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.
“I’ve sold out and I turned a turned a profit but it really didn’t seem worth all the work I put in.”
This is good place to begin.
Hourly wage = (Total Sales Dollars - $1,000) / Total number of hours making shirts
Assume it takes two hours to make and ship a shirt and you sold them at $40 each.
($2,000 - $1,000) / 100 hours = $10 per hour
If you could get job in convenience store at $15 per hour, opportunity cost is $5.00 an hour.
Opportunity cost is the value of the next-highest-valued alternative use of a resource (i.e. time).
Your solution is to borrow money to make and sell more. However, this will also require more hours to make and sell.
So, to make it worth while, you need to increase price or figure out a way to make and sell for less cost (i.e. faster process, less expensive inputs),