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How to Start a T-Shirt Business
T-shirts are always in-demand and a fantastic creative outlet. That’s why the US’ online T-shirt market has more than doubled in size in recent years to more than half a billion dollars. By starting your own T-shirt business, you can get a piece of that market and start building your casual clothing empire.
Starting a T-shirt business takes more than creativity – it takes hard work and knowledge. Fortunately, this step-by-step guide is loaded with all the insight and information you need to start designing your entrepreneurial future.
$2,050 - $5,100
Time to build
$60,000 - $200,000 p.a.
$45,000 - $150,000 p.a.
Step 1: Decide if the Business Is Right for You
Pros and Cons
A T-shirt business has pros and cons that you should weigh to decide if it’s the right path for you.
- Ease of Supply – Online companies will print and ship your designs
- Low Startup Costs – You don’t need much to get started
- Huge Market – You can sell all over the world!
- Competition – The market is saturated with T-shirt designers
- Changing Tastes – You’ll constantly need to adapt your design to trends
Market analyst IBISWorld values the U.S. online T-shirt design industry at nearly $520 million,https://www.ibisworld.com/industry-statistics/market-size/online-original-design-t-shirt-sales-united-states/ after doubling in size in the past decade. The global T-shirt industry is expected to grow an impressive nearly 6% annually through 2026, according to German research firm Statista. … Continue reading
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.
How much does it cost to start a T-shirt business?
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.
|Start-up Costs||Ballpark Range||Average|
|Setting up a business name and corportation||$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 - $1000||$750|
|Total||$2,050 - $5,100||$3,575|
How much can you earn from a T-shirt business?
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.
You can use Step By Step’s profit margin calculator to analyze your numbers.
What barriers to entry are there?
There are a few barriers to entry for a T-shirt business. Your biggest challenges will be:
- You need to have the talent to create unique and desirable designs
- It’s a very saturated market so you’ll face strong competition
Step 2: Hone Your Idea
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.
Why? Identify an opportunity
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.
What? Determine your products or services
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.
How much should you charge for T-shirts?
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, use the Step By Step profit margin calculator to determine your price points.
Who? Identify your target 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.
Where? Choose your business premises
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. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- The name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “T-shirts” or “custom T-shirts”, boosts SEO
- Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step business name generator
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 at a web cataloging site such as NameChk. 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. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your offerings in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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.
Choose your business structure
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 four main options:
- Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the pre-tax profits and are liable for losses.
- Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.
Step 6: Register for Taxes
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.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Crowdfunding: Websites like Kickstarter and GoFundMe offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
- Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.
Step 8: Apply for Licenses/Permits
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, health license and permit 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 licenses 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.
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.
For peace of mind and to save time, 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 you to make sure you’re fully compliant.
Step 9: Open a Business Bank Account
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.
Step 10: Get Business Insurance
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:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
You can create your own website using services like WordPress, Webflow, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Essential software and tools
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.
Some of your business will come from the casual online visitors, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Step 12: Build Your Team
If you’re starting out 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:
- Customer Service Reps – answer customer questions, take orders
- General Manager – manage staff, accounting
- Marketing Lead – SEO strategies, social media, other marketing
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.
Step 13: Start Making Money!
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets 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:
- Trendy T-shirts delivered in two days or less!
- Dazzle your friends with T-shirts that sparkle
- Be bold; make a fashion statement with our T-shirts
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as 20% off your first purchase
- Optimize calls to action – Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Signage – Put up eye-catching signage at your store and website
- Flyering – Distribute flyers in your neighborhood and at industry events
- In-Person Sales – Offer your products/services at local markets, trade shows
Build Affiliate Relationships
Affiliate marketing is advertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.
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 almost $520 million, and you can start your business for very little money and make a healthy profit, even from home. 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!
T-shirt Business FAQs
You can start a T-shirt company for as little as $2,000. You just need to design some shirts, set up your business and website and buy your initial inventory.
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.
You don’t need a specific license, but you may need business licenses and permits at the state and local levels. Check with your local government offices for requirements.
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.