Tips for Surviving the Fashion Biz
My children’s clothing line, Glamajama, has been in business for almost five years now. Throughout those years I’ve seen quite a few designers come and go. One thing that I have learned is that it takes more than just having a great product to make a company successful. There are tons of great products out there and your staying power depends on your business skills- not your fashion skills. I always tell people, I’m not a fashion business -I’m a business that sells fashion. There is a difference. Keeping your focus on the business and not the “glamour” of being in the fashion industry will help keep you from becoming just a passing fad. Below, I’ve tried to list some tips for avoiding the most common pitfalls that can lead to failure.
Think Marketing First
As I mentioned above, having a great product is simply not enough to create a brand with staying power. The reality is, it’s a cluttered marketplace. To stand out from the crowd, you have to have a “hook.” Don’t wait until you’ve already had samples produced to start thinking about that hook. Ask yourself key questions at the beginning, “What makes my line different? What’s my niche?” As you continue to brainstorm concepts for your line, try to envision the logo, tagline, sales pitch, etc. How would you sell this to customers? Who is your target customer? Pick out your favorites and then solicit feedback from friends, family, and most importantly- complete strangers that belong to your target demographic. Which strategy garnered the most interest? Pick the winning marketing concept and make sure you incorporate that message as you fine-tune your line. Being able to effectively communicate your unique selling points is vital to stand out from the competition.
Focus on Cash Flow
Cash flow is hard for any business and especially hard for a fashion company. The sales cycle usually looks like this: make samples-write orders based off samples-manufacture line-three month’s later ship the finished product to customers-get paid. The problem lies in that you will need to pay for production upfront with a letter of credit to ensure that deadlines are met, but you won’t receive payment until the line ships three months later. Also, if you allow your customers to pay Net 30, it could now be four months before you get paid. The key is addressing this early on in your business plan. Can you add additional pieces that are non-seasonal to balance out your seasonal business? Can you secure a large customer early on that will allow you to finance their invoice to pay for production? Can you offer a discount to stores who agree to pay a deposit on the line when the order is written? Solving your cash flow problems on paper before the line launches will save you a lot of sleepless nights later on.
Perfect Your Pricing
Pricing is always difficult for new designers. The initial product volumes are low which translate to higher production costs. After the initial mark-up to cover your overhead costs such as marketing, utilities, and salaries plus the 2.2 mark-up for retail pricing, the product is often priced far out of what the market will bear. If the product is perceived as being priced too high, you won’t achieve the sales volume you need to garner the lower production costs. If you can’t lower your production costs, it will be difficult to be profitable. Without profits, the business won’t be viable. Welcome to the downward spiral! Pricing is arguably the most important component for your line’s success and also one of the hardest strategies to commit to. There are far too many variables to take into account when pricing your line to cover them all here. I can, however, suggest reading Frances Harder’s book, Fashion for Profit . She has a great chapter on costing and I would highly recommend reading it before solidifying any pricing strategy.
As always, please comment below with any questions and I look forward to hearing from all of you! Contact me directly at firstname.lastname@example.org