Two to three times a year, someone reaches out to us to design a logo for their startup fashion clothing brand. So I meet with them and discuss their vision for the brand. And then I start asking questions. It typically goes something like this:
“What items are you planning to get manufactured first? Hoodies, hats, sweatpants. Awesome. How much do you expect to sell the hoodies for? $80? Ok.”
“Where are you planning to sell these items? Do you have a store? Oh – just online? Ok.”
“Is this a side gig, or are you planning to make this your main thing? Sure, start small and then grow the business. Ok.”
I like to see my clients succeed at whatever they do. So before you jump in and start your indie fashion brand – lets take a look at a few numbers first.
Crunch the numbers on your clothing costs
Lets be super optimistic and you sell 200 items at $80 each (no discounts, no sales). That is $16,000 in revenue. If you get those items made in Canada, it will cost you $60 / item (unless you own a silkscreening shop or can make hoodies from scratch). That’s a cost of $12,000 — that you pay entirely up front. That means you’re only working with $4000 in margin, and you haven’t spent any money on marketing, distribution or admin yet.
All sales done online? OK. You’ll need to get a website built. That’s not too hard – you can get it build in WordPress with Woocommerce, or Shopify, or set up a store on Ebay. (Unless you are tech savvy yourself, that’s a couple thousand more dollars there.) But the real problem is to get people to go to your website and buy your hoodie. Social media accounts will take you so far, but even if 1 out of 20 followers buy a hoodie, you’ll need to have accounts with 4000 people actively following you to sell 200 hoodies. Its a fair bit of work to get 4000 people to follow you. (More dollars there to hire a social media person to create all those posts and constantly take fun pics of your product)
So that is a significant risk you’re taking, for not a lot of upside.
If you are happy to take that risk, and are in a position to not care about manufacturing costs for a small run of products – then great! Lets create a brand for you and get going.
But if you are looking to make money you can live off, a shift in your thinking is needed.
The only way to make real margins in clothing is to wildly increase your margin by dropping the cost of production. To do that, you need to get the products made offshore – Vietnam, China, etc. To do those orders you need some volume. To do volume, you need distribution – which means deals with major chains. Or a very niche market with an amazing website and significant marketing budget.
Here is a better approach to your startup fashion business. Solve a problem. The bigger the problem, the more valuable your solution will be. Make a better belt. Make a better shoe. A better overall.
I’m not saying you can’t make some good side money with your clothing brand – but I want to make sure your eyes are wide open when you do.