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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 22, 2021
Investment range
$2,050 - $5,100
Revenue potential
$60,000 - $200,000 p.a.
Time to build
1 - 3 Months
Profit potential
$45,000 - $150,000 p.a.
Industry trend
Growing
Commitment
Flexible
These are the key elements to think about when starting your T-shirt business:
A T-shirt business has pros and cons that you should weigh to decide if it’s the right path for you.
The custom T-shirt industry is experiencing some trends, including shirts featuring TV characters, book designs, and political statements. Consumers are expressing their opinions in bold ways. Hand-drawn designs or hand-lettered T-shirts are also in vogue.
Trends shaping the T-shirt industry are:
Challenges faced by the T-shirt industry are:
You’ll need a graphic designer to make your T-shirt designs.
Startup costs for a T-shirt business range from about $2,000 to $5,000 or more. The largest expense is for a website, though you could instead sell through an online marketplace like Etsy or Shopify. However, having your own site will help you build your brand.
| Startup Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Licenses and permits | $100 - $300 | $200 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| First run of t-shirts | $500 - $1,000 | $750 |
| Total | $2,050 - $5,100 | $3,575 |
The cost to make a T-shirt is around $5, while the same T-shirt can be sold at a retail price of about $20, resulting in a 75% profit margin.
In your first year or two, you could work from home and sell 3,000 T-shirts annually, bringing in $60,000 in annual revenue. This would mean $45,000 in profit, assuming that 75% margin. As your brand gains recognition, sales could climb to 10,000 T-shirts a year, providing you with annual revenue of $200,000 and a nice profit of $150,000.
There are a few barriers to entry for a T-shirt business. Your biggest challenges will be:
Now that you know what’s involved in starting a T-shirt business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research established T-shirt businesses to examine their products, price points, customer reviews, and what sells best. You’re looking for a market gap to fill. For instance, maybe the market is missing a company that makes popular news-related T-shirts. If you can get a trending phrase on a T-shirt before anyone else does, you can capture that market.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as sports-related T-shirts.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Determine what kinds of T-shirts you’re going to sell. Men’s or women’s? Will you offer different styles, not just designs? What sort of designs will you create? You should go ahead and come up with four or five top designs and focus on selling those first.
Discuss the importance of balancing quality and variety, and how different printing methods (like screen printing or digital printing) can cater to different design needs. Encourage considering sustainable and ethical sourcing as a unique selling point.
Your prices will be determined by the quality of your materials and the desirability of your design. Prices for T-shirts can range from $10 to upwards of $200 for designer T-shirts. If you stay somewhere in the $15 to $30 range, you should be able to sell to a large market.
Once you know your costs, you can use our profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on what kinds of designs you choose. If you create trendy designs for young women, you’ll probably be able to find them on Instagram or TikTok.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a store or just an office. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.
Look for a spot with high foot traffic, such as a busy shopping district or a tourist area. Consider the demographics of the area and aim to offer products that match the needs and preferences of the local population.
You may also want to consider the proximity to complementary businesses, such as clothing or souvenir stores. Depending on your target market, you may want to consider a location near universities, theme parks, or other popular attractions.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to the T-shirt business.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your T-shirt business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a T-shirt business. You might also try crowdfunding if you have an innovative concept.
Starting a T-shirt business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your T-shirt business as a sole proprietorship. Opening a business bank account is quite simple and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as GCS, Brightpearl, or Exenta, to manage your inventory, billing, and design options.
Developing a website for your t-shirt business is a critical step in establishing an online presence and reaching a wider audience. You have two primary options: using website builders like Shopify, Wix, or Squarespace, which offer user-friendly interfaces and customizable templates, or hiring a professional web developer for a more tailored solution.
The importance of a well-designed website cannot be overstated; it’s your digital storefront. To optimize your e-commerce store, focus on user-friendly navigation, high-quality images of your products, and clear product descriptions. Additionally, compelling call-to-action (CTA) buttons, such as “Buy Now” or “Learn More,” are essential to guide visitors towards making a purchase or engaging with your brand.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your T-shirt business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your T-shirt business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a T-shirt business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in T-shirt printing for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in T-shirts. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a T-shirt business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
A T-shirt business is a great way to show your creativity and make good money while doing it. It’s a fast-growing industry worth more than $580 million, and you can start your business for very little money and make a healthy profit, even from home.
The key to a successful T-shirt business is to develop distinctive designs first. You can design and take orders and let another business do the hard work of printing and shipping your T-shirts. Now that you’ve learned about the industry, you’re ready to start your entrepreneurial journey and design your way to a T-shirt empire!
You can have T-shirts made for as little as $5 per shirt and sell them for $15 – $30 and make a healthy profit. Your challenge will be making your products stand out from the competition, and making sure people can find you online.
There are several online companies that will print and ship your T-shirts for you. It’s inexpensive if you buy in quantities over 100. You could also partner with a manufacturer, which you might want to consider if your company sees big sales.
Start by defining your brand’s mission, values, and target audience. Create a unique brand name and logo that represent your business and resonate with your target customers. Develop a consistent visual identity across your marketing materials, including packaging, website, social media, and promotional materials. Infuse your brand identity into your t-shirt designs, ensuring they reflect your brand’s personality and appeal to your target audience.
Utilize social media platforms to showcase your designs, engage with your audience, and run targeted advertising campaigns. Collaborate with influencers or bloggers in relevant niches to expand your reach and gain exposure. Participate in local events, fairs, or pop-up shops to showcase your products and connect with potential customers.
Consider incorporating innovative design elements, such as intricate patterns, typography, or hand-drawn illustrations, that set your t-shirts apart from competitors. Experiment with different printing techniques, fabric choices, or garment cuts to create a distinctive look. Stay updated with fashion trends, but also strive to create timeless designs that can appeal to a broad range of customers.
Start by researching and identifying potential suppliers that align with your quality standards and production needs. Reach out to them, discuss your requirements, and request samples to assess the quality of their products. Establish clear communication channels to ensure smooth collaboration and production processes.
You’ll need a reliable computer or laptop for designing, managing orders, and marketing your business. Design software such as Adobe Illustrator or Canva can be helpful for creating t-shirt designs. You’ll also need a heat press or screen printing equipment for transferring designs onto the t-shirts. Invest in high-quality blank t-shirts in different sizes and colors to accommodate various customer preferences.
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