How To Start a Clothing Business in 2026

If you’ve got a passion for clothes and a great business idea that harnesses it, you’re already on the right track to starting a clothing business. Whether you’re dreaming of opening a local boutique or designing cutting-edge looks for runways and red carpets, it’s best to start small before thinking big.

In this guide, we’ll talk you through how to start a clothing brand from initial vision to grand launch.

Things to consider before you start a clothing business

Before you dive into the nitty-gritty of launching your clothing business, it’s important to take a step back and think about your broader vision.

This is the stage where you ask questions like “who will I sell to?” and “what business model is right for me?” You should also try to picture what you’d like your business to look like in the future.

Here are some key steps to take when putting together your business vision.

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Define your USP and niche

If you think of your favourite clothing brand, the odds are that you can easily describe who they sell to and what makes them unique. That’s the power of having well-defined unique selling points (USPs) and a clear niche.

USPs help you stand out in a crowded market and provide you with a clear framework through which you can make decisions about branding, product development, location and more.

Let’s expand on these terms:

• A niche is a narrow ‘slice’ of a larger market that serves specific needs or interests. For example, maternity activewear and maternity swimwear are niches in the wider maternity wear market. The key to defining a viable niche is to carve out a narrow segment in the market, while maintaining strong demand.
• A USP is a feature or benefit your company offers that sets it apart from competitors. Brands can have multiple USPs, which can be product characteristics, such as quirky designs or eco-friendly materials, or service-based extras, like super-fast shipping. When deciding on a USP, keep your audience’s needs at the front of your mind. Ask yourself what consumers need that your competitors can’t provide. You won’t be able to offer everything, but two or three USPs are typically enough to help you stand out.

Understand your target market

When you start a clothing brand, it’s important to define your audience. To begin with, simply form a general idea of who your core target market will be. This may involve thinking about:

• Demographics: The age range, location and income of your likely shoppers, eg, mid-income urban women in the 18 to 35 age group.
• Buying habits: The frequency with which they shop, their preferred channels and any notable habits, eg, purchase twice monthly, mainly using a smartphone web browser after comparing deals.
• Price expectations: The price level they are both able and willing to pay, e.g., budget prices with a willingness to increase by a small amount for sustainable materials.

Choose your business model

Do you hope to trade as an online retailer, an affordable high-street stalwart or a prestigious boutique?

These choices will have a huge impact on every aspect of your business – from overheads and products to marketing and customer service. Understanding them is key to knowing how to open a clothing store successfully.

There are three main clothing business models:

• Online: Clothes are sold through a digital eCommerce website like Square Online. This model has lower overheads and wider reach but requires a strong digital marketing strategy to reach potential customers and a well-organised fulfilment (shipping and inventory management) process.
• In-store: You have a physical presence where customers can find and interact with your products. Overheads can be higher, but you may benefit from local footfall, especially in more highly populated areas like town and city high streets.
• Hybrid: A hybrid model combines online and in-store shopping. This approach offers the widest reach, but managing both channels is resource-intensive because it requires coordination across multiple online and offline systems. This includes inventory management, advertising, regulations, staff and logistics.

You can always start with an online or in-store model and transition to a hybrid model later. In fact, in the Square Future of Retail report, Square found that omnichannel experiences that combine online and in-store shopping lead to higher satisfaction, with 83% of consumers having positive experiences in physical stores.

Map out your sourcing and manufacturing approach

One of the key steps when you start a clothing business is to identify who your suppliers will be, and what your supply chain looks like. To help you do this, ask yourself the following questions:

• Who will my suppliers be? Look for clothing wholesalers or manufacturers that meet your quality, quantity and deadline requirements. If you plan to produce your own garments, request swatches from textile wholesalers or local mills, and test small runs before committing to a supplier.
• What are my sustainability requirements? Clearly define your environmental and ethical standards – fibre sources, ingredients in dyes, labour practices, etc – and evaluate suppliers against these before selection.
• What delivery providers will I use? Carriers who deliver goods to your shop or warehouse must be affordable and deliver in time for you to meet expected demand.
• How will I handle warehousing, inventory and returns? Will you choose third-party fulfilment (which is popular with online merchants), rent storage space or keep stock on your premises?

Essential skills for running a clothing business

Many great fashion brands have been built off the back of the passion of their founders — Nike, Vivienne Westwood and Alexander Wang are all examples.

However, a successful business isn’t built on passion alone. Understanding how to start a clothing business requires a mix of skills, acumen and foresight. Fortunately, these soft skills can be developed with practice.

Here’s an overview of the skills that will help you thrive as a clothing retailer:

• Creativity: Curating products and shaping a unique brand identity through customer-facing materials
• Organisation: Managing business operations effectively – inventory, suppliers, shipping, etc.
• Negotiation skills: Making favourable deals with suppliers
• Financial literacy: Understanding margins, profit, cashflow and other key retail metrics
• Customer service: Ensuring that customers are happy both during and after purchase
• Market awareness: Staying on top of new styles and customer trends
• Digital marketing: Using online channels – especially social media – to connect with customers
• Resilience: Maintaining focus through slow periods and logistical challenges
• Leadership: Organising your team and keeping up morale

Finally, don’t be afraid to lean on modern tech, such as Square for Retail, which combines tools for POS, inventory management, eCommerce hosting and more. Solutions like this can help you manage your clothing business with much greater ease and efficiency, filling skills gaps as you learn and helping you understand how to start a clothing brand in a much shorter time.

Steps to start a clothing business

To start a clothing brand, preparation is the first key to early success. Let’s look at the steps fashion entrepreneurs should take to ensure success.

1. Research the market

The aim of market research is to understand your niche so you can position yourself effectively within it. This phase gives you a clear understanding of customer needs, your competitors, product pricing and market gaps. There are two types of market research:

• Primary research is direct research on your target market through surveys, focus groups and observation.
• Secondary research uses existing data available in reports, publications and records, like reports published by the Office for National Statistics on the UK retail industry, or trend reports like the Square Future of Retail report.

Analyse competitors and trends

Follow these steps to understand your competitors and clarify broad trends in your niche:

1. List five to ten direct competitors selling similar styles or targeting your ideal customer profile (ICP).
2. Pick out their bestselling products (these are often items with the most reviews) to identify general style directions and pricing. What’s popular with consumers, and why?
3. Analyse your competitors’ branding, website and social media to get a sense of how they position themselves in the market. Do they offer budget or luxury pricing? Fast fashion or sustainable? Functional or aesthetic designs?
4. Create a table that includes positioning angles, pricing and style focus – for example, neutral palettes or colourful design.

Identify gaps and opportunities

Here’s how to identify untapped opportunities in your chosen niche:

1. Start with reviews of competitors and their products, paying attention to the most positive and most negative to better understand consumer friction points and desires. What’s working for your competitors, and what isn’t?
2. Tap into potential demand by building an understanding of – or even a close relationship with – your audience via social media. Review comments and online discussion to better understand their expectations.
3. Map potential segments against the style and price point of your brand vision and available products from suppliers. Group customers by demand points (style, fit, budget, etc) to find overlap between what these segments want and what you can provide.

2. Create a clothing business plan

A business plan groups your ideas into a formal document that explains your business objectives and strategy. Business plans act as a type of roadmap and keep your work on track, and may also help to secure funding as they can convince potential investors of the potential that your idea holds.

Let’s look at the essential components of a business plan.

Executive summary

This is a one-page overview of your clothing business. Outline your concept, target market and USPs. Also include a summary of your business model, financial projections and why you believe it will succeed. Investors often use the executive summary to decide if they’re interested.

Market analysis

Document the insights you’ve gained through primary and secondary market research. Include overall trends, opportunities and the gaps that you intend to fill. This section should clarify why the market is attractive and why you’re well-placed to meet demand, so it’s a good idea to include a SWOT analysis.

Competitor analysis

Analyse the brands that operate in your chosen market space. Summarise how they position themselves in the niche and price their products, as well as overall competitor strengths and weaknesses.

Product offering

Your product offering is a description of the main clothing categories you will offer when starting out. Be specific about target customers, materials and pricing. Prove why your chosen products fit with market demand.

Operations plan

This section should cover day-to-day operations and describe your supply chain across manufacturing, wholesale, logistics and customer fulfilment infrastructure. Go into more depth about your business model here, too – online, in-store or hybrid – and what your initial staff requirements are.

Financial plan

Your financial plan should be built around three core components: costs, projected revenue and investments. Include a full cashflow forecast, showing what your anticipated revenues will be over the first twelve months, alongside a pricing, margins and cost of goods sold (COGS) breakdown.

Also be sure to forecast operating expenses, which are separate from the direct costs of producing or stocking products. If you require funding, explain how investor money will be used, when you expect to break even, and what the returns – whether interest or equity – will be.

Pricing strategy

Detail your overall product pricing strategy and why you think it will resonate well with your target audience. Demonstrate sustainable margins by showing the average markup on all of your product categories.

Marketing strategy

Outline your strategies for branding, content and advertising in this section, ideally with mockups that show your unique look and feel. Provide a breakdown of your marketing budget and which channels you will utilise.

3. Legally establish your clothing business

To trade legally, you’ll need to follow UK regulations, but this isn’t as overwhelming as it sounds.

Here’s a step-by-step guide to legally establishing your business:

1. Register your business with HMRC: There are several structures you can choose from, but the most common for clothing retailers is a private limited company.
2. Trademark your business name: Check that your brand name is not already taken by searching the trade marks database and submit a trademark application to protect it.
3. Apply for necessary licences: You do not need a licence to sell clothes, but you may need one for other secondary activities in physical stores, such as playing background music or serving food.
4. Take out liability insurance: If you employ staff, you may be required to take out employer’s liability (EL) insurance. Public liability insurance is also highly recommended.
5. Ensure health and safety standards: These apply to both employees and customers, and cover aspects like changing rooms, fire exits and protocols for illness. The Health and Safety Executive provides straightforward guidance for businesses.
6. Understand relevant legislation: Familiarise yourself with the main pieces of legislation that are applicable to retailers. These are the Consumer Rights Act 2015 and the General Product Safety Regulations 2005.

4. Source materials and manufacturing

If you plan on designing and creating your own clothing lines, you’ll need to decide between DIY or outsourcing, as well as selecting fabrics and materials, and choosing the best suppliers and manufacturers.

DIY production or outsourcing

In-house production gives you more control but requires specialist equipment, well-honed skills and can be time-consuming. It’s highly unlikely you’ll be able to manage both the manufacturing and retail elements of your business by yourself, so you’ll need to consider hiring trained staff. Alternatively, outsourcing your designs to an experienced manufacturer allows for speed and scale of production while limiting costs.

Selecting fabric and suppliers

Your choice of fabric and materials should fit with your desired quality level, environmental impact and price. Pay attention to suppliers’ minimum order quantities and lead times. Always ask for samples before making a decision.

Choosing manufacturers or sustainable partners

Evaluate manufacturers on three criteria – quality standards, ability to scale and reliability. Supply chain issues can make or break an emerging clothing business, so it’s important to choose a manufacturer who can consistently and reliably meet your needs.

5. Design and build your clothing brand

The clothes you sell are the cornerstone of your business and the primary factor that will make it attractive to your audience. It’s therefore vital to invest in prototyping for all new products to ensure quality, durability and suitability for mass production.

Prototype development and sampling

Follow these steps to create prototypes (early versions of your products for testing) before full production:

1. Put together initial sketches and technical specs detailing sizes, fabrics and measurements.
2. Send these to your chosen manufacturer or sample maker to create a prototype.
3. Review the prototype, paying particular attention to fit, quality and performance.
4. Send feedback and repeat the process until you are happy with the final version.
5. Also consider what your packaging and labels will look like. As a baseline, they should display your logo.

Align designs with seasons and trends

After you’ve launched your business, here’s how to ensure your products keep up with shifting trends and seasons:

• Add key dates to your design calendar for when to start prototyping new lines. This should be several months before key buying seasons.
• Regularly review trade publications, fashion magazines and social media to stay on top of emerging trends and colours, feeding relevant designs into your own prototyping.
• Gather feedback from your customers about what designs they would like to see. This is a powerful and often overlooked source of design ideas. Surveys, focus groups and one-on-ones are all excellent ways of gathering this information.

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6. Choose where to sell (online, in-store, or both)

One of the great debates of fashion retail is the benefits of online versus in-store shopping. Increasingly, the trend is towards hybrid, omnichannel approaches, as was found in the Square Future of Retail report.

However, when first opening a clothing store, it can be more cost-effective to pick either an online or in-store model, moving to a hybrid approach as you become established.

Let’s look at the pros and cons of all three business models:

Online retail: Pros and cons

Online retail is the most common way of starting a clothing business. In fact, there were 26.5 million eCommerce sites worldwide in 2023, with that figure only set to grow.

Here are the main pros of online retail:

• Cost-efficiency: With an online business, you don’t need to worry about rent for premises or high overheads associated with a physical location.
• Market access: Online retail removes many of the barriers between you and your customers. Whether you’re running your own site or using platforms like eBay, Amazon, Depop or Vinted, consumers can find you from anywhere.
• Customer data: Digital analytics allow you to understand your audience and gives you direct insights into their behaviour and preferences.

Here are the main cons of online retail:

• Limited interaction: Customers may want to assess clothes in person or try them on, which impacts purchase confidence when shopping online.
• Higher return rates: Fit and expectation mismatches cause higher return rates, which can also be costly for the retailer.
• High competition: Ecommerce retailers face stiff competition, and it is becoming harder to stand out in an increasingly saturated market.

In-store retail: Pros and cons

Here are the main pros of in-store retail:

• A personal touch: Sometimes, in-person customer service can make all the difference. In fashion, personalised style advice can help clinch sales and build lasting relationships.
• Footfall: With a physical store and the right visual displays and merchandising, you can attract customers directly off the street.
• More reliable sales: One of the main advantages of physical stores is that customers can try on the clothes before committing to a purchase, which helps minimise returns.

Here are the main cons of in-store retail:

• High overheads: Rent, utilities and staff costs make physical stores more expensive to operate.
• Limited reach: Depending on footfall in a particular area, access to customers might be limited. Moreover, prime locations aren’t always evergreen – a once bustling high street may grow quieter over time.
• Smaller inventory: Space constraints limit how many products you can show to customers.

Hybrid retail: Pros and cons

Here are the main pros of hybrid retail:

• Maximum customer reach: Hybrid retail combines local footfall with the national or even global reach of digital traffic.
• Breadth of service options: You can offer click and collect, in-store returns and omnichannel shopping.

Here are the main cons of hybrid retail:

• More operational complexity: Managing inventory, logistics and fulfilment across online and offline systems simultaneously requires tight coordination.
• High overheads: A hybrid model combines the costs of an eCommerce website and a retail outlet.
• Inventory management channels: Stock must be closely monitored to prevent duplicate orders.

7. Find a location

If you opt for an in-store or hybrid model, location is everything. It’s important to choose wisely.

Factors to consider when choosing a retail space

• Footfall: Is there significant local footfall, and do potential buyers match my ICP?
• Demographics: Does the location offer plenty of access to your target audience?
• Competition: Are there direct competitors in close proximity?
• Operating costs: Are rent and business rates affordable based on projected revenue? Are the utilities affordable? Can you continue to honour your operating costs in less profitable periods?
• Inventory: Is the shop large enough to display all products and store sufficient inventory?

Design your store layout

Once you’ve found the perfect location, it’s time to design it. Store layout can have a big impact on sales – retailers devote significant time and resources to determine ideal layouts.

Follow these steps to design an attractive layout that encourages sales:

1. Map out a natural flow from the door to checkout that exposes customers to all products.
2. Place key displays and bestselling items in high-visibility areas.
3. Allocate sufficient space for changing rooms and storage.
4. Place signage around the store to highlight seasonal items and special offers.
5. Test the layout by inviting a sample group of customers to a pre-launch shopping session before opening your store.

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8. Set up retail technology

From inventory management to returns processing, technology is often the backbone of a successful clothing business. Let’s look at how to pick a system that makes it as easy as possible to start a clothing brand.

Choose a retail POS system

The best retail POS systems bundle different features into a single platform that allows you to manage sales without switching between dozens of dashboards or tools.

An all-in-one POS system like Square for Retail has all of the following features:

• In-store and online payment processing
• Synced inventory management across online and brick-and-mortar stores
• Returns and exchange processing
• Online storefront creation with Square Online
• Analytics covering sales, returns, stock levels and more
• Automated purchase orders to wholesalers and manufacturers
• Invoice management
• Barcode and SKU management
• Shift scheduling and payroll tools
• Loyalty rewards programme, customer CRM and marketing tools through Square Customer Engagement

Set up inventory management

Without the appropriate inventory management software, stock issues can eat into retail profits. Consider the following when choosing the best inventory management software for your business:

• Real-time stock tracking
• Low stock alerts
• SKU database with colour and size variants
• Integration with your POS, website and accounting tool
• Embedded analytics to track sales
• Returns management
• Multi-location support if you have more than one store

If you want to see what inventory management looks like in practice, Square offers a complete inventory management solution for free.

Taking payments

Your customers expect plenty of choice, which is also true when it comes to how they pay.

Opt for a system like Square Payments (which is integrated with Square for Retail) that offers all of the following options:

• Tap to pay: Contactless card and device payments
• Terminal: A physical card reader for chip-and-PIN payments
• Cash: A cash register for customers that prefer to pay in cash
• Virtual terminal: Payment processing over the phone via a secure online gateway
• Apple Pay and Google Pay: POS support for mobile wallets
• Invoices: Payment links and email attachments for high-ticket items

Staff management

Labour will represent one of your main overheads and a significant management task, so it’s important to streamline and automate wherever possible. Familiarising yourself with staff management best practices is a key part of learning how to open a clothing store.

Square Shifts ensures streamlined staff management with these features:

• Integration across your whole retail management system
• Employee time tracking
• Scheduling and shift management
• Access permissions for senior staff members
• Automated payroll prep
• Time-off requests

9. Launch your marketing strategy

A solid marketing strategy can be the difference between surviving and thriving.

It’s how you reach your potential customers, make a strong first impression and keep buyers coming back for more after they’ve visited your store – online and in person.

Let’s break down the key elements of an effective marketing strategy.

Branding and visual identity

Here’s how to open a clothing store with a brand identity that resonates with your niche:

• Outline your brand characteristics, including values, tone of voice and top USPs.
• Create a visual system, such as a logo, colour palette, typography and photography that fits your product niche.
• Apply both brand characteristics and visual elements consistently across all customer-facing materials, such as packaging, your website, social media posts, ads and so on.

Build your online presence

To build a strong online presence, you should focus on three main areas: social media, traditional and AI search optimisation and your own website.

Here’s a breakdown:

• Social media: Regularly post visual content across all your social media channels – Instagram, Facebook, TikTok and Twitter. Examples of proven content include images of new product drops, founder stories and style tips.
• Ecommerce website: Include detailed product pages, size guides and measurements, customer reviews, images and information about shipping and returns.
• Organic search: Ensure that you appear in traditional search engines and AI search results by following SEO best practices.

Advertising

In addition to organic marketing, you should also consider paid advertising. Paid ads are an excellent way of building brand awareness over the long term. They’re also good for promoting time-limited sales and seasonal product lines.

Here’s an overview of the top advertising types for clothes retailers:

• PPC ads: Run campaigns on platforms like Google Ads and Meta Ads to reach your ideal customers. You can also use Google Shopping ads to showcase products to targeted buyers.
• Boosted social media posts: Use social media “boost” features to increase the reach of your top-performing posts.
• Pop-up shops: Organise temporary pop-ups in high footfall areas to build buzz about new lines and collect email addresses.
• Billboards: Target specific areas with billboards and street posters to increase local visibility.
• Traditional media: Niche and local magazines and newspapers can be a cost-effective way of reaching a focused audience that fits your ICP.

10. Open your clothing store

You’ve learnt everything you need to know about how to start a clothing brand, and you’re primed for success. But don’t take your foot off the pedal —a successful launch will build an initial base of customers, generate publicity and provide you with valuable customer data.

Here’s a checklist for launching your store and maintaining momentum:

• Host a soft launch (a pre-launch launch) to test systems and train staff.
• Plan a grand opening event with local influencers, journalists and businesses to drive footfall and publicity.
• Collect customer and staff feedback in the weeks after launch to learn what’s working and what needs improvement.
• Promote launch-week offers across social media and through local ads.
• Track sales closely to identify low-margin and high-return items quickly.
• Collect emails from the get-go to build your mailing list and add customers to your loyalty programme.
• Re-order fast-moving items to prevent stockouts.
• Adjust your in-store layout based on how customers actually browse.

Learn more about opening your clothing business with a fully integrated retail solution like Square for Retail. Access to data in one place will let you monitor sales, identify any issues and refine operations based on early results.

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How to start a clothing business FAQs

How much does it cost to open a clothing business?

Make it British, a UK consultancy for clothing brands, surveyed its members and found that 44% invested between £15,000 and £50,000 to launch their businesses. Towards the lower end, 20% of respondents had a budget of between £1,000 and £5,000.

While some costs are relatively low – you can launch a website for free with Square Online, for example – the price of prototyping, inventory, floor space, admin and marketing quickly adds up.

Based on this data and our review of industry averages, the minimum you should expect to invest in an online store with limited stock is £1,000. For a physical store with rent, display items and staff wages, startup costs will most likely fall in the £20,000-plus range.

Which clothing business is most profitable?

It is difficult to point to any single clothing business brand or category as the most profitable. Companies like Louis Vuitton, Chanel, Nike and Hermes regularly make top rankings. Basics, activewear and streetwear are also among the high-performing categories.

Generally speaking, online-only brands have higher profit margins than in-store or hybrid businesses because of fewer overheads. A business with a distinct brand identity, multiple USPs and a well-defined niche audience is much more likely to outperform generic competitors.