How to Start a T-Shirt Company

Starting a business is an exciting venture. You get to make a number of interesting decisions like naming your company and choosing a logo. Along with fun branding decisions, there are many other considerations you should assess before opening your business to ensure you’re meeting federal and state regulations and know what to expect financially once you begin your operation. Learn about the basics of starting a t-shirt business and read answers to frequently asked questions about starting a t-shirt business. 

 

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Benefits of starting a t-shirt business

Owning your own business usually provides a number of advantages you can’t get working for someone else. Running your own t-shirt business gives entrepreneurs several unique benefits: 

  • Flexibility: T-shirt making is a flexible business, particularly for those who sell primarily online. You’re not required to follow a traditional 9 a.m. to 5 p.m. work schedule. 
  • Multi-dimensional: As the owner of the company, you’ll get to perform several different tasks like designing shirts, negotiating with suppliers and selling to customers in the course of your daily work.
  • Scalable: Your t-shirt business can start as a small, part-time endeavor and slowly scale up as you bring in higher profits and grow your customer base.
  • Geographically friendly: For online merchants, you can take your operation anywhere in the world.  
  • Clearly defined products: T-shirts are a straightforward product that most consumers understand. You can create a marketing campaign focused on creativity and quality rather than spending time and energy explaining what your product is and does. 
  • Creativity: You get to use your creative skills as a t-shirt designer while also running a business. 

Related: 10 Steps to Starting a Business

 

How much money you need to start a t-shirt business

Every business has two types of costs — start-up costs and ongoing costs. When starting a t-shirt business, you must consider how much money you’ll need upfront and how much money you’ll need on hand to cover your regular expenses until you turn a profit. Consider these common t-shirt business costs: 

 

Printing press

You have a few options when it comes to printing your design onto your t-shirt. You can print your shirts yourself using a screen printer or heat transfer printer, or you can outsource the printing to a manufacturer. The costs vary considerably depending on the volume of shirts you plan to produce. If you’re going to do the printing yourself, expect to spend around $1,000 on your printing press and initial materials. If you outsource to a printer, you’ll probably spend about $5 per shirt, with that number reducing as your volume goes up. 

 

Computer

Regardless of how you do your actual printing, you’ll need a computer to create designs, run your store and market your products. Depending on what programs you prefer to use for design and whether you’ll need more than one computer, you’ll likely spend a couple thousand dollars on your computer and related technology. 

 

Materials

Nearly every t-shirt company orders their shirts in bulk from manufacturers. Depending on the quality and volume, you’ll probably spend between $1 to $2 per shirt when ordering in bulk. The more you order at once, the less you’ll spend, so it may save money to stock up on product initially. 

 

Licenses and permits

To run a business, you have to obtain a few licenses and permits from your state or county. The specific licenses and permits you’ll need depend on what state you live and how you operate your business. If you’re selling your shirts exclusively online, you may not need a sales tax permit. Regardless of where you live and how you sell your products, you’ll need to register your business with the IRS and receive an Employer Identification Number, or EIN. Check with your local government to see what else you’ll need. 

 

Storefront

If you plan to sell your t-shirts in person or need a space to store your materials and print your shirts, you’ll require a workspace. Rent can vary tremendously depending on where you live and the size of the workspace. Most landlords require a security payment and first and last months rent upfront with continuing rent payments monthly. If you need to make any changes to the space, you’ll also have to factor in those costs. 

 

Utilities

Utilities like electricity and water are ongoing costs for your business. Those expenses vary depending on the size of your space and where you live, but it’s important to include estimates for utilities in your monthly budget. 

 

Labor

Some t-shirt business owners run their operation entirely on their own, while others hire employees to help with design, printing, marketing and customer service. If you’re hiring employees to assist you, consider how much you’ll need to pay each of them every month. For example, according to Indeed, digital marketers make an average of $59,290 per year.

 

Marketing

Marketing is absolutely vital for your company. Establishing an effective marketing strategy will help potential customers find your business and bring in revenue. Depending on how you plan to market your company, you’ll likely spend a few hundred dollars a month between purchasing ads, designing marketing materials and other advertising endeavors. 

In total, you’ll probably need between $2,000 and $7,000 upfront to get your business running. 

Related: How to Hire Employees: A Step-by-Step Guide for SMB Business

 

How to register your t-shirt business

Business registration laws vary from state to state and county to county. You should check the local laws in your area to ensure you’re in compliance, but you can use these steps to help you get started on your business registration:

 

1. Select a business structure

Before you can register your business at any level, you need to decide how to structure your company. Every business structure provides advantages and disadvantages, so it’s important to understand all the options before choosing one for your company. The most common business structures include: 

  • Sole proprietorship: In a sole proprietorship, you are the only owner and your personal and business liabilities are not separate, meaning the government can take your personal assets to satisfy your business debts. 
  • Partnership: Partnerships are similar to sole proprietorships, except there are multiple owners. You also have more flexibility in how your structure liability between partners than you do with a sole proprietorship.
  • LLC: A Limited Liability Company separates the business from you as a person, establishing two independent entities. However, the business’s profits and losses are often listed on the owner’s personal tax return. 
  • Corporation: Like a LLC, corporations separate personal and business assets and liabilities. Corporations are taxed independently of its owners. 

 

2. Confirm your business address

You’ll need to list a business address on your registration documents. If you have a storefront or office space, you’ll likely use that address. If you’re operating out of your home or working remotely, you’ll probably use your home or permanent address. 

 

3. Choose a name

Select a name for your business. You’ll want to make sure no one else is using the same business name in your state. Most state governments make it easy to search their website for registered businesses to ensure you don’t infringe on any names already in use. You want your business name to describe what you do and be memorable so customers build brand recognition.

 

4. Register with the IRS

With your name, address and business structure in place, you can register your business with the IRS and receive your EIN. Think of this number like a Social Security number for your business. You’ll use it when you file your taxes. 

 

5. Register with local entities

Go to your state or county government website to learn what you need to do to officially register as a business at the local level. 

 

6. Obtain licenses and permits

Every industry has different licensing and permitting obligations. For t-shirt companies, the licenses and permits you need depend on whether you’re running a brick-and-mortar business or an online business. Check with your local government to learn what you need. 

Related: How to Hire a Graphic Designer

 

Printing options

Deciding how you’ll print your shirts is one of the most important decisions you’ll make for your company. Most companies choose from three options: 

 

Screen printing

With this method, you use a thin screen, traditionally made of silk, with the design you want on the shirt in negative form. You stretch the screen across the shirt and push ink through the screen. The screen only allows ink through the design. After you’ve applied the ink, you let the design dry. This method produces high-quality, long-lasting products, but it’s a challenge to make designs with multiple colors. 

 

Heat transfer vinyl

Heat transfer vinyl printing involves using a large iron to transfer your design from a transfer vinyl onto the shirt. It’s a quick process that’s much less messy and time-consuming than screen printing. However, if you don’t use high-quality materials, the designs can crack and peel quickly. 

 

Outsourcing

The final option for printing your shirts is to outsource the entire operation to a printing manufacturer. They may use screen printing, heat transfer vinyl or direct to garment printing popular with large-scale manufacturers. The benefit of outsourcing is you don’t have to acquire and maintain the necessary equipment for printing or spend the time making the shirts, leaving you free to manage designs and marketing for the company. If you have a low volume, however, outsourcing can get costly. 

Related: How to Start a Website

 

How to set rates

Carefully consider how much to charge for your shirts to ensure you can cover your basic expenses, continue to grow your company and make a profit. Follow these steps to set reasonable rates:

 

1. Determine costs

You need to know exactly how much it costs to produce your product. Consider expenses like:

  • The cost of the plain t-shirt
  • Equipment and materials expenses
  • Manufacturing costs

Add these together to see how much you spend on producing your t-shirts. 

 

2. Consider overheard

You also need to factor in overhead costs when establishing pricing for your products. Think about:

  • Rent
  • Utilities
  • Marketing
  • Labor
  • Insurance

Consider how much you spend on all of these items in a typical month. Add the figures together and divide by how many shirts you regularly sell or project you can sell in the same time frame. Add the result to your figure from step 1. 

 

3. Think about profit margin

You now have a number that should pay for all your expenses, but doesn’t produce a profit. Think about how much profit you hope to make on each t-shirt. That percentage varies from vendor to vendor, but many aim for a profit margin of about 50%. 

 

4. Establish a price

Take your baseline price and add your desired profit margin to it to find your rate. For example, say your baseline costs for your t-shirt comes to $10. 50% of $10 is $5, so you’d add another $5 to your price. You should make a profit of $5 on each sale.

 

How to hire employees

If you plan to hire employees to help you run your business, follow these steps to find the best possible candidates: 

 

1. Write a job description

Begin by writing a thorough job description for each open position. Include information like:

  • Job title
  • Key job duties and responsibilities
  • Necessary skills
  • Necessary experience
  • Expected work hours
  • Company description
  • How to apply

You can also include salary and benefits information, or you can wait until the job interview to discuss compensation. 

 

2. Post the job description

Post your job description on your company’s website and online job boards like Indeed. Depending on what the position is, you might also post the job description on college job boards or give it to industry professionals to share with their contacts. 

 

3. Conduct interviews

Once you’ve received applications, select the best candidates for interviews. Ask questions about the candidate’s past job experience or education and about their career goals to see if they have the necessary skills and experience to perform the job well. See if they’re committed to working with your company long term. 

 

4. Make an offer

Once you’ve decided on a candidate, make them a job offer that includes a compensation and benefits package. You can make an unofficial verbal offer followed by an official written offer that the candidate signs to accept. 

 

5. Negotiate and sign

Your candidate may want to negotiate some terms of the contract before signing. Work through the negotiation process and get your candidate’s signature on their employment contract to officially begin your working relationship. 

 

Best ways to market the business

You can market your t-shirt business using traditional and digital methods. The specific tactics you employ will depend on who your target market is and where they spend their time. Consider a few of the most effective types of marketing: 

 

Traditional 

If you’re making t-shirts with local or geographical designs, it makes sense to engage in some traditional marketing, like:

  • Posters and brochures
  • Mailers
  • Advertising at local events

 

Digital

Digital marketing is absolutely vital, especially if you’re running an e-commerce site. Use tools like these to reach your target demographic:

  • Social media marketing
  • Pay-per-click advertising
  • Search engine optimization

 

Frequently asked questions about starting a t-shirt business

 

How much does it cost to start a t-shirt company?

The costs to start a t-shirt company vary depending on factors like whether you’re operating out of your home or a designated workspace and If you’re printing the shirts yourself or outsourcing the manufacturing. 

If you plan to work out of your home and outsource your production, you can expect to spend a couple thousand dollars getting your business started, but anticipate higher ongoing costs to maintain your business. If you rent an office space and perform your own printing, your start-up costs will be higher, probably closer to $5,000 or $6,000, but your monthly costs should be slightly lower without the need to pay for outsourcing. 

 

Do you need a license to sell t-shirts?

You may or may not need a license to sell t-shirts. Every state and county has different regulations for business licenses and permits, so it’s best to check with your local government for guidance. Additionally, brick-and-mortar businesses often have different regulations than purely online businesses. 

 

Is selling t-shirts online profitable?

Selling t-shirts online can be a profitable venture. T-shirts usually have a high profit margin, and t-shirts are a frequently sought after item. Profitability depends on your business model, budgeting abilities and brand recognition. 

 

How much does it cost to make t-shirts?

The cost to make a single t-shirt depends on several factors: 

  • Volume: The more t-shirts you make at once, the lower the overall production cost. It’s significantly more expensive to make a single shirt than to make 100 identical shirts. 
  • Printing: The style of printing can also change the cost. Screen printing and heat transfer vinyl printing often cost less upfront than direct to garment printing, but can cost more to operate long-term. 
  • Design: Some designs are more complicated to print than others, which can cost more money. 
  • Quality: The quality of the t-shirt and of the materials you use to put the design on the shirt can impact the overall cost. 

Starting your own t-shirt company gives you enormous flexibility. You can operate the business part-time out of your home until you have enough revenue to expand your operation. Many people run their t-shirt business independently, while others hire a few employees to help with tasks like marketing and printing. Review all your options before starting your company to ensure you have enough capital to successfully run your business. 

 

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