Question

600-800 words.

Please write three complete and well-composed paragraphs in your own words in which you use, as an example, a manufacturing company (dress making/clothing company) that operates where you live. Write about what you believe the elements of unit costs would be for that business.

Answer 1

1. Manufacturing costs

This is the main costing factor for which a large part of your capital will be spent on. Manufacturing cost is the central focus of your business plan and it can dictate the size of your business along with your target market. Most importantly, there are sub-factors to consider which are related to materials and the production process. Make sure that your production cost and target price line up.

2. Material costs

The costs of raw materials you will use for your clothing business is a major costing factor. Expenses for materials such as fabric, packaging, labels etc. should be summed under materials cost. Taken together with the labor cost based on the production location and the order quantity, this constitutes your manufacturing cost.

3. Marketing costs

A lot of businesses take advantage of social media as a form of free marketing since it will not cost you anything to sign up for social media accounts. However, if you want your clothing brand to compete with other established brands out there then you might have to spend money for marketing schemes. Allot a few dollars for ads, which are mostly spent online in Google, Facebook, Instagram and co these days. You can also give out shirt samples to a few friends and target customers to spread awareness of your brand.

No matter how you advertise yourself, shell out some money for your marketing campaign if you do not simply want to rely on free marketing that the internet and your friends can provide. Spending on marketing is not necessary, but it certainly helps your how to start a clothing business venture. Learn how you can go viral as for instance Patagonia did with their “don’t buy this jacket” campaign.

4. Design costs

Your shirt designs are a crucial factor when starting a clothing line. This serves as the backbone of your products. A lot of people simply purchase shirts because of its print and only bother about the garment quality or comfort later. This does not mean you have to compensate quality and comfort for design, but it only goes to show you need to spend for your designs to sell your products.

If you have graphic design skills and do all of your shirt designs personally, then you would not have to pay for professional graphic designers or garment product design agencies to do it for you. But in the long run, you cannot do it alone and you will eventually need the help of other graphic designers for a helping hand. Designing costs is inevitable when starting a clothing line.

5. Licensing or business permit

Registering your business is a must to legalize your operations. You can only make so much money legally as a private person (depending on your residence). There are some expenses involved in processing the business permit and as well as paying for taxes involved when starting a clothing business. You must have a budget for the license acquisition and not allow this to become a hindrance on how to start a clothing company.

6. Labor costs

No one will advise you to become a one man wrecking crew on how to start a clothing company. You need to have a staff working with you including third-party service people (like fulfilment) that will be part of your operations. Pay these employees for their worth to expect quality work from them. Employees who are underpaid are the ones who will not work up to the right level expected from them. They allow you to grow.

Summary

The costs of starting a clothing line depends on the scale and business size you are planning. For small batch clothing production, you can already jump start with $500. If you are thinking of a medium sized clothing company then $1,500 up to $5,000 should be sufficient enough.

However, if you are thinking of a major clothing business then $20,000 to $50,000 is a perfect investment amount. These numbers could vary depending on the costing factors involved but they generally give you an idea of the amount you need to prepare when starting a clothing business.