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The Ultimate Guide to Starting a Clothing Line With Little Money

How To Start a Clothing Line Business
Lauren Ward
Lauren WardUpdated July 16, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
How do you start a clothing line? While there is no one way to start and run a business, establishing a successful clothing line requires strategy and business acumen. With so many moving parts, it can present a bit of a challenge when you’re first starting out. Below, we talk about the best way to start a clothing line, how to start a clothing business with little money, as well as industry tips to help you grow and expand as the years progress. 

How to Start a Clothing Line

When you’re starting out, you’ll need to do some market research, write a business plan, and create a website. Without doing these first steps, you may have trouble differentiating yourself from your competitors. 


The clothing industry is one of the most important industries to conduct market research. Knowing ‘what’s hot and what’s not’ is essential. Field research, in-person interviews, and user testing should be thoroughly done to understand what people want and what they may be interested in.

Write a Business Plan

Don’t skip writing a business plan. A business plan is essentially your personal strategy for success. How will you educate the consumer? Where and what are you going to sell? How much will it cost? If you have any partners, what will each of your responsibilities be? Revisit it on a routine basis and rewrite anything that needs mending. For the first year or two, your business plan will probably change a lot as you adapt and learn.  

Build a Website

Even if you plan on selling through a third party, you need a website to help you market your clothing line. It will likely feature a lot of the same content as your social media accounts, but that’s fine. Plus, if you realize you’re generating a lot of traffic on your own, you may decide it’s time to add a shop button and take things into your own hands. Just be ready to deal with the logistics of shipping and returns on a daily basis if you do decide to sell directly to consumers.   

Tips for Starting a Clothing Business With Little Money

How much money do you need to start a business? It depends on your vision, where you intend to sell, and how you intend to market your products. 

Start small and focus on a niche

One of the best tips for starting a business in the clothing industry is to start small. Daymond John, the founder of FUBU, started off by selling wool beanies on the street. By 1998, FUBU’s sales would reach over $350 million. While success was always the aim, he started small and marketed in his local neighborhood.Ask yourself, who is your buyer? What is one thing you know they’ll want?   

Use affordable materials and production methods

You may want to only use the best materials and production methods, but consider your budget and how you intend to scale. In the beginning, craft only what you can comfortably afford. If you aim for top quality before you’re generating consistent sales, you may start having working capital issues. 

Utilize social media and influencer marketing

Done correctly, social media can be a very cheap way to market your clothing line. The trick is to create consistent, quality content. However, if it’s not your zone of genius, you may consider hiring a marketing agent. Working with a social media influencer can also expedite your growth. With a dedicated following, they may be able to direct many of their followers to your shop. The cost of working with them varies, but some may even be willing to do it for free. 

Attend local events and pop-up shops

Starting a business sometimes revolves around hustling every waking hour. Attend trade shows and pop-up shops with your merchandise, or even consider trying your own pop up. Pursue sales anywhere you can. You don’t have to limit yourself to solely an online retailer or brick and mortar shop.   

Consider crowdfunding or seeking investors

Crowdfunding is when you raise money from a large number of people over the internet. The donations are typically small, but when added together amount to a large sum of money. There are four kinds of crowdfunding:
  • Donation based: Donors give any amount they choose because your story and mission has inspired them. The money does not have to be paid back, and the donors are not entitled to anything in exchange for their money. 
  • Rewards based: Donors select which reward they want to receive from you, and then donate the appropriate amount to receive the reward. This is a popular option for companies that want to test out their products on the general public. 
  • Equity based: With equity based crowdfunding, small business owners sell a portion of their company to the crowd. This type of crowdfunding appeals to donors who want to get in early on the next big company. 
  • Loan based: Essentially peer to peer lending (P2P), loan based crowdfunding is like a standard bank loan, but the difference is the ‘crowd’ loans you the money. If you have a subprime credit category and have had trouble getting approved elsewhere, loan based crowdfunding may present a genuine opportunity for you. 
Apart from crowdfunding, another option is a business investor. Investors give small business owners a sum of money in exchange for a certain percentage of equity. When your company becomes profitable, they get a percentage of the profits proportionate to the amount of equity they own. Smart business owners find investors that also have a background in their particular field of business. Therefore, they are not simply a source of funds, but are also a source of knowledge. If you choose to work with an investor, make sure you choose one who has a proven track record with the clothing industry. Not only should they have insights into how to market your clothing line, but they should also know how to bring your costs down. Recommended: How to find angel investors for startups

Small business loans

A quick internet search suggests that businesses are only able to get a small business loan after being in business for two years. However, not everything on the internet is right. It is certainly possible to get a business loan without being in business for two years. While it’s easier the longer your track record is, there are many loans available to businesses just starting out. For example, the SBA 7(a) loan is one of the top small business loans on the market. Because it is insured by the federal government, the interest rates are typically lower than most other loans for many businesses. The underwriting process is typically a few months, and you may have to sign a personal guarantee if you’re approved.    A merchant cash advance is another option. With a merchant cash advance, you are given a lump sum of money. With this type of loan, a ‘standard’ monthly payment is not required. Instead, the lender takes a small percentage of each credit card sale. Plus, because repayment is guaranteed, no collateral is required. Inventory financing is another one you may want to consider. With inventory financing, the inventory is used as collateral to secure the loan. Should you default on the loan, the lender seizes the unbought inventory.  Other options include invoice financing and invoice factoring. With invoice financing, unpaid invoices are used as collateral to secure the loan. Once they are paid, full repayment is expected. With invoice factoring, a third party buys unpaid invoices at a discount. They collect payment on the business owner’s behalf. Once it is received, the remaining invoice amount is forwarded minus any fees the company charges for collection.   

The Takeaway

When starting a new clothing line, start small and scale as sales become consistent and grow. In the beginning, utilize affordable fabrics and manufacturing methods. Should you want to increase the complexity and quality of your clothes, only do so when you have enough working capital and repeat customers to comfortably invest in higher tier inventory.  When you need to finance materials and inventory, you have options. From crowdfunding, investors, to small business loans, business owners have a variety of options. The trick is to not wait until it’s too late. Always identify your capital needs as soon as possible so there are no hiccups in operations. Learn more about small business loans today with Lantern Credit.

Frequently Asked Questions

How much money do I need to start a clothing line?
How do I find affordable materials and production methods?
How do I market my clothing line on a budget?
Photo credit: iStock/eclipse_images

About the Author

Lauren Ward

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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