Starting a T-shirt business

Home Office Computing, Nov, 1992 by Spider

A friend of mine says, "The good thing about the T-shirt business is it's easy to get into. The bad thing about the T-shirt business is it's easy to get into."

Starting a T-shirt business doesn't require a lot of knowledge about the screen-printing process, or a lot of money. Of course, both help, but the most important part of the business is sales. If you don't like selling, don't give the business another thought.

There are two distinct types of T-shirt: novelty shirts and advertising shirts. The novelty T-shirt business is riskier for a beginner, because you have to produce shirts in quantity before you sell them, whereas you sell the advertising shirts before you produce them. It's best to get your feet wet with advertising T-shirts, then move into the novelty business as your knowledge increases.

PRODUCING T-SHIRTS

Producing T-shirts is a three-step process: You buy blank T-shirts from a wholesaler, buy or produce the art, and take the shirts to a screen printer who applies the art to the shirt. Screen printers are listed in the yellow pages in most cities under "Screen Printers" and T-shirts." If you're outside a major population area, you can ship shirts to the printer.

The most popular shirts are short sleeved, either 100 percent cotton or 50 percent cotton and 50 percent polyester. Have your supplier send you a sample of each, as well as a swatch of each available color. Keep the number of choices you offer to a minimum, to make your selling job easier.

Getting a good set of art separations to print is a vital part of the business. Printers often have good in-house art departments that can handle your needs if you're not an artist and don't feel comfortable with graphics software. You can also consider hiring a freelance artist.

PRICING

How much will you charge for your shirts? Improper pricing can drive newcomers out of business before they really get going. First, calculate your break-even point (your total costs), then figure out how much of a profit you need to make on each shirt (see box, "Setting Your Price, " on next page).

At the beginning, you can probably count on getting one good order a week, usually a gross of shirts (12 dozen). If you add up all your monthly business expenses and divide the sum by 4.3 (the average number of weeks in a month), you'll know your weekly costs and can figure out your cost per shirt produced. You will soon be producing more than 12 dozen shirts a week, but stick with the same overhead costs for the first year, just to keep matters simple.

The usual markups are 33.3 percent and 50 percent. However, if you want to hire a salesperson to help you, you should factor in that expense. Since salespeople are usually paid on commission, you can simply add a percentage to the markup. For example, to recoup a 10-percent sales commission, you'll need to increase the markup 11.12 percent; to recoup a 12 percent sales commission, you'll need to increase the markup by 13.64 percent.

A friend of mine was paying a 10 percent sales commission and charging a 10 percent mark up to cover it for two years, until I showed him how he was losing his T-shirt off his back. Here's the math: If you have one dollar in quarters and you take away one quarter, you have effected a discount of 25 percent. However, if you take that 75 cents and add 25 percent to it, you won't have a full dollar (only 93.75 cents). You need to mark up by a third (33.33 percent) to get the dollar back. Don't cheat yourself with bad math!

Notice that in the sample pricing sheet, art fees; screen, camera, and ink charges; and other printing costs have not been included. You bill the client directly for these costs, and you can charge the client a small fee for handling the work.

GETTING BUSINESS

Both small and large companies can use T-shirts as promotional giveaways and are thus potential clients. Companies can buy shirts from you at $5 to $7 and hand them out to their clients. A T-shirt is a relatively inexpensive promotional piece that will advertise a given business for years.

Select a list of potential clients, preferably in a field you have worked in, and get on the phone. Keep your introduction short: "Hi, this is Jerry from Jerry's T-shirts. I used to work with xyz. I have my own company now, doing promotional T-shirts. I thought this might be something you'd be interested in and I'd like to set a time to come by. . . ." You,get the idea.

Ask your customers to pay half the cost up front, and the other half on delivery. This will give you cash to order the shirts from the supplier. If the down payment doesn't cover your shirt and shipping costs, you will have to adjust your prices upward. You pay for the art and printing costs out of your own pocket, but you'll get reimbursed when you collect the final payment. And, if you've figured things right, there will be money left over--your gross profit.

SPIDER, an artist, printer, lecturer, and consultant who has been involved in all aspects of screen printing and the T-shirt business over a 35-year period, runs Spider & Company with his wife from their home in Mesa, Arizona.