How to Start a T-shirt Company
It started with a nickname. Every day, Johnny Earle would go to work at the Braintree, Massachusetts, music emporium Newbury Comics, and every day his colleagues would call him something different. "Hey, Johnny Appleseed; Johnny Pancakes; Johnny Cupcakes!" Somehow, Cupcakes stuck.
That was back in 2000, when Earle was ordering T-shirts for his metal band, On Broken Wings. On a lark, he got a Johnny Cupcakes shirt printed up. His colleagues hooted, and store customers asked, "Where did you get that? Is it a bakery? An adult movie store?" Soon, Earle was selling half a dozen shirts a day from the trunk of his '89 Camry. He bought cheap shirts from a local silk-screen shop where he once worked. Shirts plus printing cost $4 or $5, and Earle charged $8 to $10. He created new designs that played off pop culture -- the Statue of Liberty lofting a cupcake; a cupcake and crossbones -- and marketed them to customers whose e-mail addresses he had collected.
On Broken Wings signed with a record label and toured the U.S. After concerts, Earle sold his shirts -- wrinkled and reeking of gas fumes from the band's van -- out of a suitcase. In cities they visited, he stopped by boutiques; a few bit. Meanwhile, customers who were also in bands dressed à la Cupcake onstage and in videos. A cult following grew.
Back home, Earle signed up with an inexpensive webstore called Merchline.com and upgraded his vendors, paying $7 for shirts and selling them for $20. He lived and stored inventory at his parents' house. He also trademarked the Johnny Cupcakes name and logo and began copyrighting designs for $750 a pop.
To improve quality, Earle began sourcing shirts from American Apparel in 2003. The next year, he laid out $10,000 to rent a booth, print a catalog, and travel with some friends to a large Las Vegas trade show. Stores in Australia, Italy, the United Kingdom, and Canada placed orders. He also had meetings with U.S. chains such as Urban Outfitters and Macy's.
Then Earle had an epiphany. "I thought, People want something that no one else has. If I put my shirts everywhere, they would just be a fad. I wanted something that would last a long time."
Earle severed relationships with large customers. He redesigned his website with better graphics and customer service features and issued numbered shirts in limited editions. The company has introduced 300 designs and retired all but half a dozen. The average price is now $35; some go for as much as $75.
In 2005, Earle rented a boat garage down the street from his parents' house in Hull, Massachusetts, for $700 a month -- the first Johnny Cupcakes retail outlet. A year later, he took a pole-vault-scale leap by opening a store on Newbury Street, Boston's fashionable shopping promenade. It was a huge investment: 1,100 square feet at $6,500 a month. Earle, a big believer in shopping as entertainment, spent $100,000 designing the space and fitting it with vintage stoves, industrial refrigerators, and baking racks. (He had a $90,000 bank loan and a $50,000 line of credit.) The opening was an event. Earle made 300 percent of his rent on the first day.
"It's impossible to tell from the outside that we don't sell food," says Earle. "When people find we don't have cupcakes, some get mad. But even the ones who get upset tell the story about how some stupid kid tricked them into going into his store. Everyone talks about us."
Company Dashboard: Johnny Cupcakes
Founder Johnny Earle, 27
Location Hull, Massachusetts
2008 Revenue $3.8 million
Start-up Year 2001
Start-up Costs About $6,700 for T-shirts and printing until 2003, when he committed to the business full time
Breakeven Five years out on sales of $1.2 million
Biggest Expense $10,000 for a trade show
Qualifications As a kid, Earle was a master out-of-the-backpack retailer, selling candy and practical jokes.
Red Tape Piracy is rampant. Once Earle got serious about the business, he trademarked his logo and began copyrighting designs.