. If you have a limited-edition jacket with a custom design, its perceived value is higher. You might price it at $120 even if your cost is only $35, because customers pay for exclusivity and design.

Here are 4 immediate steps to take:

• Calculate the full landed cost for one of your main products.
• Research the prices of five similar items from your top competitors.
• Set a baseline markup percentage for your collection.
• Identify one product where you can test a value-based price.

Step 10: Control quality and scale your operations

Establish your quality standards

You need to inspect every shipment you receive. A good target is a defect rate below 2%. Many new owners skip this step to save time, but that often leads to a surge in customer returns and negative reviews that can damage your brand early on.

Create a checklist for your inspections. It should cover stitching quality, fabric consistency, color accuracy against your samples, and correct sizing. If you market sustainability, look for suppliers with certifications like OEKO-TEX or GOTS to validate your claims.

Know when to scale

Once your quality is consistent, you can plan for growth. When you consistently hit $10,000 in monthly revenue, it is a strong signal to consider expanding your product line or increasing your marketing budget. This is a good benchmark for sustainable growth.

When order fulfillment takes more than 15 hours a week, it is time to hire more help. To manage this growth, an inventory system like Katana or Cin7 becomes very useful. It helps prevent overselling as you add new sales channels.

Here are 4 immediate steps to take:

• Create a quality control checklist with at least five inspection points.
• Check if your main supplier has an OEKO-TEX certification.
• Set a monthly revenue goal that will trigger your next big investment.
• Explore the features of an inventory management system like Katana.

Starting a clothing line is more than selling garments; it's about building a brand with a story. Your unique perspective is your greatest asset. You now have the steps to guide you, so trust your vision and take that first leap.

As you start to sell, a simple payment solution helps. JIM turns your phone into a card reader, so you can accept payments anywhere with a flat 1.99% fee and no extra hardware. It keeps things simple as you grow. Download JIM to get started.