Fashion

Budgeting 101: Options for Financing a Clothing Line

A lot goes into a clothing line: creative development, production, and digital design—and each step requires money. Simply put, without adequate finances, new clothing lines tend to crumble.

Before you start working with clothing manufacturers, it’s crucial to establish an accurate budget not only for your first few years of operations but also for year-to-year growth.

Why? Because according to the Business of Fashion, “each season as your sales increase and your business grows, your upfront costs will increase and the money you earned from previous sales will not be sufficient to finance the growth. You will need some kind of financing to bridge the gap.”

As you research potential partnerships with US clothing manufacturers, be mindful of these common financing mechanisms to help kick-start your business.

Bootstrapping

It might be a colloquial term, but “bootstrapping” refers to using good old-fashioned savings and existing resources. Depending on the size of your clothing line, you might be able to kick-start your initial operations with money saved over the years. If you’re deliberate in your savings and reach out to friends and family for assistance, you just might be able to raise enough capital to go at it without the attached strings of outside investors or loans.

Investors

When launching a clothing line, you can seek out and work with an investor who can help you grow your business through equity, cash infusion, or a line of credit. When you work with an investor, they will likely become a part owner of your clothing line and have some say in the decision-making process. This can be a tremendous asset, especially if he or she has an aptitude for business operations, strategic operations, or fashion merchandising.

Loans

Debt financing means you take out a loan to kick-start your business. As an investor, a loan offers an immediate cash flow to help you support your business. This is especially important early on when you may not have enough cash on hand to pay for things like salaries, materials, etc.

That being said, an option worth considering when producing your fashion line is working with full package manufacturers, which allows you to avoid paying salaries to workers by leveraging their staff and using them only as needed for their skilled labor workers.

A loan will let you retain control over your operations and make decisions without consulting an investor. However, you will be required to pay back the amount of the loan plus interest within a predetermined amount of time. This will usually result in you paying more than you initially borrowed.

Crowdsourcing

With the advent of online fundraising sites, it’s easier than ever to make a case for your business. You can create a page; present your sales pitch, vision, and business case; and, if investors or donors are interested, they may make a pledge to support your business.

Be aware, though, that there are different ways to crowdfund, including loans, investments, and donations, and, depending on the type, you will likely have to give the funders a share of the business, pay back the loan, etc.

Awards or Grants

You may also consider applying for grants or entering design competitions to help kick-start your clothing line. A financial award will not be tied to interest or repayment programs, though they do require some time and energy to apply for.

About Indie Source

Indie Source is a full-service apparel manufacturer and fashion consultancy for upcoming and established brands. Based in Los Angeles, Indie Source is changing the way apparel comes to market by offering in-house experts across the development, production, digital design, and consultation phases. They are among the top clothing manufacturers in the USA and can help bring your vision to life with professional support throughout design, manufacturing, and marketing.

Learn more about manufacturing opportunities at Indiesource.com

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