How to Start a T-shirt Business

There can be few things more thrilling than seeing someone wearing a piece of art that you have created. One way to achieve this is to go into the T-shirt business, create amazing designs and then sell them to people online.

Starting a T-shirt business

Historically, only established clothing brands could create and sell T-shirts, but that’s all changed. With the rise of ecommerce and print-on-demand T-shirt services, you can create and start selling T-shirts online in just a couple of days.

Don’t be fooled though — running a successful T-shirt printing business can be tough. There are low barriers to entry, so finding the right niche, creating eye-catching designs, branding your business properly, ensuring quality and having great marketing are essential.

T-shirt Business formation guide

In this guide we’ll explore everything you need to do to set up your T-shirt business and maximize your chances for success. We’ll cover:

Understanding the world of the T-shirt business

Paying taxes and for your T-shirt business

Deciding if you’re ready to start a T-shirt business

Hiring employees, managing finances and administering your T-shirt business

Planning out your T-shirt business

Locating other resources for your T-shirt business

Determining the best legal structure for your new organization

Determining the best legal structure for your new organization

Determining the best legal structure for your new organization

And much more

By the time you’ve read through our complete T-shirt business guide, you will have all the information you need to set up and manage a thriving T-shirt business. Let’s get into it.

Understanding the World of the T-Shirt Business

Key T-Shirt Business and Background Data and Statistics

It’s important to understand the opportunities in the online T-shirt printing and ecommerce space. Here are the key facts you need to know:

$3B

Total revenue for online T-shirt printing and sales a year

$10B

Market is expected to grow 2025

Statistics about T-shirt businesses
The industry has grown by nearly 9% a year between 2011 and 2016
The top four online T-shirt businesses generated just over 35% of all revenue between them, with the remainder being split among the other, smaller businesses

There are over 400 online T-shirt design and printing ecommerce businesses, and the number of businesses is growing by around 11 percent a year

Together, these companies employ around 2,500 people

Cafepress, CustomInk, Threadless and Teespring are some of the large businesses in the space

This all points to the T-shirt industry being ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your T-shirt business. Incfile is here to help you form your T-shirt business and understand the ins and outs of owning a T-shirt company.

What Your T-Shirt Customers Are Looking for

When it comes to creating a custom T-shirt business, it’s important to stand out — there’s a lot of competition in the space. If you want to be successful, you need to focus on several key areas:

The Right Niche

It’s impossible to be a generalist in the world of T-shirt commerce — you will need to pick a good niche and stick to it. Carry out online research to see what niches are underserved so you can make a splash in your chosen area. Niches might include areas like a specific band, TV show, art style, current events or something else.

Original Designs

When it comes to custom T-shirts, originality is everything. You will either need to create original designs yourself or find a designer you can partner with to create designs based on your ideas. You can also share your designs with your proposed customers to get their feedback.

Strong Branding

You want your T-shirt brand to stand out so you can start to build customer loyalty. Spend some time creating a powerful, recognizable brand that you can use on your website, in your marketing and elsewhere.

High Quality Materials

You will want T-shirts that combine comfort, durability and style. It’s worth spending a little more to find higher quality cloth and cuts as these will last longer and stand out in the minds of your customers.

Awesome Marketing

There’s a great deal of competition in the T-shirt design space. You will need innovative, audacious marketing to make a splash and get noticed. Combine your niche with your brand to create powerful messages with striking imagery so your customers will remember you.

The Benefits and Challenges of Being a Successful T-Shirt Entrepreneur

What Are the Main Challenges for a T-Shirt Entrepreneur?

Low barrier to entry

Starting a custom T-shirt business is easy, but being successful is not. You need to narrowly define your niche, build a distinctive brand, create amazing designs and use fantastic marketing. If you can get all of these areas to align, you will have a successful T-shirt business.

Low profit margins

The profit margins on custom T-shirts are quite thin. You will need a rock solid understanding of your revenue and finances to ensure you’re able to make a profit on every item sold.

High initial cost if you print yourself

If you choose to print yourself, you will have to outlay the cost of your printing machine and T-shirt stock, in addition to dealing with packing and postage. We recommend using a print-on-demand, dropshipping-style fulfillment service to avoid this.

What Are the Main Benefits for a T-Shirt Entrepreneur?

Low overheads

If you use a print-on-demand service paired with an ecommerce store, your business can pretty much run itself. You will still need to be involved in marketing and customer service, but the ordering and fulfillment will be taken care of automatically.

Great introduction to entrepreneurship

Most T-shirt entrepreneurs don’t stop there. This type of business is a relatively low-risk way to learn about running your own business, especially in the ecommerce space.

A Plan for Starting Your T-Shirt Business

Before you start your business, there are a few key areas you need to focus on. You will need to establish whether there’s a demand for your T-shirt business services, look at potential benefits and pitfalls, understand how your business finances might look and ensure everything is in order.

Here are the steps you’ll need to take to setup your custom T-shirt business.

Do your research and understand the niche you want to go into. Validate this niche with your potential customers to check that there’s interest.

You will need to create designs yourself, partner with a designer or source designs from elsewhere for all your T-shirts. You should come up with several original designs for when you launch your T-shirt ecommerce store.

You will need to create an online store to sell your T-shirt products through. Shopify is a great place to start; it automatically has integrations with several print-on-demand services. Alternatively, you could try an online web builder like Wix or Squarespace, or Wordpress paired with WooCommerce.

We recommend using a provider who can handle the printing and distribution of T-shirts on your behalf. There won’t be any upfront expenditure for you; you don’t need to hold stock and the provider will take care of everything. Shirts.io, Merchify, Zazzle, Cafepress, Print Aura, Printify and Printful are all good services.

Build your website, upload your designs, link it to your print-on-demand provider and launch your business.

Once you have launched your store, you will need to market and brand it properly. Use whatever type of marketing works, take advantage of social media and engage with influencers.

You will need to continue marketing, handling customer service and coming up with new designs. Keep a close eye on your analytics so you can see what designs are selling.

Do Market Research and Validate Your T-Shirt Products and Services

Before you launch your T-shirt business, you need to understand if there’s a demand for what you’re selling. That means carrying out market research and “validating” your products and services. Here’s how to go about it:

Identify your business’s unique selling points (USPs)

These are the areas that will set you apart from competitors and encourage customers to come to you. You might have better pricing, more exciting designs, an underserved niche, a higher-quality service, faster delivery or some other special feature.

Look at who your competitors are in the space

There are likely to be plenty of competitors. Look through them and see the types of clothing and designs that they are offering so you can find a gap in the market.

Validate your products and services

Test whether people will commit to spending real money on what you’re offering.

Talk to clients

Speak with potential customers to understand what they want from your T-shirt products.

Get involved with business communities and discussion groups

Ask questions about T-shirt businesses. You can find links to some excellent discussion groups later in the article.

See if there are any market research reports for T-shirt businesses

Search locally, nationally or internationally to help you find your T-shirt niche.

Understand Your T-Shirt Business Model and Financial Projections

All businesses need a business model, which is how you will generate sales, provide products and make money. Think about your business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

You will also need to look at financial projections for your T-shirt business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others? If you can, try to plan your revenue for the next month, three months, year and two years.

Write a Business Plan for Your T-Shirt Business

Finally, you should put your business plan together. Business plans do vary slightly, but they should cover the following areas:

1

An executive summary with the most important points from your business plan

2

Your goals and what you hope to achieve with your T-shirt business

3

A description of your business, background information and context

4

A market analysis and likely demand

5

An overview of how your business is structured

6

Your business model

7

How you will market and sell your offerings

8

Financial projections, revenue and profitability

9

Appendices

We’ve got the perfect guide to writing your business plan.

Choose the Right Business Structure and Register Your T-Shirt Business

Now that you have all the background information for your T-shirt business, it’s time to make it into a reality. Starts by choosing the right structure or “legal entity” for your business. In the U.S., there are four main business structures. They are:

Sole Proprietorship

This is the "default" business structure and is what your business will be if you decide not to create a more formal structure. We don't recommend this type of business as it doesn't give you the legal protections you need.

Limited Liability Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your T-shirt business.

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organization.

C Corporation

These are the largest and most complex types of businesses and are far more than the average entrepreneur or business owner will need.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure for your t-shirt business.

In most cases our recommendation would be to create an LLC. We have a complete guide to everything you need to do, and we can set one up for your T-shirt business. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

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The Next Steps: Running a T-Shirt Business

Once you've legally created your T-shirt business, you’ll need to get some other things in place.

Location of your business

If you’re using a print-on-demand service, you should be able to run your business from your home. If you’re printing yourself, you will likely need a warehouse or something similar.

Permits and licenses

Running a T-shirt business comes with certain rules, regulations and legalities you need to be aware of. Incfile offers a Business License Research Package for you, or you can take the time to do the research yourself.

Marketing

Branding and marketing are vital to help you build a distinctive identity. This is one of the areas that you should invest plenty of time and resources into.

Processes

Make sure you understand all your profit margins and get strong analytics in place so you can understand exactly what is and isn’t selling.

Employees

You will probably need to hire employees for your T-shirt business; more on that below.

Equipment

Branding and marketing are vital to help you build a distinctive identity. This is one of the areas that you should invest plenty of time and resources into.

Finances and taxes

What kind of bank account will you get? Do you need a business credit card? How will you pay your business taxes? These are important questions to consider so your T-shirt business stays in the green. Here at Incfile, we can even help you file your taxes.

Business maintenance

Most states require businesses to file an Annual Report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. Your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.

The Complete "Start Your Business" Checklist

A Clear and Comprehensive Guide to Starting Your Business the Right Way

Hire Employees for Your T-Shirt Business

If you’re just running your T-shirt business solo, you don’t need to worry about employees. If you are hiring people to work for you, you will need to know what to do. See our 10 tips on hiring employees.

Contact the IRS and let them know you will need an EIN for your T-shirt business. This is a number you will use to file and pay your taxes. We put together this guide to getting your EIN.

Your employees must be legally able to work here. Carry out background checks and ensure they have all necessary legal documentation.

In most cases you will need to report the hiring of employees to your state.

You will need to calculate and keep back income tax so you can pay the appropriate bodies. You will also need to pay the employer portion of the payroll tax.

As listed above, you will need to make sure you have proper workers’ compensation insurance to cover injuries, illness, medical costs and the like.

You will need to run payroll and compensate your employees on a regular frequency. Your state may mandate how often employees need to be paid.

You do have certain responsibilities and requirements for hiring employees. In addition to getting a proper employment contract in place with them, you have a duty to provide them with a safe working environment, proper training, regular pay and certain other criteria. OSHA covers your health and safety requirements, while the U.S. Department of Labor provides information on other responsibilities.

Useful Online Resources for T-Shirt Entrepreneurs

Here are some really great online tools for managing your T-shirt business. They will reduce the time you spend on administration, help you collaborate with others and free up your time to grow and manage your new venture.

Ready to Start Your T-Shirt Business?

Starting a T-shirt business is a great way to get exposure to the fast-moving worlds of e-commerce and creative products. Although it’s difficult to succeed as a T-shirt entrepreneur, with the right niche, awesome designs and great marketing, you can certainly make an impression. Just remember to stay on top of your profit margins, try new things and learn how your T-shirts can help your customers express themselves.

Start your T-shirt Business with us, today