Fashion is a cut-throat business. Brand success does not necessarily equal financial success. Victoria Beckham’s fashion empire has achieved critical acclaim and worldwide success, yet the company posted losses of £8.4 million in 2017. Most other fashion labels would have folded under the pressure.
The fashion business is broad and all-encompassing. At one end of the spectrum, there are people selling accessories from a market stall, and at the other, we have the likes of Victoria Beckham designing and selling high-end garments. Anyone can start a fashion business, but the key to success is to understand the difference between creativity and business. Being a talented designer/creative does not mean success is a given.
Creativity Vs. Business Acumen
Paris Fashion Week is 100% glamour but packing orders at 2 AM is not. Nor is going to a meeting with your bank manager to beg for more money. To be successful in the fashion business – or any other business for that matter – you need tenacity, business acumen, and the hunger to push through the bad times.
Recognise the distinction between critical success and commercial success. It doesn’t matter how many great reviews you have – unless positive reviews translate into sales, your business is doomed. L’Wren Scott is a good example of a high-end designer who was able to showcase her designs on numerous high-profile people but struggled to make sales. By the time she died, her business was more than $6 million in the red.
Successful fashion businesses all have key things in common. Firstly, they are selling a product that customers want to buy. This could be anything from designer clothing to cheap and cheerful accessories. The point is that without a market for your products, you don’t have a business. So, the first task any budding fashion entrepreneur must do is market research.
Talk to potential customers, online and offline. Find out who they are, what they want, where they want to buy it, and what price they are willing to pay. Once you have answers to these questions, you can move on to the next stage.
Write a Business Plan
A business plan is a blueprint for how you run your business. It is also essential if you plan on borrowing money to start the business. Templates are available online, but in general, a business plan should cover everything from what makes your brand unique to how you plan on marketing your brand online. Use this as an opportunity to figure out what makes your brand unique and how you can persuade customers to buy your products.
Maintain Positive Cash Flow
Cash flow is critical. Once your cash flow dries up, you can’t pay suppliers or staff, ship orders, or do much of anything. This is usually the point when a successful brand goes to the wall.
Monitor your cash flow very carefully and keep outgoings as low as possible. If you need more working capital, start looking at financing options. Whether you approach your high street bank or move on from a MetaTrader 4 demo to start generating income trading forex, is immaterial. What matters is that you plug your finance gap before the bills start piling up and business stalls.
Fashion – and retail in general – is in a tough place right now. Traditional fashion stores are struggling. Victoria Beckham’s sister opened a fashion boutique in 2015. It lasted less than three years, despite the backing of her famous sibling.
The Secrets of Success
Many fashion entrepreneurs start selling their products online. Running costs are lower and market reach is far greater. Boohoo began life as a market stall and is now a £2 billion online fashion empire. The success of Boohoo – and other online giants like ASOS – is that they have adapted to market conditions, despite the looming threat of Amazon.
Learn from their success if you want to emulate them.