Some businesses are directly proportional to the population which means that they are always growing as the population is increasing. Clothing is one such business which is always on the rise. IBEX has found the T-shirts business for men’s wear an opportunity for small investors.
T-shirts can be manufactured from scratch but that requires ample investment in hundreds of million rupees which is difficult for a small investor. The investor can also get T-shirts on order from local factories and then sell them in the local market to garment shops or even export the stock. The last and best option for a small investor is to setup a retail shop and start selling the T-shirts under his own brand.
Starting the Business
In this business, the investor should have the knowledge of the quality of the fabrics available in the market. Various qualities of fabrics can be purchased from Faisalabad and Karachi. Once the fabric is purchased, the investor has to find a manufacturer (factory) where he can place an order to manufacture the T-shirts according to his specifications (size, design, style etc).
In the factory, the fabric will pass through the process of dying, cutting, printing and stitching. Once the T-shirts are manufacturing, the investor then chooses how he wants to sell the stock.
For exporting the product, the investor has to maintain the quality of the fabric and designs. In this case, before exporting the product the investor must visit the countries where he wants to export and observe the various business procedures including how shipments are handled, what are the latest trends, study customer choices, analyze the competitors, marketing procedures and pricing trends. Ample time is required in the initial research phase for any investor to enter the exports business.
An employee must always be present in the exporting country where he can handle the sales and other export related operations. The investor should also have employees who can deal with shipments.
An investor can also sell the stock to the local retail garment outlets. For that he should visit different areas in the metropolitan cities, meet and build relationships with retail shops and then sell the stock. The stock is sold according to the pricing conditions on which both the investor and retailer agrees. If the investor wants to develop a brand name then there is a strong possibility that the retailers will not accept the T-shirts. The profit margins in this case will not be high as compared to when the investor himself is a supplier.
The third option in the local market is to setup a retail outlet (shop) and start selling the T-shirts with a brand name.
The investor can also sell the T-shirts in companies as giveaway items. Many multinationals order millions of T-shirts every year with their brand name printed on them. For that the investor must have relationships with the procurement departments of various companies and also offer best possible prices. This is a profitable venture but the competition is very strong as the existing vendors are the big investors who also have the knitting, dying, cutting and stitching machines. It will be hard for any small investor to compete with them on prices.
The best alternative for a small investor is to get custom made T-shirts from factories and sell them to the garment shops or start his own retail outlet.
Initial Investment, Costing and Profit Margins
The manufacturing of T- shirts requires hundreds of million rupees which is a large amount for any small investor. To get custom made T-shirts form factories, an initial investment of Rs. 2 lac to Rs. 20 lac is needed depending upon whether the investor wants to sell the T-shirts directly to the customers by setting up a retail shop or supplying to the retail shops.
If the investor wants to sell the stock to garment shops in whole sale, he can enter this business with even Rs. 2 lac. A quality T-shirt costs around Rs. 150 to 200 for a normal customer. If the investor wants to target higher end quality conscious customers, this cost can reach around Rs. 300. These T-shirts can be sold to the wholesalers or garment shops with a profit margin of Rs. 50 to 100 depending upon the investor’s relations with them. From an investment of Rs. 2 lac, 1000 T-shirts can be manufactured at a cost of Rs. 200 each. These T- shirts can be sold at Rs. 250 to 300 giving a profit of Rs. 50,000 to Rs. 100,000.
As far as the retail shop is concerned, location is a significant factor. The investor will have to find the best location according to the investment amount. A shop in a posh commercial area of Islamabad, Lahore and Karachi can be acquired on a monthly rent of Rs. 40,000 to Rs. 60,000 a month. This means that Rs. 5 lac for one year rent should be reserved. Utility bills and a sales man will cost around Rs. 15,000 a month. The number of salesperson depends on the shop size and average customers at a time. To start a retail shop, approximately Rs. 10 lac is required.
For stock, the investor must have Rs. 5 lac in reserve as some T-shirts might not be purchased at all. After investing Rs. 1.5 to Rs. 2 million, the investor can reach the breakeven point of the business in 1 to 2 years depending upon the location, T-shirt quality and his marketing tactics.
Another option for the investor is to setup an online website to acquire orders from different local locations as well as from other countries. It depends on the business model that whether the investor wants to have a salesperson to visit the local buyer or just a delivery man. Overall this business is rather profitable for small investors. Market know-how and relationships with the manufacturer, vendors and customers are the key success factors of this business.