How Much Money You Need To Have Your Own Clothing Line
One of the biggest questions to starting your own fashion business is, how much does it cost to start a clothing line? Well, there is not just one figure or answer for this question because it depends on a lot of variables. But I will try to break down all the costs involved to better understand how much you need to have your own line.
One of the biggest reasons why fashion designers fail is because they didn't have enough capital to begin with. As your business grows you will need more money, if you have a successful season, you need money to produce the items to get paid. It is important to remember, in the fashion business you can write orders for a lot of money but you need money to produce those orders and you will not get paid for those orders until you ship the items and often stores take up to 60 days to pay after receiving goods. It's good to keep this in mind.
There are a few successful stories of fashions designers that started out with little capital and turned their business into millions like Calvin Klein who started with $10,000 and now his company generates over $800 million a year. Below are some designers and what they started their fashion business with.
- Derek Lam started his line in 2002 with $380,00
- Tuleh started with $225,000
- Gunmetal shoe label started with $300,000
- Ingwa Malero started with $10,000
- Twinkle started with $900 of yarn and knitting needles back in 2000
- Milly started with $100,000, but needed an additional $350,000 to fill her first year orders. From then on the business financed itself.
The famous fashion designer show "project runway" gives the winner $100,000 to start their own clothing line. You will need to plan everything out in advance and consider some of the below costs that you may run into.
- Operating expenses- (Rent, utilities, staff, etc)
- Business expenses
- Fabrics and materials
- Samples and patterns
- Production costs
Besides setting up your business, initially your biggest cost will go towards the samples. If your line consists of 30 pieces, you will need to make 30 samples, buy the fabric, notions and labels and pay the sample and pattern maker to make the samples. If you are sewing your own line, you will save a lot here. You will just need to buy the fabric, labels and notions. Sample makers charge differently so it's important to shop around and make sure they are good. To give you an idea of what a sewing contractor charges, it ranges from an average of $6.00-$50 or more a piece. This depends if they make the pattern as well. Samples are often a little more because they are making only a few pieces and more work is involved initially. You will receive a break in cost when you go into production, the larger the quantity the bigger the discount.
Your budget will also depend if you are doing a high-end line or a less expensive line. An high-end line usually has more expensive fabrics, quality, etc. The costs of fabrics play a role in determining your budget and what you will need. If you are choosing a fabric that is $20.00 a yard opposed to $6.00, the difference is significant, especially when production require 500 yards. You will need $10,000 or $3,000 depending on how much the fabric is. And, that may be for one style. Imagine if you have 20 styles and the fabric is $20 a yard, and you need 500 yards of each. Your looking at $200,ooo just for fabric. So naturally a high-end luxury line will require a bigger budget.
Start Off Small
When you are new and have limited resources it's better to start with a smaller line with fewer pieces and grow over time. Make 15 good pieces instead of 30 okay pieces. Then gradually add to the collection each season. Big collections cost more money, instead of spending all your money on the collection, reduce the size to reduce the budget.
Don't Forget Shipping Costs
Designers often forget to include shipping costs because they are not though of until later. Shipping can get expensive especially if you are shipping a lot. Always check with the fabric suppliers of their costs include shipping.
Don't Order Excess fabric
Over ordering fabric is a waste of money and more in shipping. Don't order the fabric until you are sure. Many designers design their entire collection off of swatches before ordering. Some designers won't order the fabrics until they know for sure the style will be in the collection.
Don't Be Late
If your production is running late due to the fabric suppliers, or sewing contractors and you ship your orders after the delivery date, stores can cancel the orders without paying you. If this happens you will be stuck with the inventory and you still have to pay for the fabric and sewing contractors. This happens often, it has put designers out of business, especially if the entire collection is late.
Cost of Production
When you have received orders and ready to go into production, keep in mind the production costs. If you have a great season and sell $100,000. You will need at least half of that upfront to produce the line. (This number depends on what your actual costs are and your mark-up, it's an example only).You will need $50,000 to pay to produce the line upfront if you sell $100,000. So you will need this amount of capital to add to your budget because you won't receive the $100,000 until after you ship the goods and receive payment. For a collection, from the beginning stage of samples, to receiving money can take up to 6 months. You can ask for COD or a deposit to help cover production. But sometimes these terms are usually harder to establish for new designers and if the designers insists on these terms they may receive less orders. The big department stores often do not do these terms, they usually pay 30-60 days after receipt of goods.
If you plan to sew the samples yourself you will save a lot of money and just have to by the fabric and supplies, the budget can be anywhere as low as $2,500 to $500,000. This depends on you and the type of line you want to launch, employees, overhead, trade shows, marketing, traveling etc. Just be ready for landing orders which is a cost, but a good cost.