George Harrison
If you’re a fashion lover who dreams of being your own boss, but you don’t want to create your own clothing line or brand, then starting your own business where you source and sell clothes could be a good idea. It is a great way to make the most of your passion and enter a huge sector, with potential for further growth.
Before you start, you’ll need to decide what kind of clothes to sell, where you’ll get them from, where you’ll sell them, and who you’ll sell them to. What’s more, as with starting any business, you’ll need to work out what structure best suits your enterprise.
Thankfully, our simple, five-step guide to starting a clothes business will give you all the information you need to demystify these challenges and help you take your first steps.
If, on the other hand, it’s your own fashion label you’re interested in creating, read our guide on how to start a clothing line.
Why start a clothes business?
- Love your work: If you’re a snappy dresser and you’ve always loved shopping for clothes, then running a business where you handle clothes all day may be a fulfilling way to make money from something you’re passionate about.
- Be your own boss: By starting your own clothes business, you’ll become your own boss. That’s a lot of responsibility, but it also means you get the final say over everything your clothing business does.
- A growing sector: With a £62 billion contribution to the UK economy, fashion represents a huge sector which is forecast to grow. Competition may be fierce, but there are profits to be made for successful clothing businesses.
- Work from home: Thanks to the internet, it is now possible to run a clothes business from your own home. More people than ever before buy clothes online, and online clothes sales in the UK have only grown in recent years. If you choose to set up an online clothes shop, you can work from home and take advantage of a vast customer base without requiring physical premises.
Start a clothes business in 5 steps
1. Research and choose your market
An essential step in starting your clothes business is gaining a better understanding of the existing fashion market. The objective of market research is to find out more about your potential customer base and competitors, which will leave you better prepared to set up your clothes business.
Consider the following key questions:
- Is there demand for my products?
- Who will my customers be?
Market research may involve conducting online research, talking to customers and competitors within the industry, or visiting rival shops and websites to check out the competition. It should help you make some big decisions about what direction your clothing business will take:
- Firstly, you’ll need to decide what clothes you want to sell and how you’ll get hold of them. Where will you source your clothes from? Will your supplier be an individual who makes their own clothes, or will you get them from a manufacturer or wholesaler? It’s important to find a reliable supplier (or suppliers) who you might work with. Consider the prices, materials, and delivery times of any potential supplier or manufacturer.
- Consider how your business can carve out its own niche in the competitive fashion market. You might decide, for example, that you’d rather sell sustainable clothes, or pre-owned clothes, or clothes for children. Using market research to figure out who your target market is will help you make this decision.
- Something else to consider is where and how you intend to sell your clothes. Setting up a brick-and-mortar clothing store would be a major endeavour and probably much more expensive than selling clothes online.
Thankfully, clothes businesses are well suited to an ecommerce business model.
Clothing is one of the most popular categories in online shopping, meaning there is already a vast market of potential customers – both in the UK and overseas – who use the internet to shop for clothes. Other advantages of using an online store for your clothing business may include lower overheads and staffing costs, a smaller up-front investment, and reduced paperwork.
If you want to sell clothes online, then consider listing your products on an existing ecommerce platform, like Vinted, Depop, eBay, or Amazon. Although there will be fees involved, it’s likely to mean a quicker set up for you. All of these platforms have their own advantages and disadvantages, and your market research should help you decide which stores will best suit your clothing business.
If, on the other hand, you decide to set up your own website, you’ll benefit from the advantage of having total control over this part of the business – and, most importantly, your sales won’t be subject to fees or commissions. However, you’ll need to set up the website, however simple, and maintain it. Though some sites are free, if you want something more sophisticated and elaborate you would probably require a larger up-front investment than using an existing ecommerce site. What’s more, you may find it harder to reach customers than if you sell your products through a website with a ready-made customer base.
If you’re interested in using a dropshipper to sell clothes online, then read our guide to dropshipping. This refers to the practice of selling goods online and outsourcing the handling, warehousing, and shipping of your products to a third-party supplier – meaning even fewer overheads, less risk, and lower start-up costs.
2. Create a budget for your clothes business
By creating a business plan and business budget, you should end up with a better idea of exactly how much money you will need to start your clothes business. Drawing up these plans should also help you work out whether your ideas can realistically be turned into a business. A business plan will normally also be required if you apply for a start-up loan or business loan.
For a detailed guide read our article on how to write a business plan.
When creating your business budget, consider the following factors:
- If you plan on selling clothes from your own brick-and-mortar store, setting up your business premises will probably be your biggest up-front expense. You will need to consider the costs of leasing your premises, as well as fittings, fixtures, energy, staffing costs, and all the other overheads associated with maintaining a physical shop.
- If you want to set up your own website, you will probably need to pay web hosting fees. It can cost as little as £100 per year to set up your own business website, although prices are likely to vary depending on what features you need – and whether you want to hire a designer to help with this process. At the upper end, it can cost thousands to get a top-spec business website up and running.
- If you’re buying clothes from a supplier, consider the costs of shipping and storing these products as well as the cost of buying them.
- You might want to set aside a marketing budget to promote your clothing business. Marketing could take the form of Facebook ads, for example, (which cost £0.78 per click on average in the UK) or you may consider paying an influencer to promote your products – a practice known as influencer marketing. In the UK, this may cost as little as £125 per post for an influencer with fewer than 10,000 followers. Generally, companies will hire a social media manager or a marketing manager to take care of this side of the business. Be aware that social media marketing may be less successful without a clear strategy from the outset.
For a more detailed guide, explore our five-step guide to creating a small business budget.
3. Register your clothes business
One of the first official steps you will need to take before setting up your clothing business is choosing a business structure and then registering your business. Take your time to research which business structure best suits your needs:
- Sole trader: A sole trader is the exclusive owner of a business and keeps all post-tax profits. There is no separation between a sole trader and their business – meaning you will be personally responsible for any losses your business makes if you decide to operate as a sole trader. If you become a sole trader, you will also need to register for self-assessment so you can pay your taxes to HMRC.
- Partnership: A business partnership is when two or more partners share the responsibilities, risks, profits and losses of a business. The three main types of partnerships are general partnerships (also known as business partnerships), limited partnerships and limited liability partnerships. The ‘nominated partner’ – the person responsible for sending the partnership tax return – must also register with HMRC. All partners will also need to complete their own tax returns.
- Limited company: If you choose to incorporate your clothes business as a limited company, you will be legally and financially distinct from your business. As a limited company, you will have shares and shareholders and can keep any post-tax profits. You can register as a limited company at Gov.uk. If you’ll be running your business as a limited or limited liability partnership, you will also need to register your business at Companies House.
» MORE: Should I register as a sole trader or limited company?
You won’t need any specific licences to sell clothing in the UK, unless you plan to sell clothes at a market stall – in which case you will need a market stall licence. Visit Gov.uk for more information and to apply.
Any clothes you sell will be subject to the Consumer Rights Act 2015. This is a law which obliges sellers to make sure their products are fit for purpose, accurately described to customers and of satisfactory quality. The Consumer Rights Act entitles customers to return any faulty or defective product for a full refund up to 30 days after purchase or delivery. Between 30 days and six months, you have the option of offering to replace or repair the faulty goods before needing to offer a refund.
Make sure any clothes you sell are also properly and accurately labelled with fabric content, country of origin, care instructions, and flammability. Your fabric supplier or manufacturer should be able to provide you with this information.
4. Fund your clothes business
Once you have made a budget and registered your clothes business, you are ready to seek the funding you need to get your business off the ground. You may need a combination of the funding options below:
- Personal savings: Using your personal savings to cover start-up expenses will allow you to retain full ownership of your clothing business, but be careful not to endanger your personal financial health in the process.
- Friends and family: Borrowing money from friends and family can be tricky, but many people use funding from people they know to start a business. If you go down this route, it may be best to draw up a written agreement in order to avoid any disagreements in the future.
- Small business grants: There are a range of non-repayable and partially repayable start up business grants across the UK you may be eligible for, as well as those specifically for businesses based in Scotland, Wales and Northern Ireland.
- Government business loans: Different government business loans may be available to your clothing business depending on where you are in the UK.
- Business loans: A traditional small business loan might be difficult to secure as lenders can be cautious towards a start up, but consider all your options for getting your clothing business up and running.
- Angel investors: Angel investors are generally wealthy individuals looking to invest in new businesses in exchange for equity or convertible debt.
- Crowdfunding: This is the term for securing funding from multiple people in exchange for things like equity or early access to products. Crowdfunding often takes place through an online campaign.
You will also need somewhere to put this funding, like a business bank account.
You can continue to use your personal account for business transactions if you are a sole trader (and your bank account allows you to), but limited companies and partnerships are legally required to keep their finances separate. Therefore, opening a business bank account is a must. Even if you are a sole trader, you may find it easier to keep funds and transactions for your clothing business in its own separate account.
5. Find your first clothes business customers
If you plan to reach customers by setting up a storefront on an existing ecommerce site, then create a profile which showcases your clothes business and the products you’re selling. Consider the requirements and specifics of the platform you’re using. Vintage clothing is particularly popular on Depop and secondhand on Vinted, for example.
Consider how else you can market your clothes company. Your market research may have shed some light on how your competitors promote their products, but simple ways of marketing an online clothes business include:
- Adding pictures, hashtags, and in-depth product descriptions to your listings on ecommerce websites.
- Setting up your own website to showcase your products.
- Using social media to promote your business and your products. You can do this through influencer marketing, paid advertising, or simply by making your own posts.
If you plan to open your own brick-and-mortar clothes shop, then consider planning events to put your business on the map and increase footfall. You may also want to consider advertising in local newspapers or magazines, since the majority of your customers are likely to live near your business premises.
How much do clothes businesses charge?
How much a clothes business charges is likely to depend on the type, quality, and design of the clothes it sells. Some fast-fashion brands sell T-shirts for as little as £2.50, while luxury designers may charge thousands of pounds for a single garment.
When you set your prices, consider that the estimated buying margin for a typical fashion product is around a 2.7 multiple. This means that if a retailer buys a dress from a wholesaler – for £100, say – they will generally sell it on to the customer for around 2.7 times the price – £270 in this case.
If you plan to sell clothes online, you may also decide to charge a delivery fee. Most online clothes businesses currently charge around £3 – £4 for domestic delivery.
Return fees are also common for online clothing businesses. To give an idea of how much your clothing business might charge for returns, H&M charges £1.99 for non-members to return clothes online, while Zara charges £2.95 for returns at package drop-off points.
Image source: Getty Images
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