The Fundamentals Of Business Structuring

Mr Gbenga Totoyi, a human resource expert explained everything a startup need to know about business structuring.

He explained that human resources helps one do business without emotional distraction.

In an organisation, there should be:

Structure – are designated roles in a business which every employee fully understands.

Policies – are already-made decisions to cover all issues or problems that may arise in the company.

Processes – is the how and why your business functions.

Branding As A Catalyst For Growth

Mr Chigozie Amaraegbeni held the class on growth and the importance of branding.

Key factors in planning for growth:
Research into our market.
Segment your market.
Customer identification.
Determine the customer acquisition cost of your customers.
How do your customer talk/want to be spoken to.
Develop a marketing strategy.
Execute.
Learn quickly and adapt.

Three things to consider in general
Who is on your supply chain?
Who is our competitor?
Who is adjacent to your market?

Product Development: From Merchandising To Range Planning

To fully understand this concept, the expertise of Mrs Sola Babatunde, Founder of OSC College of Fashion, was implored.

A product developer designs and builds a product for eventual sale. This person must have a strong understanding of product development and production, and ensure profitability.

To start product development you have to:
Identify the market.
Maintain an identity for the brand.

The Processes Are:
Research and Analysis to Concept development to Sample preparation to Pattern development and cutting to Manufacturing.

Range Planning is when a collection has different range – pieces that go together – within it.

Fundamentals of fashion
Haute couture.
Designer label.
Mass market.

The Legal Side Of Fashion

Equity. Share holding. Ownership. Phantom stock. These are some business terms that has to do with finance. Fashion, like every other business thrives on finance. To really understand the legalities involved with owning and dividing a business, Mrs Jane Maguegbuna, a legal practitioner and the co-founder of Afrinolly was invited to share her personal story.

She began with the quote from Peter Drucker: “wherever you see a successful business, someone once made a courageous decision.”

Starting from when you wake up in the morning, you make a conscious decision to either get out of bed or remain in bed; workout or not; go to work or not. Every decision you make adds up to where you end up. So, it is very crucial that you make decisions that reflect where you see yourself and the goals you’ve set for yourself. Most times, these decisions are difficult and they’re not fun but they have to be made.


Equity and Share holding

Who holds what?
What percentage is fair?
How do you determine percentage?
Should you keep a reserve equity?

Equity is shared in a company as follows CEO – CTO – COO, where CEO gets the largest number of shares.

Mrs Jane Maduegbuna’s advice: at first 10% may not seem like a big deal but further down the line, you will come to see the benefit of just that amount of shares. Be careful how much shares you give away and to whom.

Types Of Employee Equity

Direct Ownership

Synthetic equity/Phantom stock: Stock Appreciation Right [SAR]. This case, you still own the stock but this helps create loyalty. As the stock value of the company rises, so those the equity share, gains more value.

Also contributing is Mr Oluwaseun Ajasa, Managing Partner ATC Legal.

Register your business name, trademark your products and always seek legal counsel on any document.

Mr Sunesis’s Guide To Business Branding

Chuks Ogene (Sunesis), is a creative entrepreneur (one who makes creative ideas profitable). He is known for his endeavours in design, fine art, brand communication, creative/art directing, fashion photography among others.

On the four brand quadrants to know where your business lies and how to effectively brand it are:

High Intellectual
These are products that are highly needed like drugs, technology etc. Customers are drawn to these products because they need them and are willing to pay a lot of money for them.

Mr Sunesis with project manager Ms Uju [left] and Mrs Blessing, Founder 360 Creative Hub [right].
High Emotional
These are products that are not really needed but wanted. The products are primarily luxurious and expen

sive. Examples include: Versace, Apple etc.

Low intellectual

These are products that are needed but also not expensive like notepads, pen etc.
Low emotional
These are products that are neither expensive nor needed, they include Limca drink, Zara brand etc.

To effectively brand your company, ask yourself these questions:
What is it about?
Why should you do it?
How do I make it happen?
Where/who will t impact?

You also need to keep in mind that to design you need to go through a series of processes beginning with learning, asking questions, thinking before finally applying.

Mr Sunesis with some of the students

Rufai Oseni: “Failing Is Not Necessarily A Bad Thing”

The fashion industry is encompassed with glamour but beyond the red carpet, the five-minute runway shows and photo shoots is an industry that needs funds to run just like any other.

Taking a peak behind the curtain, one would see that a lot of fashion entrepreneurs sway towards the creative part of the industry and neglecting the business side of it – which is the most important if you want to have a sustainable business.

Rufai Oseni speaking to the students.

To educate the young fashion enthusiasts is Rufai Oseni; a broadcaster with over 15 years of experience, an author and an all-round business man.

“Entrepreneurship is moving from one venture to another, consistently failing but without losing your sense of enthusiasm,” Mr Oseni said. He emphasized on the importance of not being afraid to fail because failing when starting a business is almost a guarantee.

Rufai Oseni

“Timing is everything.” Mr Oseni gave examples of some technology that would have been rejected if they actually came decades earlier. To break into your market, one must know when to do so.

On innovation, he gave a few sources where an entrepreneur can get one, with the primary focus being the customers. Watching trends, peer review and branding also being on the list.

After speaking extensively on the business side of fashion or any other business, he ended the session by giving a piece of advice: “business is a rational venture that needs an emotional fuel.”

Rufai Oseni

360 Creative Hub Fashion Acceleration

In an earlier post, I talked about the perks of signing up for a Fashion Acceleration Program  like I said it is not an alternative to fashion school. It is a program primarily focus on business and not design.

In light of this 360 Creative Hub would be hosting a specialized training aimed at Accelerating emerging fashion designers to becoming the next Valuable Brand and transform their fashion label into a sustainable business.
The program will welcome 30 fashion entrepreneurs that have existing businesses operating in Lagos, Nigeria. Fashion Acceleration Program is open to any entrepreneur within the fashion value chain; Fashion designers, Fashion Bloggers, Fashion illustrators, Fashion Retailers, Pattern makers, Jewelers, Shoe makers, Bag Makers, and every fashion-related field.

TRAINING COURSE OUTLINE

What will be taught in the program?

The Accelerator program is developed with your best business interest in mind and equip you with all knowledge needed to strengthen your business case.

The program will cover the following course material:

  • Business Model Design and Business Strategy
  • Customer Development
  • Competition & Positioning
  • Financial Literacy & Planning
  • Funding Strategies
  • Operations Management
  • Distribution Strategies
  • Digital and e-commerce Strategies
  • Marketing
  • The use of Social media to grow the Fashion Business.
  • Hands on Practical Sessions.

How it works
• Each Participant would be subjected to training for 12 hours per week (that is, 8 hours on Monday, 4 hours on Tuesday, including practical sessions)
• The 360 FAP Board will invite notable Fashion celebrities during weekends of the program to have a mentoring session with the designers,
• The designers would be given weekly assignments which would prepare them for a grand finale competition
• The graduation day will feature a competition where all the designers will showcase their designs that will be judged by Industry experts.
Academic Backbone
The program has been specifically designed with a strong academic foundation in collaboration with Alan & Grant Business Solutions in order to deliver a comprehensive and instructional program that will equip the students with a global mindset.
Industry Practical Know-How
The program has partnered with some international and the country’s top minds and companies as workshop instructors & guest lecturers, merging practicality and industry insights with academic backing.

PROGRAM PHASES

Phase 1: Call to entry and opening applications

The program has a two-step application process. The first step is the online application which will evaluate the participants on basic business & financial understanding, as well as on the solidity of their business structure.

The 2nd step is a day-long boot camp, where the applicants will convey at 360 Creative Innovation Hub and embark on a day-long activity, designed to test them on key business skills such as financial literacy, sales negotiation, marketing and human interpersonal skills.

Phase 2: The Accelerator

During this period the accelerator will take place every week on Mondays (full day) and Tuesdays (half day).

Phase 3: Graduation + Announcement of 2018 Edition Winner

At the end of the program, the participants will be required to present a business case in front of the judges and review committee. All participants will graduate officially from the Fashion Acceleration Program; one participant will be nominated as the winner.

During the graduation event, our panel of judges will select the fashion entrepreneur who has demonstrated most business acumen and capabilities to become the first Fashion Acceleration Program Winner.

Click the link below to register.

Developing a Fashion Collection Plan

As you think about the overall size and breadth of your fashion collection, you should identify the number of items required to fulfil your vision, but cross-reference that with a reasonable assessment of what can fit in a store, on a website or into a retail account’s buy.

There are three fundamental elements to planning a balanced collection and it’s essential to keep these in mind, over the long-term development of your product assortment, as well as in each and every collection you produce. We often think about these as a collection pyramid.

The Base: Every successful fashion company rests upon the success of one or two items which form the foundation of the overall product assortment and a more predictable stream of revenue around which a real business can be built. These products don’t change dramatically from season to season and they become the staples of your product offering. Tory Burch has her Reva ballerina flats, Louis Vuitton has its leather goods and Acne has its denim. Without this kind of solid foundation, it’s difficult to build a successful business.

The Middle: In the middle are the products that you adapt and refresh each season with new colours, fabrics or prints, but the basic silhouettes remain the same. Over time, you may choose to slowly adapt these products and perfect them, but in general, you are using tried and tested shapes which have already been proven in the market.

The Top: At the top of your collection is the purely seasonal elements which are more about driving interest and bringing new energy to your product mix. This may be the pieces you show on the runway and which are featured in the editorial. From time to time, you may have a huge commercial hit at the top part of your collection, but as it’s generally hard to predict exactly what will strike a chord (or which product your favourite A-list celebrity decides to wear), it can sometimes be hard for a small fashion business to capitalise on the short-term buzz generated by these types of products.

Use a stylist – smartly!
Many designers choose to employ the services of a stylist. These can be hired professionals, in-house team members or even a friend or colleague with a good eye. The most important outcome here is that you receive a second opinion on how the collection sits together best and how to present it to buyers or customers. Don’t underestimate the importance of this step, as it can greatly impact your eventual sales.

Make sure that you are designing and developing a product that can reasonably be produced. While that may sound like an obvious point, many talented designers create beautiful concepts that prove to be too expensive or complicated to produce at scale.

Fashion Design and Development

When we think of design, we often focus on the creative side alone. This is no doubt important. But it’s also critical to consider market feedback that may influence how you present your product. Everything you create produces a reaction, positive or negative. And the most successful business people tirelessly look for these signals, embrace their genuine meaning, and then react. Structured cost analysis, collection planning and smart presentation are also essential.

Here are four things you can do to make your design process more effective — and profitable.

1.  Pore over your sales results from each season
If you are already selling a product, you should have excellent access to every valuable sales data. Use it.

Read the reports generated by your store or website and ask your stockists for sales summaries. The information is generally available, you just have to ask for it.

Important metrics to focus on are: unit sales, total volume, sell through percent, net gross margin, net average retail price and returns. A quick note on the all-important sell-through, however. Sell-through is only a function of the success a product achieves related to how you or your buyers purchased it. So, while this is an important measure, it can exclude some important contextual information that should always be considered, as well.

A good buy from the same collection can significantly lift sell-throughs.
You should also spend time with your buyers and retail partners to add qualitative colour to the quantitative data you get from the reports. Ask them about specific styles. Why did they or didn’t they work? What might they do differently? What did you miss in your offering?

2. Talk to floor associates and check out the competition
Fashion is not a desk job. Get out there and see the state of the world for yourself. While buyers and company executives will give you good intelligence, the sales associates who work on the front lines can also be valuable in painting a vivid picture of how your product performs on the shop floor.

Initiate these relationships as often as possible and encourage the associates to speak candidly about what is and isn’t working, and what’s missing. As an added bonus, you may be pleasantly surprised by the attention your product gets on the floor once an associate is better acquainted with you.
You should also spend some time observing your peers (also known as competitors). Most customers have a finite amount of money to spend on fashion and it’s important to understand what other brands competing for that same share of wallet are doing and, in particular, which types of products seem to be performing the best.

3. Gather first-hand customer feedback
There is nothing quite as valuable as a direct interaction with your customer. Reports may tell you what consumers bought, but spending quality time with them or at least watching them shop will help you to understand how and why they make purchase decisions.

You’ll also get a better handle on what they chose not to buy. This is a particularly good way to identify styling issues, in addition, to fit and quality problems. The most tragic failures occur when a designer creates a beautiful product that’s poorly executed in terms of fit or quality. Without these elements, your hard work will be for nought.

So, if you are lucky enough to be selling product out of your own store, spend as much time as possible on the floor interacting with your customers. And if possible, when visiting your accounts, observe (or work!) the sales floor. Trunk shows are another great way to meet customers directly.

If you have a mailing list, you can consider reaching out directly to your customers for feedback. Posting a feedback link on your website or via social media is another quick and easy way to get more structured thoughts from your customers. You may be surprised how happy your fans will be to help you out. Sending a personal thank you note or offering a discount on the next purchase are both nice touches and good incentives for your customers to make future purchases.

4. Consider costs carefully
Make sure that you are designing and developing a product that can reasonably be produced. While that may sound like an obvious point, many talented designers create beautiful concepts that prove to be too expensive or complicated to produce at scale.

Be sure that every detail of the product is truly creating value for a customer. With a retail markup, on average, of 6 times production cost, every naira you are adding to the cost of producing a garment will add around N600 to the final retail price.

Your products should have clear cost targets, derived from working backwards from final retail pricing. Make sure to build in a realistic margin for yourself that considers not only the pure costs of production but also other monies that you will have to spend in order to get the product into a selling environment. This includes things like duties, freight, fees, comissions, warehousing, sampling and development costs.
Keep in mind that samples are often one of the single biggest line items in the design process and can swing a seemingly profitable collection into the red.

To know more about managing the business angle of your fashion business, you can register with us or find out about our upcoming Fashion Acceleration Program

5 Principles of Allocating Money in your Fashion Business

In an earlier post, we discussed Financing your Fashion Brand, in your fashion business by utilizing three different sources equity, debt and other income. Now that you’ve done it. The question is, now what to do with your funding? And, how do you make it last?

It’s likely that you will have had to agree to fund allocation to some extent with your investors prior to securing the funds, but it will be important to re-visit and re-confirm this now that you are past the negotiation stage. In reality, you will make spending decisions every single day, however small.

We will discuss the allocation of your capital, or more simply, how and where to spend your money.

The easiest way to think about allocating capital is by using a series of principles. Allocating money is about tradeoffs, and making those tradeoffs means choosing between spending on things that might seem equally important, on the surface.

For example, every fashion business will have to choose how much money to spend on building and shaping a collection and how much to spend on actually selling the collection. How do you make these decisions?

By using the principles below combined with the priorities for your own business. The ultimate decisions may differ from business to business.

So here they are, the 5 principles of allocating money in an early-stage fashion business:

Key Principle 1 – Carefully manage product development costs

While fashion is a product business that often comes with exacting standards, it is still important to carefully manage your product development costs. Creating large, unfocused sample collections with very expensive fabrics can be a death knell for a young fashion company. Not only will you have spent a fortune on developing a set of samples, you may have also created a collection that could never sell at retail because it would be far too expensive. Always use a collection plan to specifically identify the size, structure and price points for your collection, and select your fabrics with this in mind. This way, you won’t need to buy a bit of everything and sort things out once you are back in your studio, wasting money and time all the while.

Key principle 2 – Advertising is a cash sink

As a young designer, you probably don’t need to spend money on advertising, and the expensive photo shoots and super slick branding that come along with it. You can still craft a very strong profile by building relationships with editors, journalists, photographers and fashion insiders who take an interest in you and your work and may help you for free. Those relationships will not only generate valuable editorial, their impact will also be felt longer than even the best-placed one-page ad in Bellanaija.

As a young designer, you have a new and interesting story to tell and people will want to tell it too — you don’t have to pay them for this privilege. Supplement this with a professional looking website that is in tune with your creative vision and a clear brand identity that speaks to who you are creatively.
Key principle 3 – Focus on growing sales

As a growing company, you will likely be best off allocating your capital to people and assets that help increase your revenues. While you must invest time and resources into your product, brand image and identity, it is crucial that you are able to then leverage this raw potential to sell. Even if you have a strong collection and a growing brand profile, this will mean nothing if you don’t have a professional sales organisation to support it.

One of the first people you should consider hiring is someone who can help you with sales. Also, investing in an e-commerce portion of your website (or through a partnership) helps you to increase both sales and profits, as you begin to capture the full-retail margin.

Key Principle 4 – Don’t forget about working capital

Not all of your funding should be invested in fixed assets like sewing machines, office furniture and computers. You will also need funding to make sure you can counterbalance the difference between the cash coming into your business (e.g. from sales, sponsorship and consultancy) and the cash going out of your business (e.g. for fabrics, rent and salaries) In a growing fashion business, the amount of working capital tends to grow quickly as payments for clothes delivered to stores are often not received until well after the designer has made significant investments in everything it takes to bring that collection into a store – a large part of this is a variable cost of fabrics and productions costs that will increase with time as your business grows.

Key principle 5 – Use a budget

It is absolutely essential that once you have thought these issues through, you create a budget to track your spending against your plan. Without this roadmap of sorts, you could lose control of spending and suddenly find yourself without enough money to keep your business afloat. You should track your budget, at the very least, on a monthly basis, which means investing in a good bookkeeper to help you regularly track your accounts.

Next time: Value Chain – Design and Development

The design and development process is often a very personal one that differs from designer to designer. It is important to keep this process free and unrestrained to unleash the best ideas, but there are also things designers can do to stay on track and manage their time (and their team’s time) efficiently. For fashion business people, in particular, understanding your designer’s creative process is a crucial part of a successful creative-business partnership, and so designers must also be able to explain to others how you work, in order that they can work with you.

To know more about managing the business angle of your fashion business, you can register with us or find out about our upcoming Fashion Acceleration Program .