Profit in Readymade Garments Business (Cost to Start)

Introduction to profit in readymade garments business (Investment to Start)

Clothing business or readymade garment stores are developing industries in India presently. As the industry is observing large profit margins, the producers keep proposing varieties in their stocks as well. However, starting a readymade garment shop or beginning a clothing business is no piece of cake. There are several things that one must keep in mind while starting their business in this sector.

A step by step guide to start and make a profit in readymade garments business

Before you plan to start the readymade garment business in India, you should keep these things in mind. Readymade clothes are the final products that producers sell straight to the customers. It is very necessary to make a few selections before starting up the business.

Types of clothing: The very first thing one must think about is what type of clothing they plan to sell. There are many varieties available in the market that one can begin. Also, you must choose whether you will initiate with kids’ or adults’ apparel. It is suggested to start with a single collection during the beginning days.

Targeted Customer: In the case of B2C trading or Business to Consumer trading, it is vital to set the customer base well-before the start. For women’s garments, there will be different types of customers, for men’s garments different, and for children also it will be different.

Get the paper works done: Any business, particularly garments’ business requires a handful of mandatory documents to be issued. Before beginning the business, all these documents such as licenses, forms, and some others will be required.

Market Research: Knowing the market in and around your locality is very essential in any sort of business. As the fashion and style of readymade garments are changing day by day, it is obligatory to know the market trend and make changes in price accordingly.

Quality Check: Finally, the quality of every garment you will be selling matters the most. It is a competitive market and it takes just some time to beat or get beaten by some others. Hence maintaining proper quality is equally significant for this business.

License required for readymade garments business

To initiate the readymade garment business one must acquire a Trade License first. It is obligatory for any other business. Trade Licenses are issued by the local municipality. In case the person who is selling the products is willing to sell their goods out of the city/town but within the state, then also they have to apply for the Trade License following certain procedures.

Apart from the Trade License, GST or Goods & Service Tax registration is very essential nowadays. So by taking the consultation from any local Chartered Accountant or Tax consultant one may register for GST. If the turnover of your business is greater than Rs. 20 Lac then GST will be applicable. However, each business should register under the GST network for starting their operations.

Area required for starting readymade garments business in India

The location and place are one of the primary necessities for this business. It is the leading determinant to develop a customer base. Now, based upon your nature of the business, location or place must be selected.

Primarily if the entrepreneur is planning for wholesale business then it can be initiated from even home or a place where bulk orders can be expected. On the contrary, if it is a B2C business that is for some kind of retail store then it must be in a location where high footfall is seen.

Initially, it can be started from home where a moderately spacious room is available. Also, the room must be somewhere in the outer part of the house so that it can easily be spotted by the targeted customer.

Marketing strategies for readymade garments business to make a profit

The marketing area is mainly based on the target customer. If the seller is desired to sell women’s garments then the marketing area and strategy must be more advanced and tech-friendly, for instance using social media or digital media.

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Marketing strategies for readymade garments business.
Marketing strategies for readymade garments business

This is important in the case of kids or men’s apparel too. If the seller is targeting the young generation then marketing should be predominantly done through digital platforms along with traditional modes. As digital platforms like Facebook and Instagram, through search engine optimization, ad-sense, and so on are trending currently; it has much more user base generation opportunities than conventional newspaper readers and TV viewers.

Staff recruitment for starting readymade garments shop

For the Readymade garment business, one requires few employees with a minimum salary. As you are heading to the readymade garment shop or business, you will not require a factory shed or a vast area with about 100 people. Considering yourself, you will need some employees who will support you to stock up the goods you get and will aid you while selling them across the counter. The salary for these staff can range Rs. 3000/- to 4000/- in the initial days.

Apart from these employees, a marketing person is necessary for marketing purposes. Even you can do it if you have the expertise of marketing your products on a digital platform. Otherwise, for door-to-door sales, you require a marketing person with a monthly salary of Rs. 10, 000/- initially.

Investment for starting readymade garments business in India

Readymade garment shops or selling businesses do not need much capital. It can be initiated with about Rs. 5 Lac. But depending on the present trendy fashion or quality products the costs can upsurge. However, for beginning, Rs. 5 Lac investment is sufficient for the readymade garment business.

How to fix selling price for readymade garments?

The selling price is usually 50 to 60% higher than the warehouse or wholesale price in the readymade garment sector. It mainly depends on what type of products you are selling and if they are classified as branded ones or not. Also, the price margin is dependent on what class of customers you are targeting at.

Generally selling price margin ranges between 30% and 60%. If the garments are branded then it can be more gainful for the seller as the margin is much higher than that of non-branded clothes.

Profit of readymade garments business

As mentioned previously the price margin is 50%, but the profit ranges from 25% to 50% for non-branded as well as for branded clothes. The price will be including tax, transportation charges, and staff salaries, material, accessories, and other needed things.

Risks and precautionary measures in readymade garments business

In India, owning a readymade garment business is somewhat risky. Either it can develop immensely or it can be ruined easily. In India, you will have two seasons when a new collection is preferably launched Autumn-Winter season and Spring-Summer Season.

Old collection of stocks which are not sold can be returned to the company or else you can sell them on heavy discounts which are a regular trend followed by branded clothing companies too. This will aid you to grow your customer base too throughout the year.

During the season, fresh collections are sold at a moderate price keeping in mind the market demand. Placing high price tags can cause a reduction in the count of customers opting for your products.

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