How to Start a Clothes Business

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: 

1. Is there a demand for my products?
2. 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 dropshipping business model 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. 

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 a website, you will probably need to pay web-hosting fees. It can cost as little as £100 per year to set up your 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 78p 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.

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.

One of your options is to run your business as a sole trader, which is the quickest and easiest business structure to set up and run. This option is likely to be suitable if you plan to run your clothing business by yourself or if you’re hoping to sell clothes as a side hustle. 

Otherwise, you could also set up your clothing business as a partnership or a limited company. For information on the pros and cons of the different business structures, check out our guide to choosing a structure and registering your business.

» 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 that 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 products 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.

Once you have drawn up a budget and registered your clothes business, you are ready to seek the funding you need to get your business off the ground.

Raising money for businesses in the fashion sector can be tricky, as it’s hard to project how much money you’re likely to make. This could make it harder to secure funding in the form of a bank loan. 

Instead, you could consider using your savings, crowdfunding, taking out a small business loan, or a government start-up loan to fund your business. For more information on all your options, check out our guide to funding a new business.

Wherever it comes from, you will also need somewhere to put your 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, in these cases, opening a business bank account is a must. 

And even if you are a sole trader, you may find it easier to keep funds and transactions for your clothing business in a separate account.

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 a separate account.

If you plan to reach customers by setting up a storefront on an existing ecommerce site, then create a profile that 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 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 could also consider advertising in local newspapers or magazines since the majority of your customers are likely to live near your business premises.