There’s the dream of starting a fashion line, and then there’s the reality behind it.
A big part of that reality is cash. Numbers. Dinero, moolah, bread, dough, jack, loot, coin. I could go on cuz I’m having fun with this but I think you get the idea…
There are a lot of factors that can play into your business’ success – or demise. And in the end it comes down to sales and profit. Did you sell enough? Did you keep enough at the end to pay your bills, support your team, support your family, and live a happy life? Do you have enough left over to make running your business FUN?
I did a VIP Intensive Day with a designer the other day and she said something that made me pause. I’ve heard it before but for some reason when she said it I wanted to reach across the table and shake her shoulder. Or slap the side of her head a little. Not too hard, no permanent damage, just to show her how much I disagree based on 20+ years in this business.
“I don’t need to make a lot of money with this new line, just enough to get by and do what I want to do.”
Mind you, this emerging designer is NOT independently wealthy.
“Then why not just keep it as a hobby? Because it sounds like you’re talking about a hobby.”
If it’s a hobby, that’s cool. But if it’s a business, you need to focus on the dollars.
And now for the list.
The 5 biggest money mistakes most startup fashion lines make.
Mistake #1: Not costing and pricing your product correctly
This one is so huge I could write an entire book about it. When I first started my line, I screwed this up completely.
There are a lot of reasons people don’t price properly. It could be that they don’t have a good cost sheet that’s geared ONLY for emerging fashion designers. It could be that they don’t understand what kind of margins you really need as a startup to make a profit. Another factor about pricing is the mental game we play with ourselves.
I meet with hundreds of designers in my work and this is a huge issue messes with their heads. When I started, I know I didn’t have the real, deep-down, in-my-core confidence in my product yet. It’s hard to sell something if you don’t REALLY believe in your pricing.
(Quick Plug: You need this mini-workshop if you’re not sure about your pricing. Seriously.)
Mistake #2: Not investing in people
Way too many startup business owners try to do everything themselves. You are in the manufacturing business, whether it feels like it or not. You need bodies – sewers, pattern makers, graders, fabric sourcing people, designers, marketing people, sales help, and cutters. You simply CANNOT get all this accomplished as a one man show. If you’re doing everything yourself, you will burn out quickly.
As soon as it’s even remotely possible, hire help. GOOD help. Hire people who are good at the OPPOSITE of what you’re good at.
As marketing guru Gary Vaynerchuk says, “Collect people”.
Mistake #3 Not knowing what you’re getting yourself into
In this case, I’m talking about the THOUSANDS of you who have a great idea and want to make a business but have no background in the fashion business. And that’s OK, it really is. What’s missing from so many startups, however, is the willingness to get an education.
I’m not talking about going to fashion school – I don’t think that’s necessary to have a successful line, not at all. I’m talking about educating yourself and learning from those more experienced than you.
Getting an education about the fashion industry should be a requirement that you make for yourself. You can do any or all of these things: Getting an internship with a successful company, reading books, interviewing successful people in your niche, taking online courses, hiring experienced help, getting a business coach, surrounding yourself with other smart entrepreneurs, attending conferences and Seminars, etc…
And then there are the SPECIFIC expenses you will run into that you don’t know about until you’re IN IT.
In my experience, there are 3 steps to a successful business in the fashion industry.
Step 1) Make a GREAT product that people actually want
Step 2) Find an audience (a community, really) that likes what you make and can afford to pay for it
Step 3) Sell your product to your audience
You need all three to have a successful business. It’s like a 3 legged stool. Lose one and the whole thing falls over. A great product with no customers will fail. You could have tremendous audience-building skills but not know how to close the sale. And all the marketing in the world will not be able to sell a craptastic product. Yes, that’s a real word.
Most startup entrepreneurs, especially creative types, spend all their time on Step One. I see it all the time – you focus all your time on product development, you’re a designer after all.
Perhaps you feel (even unconsciously) that if your product is great enough, people will find it. Then you’re shocked and disappointed that when you finally launch there’s no on to launch TO and sales are slow. “Build it and they will come” is total BS when it comes to selling a fashion line.
Mistake #5: Mixing personal and business finances
I’ve made this mistake too. Heck, I’ve made all the mistakes on this list. It’s tempting to “keep things simple” for yourself and mingle the funds. After all, sometimes it feels that YOU ARE the business, right? But keeping these two entities completely separate is important. It will make it so much easier for budgeting, accounting, and understanding your true expenses.
There are some things that just are NOT meant to go together – and your business and personal finances are one of these things.
- oil and water
- NPR and NRA
- Brushing your teeth and orange juice
- Julia Roberts and Lyle Lovett
- Donald Trump and the Presidency of the United States (couldn’t resist)
Here’s my advice about NOT co-mingling your funds:
- Keep business money separate from home
- Could even be 2 checking accounts (both personal but separate) until you get a business account
- 2 different credit cards – one for work, one for home
- Track everything from the beginning – everything you spend AND every dollar you make
- I recommend QuickBooks
- Consider getting help setting up your chart of accounts if you use QuickBooks – after that you can do everything
- Check out Mint.com. I use it and I LOVE it – and it’s free
- You can even start with a simple Excel spreadsheet, just do SOMETHING
The TAKEAWAYS from this article
Get help. Know what you’re going into. Treat your business like a business. Give yourself an education.
Want more free help for your startup?
Join me for a LIVE free online Startup Webinar, “How to Start a Fashion Business Without Losing Your Shirt”
It’s happening August 20th, 2015, and I’m going to teach you what I wish I know BEFORE I started my clothing line. Plus, I’m doing it LIVE and I’ll be taking your questions at the end of the presentation.
Now it’s YOUR turn… Was this article helpful? If so, kindly click the LIKE button below and SHARE it with your peeps. Also, give me some feedback!! Which of these things do you think is MOST important? Can you give me an example from your own business about one of them? Leave it in the comments below and let’s get chatting, OK?
Thanks for reading,