Disclaimer : I am a high schooler and I just turned 18 in September. I don’t know much about business. No one in my family knows much business. If I sound clueless and naïve it’s because I am.
So this summer I started a small clothing brand from my own pocket. I had one design manufactured at a quantity of 50 and it cost me around 1k. I’ve sold out and I turned a turned a profit but it really didn’t seem worth all the work I put in. I know that if I want to see higher returns I have to sell more than 50 shirts.
I want to have my next design made but I just don’t have the money. Is it wise to take out a loan? All I can hear is my mother berating me about what a terrible idea that is.
If I were to take out a loan it would be for less than 10k. But the idea of going into debt at 18 is horrifying. I’m sure I could make it back with time. Having that much money means so much freedom to create the brand I’ve dreamed of. Part of me just feels like I’m too young and inexperienced to chase this passion and I should just work a normal job while I’m in school. I’m just lost.
As you can tell I do not know a lot about the business world and finances. Any and all advice/information will be hugely appreciated.
Selling 50 shirts is nowhere near equivalent to owning a business. When I was 14 I ran homework services in school and I made a killing (at least to a 14 year old). I mentioned this because running my own homework “business” was nothing close to actually running a business and its very likely that its the same for you. With that in mind, instead of taking a loan out, you ought to either seriously study marketing, sales and business, or find a mentor who will help/guide you, or work alongisde someone who is doing similar to what you are doing now but on a bigger scale… this way you can learn from them.
Alternatively, if you find yourself a stubborn individual who will not be resisted by anyone and are deadset on getting that loan, here is an alternative which is by far safer.
Find clothing manufactures and ask them to create X amount of product for a “testing” phase. Then tell them that if you sell X amount in Y amount of time, the manufacturer will receive all the profits for this (bar the shipping/handling). In exchange for this, they have to agree that if the tests proves succesful and the manufacturer is satisfied with the results, they will produce the next batch of product (say 1k clothes) and will only receive payment after the item is sold… This is basically how you elimante the need for loans (on a small to medium scale). One thing to note with this approach is that in the last part of the plan, the “will only receive payment after item is sold” you should give them highet profits to ensure the highest chance of them accepting this deal. So for example, say you pay 1$ for 1 piece of clothing from manufacturer. Well to make sure they accept your offer, increase their profits, say from 1$ to 1.15$ or 1.30$ or 1.5$ and so on… sure you may profit less, but at least you arent in debt and are safely running your shop, which in my opinion is by far better and more appealing… also, if you increase the profits the manufacturer receives, its highly likely that they will offer you additional benefits that may come in handy, or they will create better deals for you, or perhaps introduce you to other people who can help you, or many other things…
I have personally used this approach countless times and even once had a car gifted to me by a individual who was in a business relationship with me that started through this approach. So, yeah, this approach is valid and very effective. If you got questions let me hear them.