Indie Source How-To: 5 Steps to Creating a Budget for Your Startup Clothing Line
One of the first questions we ask our new development clients is “what is your budget for the project?”. It’s not surprising that many new designers and entrepreneurs don’t yet have the answer to this question. We know that the idea of budgeting can be overwhelming when you are first starting out, so we decided to outline a few important budget components to get you started. So without further adieu, here are 5 steps for forming a budget for your new clothing line, as outlined by the experts here at Indie Source.
1. How much can you spend in total?
It might seem basic, but the first step to devising a budget for your project is to look at your finances and determine how much you can spend in total. Lots of new clients will say they don’t have a budget, and that they are willing to spend whatever it takes to get their clothing brand up and running. But let’s be honest: most of us don’t have an unlimited pile of cash to funnel into a new business. So sit down and take a look at your finances to see just how much money you are willing to invest in your new brand. Once you have your total budget, you can then decide where to allocate your funds to best utilize your resources.
2. How much do you want to spend on Product Development?
Before you can start manufacturing your clothing in bulk, you will need to spend on developing your products. Here at Indie Source, we have a full Product Development Program, in which we help clients to develop their designs. We provide fabric sourcing, trim sourcing, pattern making, and cut and sew for your samples. To develop samples with Indie Source, clients typically spend between $1,500 to $2,000 per sample including all of our development services. We recommend that you devote at least $2,000 to each sample in order to create a quality product that will be successful in the marketplace.
3. Decide on your Target Price Per Unit for Manufacturing.
Once you have allocated funds to product development, calculate how much you can spend per unit to produce in bulk. In order to determine your Target Price Per Unit, start by learning the industry standard retail prices for your product. Find out who your competitors are, and what they are charging for their products. Once you decide on a Target Retail Price, decide how much you need to make off of the sale of each unit. From there, you can work backwards to determine how much can be spent on labor and materials.
4. Choose your Method of Distribution.
How will you be selling your product? Will you be selling your clothing to stores or will you be selling on your own e-commerce site? Many new businesses start out with a Shopify site to keep web development costs down, but some businesses hire a web developer to design an e-commerce site for them. Decide how you want to sell your product and figure out how much you will need to spend on your chosen method of distribution.
5. What is your Marketing Strategy?
For a startup clothing brand, we recommend allocating a significant amount of time and resources to the marketing of your product. This is necessary to create buzz about your company. Facebook and Instagram ads are a great way to jumpstart your company’s social media audience and promote your brand name. If funds are tight, we recommend utilizing free social media marketing tools such as Hootsuite, Instagress, and Buffer. Circle back with us next week for a new blog post on how to market your new business!
We hope these steps have helped you get started on your own budget! Is there something you think we should add to the list? Leave us a comment below with any questions or comments…we love feedback.