Starting a clothing business can be a great option for people who are bored with their office jobs. Being your own boss and managing your own days are really amazing benefits. If you have a good sense of fashion and you like dealing with customers, starting a clothing business is a perfect fit for you. However, regarding finances and profit, you have to have a detailed plan with adequate market research. One of the keys to success is to be able to buy at a low price and sell at a higher price obviously. But how can that be achieved? Well, the answer is pretty simple. You have to find wholesalers who you can start a long-term business with. After that, you only have to think about your buying and pricing strategy and handle the legal requirements.
As it can be pretty overwhelming for someone who’s never had his own business, this article will guide you through the process. You can find all the steps you need to think about as well as the important decisions you have to make.
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Regardless of your business’s core activity, you have to start with setting up the legal frame for your business. For any business operating in the US, at least a general business license, an employer identification number, a sales tax license, a sign permit, and a fire permit will be essential. These are the basic ones that are necessary in each and every case.
The general business license and the employer identification number is needed before starting to operate your business and the sign permit will have to be granted before putting up your business’ sign anywhere. Also, it is not a requirement in every state, but there can be requirements regarding registering the name of your business as well.
The fire permit is required as you will be open to customers and the public. And lastly, the sales tax license will allow you to collect sales tax while selling to customers so it is required for your selling activities.
In some special cases, you might need other licenses as well. This is determined based on the location of your store as well as the state regulations. For example, if you build a new establishment for your store, you will also need a building permit beforehand.
In case you don’t feel comfortable with handling legal requirements, or you are unsure of some regulations, it is always advised to consult with a professional. There are several organizations and businesses which offer consultations about starting a new business and handling all legal matters. It is best to be on the safe side as any omission can cost a small fortune.
Determine Your Clothing Niche
If the legal part of the business is handled, you can focus on your are, also known as your market niche. Why is this important? Firstly, because you will have to face seriously high competition. The fashion industry has been growing significantly so more and more new brands emerge on the market every day. In order to be successful, you have to find your small business segment where you will be able to sell successfully and with relevant profit. You can do that with a thorough market research in order to find a segment where there is a need for supply. In the case of a local store, it is also worth looking around in the neighborhood and figuring out which types of fashion shops are missing.
Secondly, every business is more authentic if you are doing it with passion and out of real interest. For example, if you don’t plan on having kids and don’t like kids in general, starting a children’s clothing line won’t likely be successful. So you have to think about which area of fashion is your real passion and start from there.
How to find wholesalers online
After you have the legal base and your market niche covered, you have to find suppliers, in this case, wholesalers. Let’s see what are your options for finding wholesalers online as this is the most efficient and convenient way of doing so. The easiest way is to try finding wholesale suppliers of brands that are similar to your idea and market niche. This way you can target wholesalers who are in the same area of business as you plan on getting into. Alternatively, you can also go through online directories which detail several big suppliers. Luckily, you can easily find long lists of wholesale clothing vendors so you will have several options to consider. The third option would be to start networking and asking for referrals and recommendations. This is a great way as you already receive options that are recommended, therefore most likely reliable as well.
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Building relationships with suppliers
So you have your chosen wholesalers and you started working with them. When it comes to retail, you have to pay huge attention to the quality of the relationship. It is extremely important to build long-lasting collaborations with your suppliers as they are the base of your business. So it is definitely worth investing in building relationships with suppliers. This means regular personal meetings where you can discuss your cooperation as well as handle your financial matters with the utmost care. This way you can ensure a trustworthy and reliable working relationship with suppliers. Furthermore, it is also important to discuss your expectations towards each other early on. This way, you can both ensure satisfaction and a smooth operation.
Your buying strategy will be crucial with regard to making profits, especially in the first periods of your business activities. In general, it is advised to buy in moderation as you might not have a huge starting capital to spend. You are not advised to buy stocks for months as you have to see how successful your business turns out to be. Furthermore, in the fashion industry, you also have to follow the trends as well as the seasonal changes. Therefore, it is advised to buy in smaller quantities as much as possible. This way you can ensure maximizing your profit and not having to deal with dead stock at the end of each season.
As a last step, after planning your buying strategy, you also have to think about selling. The most important aspect of selling is setting the prices. When it comes to that, you have a few aspects to think through.
Firstly, you have to see the average market price in your niche market. This can give you a general idea about your prices. It is only logical that the popular and successful stores can easily sell at their price so that is always a good starting point. Therefore, it is advised to take a look at your competitors’ prices when you are setting your own prices.
However, you also have to compare these prices to the price at which you actually buy your stock. This means calculating your wholesale prices and comparing them to the ideal prices on which you plan on selling. Also, when you try to set your prices with a cost-based method, you have to calculate all the added costs of operation as well. This can mean the rent you pay for your store, and utilities, as well as how much you spend on marketing and on your staff. Altogether, you will have a rough estimate of your total costs which can also be the base for calculating and setting your own prices.
Lastly, it is also advised to do market research on your target audience. Your customers’ behavior and way of spending can also be good insight when it comes to setting prices. You have various tools and sources when it comes to customer surveys and data.
All in all, you have to realize that if you don’t have reasonable profit on your products, then it won’t turn out to be profitable and smart to even start the business. As a beginner, it might be advised to take into consideration all the above mentioned factors when you set your final prices. However you decide, the point is to have a decent profit on your sold goods.
As you can see above, it is not so complicated to start a clothing business with buying wholesale. Obviously, it requires handling legal matters as well as market research and business planning. But this would be the case with any other business area as well. So be prepared to roll up your sleeves and start handling all aspects of your business, unless you want to involve an outsider consultant as well. Obviously, similarly to the legal matters, it can be a realistic option to ask for professional help when it comes to planning the finances of your business. After all, it is at least as risky as handling legal matters.
After it is all done, you are finally good to go! Once you set up the base of your business, you will only have to keep up with the market changes and the new fashion trends. But as a fashion enthusiast, that doesn’t even feel like work!