What the future holds : Fashion 2.0

I’ve been in this scenario long before I started my career in the fashion industry. To be precise, I was working for some of America’s big I.T. companies like IBM, Hewlett-Packard and Intel. Now I find myself having to refresh my memories of the IT jargons and acronyms to familiarize myself again but it’s not so hard after reading a very interesting article posted on The Business of Fashion recently.

The topic was regarding the role that the Internet and so-called “Web 2.0″ technologies can play in the branding, marketing and commercial strategies of luxury and fashion companies.

It felt like being in a time warp for me being in the IT back then when all we talked about was e-Commerce, e-Biz and the Internet. It’s like deja-vu! But being in the fashion industry there was a notion that luxury “customers aren’t on the Internet” and that the Internet “is too risky” for luxury brands. BoF shares two examples of fashion businesses that were effected differently by the introduction of the Internet were Natalie Massenet (of Net-a-Porter) or Ernst Malmsten (of boo.com) back in 1999, making a case for the potential of Luxury and the Internet, to people who were very risk-averse, conservative and stuck in old mindsets; people who couldn’t see the potential for what the Internet could do for their brands and businesses. Of course boo.com and Net-a-Porter have followed two very different stories. (One, which ended abruptly, was discussed in this post.) Massenet, however, has shown (with her company that is now turning over a reported $80m and growing at 100% per year), that as with all businesses, harnessing the power of the Internet for Luxury comes down to basic business acumen, strong marketing skills, and knowing how to properly manage and grow a start-up, while also understanding technological issues such as the adoption curve and limitations of sophisticated technologies.

As for Luxury customers not being on the Internet, this appears to be an assumption made in the absence of basic facts or data. One need only look at a recent article from the Financial Times to see really how many luxury customers are online:

“A survey of 500 of America’s richest families published in 2005 by researchers Doug Harrison and Jim Taylor found that the respondents spent on average 13.7 hours a week online. The Luxury Institute, in a survey of 1,000 wealthy consumers published in March, found that 98 per cent used the Internet for shopping, and that 88 per cent read product research and review sites.”

Clearly, these are not just young bucks trying to pick each other up on Myspace or Facebook, but also high net worth communities like asmallworld and focused fashion communities like Iqons.com. Big brands and collections are being discussed passionately on all of these highly-trafficked sites, but also on blogs (purseblog.com, whowhatweardaily) and virtual communities (secondlife.com). The amount of content is mind-boggling.

Obviously not all of it is good content. But, the basic point is that since conversations about Gucci, Prada and Burberry are going on, Gucci, Prada and Burberry might as well figure out a way to be part of those discussions, where it makes sense. The fact of the matter is that the conversations will continue, whether they are involved or not. Of course, not all of those places would make sense for every brand all the time, but to disregard the importance of the Internet outright seems shortsighted.

When it comes to the riskiness of luxury brands on the Internet, I can certainly appreciate this point. Big players have the most at stake, given the energy and money that have been invested in their brands, sometimes over hundreds of years. But that said, where there is risk, there is also opportunity. Thankfully, some big brands have recognized this and started to experiment with some of these new communication channels. Armani and Karl Lagerfeld have brought their fashion show videos to the Internet, iPods and mobile phones, showing that being a pioneer has nothing to do with age, it has to do with attitude. Dior has also experimented with the launch of a jewelry collection on secondlife.com.

That said, some of the most exciting ways to really experience what online luxury might feel like in the future is by visiting the amazing virtual worlds created by emerging designers, who are able take more risks and experiment. Boudicca’s site at platform13.com is like walking right into the fantastical (sometimes incomprehensible) world of the designers, Zoe and BriSuestemp_5 and, who share all aspects of themselves and their passions. They have also uploaded all of their fashion shows to Youtube. Other fashion designers are also providing a peek into their everyday lives by keeping regularly updated blogs. New York-based Brit Sue Stemp and dynamic British-Japanese duo Eley Kishimoto are amongst those using blogs to create a space to communicate with their customers.

What the future holds for luxury eCommerce in particular is very exciting indeed, because much of the basic foundation has been laid. Competition is just beginning to heat up.  Since pioneers like Massenet successfully brought luxury online, all of the big retail and luxury players have jumped in. You could say, they have been fashionably late. Neiman Marcus’ direct business (which includes the nm.com, bergdorfgoodman.com and the catalogue business) now generates $700m in revenue. Revenue growth rates for the online boutiques of Coach and Gucci are massive, somewhere in the 60%+ range. Interestingly, partially because of the rush to capture online real estate and market share quickly, almost every online luxury site feels the same. Not much time has really been spent in creating a truly unique destination. Just check out  brittique.com, matchesfashion.com, brownsfashion.com, neimanmarcus.com, eLuxury.com , and bluefly.com and you will see what I mean. For the most part, each site is a one-way interaction with the consumer. They also tend to be organized in the same way, with similar aesthetics using similar fonts and layout. Only Net-a-porter has successfully integrated compelling content into their site (with its magazine) and just Yoox has a truly different look and feel.

YooxSo now, as with any other business where the product/service starts to become commoditized, the key players will have to take it to the next level and differentiate themselves to keep up with the rapid pace of what’s going on. It’s not a zero sum game yet because the industry’s growth is so high, but with so many players in the game, its bound to be more competitive. This is where Web 2.0 can play a role. Luxury ecommerce sites, which differentiate themselves through unique product assortments, clever editorial and content, and interactive community development, will be the ones that succeed. On the other hand, with retail it always comes down to number of visits and average purchase size, so its also important that the interactivity and community don’t detract from the primary objective at hand, which is to drive sales.

So start thinking about your website if you already have one on how you can be more interactive with your customers.

Tags: Armani, boo.com, Boudicca, Burberry, Dior, eCommerce, Eley Kishimoto, Facebook, Financial Times, Gucci, Internet, iPods, Iqons.com, Karl Lagerfeld, luxury, Massenet, Mysapce, Net-a-Porter, platform13.com, Prada, purseblog.com, secondlife.com, shopping, Sue Stemp, web 2.0, whowhatweardaily, Youtube

Launching your Fashion Label

It’s been said that fashion revolves after a cycle of twenty years but it seems to be revolving a lot faster than the duration predicted. I remember doing fashion shows at functions and clubs in the 80s. Though its the millennium now, some of my fashion designer friends also started out that way back in the 90s. Eager to get their creations showcased to the public at any chance they can get without having to pay for a proper trunk show. That seems to be the few ‘first steps’ into getting your collection into the public eye literally but now we have blogs. Though the latter is still being used till this day, it creates a platform to network and become fashion-savvy with the new designs presented today.

Through blogs or community websites like facebook, myspace and alike are good networking tools to keep your friends in touch with an event or a party or a birthday or even a group that you might be acquanited to. I found myself attending fashion related events through blogs and facebook. It was well attended by people of the same interest though some of the attendees were there for other reasons besides being labeled a fashionistas.

Fashion flea-markets were also organised and announced through blogs or facebook. It generated sales for the fashion-wannabes to sell their creativity and motivates them to bring more items to sell. Though I must say that if you’re not into bargain hunting, you might want to miss this and maybe someone will soon come out with a private sale for really branded items that are either samples or knock-offs. This private sale would strictly be for the truly fashionistas that want exclusivity and would pay good money for. Maybe I should dwell deeper into this myself.

But coming back to the launching of your label, you need to research and test the market of what the responses you’d get to understand who are your customers. Ofcourse if you collection is positioned to the middle to high income group, you still need to select carefully the kind of event that you’d want to showcase your clothes or designs to. If the club or event is of high calibre that targets to the income group that you’re targeting, then it’d be a good partnership. Explore further on the publicity that you’ll get from this partnership, explore the possibilities of new customers that you could pick up and most of all explore the first hand response and feedback that you’d get from this event. You have to be your own PR and marketing person to generate awareness of your label unless you have a rich daddy, hire a good and experienced consultant that can cover both marketing and PR for you.

I happen to be in that field and have had the experience with two renowed Malaysian fashion designers that are of international status. If you’re interested to know more about what I do, please email me at alrod1965@gmail.com for a private consult.

Back to the clubbing and blogging. I find blogging a fantastic way to connect with people who might or might not be interested in what I have to share but I know that eventually I will have feedback or comments be it positive or negative. At least it’s getting attention.

Be in the know as much as you can so that you can generate new ideas, create new designs or devise a good marketing or promotional campaign to sell your goods. The times are down but it’s the time to seize opportunities though retail is slow. Not everyone has stopped shopping, its just how they shop has changed so you need to feel them out and know what’s happening around you and also find out what your competitors are doing.

Happy blogging or clubbing…..don’t be lazy……get creative!

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: fashion, launching, starting up

Emerging Markets still seen Strong

With Asian stock markets in free fall last week and the steady decline in value of Russia’s two main exchanges, luxury and fashion brands fear they might have to wave goodbye to any growth they were seeking from emerging markets.

But will they?

Despite the grim news from nearly all corners of the world, some analysts and industry principals said brands may not suffer that much from any downturn in areas such as Russia, China, India and the Far East.

“In the shorter term, we’re likely to see faster economic growth in Asia. Europe, the U.K. and the U.S. are already in recession, so the potential for growth is better in the East”, reported by a WWD reporter on October 13, 2008.

If this reporter waited to research a little more, he wouldn’t have written that. Asia is entering recession whether we like it or not but many choose to ignore or close an eye. It’s reported that the Indonesians have been exchanging their hard cash for gold bullions or gold coins and they even closed their stock exchange for 3 days because they wanted to avoid any further slump in the stocks when US stocks came tumbling down last week.

Japan, too is hurting and in today’s news it announces that Britian is reserving U$2 billion for 3 banks that’s going under and one that I can recall is Lloyds Bank.

I think fundamentally what a business owner would have to do is to look at how the business can offer more value-added services or products with an attractive price to its existing customers. Suppliers of fashion items from fabric, zippers, buttons, embellishments, machines, scissors, threads and everything that is needed in making your clothes will also have to do some cut-backs to sustain their businesses.

If markets in the emerging region which technically are countries in the South East Asian region is predicted to be strong in times of the great world recession, then SEA must have done something right to give out that impression or else this plague will catch up real soon and before you know it, you’re out!

Though oil prices have dropped to U$70 a barrel but that is not changing the cost of food and consumables or even lifestyle. In times like this I find myself adjusting to my spending, to cut back but somehow I keep going out to clubs for drinks with friends almost three to four times a month. An activity that I had cut-back for nearly two years but my conclusion is that I want to find an outlet to forget about what’s happening out there, the recession, the slow-down in retail business and generally the gloom around. So the idea of clubbing with some friends at a upmarket club sounds too good to pass up right now.

Just recently I attended a weekend birthday outing, a high-socialite party and an auction party; the club or venue was packed with people that’s probably share the same sentiments like me. In plain English, we want to drown out the gloom and want to stay happy any chance we can. Does that sound like we need a shrink to consult? Are we going bonkers? Or some would say lalaland!

No, it’s a natural emotion to feel when every morning you pick up the newspaper and see negative news not in your own backyard but around the world. It’s alarming especially I just read that Korea is predicting more suicides to happen when they hit steep recession.

So what do we do? The obvious is to tighten our belts, spend wisely, get out debt or at least minimize as much as possible, don’t borrow till you know you can afford it and continuously think creatively how to survive this world gloom we face today, tomorrow and who knows when it will end.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: fashion business, finance, trend

Retail seen to risk meltdown in next 10 years

“Rising costs and depressed demand could reshape Britain’s retail industry over the next 10 years, with bankruptcies and job losses set to rise as companies struggle to adapt, a report showed on Friday. The cost of running a retail business is set to explode over the next decade as tighter environmental regulations, higher energy prices and more expensive supply chains create a sustained period of inflation, according to the ActiveResilience Retail Risks report by Verdict Consulting. Verdict estimates retail cost inflation could rise to 9 percent or more over the next 10 years, from 4 percent now. At the same time, it believes consumer demand will slow, with retail spending growth moderating to 2.6 percent in the 2010s from 6 percent in the 1990s. “Managing a simultaneous increase in costs and a slowdown in demand will be extremely challenging,” Verdict said.”Over the medium term the number of retail bankruptcies and job losses will increase steadily as players adapt to the new retail reality.” On Thursday, official data showed that retail sales volumes in Britain fell 3.9 percent in June from May, the biggest monthly decline since records began in 1986. (Reporting by Mark Potter; editing by Sue Thomas of International Herald Tribue; published on 25 July 2008)”So what do you do in hard times like this?Get creative again, get back to basics, get into how it all started for you when you first dedicded to retail your designs but with a twist now. And the twist is called “COMPETITIVE EDGE”. Know you competitive edge to stay ahead but never compromise on your designs, presentation and quality.Things that you can compromise on are what I term as being truly creative is to lower your price points, use simpler fabrics (but still good quality) and less dramatic cuts.A friend from US shared this with me that most of the top labels, the companies are cutting cost to their prices still making it affordable for the consumers to buy new clothes for the season. So it’s a no brainer, why not do the same after all it’s tried and tested….especially by renowned designers.But keep the signature that you’re famous for and never compromise too much on the quality nor the fabrics used. Keep it affordable and trendy.Till my next topic…maybe on what trends are next for the coming Spring/Summer 2009.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: fashion, retail

How do I decide where to allocate my capital?

The fourth article series for emerging designers has been a long time coming. We have been receiving emails every other day asking when the next article would be published. So, here it is, and thank you for your patience.

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So you’ve done it. You’ve cobbled together some financing from family and friends or squeezed a loan out of your bank manager. If you’re a little farther along, perhaps you have managed to raise an injection of capital that will help take your business to the next level. 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 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, how ever small. The fourth part of the BoF Basics discusses 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 Vogue. 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 organization 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.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: finance, start up

The Business of Fashion: Basics 3 – How do I find the right investors and partners?

Taking on financing is one of the most important decisions an emerging fashion company will make. This step is absolutely essential because the early stages of growth often requires significant amounts of working capital that cannot be generated by the business alone. So, unless you are independently wealthy and sitting on a pile of cash, financing decisions will be part of your critical path, early on.

What is the difference between equity and debt?

Financing can come in many forms, but it basically comes down to equity versus debt.

Equity investors (in this case, venture capitalists or angels) provide cash to invest in your company and therefore end up sharing ownership of the company with you. They invest in the hopes that your business will grow and that they will have some positive return through shared profits and upside. They may offer you resources and expertise to help drive the business further. In fact, this is much preferred to someone just giving you cash and leaving you to fend for yourself. If, however, you disagree fundamentally with your investor on where you want to take the company and how you will do it, then you may find their “help” a nuisance. Thus, when evaluating equity investors, choose someone who is aligned with your strategy and who has the industry and/or functional experience that your business needs to grow.

Debt financing, on the other hand, usually comes in the form of loans, where you are required to pay back the money you have borrowed, plus interest, using a fixed schedule of payments that can be spread out over many years. While debt providers won’t be actively involved in your day to day business, taking on debt will mean you will have an additional cash outflow that your business will have to be able to support each month to stay on good terms with your bank. If payments aren’t made regularly, you may quickly find yourself dealing with irate calls from your bank manager. In the worst case, taking on too much debt could drive your business into bankruptcy. Debtors are always paid back before profits are shared amongst the shareholders of your company.

The good news is that with your business plan in hand, you are in a good position to share your vision with potential financiers to sift through the various options and make the best decision for your company. Financiers may have advice to offer, and you should take this under consideration. But, keep in mind the need to stay true to what you originally set out to create. It is important that you believe in the strategy you pursue.

What legal precautions do you need to take?

Before sharing the nitty-gritty details of your company with anyone, you should request that they sign an NDA, or non-disclosure agreement, which legally restricts the other party from sharing your confidential company information with anyone else. Of course, you can’t control what they actually tell other people, but this is a good way of sending a message that you take your business seriously, and that there is value that needs to be protected. Often, NDA’s are reciprocal, so both parties are protected. Your lawyer will very likely have a template that you can use, with some small adjustments so that it is fit for purpose. It is customary to offer two copies for the other party to sign, so that they can also keep a copy for their files. Eventually, you may also need legal advice to ensure your interests are being protected in any subsequent financing arrangement that arises.

What are the equity and debt options available to you?

1) Venture capital – VC funds look for high-potential businesses with strong prospects for growth, often based on a core new technology or brand.

Many VC companies don’t even consider fashion as a core industry for investment, as it is a notoriously fickle place with all sorts of “fashion” risk. However, as the world has been abashed investment capital lately and as the competition for traditional investment opportunities has increased, more people seem to seeing a gap in the market for investing in fashion. Initially, the money was targeted at larger investments that have seen the likes of Jil Sander, Helmut Lang, and Jimmy Choo and most recently, Valentino, take on private equity. But now, new funds are being raised in London, New York and Paris to focus on earlier stage businesses:

* The Atelier Fund – Richemont has backed the Atelier Fund to invest in early-stage fashion businesses, spearheaded by Dawn Mello, former President of Bergdorf Goodman. The first investments made were in adampluseve, Mathew Mellon, and Mary Norton.

* Towerbrook Partners – Robert Bensoussan, formerly CEO of Jimmy Choo is raising a fund with Towerbrook Partners to invest in fashion businesses with sales of $30m — not quite start-up revenues, but still earlier stage than previously seen in private equity.

* Marvin Traub Associates – Marvin Traub Associates, the New-York based luxury business consultancy, has stated in Women’s Wear Daily that it is toying with the idea of raising investment capital for emerging designer businesses to pair with its business expertise.

* The Centre for Fashion Enterprise – With the support of Harold Tillman, Chairman of Jaeger, and The Centre for Fashion Enterprise in London is trying to raise a fund of £5m to invest in early stage fashion businesses. The CFE is a government-funded body that, up until now, only provided small investments of £20-40k.

* Trapezia Capital – In the UK, there is also a venture capital fund called Trapezia Capital that focuses on business started up by women entrepreneurs.

With all of that said, venture capital firms, even the ones that are focusing on early-stage businesses, will often not consider any investment until the business has a proven concept – e.g. sales in excess of $5m, a compelling retail concept, and the potential for multiple product lines, etc.

2) Angel investors – If you’re looking to raise capital for a pure start-up business, Angel investors could be your best bet. “Angels” are independently wealthy individuals, often with backgrounds in entrepreneurship and business themselves. While the name might make them seem truly heavenly, angel investors can sometimes be anything but divine and this route needs to pursue with caution. Just finding angel investors (let alone convincing them to invest) can be tough.

The best thing to do is ask friends and family if they know people who might be looking to invest some cash. This will not only help you find angels, it also comes with a built-in personal reference from the person who puts you in touch. There are also networks of angel investors, like Pi Capital, The Go Big Network and The Angel Investor Network, which help to bring angels and entrepreneurs together.

When dealing with angels, it is important to ensure that there are clear roles defined before any investment has taken place. It is not rare to see angel investors, with the best of intentions, wreak havoc because they think they are fashion experts and end up interfering in the business. Make sure you agree what they will and will not be involved with based on a clear assessment of their skill set. Make sure you are confident you can jointly make business decisions with them. Test their response to pushback. It is better to know exactly what you are getting in advance, than taking the money and having to struggle later on.

Guy Kawasaki has some great lessons on raising angel capital on his blog, How to Change the World.

3) Banks – Bank loans are possibly the most readily available source of funding for young start-ups. Jasonwu_2 a bank loan usually comes down to:

* the quality (and length) of the relationship you have with your bank and bank manager

* the future prospects for your business

* the debt burden you are already carrying

Essentially, banks want to be confident you will be able to pay them back. While all banks have credit guidelines to assess this, the process is not as scientific as it might seem. A good relationship can go a long way.

Since you won’t have much in the form of collateral to offer the bank in return for your loan, the amount the bank can give you may be relatively small compared to your overall funding need. Therefore, a bank loan strategy may not be sustainable over the longer term as it requires constantly going back to your bank and offers no guarantees that future loans will come through.

Finally, keep in mind that loans also add another cash outflow to your business. To reflect this in your plans, use your cash flow statement to establish your funding gap for the next 1-2 years, and add in the loan payments that you will have to make each month to learn how taking on the loan will impact your monthly inflows and outflows of cash.

4) Factors – Factors provide capital to businesses based on the actual orders they have received on a season-by-season basis. This is very useful in the fashion business as it can help to finance production for sales orders that have just been completed. Once you hand over your order book to the factors, they will take a cut of the total value themselves, and in return provide you with the cash up front while they take on the risk of collecting payments later when the goods are delivered. Factors may choose not to underwrite certain stockists that are too small or have bad credit records. One of the leading factors in the US is Hildun. Working with factors means giving away part of your revenues to the factor right from the start.

Where else can you look for more information?

For more information on financing your fashion start-up, some general lessons can be learned from the US Small Business Administration website and from this case study.

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Next time: How do I decide where to allocate my capital?

Once you have successfully raised your capital, you will need to think carefully about how to allocate this capital across various business needs that you have identified in your plan. You may not have raised all the money you need, so carefully prioritizing key areas is important.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: business of fashion, how to

What is a business plan for and how do I go about writing it?

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. I use these words intentionally. 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 organised 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 for 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 describes 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.

The importance of knowing your target market cannot be overstated. Therefore, one of the first questions I always ask when meeting emerging designers is about their target market. When they provide a fluffy answer like “I design for people like me and my friends” or “A young woman with lots of money,” it usually indicates that they haven’t spent much time thinking about this critical question. And if they haven’t done so, it makes me wonder exactly who are thinking of when they are designing. If they don’t have a specific person in mind, then how do they know exactly what that person needs, and what occasions they are shopping for?

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 everyday about how you design your collections, manage your business, and promote your brand.

3. Market and competitive landscape – This section describes 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, 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.

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 to operate 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 contact) 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: Finding the right investors and partners

Once you have a plan in place, you will then be ready to start soliciting financing. In the next installment we will give you concrete advice on where to find the best investors and partners for your business.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: business plan, how to

Setting up your own fashion business – what do I need to know first?

Many young designers rush into setting up a business, attracted by the perceived glamour and fun that is associated with the fashion industry. There are wonderful fairy tale stories of young talented designers graduating from St Martins or Parsons and then going off to achieve fame and fortune. The stories we hear less of are those that describe all of the failed companies and dashed hopes that are the cruel reality of this industry.

One of the most common questions asked by young designers who have just come out of fashion school (at both the bachelor’s and master’s level) is: “Should I start my own business or should I go work for a big fashion house?” The truth is, the right answer depends on you and your aims. In my first article on the basics of fashion business, I will pose the questions that you need to ask yourself – so you can make the right decision.

The first thing to think about is “Do I really want to run a business?”

Beautiful people, fun parties, flights of creative fancy – what more is there to want from a career? Here’s a reality check: it’s not as glamorous as it sounds. Running a fashion business means that packing boxes at 2 am, steaming clothes over and over again, and pouring through receipts with an accountant will become part of your routine. You will likely spend less than 10% of your time designing, while the rest of the time you will be managing production, sending clothes to magazines, dealing with suppliers who want their money (now!), managing your employees while hoping they don’t fall ill, and trying to eat and bathe in between. On top of all that, you have to worry about making enough money to declare some kind of dividend from the business for all your hard work. You will eat, live and breathe your business 24/7. If that doesn’t turn you off, then keep reading.

Starting any kind business requires tenacity, endurance and dedication. Setting up a fashion business is all the more challenging because this is a hyper competitive industry (who doesn’t want to be a fashion designer these days?) and a very complex one as well, even at the smallest of scales. What other kinds of start-up businesses so quickly find themselves with customers and suppliers scattered around the world, requiring so much coordination and organization? Managing to get all of your raw materials (fabrics, trims, haberdashery, etc) all to your manufacturer at the same time to start your production and then sending it all out to stores in different corners of the world (each with their own customs procedures) in only 2 months can be a nightmare, even for those with great forward planning and troubleshooting skills.

All of this is to say that one of the key drivers of success will be your entrepreneurial skills and your commitment to running a business. In order to be successful, you should think of yourself as a Managing Director first, fashion designer second. An MD is a manager of people, finances and processes. Therefore, you will have a great deal of responsibility and important business decisions will face you each and every day. The buck stops at you and the business should always be at the forefront of your mind, not just an afterthought.

For some people this is an extremely exciting and energizing situation to be in. For others, it is their worst nightmare. What kind of person are you?

Next, you should ask: “Do I already have or can I find the necessary skills, contacts and funding to create a successful fashion company?”

Clearly, you won’t be able to do absolutely everything yourself. This is where you need to find other people who believe in you to join your team or provide support in some other way. Doing a self-assessment of your skills and abilities will tell you what gaps you will need to fill in order to make your business work.

You may assume that having completed a design degree, there are no skill gaps there. However, the design process in a business can often feel very different to that of the design process in school, where you don’t have to worry about things other than the product. Running fashion business means developing and following an organized creative process that works for you – and that other people can work to as well. One of the great things about designers who have previously worked in a large fashion house is that they have seen how other people organize themselves and can take lessons from there as they start. Having a clear design methodology is crucial to getting the best out of your abilities. If you don’t have this in place now, perhaps you may want to spend some time learning from someone else first.

Apart from mastering the design process, something that some of the smartest designers do next is to find a business partner they can trust, who brings different skills and connections to the table. Often it is a spouse (Dirk Lubert is married to Melinda Looi), sibling (Datuk Tom Abang Saufi’s sister Habsah runs the business) or a friend (Marc Jacobs has long time business partner Robert Duffy) who might take on this role. In this way, not only do you have someone to lean on in times of difficulty, you also have a division of roles, which allows you to focus on more on the creative aspects of the business.

You will also need to find people in the Industry who agree to support you and work with you. You’ll need Marketing cum PR consultant who will (at least initially) give you hers/his services for almost nothing and a factory that will make your clothes in small quantities. You will also need accountants, lawyers, stylists, photographers, graphics designers, production managers and interns – hopefully all at discounted prices. You therefore need to ask yourself if you already have a set of contacts that you can leverage to make your business work. If not, you need to get out there and meet people so you can start your business on the right foot, with the right team behind you.

Finally, for most designers who haven’t come into an unexpected windfall inheritance in the millions, starting a business is also a question of finding money. There are many sources of funding, but each source will take time and effort before it bears its fruit. Family and friends who believe in you are obviously one place to start, but you will also need to deal with bank managers about loans, and think about taking on investors as well. Having a network of people who may be able to introduce you to potential sources of funding is imperative to setting up your business. You can have a brilliant business concept, a fantastic team, and all the energy in the world, but without funding in place from the start, it will be difficult to get up and running. You should also do research on grants; sponsorship and awards that many organizations make available to nurture new design talent.

Lastly, you should ask yourself: “Do I have something unique to offer the market?”

If there is one crucial thing I recommend that you do before rushing off to start a business, it is to carefully craft your business concept. What is it about your business that will be unique? Why will people choose to buy your product over someone else’s? Is it the design, the price, the value or the dream that they are buying into?

You will need to think carefully about whom you are designing for. It is cliché by now, but I almost always ask designers when I first meet them: “Who are you designing for? And why?” Most of the time, this simple question is met with groans or blank stares or platitudes like “I design for me and my friends” or “A very glamorous woman with lots of money”. This is not enough. You need to get into the mind of your customer and understand what motivates them. Where do they spend their time and for what occasions will you dress them? What makes them buy a garment? Understand their psychology, emotional needs and relationship with clothing. Visualize all the aspects of their lives and assess how your business can blend into making them even better.

It’s worth pointing out now that not all fashion businesses have to operate at the high end of luxury, although it seems that that is where every designer wants to be. Remember, your business concept needs to offer a clear proposition of value to your customer, and that value could be world-class design at more reasonable prices. Look at Eclipse or Zara or Coach or American Apparel and how they have taken clear business ideas that allow them to deliver great fashion to the masses. While it may seem ideal to be a “luxury” brand, also remember that some of the most influential fashion businesses are on the high street and in your neighborhood mall, because they dress thousands of people around the world.

Next time: Writing a Business Plan

Assuming I haven’t completely scared you from starting your business, our next article will go through the process of writing a business plan and why it is so valuable. In short, it will help you to rise funding, to clarify your vision, and to set a roadmap for how to get there.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

7 Steps To Get A Loan For Your Fashion Business

I know show hard it is to get a working loan for your business because many of us don’t spend enough time to find out how to go about it so through my own experience, you may try these steps but please note that these are just what I am sharing and I don’t guarantee anything. It’s all your own effort and perseverance to make it happen.

I wrote the following steps to help you raise the right amount of capital to get your business going.

Step 1: Decide how much money you need.

This is an obvious but often overlooked. Entrepreneurs, particularly start-ups, when budgeting for their business often focus on what they will need to get their business going, or to finance a particular project without accounting for working capital or cash for contingencies. This is dangerous because lack of working capital can mean the death knell for the business.

On the other hand, some entrepreneurs, again start-ups, drastically overestimate their costs. This will make lenders not only question the entrepreneurs’ assumptions, but also question whether they know what they are doing.

Now that we decided on an amount, lets focus on the lender.

a) If you are a start-up:

Loan amounts below RM25,000 are considered smaller, micro-loans. Not all banks will be interested in doing a SBA guaranteed loan for small amounts (more below). Micro-lenders and Alternative-lenders are better equipped to handle this type of loans. These lenders usually make smaller loans and have a community focus. Look to credit unions, local development corporations and other non-profit lenders.

Small Business Administration (SBA) guaranteed loan is a guarantee to the lender. If the borrower defaults, the lender is guaranteed repayment of a portion of the loan by the SBA. You are still liable for the loan, so your obligation does not go away. From our experience, an amount of RM50,000 and above is the usual range for SBA loans. The higher the amount requested the more the lender would look for collateral to secure the loans. Start-ups and existing businesses can apply for SBA guaranteed loans.

b) If you are an existing business:

If you own a company that has documented sales (you will need to show previous years’ tax statements) then you can apply for conventional bank loans. These loans are usually easier to apply, and may have lower interest rates. Normally for a conventional bank loan, you will need to be in operations for at least 2-3 years.

c) Set your expectations:

The bank does not want to own your business. It is highly unlikely that you will get a loan for a 100% percent of the project cost. You will need to put down a co-payment. Although the minimum co-payment varies by industry and lender, expect to put down at least 20%-30% or more of the cost of the project.

Step 2: Find out your credit score.

You should check your credit score and look over your credit report to make sure there are no problems. A credit score of above 650-680 is considered “Good”, but it does not mean you will get a loan. A credit score in the 700-800’s is very good and increases your chance of getting approved.

You can request your credit report from one of the reporting agencies, or use one of the many online services available to check your score.

Step 3: Start researching your options.

Start weighing all your options. Think of ways to strengthen your loan application. Can you find a co-signer? Bring in a partner with good credit or experience? Invest more cash into the business? If you think that you are not a strong candidate for a business loan, you can present the lender with options to increase your chances.

Step 4: Start writing the business plan and create the financial projections.

The business plan is more than a plan—it is a tool that helps you evaluate your business concept, your product or service, and discusses how to implement your ideas. A business plan is also a tool to obtain investors, lenders, and strategic partners. You can find many resources and opinions on the Internet as well as your local bookstore on how to build an effective business plan. A lender will usually require a comprehensive business plan as well as a projected 1-year cash flow projection (month-by-month), 3 years income statements, a balance sheet, a statement of sources and uses of funds, and a loan amortization schedule. One mistake that we usually see is that the figures on the Business Plan do not match the figures on the financial projection. Double-check your work before sending it to the bank.

Step 5: Find a lender

Finding the right lender is not easy; each lender has its own criteria for lending. However you can use the list below to get an idea of what type of institution is a better fit for your loan needs.

a) Commercial Banks

Banks are one of the largest small business lenders but their approach to lending varies. Commercial Banks decisions are based on your strength as a borrower (a good credit score, personal financial statements, experience and collateral) the banks goals for the period and their lending philosophy. Banks may be looking to expand their small business loan consumer base; others may focus on larger loans or a specific industry.

You will need a high credit score if you are applying for a bank loan (with or without the SBA guarantee). Although, this is not an absolute rule for all banks, we found that a credit score over 700 is a better predictor on the success of a loan application. The bank may look for collateral (home equity, saving, etc) if you are applying for amounts over RM150,000.

The borrower’s personal financial situation is key for the application. The bank’s underwriter will analyze the person’s net worth; as well as look at her previous earnings, length of credit history, among other factors.

For lower amounts the bank may not require a business plan. However, if there is a particular weakness in the loan application, the loan officer may ask the borrower to submit a business plan and financial projections.

b) Non-Bank lenders

These institutions do not conduct consumer banking but offer business services and business loans. Lenders’ requirements vary depending on the institution, and some prefer lending to specific industries. The Non-bank lender may take longer to process your loan application than a regular bank, but they can approve loans that banks find too risky.

Non-Bank lenders usually require a business plan and ample documentation with the loan application. Compared to banks these lenders have more flexibility working with lower credit scores as long as the borrower has the necessary experience and collateral.

c) Region specific Lenders

There are neighborhood specific for-profit/non-profit lenders that have more flexible lending terms. For example: Credit Unions and Community Development Organizations may lend to specific neighborhoods. The nature of your business and the reason why you are requesting the loan should fit with the organizations’ goals.

d) Micro and Alternative lenders

Micro and Alternative Lenders lend to riskier borrowers. These borrowers usually have low credit scores or they are just building credit, also they don’t have a strong financial history and have little or no collateral. These institutions lend lower amounts and charge higher interest rates.

Step 6: Prepare the loan application package

A “Loan Package” is the paperwork you submit to the bank in order to apply for a loan. The Loan Package includes the following:

• Business Plan

• Business Financial Projections

• Personal Financial Information

• Personal Tax Statements

• Information about business, location, sales contracts, etc.

• Business Owners’ Resumes

Step 7: Waiting

Loan applications are approved or declined much quicker than people think. A lender can approve an SBA express loan within 36 hours. Regular commercial loans have similar processing times. You should expect to get an answer within 2 weeks, and hopefully close the loan (get access to the money) within another 2 weeks. However, if the institution needs more documentation, or if the loan is for a larger amount, then it might take longer to process the loan, especially SBA loans.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: finance

Gianni Versace – Part 2 (final)

After GV’s death, the stylistic control of his company passed in the hands of his sister, Donatella, who had been his collaborator for years and worked with him on some of his collections. His brother, Santo, is also involved in the administrative and business management of the company. This transition of leadership has only minimally modified the Versace approach to fashion. Donatella has undoubtedly contributed her own personal vision to the “Versace” look, but she has moved forward in the spirit of aesthetic research that has always distinguished the company. She has been particularly successful in her efforts to the young client, with collections that increasingly reflect the spirit of the times and which reinterpret and “upgrade” the canons of street fashion. The consolidation of the relationship between fashion and rock music has also had a significant influence on the Versace look. Rock was a great source of inspiration for Gianni, but it has become a true leitmotif for Donatella. Her collections abound with musical references and icons, and she has also become involved with the growth of young rock groups who as as authoritative spokespersons for youth styles. “Thinking about tomorrow” and “daring to be” are the two fundamental guidelines that have marked the success of the Versace collections, past and present.

Chronology of Gianni Versace

1946 Born on December 2 in Reggio di Calabria, Italy

1964 Works at his mother’s tailoring studio

1972 Moves to Milan

1973 – 75 Does freelance design for the brands Callghan, Genny, and Complice

1978 Founds the label Gianni Versace together with his brother Santo; introduces the first women’s wear (S/S) and menswear (A/W) collections

1985 Gianni Versace: A Sense of the Future, exhibition. Victoria and Albert Museum, London.

1989 – 91 Introduces the youth-oriented, secondary line, Versus, in the United States, the V2 by Versace line, and the classic Signature line.

1991 – 92 A/W “Bondage” collection, inspired by sadomasochism causes a sensation; design costumes for the Scala Opera House in Milan and the ballets by Maurice Bejart

1994 Introduces Home Signature line

1995 – 96 Introduces youth-oriented Istante line; presents S/S collections in neoprene-like material; shift dresses in apple green and shocking pink.

1997 Dies in July 15 in Miami Beach, Florida; company now run by his sister, Donatella Versace

Perfumes Donna (1981), Versace I’Homme (1984), Versus (1991), Versus donna (1992), Red & Blue Jeans (1994), Versace’s Blonde (1997)

Blue Jean was my favorite and remembering owning three to four bottles as each time it finishes, I go looking for it. He is a legend in his own right and I will always the influence and impact he made on me, my fashion sense and that spurred me to appreciate the art of fashion of every individual fashion designer.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.

Tags: Icons, Versace

Gianni Versace – Part 1

“I have no desire to give lectures on the subject of fashion. I put my money on feelings: wear it and enjoy It.” – Gianni Versace

Ah yes, GV, as he was fondly known back in the late 80s and especially among a group of young and enthusiastic catwalk models that was getting more and more influenced by the fashion icons of that era.

I must admittedly say that I belonged to that group of young models that treated “Cosmopolitan” like a Bible for the fashion believers! Though it was rather expensive buying each months issues but I had to have it no matter what as I loved fashion, modeling, the images, practically everything about the fashion world and I was only 19 when I first enrolled into a modeling and grooming school to learn the skills of modeling and social etiquette and behavior. It was worth it because it has taught me things that I don’t see happening in current modeling agencies.

Enough already about me, I started to write about Gianni Versace because he was one of the international fashion designers that I loved and admired. First of all his designs back in the late 80s early 90s were captivating, sexy, seductive, feminine and yet independent and individualistic. Well that what I gathered when I see his designs with the roman print, embellishments and silhouettes. I adored him and his design; his models that he knew would make such an impact wearing his designs like Naomi Campbell, Christy Turlington and Linda Evangelista. But I want to share more about him and read on so maybe you could learn something new that you didn’t know about GV.

Gianni Versace’s talent was immediately evident with the presentation of his first tow collections, one designed for Florentine Flowers in 1972 and the other for Callaghan in the following year. Versace, then twenty-five years old, had been breathing fashion since his childhood, which he spent partly in his mother’s dressmaking workshop. As a young designer, he advocated and expressive freedom which set his work apart and which would make his name synonymous with daring, provocation, and the aesthetic sublimation of desire. It has been said that he rewrote the logic of appearances.

GV’s importance to the history of fashion lies mainly in his having carried the seduction of the unusual to extremes. He did so by audaciously introducing stereotypes of vulgarity in the world of haute bourgeoisie – lunging necklines and miniskirts, sheath dresses, and gaudy accessories – and by using apparently improbable combinations of fabrics, colors, and prints. Throughout the 80s, GV’s style created a new fashion-media relationship, helping to establish an icon of a life-style, and reinforcing the importance of clothing in the social imagination. Asymmetrical cuts, layering, draping, optical designs, metallic mesh, and the use of studs and lace are some if GV’s aesthetic “inventions” that have become his trademark. He was also one of the first designers to totally reinvent certain materials. In his winter collections of 1983/84, he replaced the weave in his tweeds, creating a striped effect, and in his 1994 collections he experimented with printing on polyurethane and the use of rubber. His desire to reinvent materials led him to explore previously unthinkable combinations such as leather and silk, jute and gold, metallic mesh and faux gems – working always in the service of a feminine aesthetic.

For more of Gianni Versace, look out for Part 2.

Contents are taken from own experiences and own researches. Some articles may seem to be similar to others however word written is original and not duplicated.