Many people in India start a business without any proper research or without following the set procedures. Due to this lack of following procedures, several businesses fail in India. We will talk about the steps required to set up a garment manufacturing unit in India in this particular article. The garment manufacturing industry is one of the largest industries in India in terms of both creating employment and contributing to GDP. This industry contributes approximately 4% of the GDP.
Steps involved in starting a garment business:
Market Research on Market Industry
It is very important to do research about each link in the supply chain of the garment industry to get an idea about things like the specific product to manufacture, domestic and international selling opportunities, demand and supply, market share, competition, costing, workforce required, sourcing of suppliers, logistic solutions, packaging costs, machinery required, branding and marketing to get and maintain customers, and so on. After getting an idea about the supply chain, it is important to research already established and successful manufacturing units and their way of doing business. It is significant to research about B2B market segmentation in order to know what the competitors have to offer and how your company can differ by offering a unique selling point to the target customers.
Opportunities in the Market
To establish the unit, you need to understand the market opportunities. If you enter an already crowded market that has a lot of manufacturers, then your chances of earning huge margins will be less. Therefore, it is recommended to scout for opportunities in areas where there are not so many players and which has scope to grow in the future. You also need to understand the consumer groups that you want to target. For instance, as consumers are becoming aware of the environmental problems, there can be seen an increase in demand for sustainable and slow fashion. This sustainability trend is being driven by millennials so the target consumer group, in this case, would be millennials.
On the other hand, there are many people who like to have a variety of clothes and believe in fast fashion and changing their closet with the trends. So, in this situation, the manufacturer will have to set up a unit and focus on changing designs or patterns every week. Some big brands like Zara, Mango, H&M, source garments from South Asian countries, so there are opportunities to tap the international market after setting up the unit.
Selection of Product Range
You need to decide the products you want to manufacture after your research. You can start with a couple of products and expand the product range in the future. For instance, you can start by manufacturing the products which are currently in high demand, and trendy, and are staple products. For instance, products like denim, men’s shirts, nightwear, and so on can be categorized as basic needs products. It is better to start with one category and selecting your niche product range to set up the unit. Once you have decided on your product range, further research and work are based on this niche range.
Finding a Location
Finding a suitable location is a very crucial step for setting up the plant. If you are willing to move away from the place you live, then you can scout for a location all over India. It is better to start by scouting the textile hubs of India like Tamil Nadu, Gujarat, Maharashtra, Karnataka, Uttar Pradesh, Rajasthan, Madhya Pradesh, and West Bengal. It is recommended to set up a garment unit in an industrial zone because of the various benefits associated. There are various factors to consider while selecting the location. Some of them are land costs, availability of labor, raw material sourcing, logistics, state laws, and the list goes on.
Estimation of Production Requirement
Based on the budget and customer demand, you can estimate the per day production of the unit and then accordingly set up the unit. You want your plant to work at full capacity the gain the most. Therefore, it is essential to estimate the production requirement carefully after conducting the necessary research.
Estimation of machinery, manpower, and raw materials
Depending on the production requirement, you decide how many machines you will require. You need to calculate per machine production capacity each day and accordingly invest in it. Furthermore, you need to decide the number of workers you will require to run the plant efficiently. You will need to estimate the number of direct labors, supervisors, managers, required. Thereafter, sourcing of raw material from suppliers and selecting suppliers who deliver in time and do not compromise on quality. You will also need to calculate the volume of material required on a monthly or weekly basis. It is always better to source from more than one supplier in order to avoid any problems later.
Investment Requirement and Raising Funds
Once the estimations regarding machinery, manpower, and raw material are calculated, it is important to create a financial model including all the fixed and variable costs estimation. This will help you understand the initial investment required and also if there are any cash shortfalls in the future, you may require several other investments. This model will act as a guide for you regarding the amount of investment required from time to time. You may also need to raise funds to get this investment as setting up a plant is expensive. It is important to choose the best funding option for your business.
To acquire and gain customers is not that easy as you need to build your credibility in the market. You will need to invest a considerable amount in marketing. You will have to set up a marketing team from the beginning to ensure people know about your products. You need to create a marketing strategy focusing on your unique selling point, develop a good website, do social media marketing, come up with some campaigns to create an impact, collaborating with international clothing brands, and so on. All this comes under customer acquisition costs. Once you have invested in this, you will see how your company grows.
Setting up the Plant
Once you have done your research and have sufficient funds, you can start to set your manufacturing unit. Follow the undermentioned procedure to set up your plant:
- Register your business
- Opening a current account
- PAN Card and GST registration
- Government approval for setting up a factory
- NOC from the local community
- Project schedule preparation and adhering to it
- Setting up a website
- Hiring the right staff at supervisory and managerial levels
- Purchasing and installing machines
- Hiring machine workers and giving them the necessary training
- Setting up different departments to avoid confusion
- Marketing your samples
- Getting bulk orders
- Purchasing raw materials
- Start production
- Quality control checks
- Dispatching order in time
- Setting up CRM
- HR checks to ensure labor productivity
- Proper maintenance of machinery from time to time
Setting up Your E-commerce Website
Nowadays, people have shifted to online platforms when it comes to shopping for garments. You can set up your own e-commerce marketplace to reach a greater number of people in the future. This will help you increase sales and customer base.
To start a garment manufacturing business by yourself can be very challenging as it includes a lot of significant steps which cannot be missed. We at HBF Direct Ltd. can help you set up your manufacturing unit and help you with the entire process. We can help you with Market Research, Business Model Development, Financial Plans, Creation of a Road Map, Legal Compliances, HR Management, IT, Fund Raising, and other services. We provide all services from zero to hundred under one umbrella so that it reduces costs for you. Get in touch with us and we will turn your business into a success story!
About The Author
Well Qualified from An ESADE Business & Law School. young age Business Consultant. Help Companies and Entrepreneurs to grow.