Preparing a Business Plan for Garment Manufacturing Setup

For starting a business, you need funds. You need a team to run the business. So, a business plan is must have before you jump into the business set-up.

This article is written to give you an idea of how to make a business plan for a garment manufacturing start-up. What are all things you can start working on before the approach for an expert's help?

Instead of telling you how to start a garment business, I will share what are the primary things you need to know when you are ready to start your business.

There are two ways to start a business.

First, get customers (buyers) and then make apparel products according to the customers' needs and sell them to them.
Second, make your product first and then get customers to sell your product. Whatever way you choose to do business, you need to work on the following things to make your project successful.

Often I used to receive emails asking about 'how to start a garment business on a small scale' and many other questions related to business start-ups in the garment industry. Most of the email senders are new to garment manufacturing.

If you are looking for ideas for starting a small business in the garment industry, read 10 Small Business Ideas in Garment Industry before you start reading following a business plan.

Read the step-by-step guide for making your business plan. In some steps, you might need an expert's advice. In the article, I have included links for your further reading to understand the business better.

1. Select the product category

What type of garments you are going to make?

If you plan to make knits garment (T-Shirts, or Polo ), you would not try to make woven products (Shirts, Trousers) at the same time. Again in woven and knits, there is a wide range of product categories. Narrow your product profile as much as possible.

Let's say, you are going to make woven shirts - Formals and Casuals. Write the name of the product in your notebook and move to the second point.

2. Estimate production requirement

How many pieces are you planning to make on daily basis? 50 shirts or 500 shirts per day?

It would be difficult to decide on the figure at this stage but you have to estimate a rough number. Later you can modify this figure depending on the budget and customer demand. Otherwise, you can't move forward with making your business plan.

When a newcomer asks me questions - how many machines and what machines they need to buy for their garment manufacturing setup, I use to ask them what (product name or type) items they want to make and how many pieces of garments they are planning to make per day.

So, define your daily or monthly production requirements.

3. Number of sewing machines needed

On the above, I have said you to estimate production requirement. If you have decided on the production figure, product type, number of sewing machines and other equipment requirements can be derived from daily production requirement information.

The calculation can be also done in a reverse way. In case you have a plan of setting a specific number of machines and type of apparel products, estimated production per day can be calculated.

Here is an article "How to Determine Machine Requirement for a New Factory" to refer to for your further reading.

4. Type of sewing machines needed for making the design

The next step is to find what types of machines are required to make garments that you have selected from the wide range of product categories.

For example, read Types of Machines used by Shirt Making Factory. It is also important to find the number of machines to be purchased for each machine type. This step would help you to calculate the capital investment in machines.

With sewing machines, make a list of other essential machines, and equipment, and set up requirements. For example, pressing tables, cutting room machines, boiler (steam generator) for the pressing tables, diesel generator for power back-up, finishing room equipment, furnishings, etc.

5. Raw materials requirement

For a manufacturing business, you need different types of raw materials to make the product. In the previous step, I said to decide the product type(s) that you are going to make. Once you finalized the products, you are ready for identifying the materials you need to procure for your business.

Make a list of raw materials required to make the garment with average consumption. This would help you to prepare your budget for material sourcing. In case you need an idea about identifying raw materials, you can take guidance from an expert.

A sample material list for knitted garments with projected costs has been published here.

6. Factory space requirement

Now move one step ahead.

How much space is required for installing machines and an office for staff?

To set up a garment factory you need space for installing sewing machines and equipment, office space and setting up departments for production and associated processes.

Calculate space requirements by departments. According to that, you have can plan for a factory building or rent a space. Estimate the rent amount for the project budget. Being a newcomer, this step would be a difficult one for you. You can seek help from an expert on this.

7. Manpower requirement

You have already got an idea about types of machinery and raw materials. Now plan for the requirement of manpower for the business. Manpower is one of the primary resources for a business.

In manpower planning, including the number of staff, supervisors, and workers (operators and helpers) you need to hire operators to make projected garments and to run the business smoothly. Also, estimate salaries for each employee and add to your budget to running costs.

Get an idea from the market how much salary you need to pay to managers and workers. You can check the latest update on minimum wages by Govt. in your location (state).

8. Project cost

How much money one needs to invest in a small-size garment business?

Here it is.

To know the estimated budget you have to prepare the cost sheet of the project.

You need to calculate total capital investment, factory rent, EMI amount (if you are taking a business loan), salary for staff, workers' wages, and factory running costs. Also include finance required for sourcing raw materials for initial months and other expenses etc. To run your business without financial problems, prepare monthly cash flow requirements for at least one year.

To estimate project costs you can seek help from an expert. I have explained the project cost estimation method in my book 'Kick Start Your T-Shirt Business'.

This part is known as preparing the financial estimates for your business startup.

9. Internal process flow

Make detailed process flow of an order.

The internal process flow will help you to decide what departments you need to set up and you can plan to hire people accordingly. You can cross-check your equipment requirement process by process.

Read the Garment Manufacturing Process Flow Chart for the export orders.

If you are new to garment manufacturing, read Apparel Manufacturing - An Overview.

10. Supplier listing

This process is not essential in the first place. But you can start working on finding good and reliable suppliers for fabrics, trims, and other necessary items required to manufacture your garments.

Start establishing suppliers within your region, then go to another state and even you can source from the international market for quality and cost-effective materials.

11. Reach your customers

You have finished the major part of making the garment manufacturing project. Now make a list of potential customers and start contacting them for business leads.

If you are new to garment manufacturing and want to enter into the garment business seek help from an expert. An expert's guidance will help you to save your time, money, and effort. You can also learn many things about business insights from an expert. Wish you all the best for your upcoming garment business project.

Resources:

I have written a book "Kick Start Your T-shirt Business: A Step by Step Guide to Starting
A T-Shirt Factory from Scratch". This book will guide you in preparing your business project report and estimating project financial projections.

You can contact us if you have any questions related to starting a garment business.

Published on: 20th De 2013

Updated on: 30 Jan 2023