Writing A Business Plan For Your Fashion Start-up.

business plan

Running a clothing store presents you with many elements to consider, such as where to get your clothes, whether to maintain a store front and/or online sales, how much to mark up clothing items, and how to market your store and protect yourself from liability. Making decisions on these matters requires careful planning in the form of a business plan. A well thought-out business plan will give your business a greater chance at success and help you avoid common pitfalls, such as unrealistic predictions of expenses and revenue.

Executive Summary

The executive summary is the first and most important section of your business plan, as it gives potential investors and decision-makers a snapshot of the types of clothes you offer, identifies the potential market for your products, lists your mission statement, your qualifications to run your retail business and details how your expertise will be an advantage in your competitive industry. The executive summary should be between one and four pages and should be written in plain language, or without too much clothing industry jargon, so that anyone can understand it.

Company Description

Whereas your executive summary describes the mission and vision of your company, your company description, which is the next section of your plan, expands on the competitive edge of your business. List any unique processes you use in obtaining, storing or shipping your clothes, explain the history of your company, what inspired its formation and expand on the specific market needs it will fulfill. If you serve a niche, such as certain shapes and sizes of people, or if each outfit is tailored to the individual, this is the place to list it.

Organization Structure and Management Team

Inform readers of your business structure, such as sole proprietorship, corporation or partnership, and explain who does what in the organization. Provide a professional profile of key managers and owners by listing related education, accomplishments and expertise details that will help your clothing store succeed. Previous retail management experience, fashion or design industry work and business management training are examples of applicable experience.

Worry less about rent, our sewing space is available and affordable.

Products and Services

Elaborate on your clothing lines and any other products/services you’ll sell. Explain the benefits customers will experience by buying from you. Use this section to assure your business plan’s readers that there are people currently interested in buying your product and that future sales will only increase. Provide information on your clothing designers and/or suppliers, the costs of your clothes, and any copyrights/patents your company holds that give you an advantage.

Market Analysis

Analyze the strengths, weaknesses, opportunities and threats for your business, a process often called SWOT analysis. Give detailed information on the retail clothing industry in your area, stores you are in competition with, your target market, how you will market to your customers, your sales distribution channels, such as in-store and/or online purchases, and the sustainability of your competitive edge.

Marketing Plan

Describe how you plan to advertise to consumers shopping for the types of clothes you sell. Show how your plan will appeal to people in targeted ways; your shopper’s demographics, including age, education, interests and location, should direct your marketing efforts. For example, if your average consumer will be 30 and under, consider investing in a heavy online presence.

Worry less about rent, our sewing space is available and affordable.

Financial Planning and Funding

Develop estimates of your store’s profit potential; this will require some market research. Specifically forecast your expenses and revenues in the form of income statements, cash flow statements and balance sheets for five years. Provide an estimate of your break-even point, or when your clothing costs and other expenses equal your revenue, which will let investors know how much product you need to sell in order to make money. The funding section is also the place to ask potential investors for capital and show them how it will be used.

Worry less about rent, our sewing space is available and affordable.

Growth and Expansion

It is important for you and your investors to know the ways in which you plan to grow the business in the future. Predict the type of growth your store will experience and set goal markers to achieve it. For example, if you want to expand your store to two locations within the first five years or expand your selection of clothing or accessories, include these plans in this section.

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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.

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Creating a Business Plan

A business plan is an essential tool, not just for raising investment, but also for clarifying your goals and objectives and communicating these to your wider team of employees, business partners and clients. There are five essential components:

A business plan is an essential tool, not just for raising investment, but also for clarifying your goals and objectives and communicating these to your wider team of employees, business partners and clients. There are five essential components:

Executive Summary: The executive summary is at the beginning of your business plan, but should be the last thing you write. It encapsulates all the key points, ideas and objectives of your business in a very short and concise “elevator pitch.”

Vision & Objectives: This section will help investors, and anyone else reading your business plan, understand what particular market need you are going after and what you will offer that is unique and differentiated.

Market & Competitive Landscape: This section describes the market that you plan to operate in. How big is the market? How fast is it growing and what evidence do you have that this part of the market is a viable opportunity? You also need to identify who the competitors in the market are, whether they are growing and what their position is on the market. What are you going to do that is different?

Implementation Plan: This is probably the most detailed section of your business plan, identifying the specific actions that your business will take to go after the market opportunity you have identified. Ideally, it should cover three years of activity, on a seasonal basis, and should include everything from how you communicate as a business and the staff you will hire, to the space you will need and the outside expertise you will require, in terms of marketing, communications or PR.

Financials: Your financial plan shows how your business will grow in terms of both profit and revenue and what financing you will need to make it happen. An income statement uses projections of how your business will grow at the top line, through sales and other revenues, and will also project the costs of delivering that growth. The cash flow statement shows the peaks and troughs of your cash situation on a monthly basis and identifies what funding you will need to finance growth.

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 .

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Creating Brand Awareness

In fashion, creating brand awareness is essential, the person designing and developing the product is often also responsible for the advertising campaigns and the brand communication. As a creative director, you will be overseeing multiple parts of the marketing mix.

 

Know Your Customer: A designer should keep a specific target customer in mind as they develop the collection. Think about their lifestyle, budget and what is important to them. Understanding all of these things will help you communicate with your customer and create awareness about your brand.

Brand Story: A brand story is what people will talk about when they think of your brand. It summarises why your brand exists and what are the unique characteristics of your product that makes it distinct from everything else in the market.

Marketing Mix                                                                                                                                The Four Ps: The marketing mix is a set of tools that allow you to craft a clear marketing direction and tell your story.

Product is the tangible physical product or service you provide. The fashion industry has all sorts of different products. You might be known for footwear, evening dresses or active wear. Be specific about what you are selling.

Price effectively positions you in the market. This determines who your competitors are and also the different materials and quality of materials that you will use for your products.

Place is where you distribute and sell your products to customers. You want to make sure that your product is available where your target customer shops and at a place that is consistent with the positioning of your product.

Promotion includes everything from traditional marketing with advertising and PR, to new media marketing on social media. Today it is absolutely essential to have a website and a digital presence.

Advertising: Advertising can help you reach a large audience, control and increase brand awareness and secure press coverage. However paid media comes at a high cost and it will probably be a long time before you can afford it. The real potential for moving your brand forward in terms of image and what you control is online.

Public Relations: When you have things to share, new products coming out or announcements to make, working well with different types of publications is going to be a key part of building your brand. Therefore you should build a good relationship with the press, especially the ones that have taken interest in your product and what you are doing.

Social Media: Social media is a powerful and affordable way to build awareness about your brand. Only engage in those platforms that address your target customer. Be aware that it takes time and resources to manage and provide content on social accounts, so it is probably the right choice, to begin with only one or two social media channels. The fashion community really engages first on Instagram and then on Facebook.

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 .

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Financing your Fashion Brand

Financing your fashion business can be overwhelming. Each season as your sales increase and your business grows, your upfront costs will increase and the money you earned from previous sales will not be sufficient to finance the growth. You will need some kind of financing to bridge the gap. There are generally three different sources of available financing for a fashion start-up.
Equity: Equity investors provide cash to invest in your business. When you take on an investment from an equity investor, they become part owners of your business, which inevitably means that you will have to share some decision-making with that investor. The best equity investors can offer you smart money, which is money that comes with expertise; contacts and other types of advice that can help you build your business. You will have to report to a board for key decisions and regularly report on how your business is progressing.

Debt: Debt financing usually comes in the form of a loan. You are required to pay back the money you have borrowed plus interest in a defined schedule of payments. Taking on the debt will mean that you will have additional cash outflow that your business will have to support each month and that can be an additional burden for a business to bear in the early stages. The big advantage with a loan is that you are not giving away any equity of your business and you maintain full control. Debt providers will not actively get involved in your business; they are mostly concerned with getting back the money they have lent you with interest.

Other Income: This can come from a variety of sources, including awards and competitions and providing advice or services to other companies. The benefit is that this kind of funding is non-interest bearing and you are not giving away any equity in your business. However, these other commitments can be a distraction from your core business, as they require your time and energy.  To know more about managing the business angle of your fashion business, you can register with us.

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Creating a Business Plan For Your Fashion Brand

The term “business plan” is casually bandied about like a hot potato in the studios of emerging fashion designers. Everyone knows you need one, but still, so few emerging design businesses take the time upfront to properly plan for their success. Success is very rarely accidental. Sure, we all benefit from some good luck from time to time, but real success can only come through hard work and good planning. For this, a business plan is critical.

So, what is a business plan for?                                                                                            Many people think that the primary purpose is to secure funding – i.e. loans from banks or cash from investors. And while this is certainly one important objective, it is not the most important one.

The truth is, the business plan is, above all else, for you: the person or people who will drive the business forward. It is the document that lays out your vision and objectives. It is your roadmap for how you think it should evolve and grow to achieve this vision. It contains the budget and projections for how your business will manage is finances and fund growth. It is the document that helps you decide what to do, and just as importantly, what not to do. It is a living, breathing document that you should use to measure your progress, while still being willing to adapt it to reflect new insights, unexpected competitive threats, and changes in your business environment. In short, it is like your company bible – except that this is a bible you can adapt as you go along.

You can also think about the business plan as a tool for communication. Anyone who has set up a new business knows that when you are looking for investors, employees, suppliers, office space, banking services, professional advisors and everything else that you need, you have to tell people about your business and its aims. When you have spent the necessary time in crafting a business plan, you will be able to more clearly articulate what your business is all about. This makes you seem more professional and organized and will enable you to attract the people, support, and money that your business needs to succeed. Going through the business planning process will enable you to distill your business down into a short “elevator pitch” of concise points that together provide a good understanding of your business aims in a short period of time. When people understand your business, they will know better if it is something in which they would like to be involved.

Now, if that all makes sense, what then do you need to include in a business plan? Essentially, it should address all of the constituent parts of your business starting from the broadest vision of the business right down to the most minute operational issues of job descriptions and work plans. The first thing to do is create an outline for all of the topics that need to be covered, and then for each of those topics jot down all the ideas and thoughts you already have. If you don’t have a written plan already, then it’s likely that much of your business plan is in your head and so you need to start getting your current thoughts out on paper in a structured way so that you can then go and revisit each of the topics in more detail.

A sample outline of a business plan for a fashion business might look as follows:

1. Executive Summary – This is something you do at the end, once the rest of your plan is fleshed out, It will quickly become the so-called “elevator pitch” for your company when you need to describe it in a short interaction. It only needs to be a few paragraphs long.

2. Vision and objectives – This section describe the vision of your business — essentially, why you set it up. What specific market need are you trying to fill? Which customer are you targeting and why?

The more specific you can be about these issues, the more compelling your business plan will be. If the reader (or listener) can really understand the market need you have identified, then they will be much more likely to buy into your overall business plan.

Understanding everything about your customer’s lifestyle and preferences will make your job as designer and manager all the easier. You will not only know who you are designing for but also where they shop, what magazines they read and what influences their buying behaviour. All of this will feed into important decisions you make every day about how you design your collections, manage your business, and promote your brand.

3. Market and competitive landscape – This section describe the market you plan to operate in. What is the size of the market and how quickly is it growing? Who are the other players in this space?

To be clear, the market size you need to describe is not the size of the global market for clothing, but your estimate of the size of the specific market you have identified, in the geographies you are focusing on. Yes, this information can be hard to find, but you can take larger market size figures and estimate what share of the overall market your business is going after.

As for your competitors, the better you can describe and understand their products, their style and aesthetic, and their positioning and strategies, the better you will be able to shape your business to stand out from the pack.

In general, quickly growing markets of a good size with few competitors (or few strong competitors) are usually quite attractive. However, if you have identified a clear niche market that is currently -unfilled, then that can also be very compelling.

4. Implementation plan – This section clearly describes all of the resources you will need to make your business successful. How many staff will you need in which roles? What type and size of space will you need to design and sell your collection? What outside expertise may you require operating successfully?

An implementation plan, therefore, contains a detailed description of all of the operating requirements in your business including Design, Production, Sales, Marketing/PR, and Retail. You should have a detailed plan for each of these core steps including human resources, expertise, space, and timing. Thinking very clearly about the various roles and responsibilities that need to be filled will ensure that you find the right people to make things happen for you. In turn, attracting the right team will also make it easier to attract funding. Most investors invest in people and teams, not just ideas.

Without an implementation plan, your business plan can lack the concreteness and specificity required to convince people you can take your vision and make it a reality.

5. Financials – This section is absolutely critical to your plan as it will identify your projections for how the business will grow, in terms of both profits and revenues, and what financing you will need to make it happen.

An income statement uses carefully thought-out projections of how your business will grow at the top-line (i.e. sales and other revenues) and will also project the costs of delivering that growth, including the team and other resources you have identified in the implementation plan. This statement will then project profit, by taking projected revenues and subtracting projected costs.

However, the income statement does not tell you how much money you will need to raise as it does not reflect the timing of cash inflows and outflows. This is where the cash flow statement comes in.

The cash flow statement is one of the most important parts of your plan as it shows the peaks and troughs of your cash situation on a monthly basis and identifies what funding you will need to make it through the troughs. You can think of the cash flow statement as a monthly account of cash coming in and cash going out. The difference between these two figures is your funding need for that month – and you are better off knowing your funding needs in advance as opposed to finding out later when your bank account is empty and suppliers are asking for payment before they release your goods. This is particularly important in the fashion business where you incur many costs up front (designing, sampling, sales efforts) before any of your revenues even come in.

If you can, you should have a trained financial or accounting professional (a friend, family member or other contacts) to help you with this section. They will have the expertise to sense check your assumptions to ensure that they are sound and believable. It’s better to have their input before you take your plan out to investors who will inevitably ask you the same probing questions and who will be looking for concrete answers.

Next time: We would discuss finding the right investors and partners

Once you have a plan in place, you will then be ready to start soliciting financing.

To know more about managing the business angle of your fashion business, you can register with us.

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