fashion Insiders logo
Close this search box.

The Best Ways to Allocate Your Budget

Rarely does a new business start with enough money to last until a profit is turned. It might happen in the movies, but what happens in real life, more often than not, is that, very quickly, you start spending some or all of the capital you have raised. That, or you know from the outset that you don’t have enough to last until you make a profit because you have only raised a partial amount of capital.

Allocate your budget

Either way, you need to make a plan for how best to spend your money and make funds last as long as possible. It is often said in the fashion industry that it takes a minimum of three seasons before buyers start buying your collections. It’s also believed that it takes three years for a business to establish itself and perhaps start making money – not to be confused with making profit.

Read Equity vs Debt here

So, if you were to take these two scenarios as a benchmark, you are looking at a minimum of 18 months with no money of any real help, coming into your business. Whatever you have needs to last as long as possible. Do not make the mistake of thinking yourself rich and hiring a trendy studio, and splashing out on unnecessary tools, frivolous decorations or materials. Be frugal, be careful and be tough on your needs if you want to make it past your launch.

Below are some of the main areas you will be spending on, and our advice on how you should spend your funds.

Fixed Costs & Equipment

Most entrepreneurs will work from home for as long as possible in order to save cash. This is not always possible in fashion: depending on your business you may need studio space for your machines, cutting tables, and so forth. But as a general rule, try to work from home if you can or share a space in order to keep your costs down.

Regardless of where that space is, there will be monthly expenses (e.g. electricity, telephone, and internet) associated with running it, make a note of them and put money aside to have these covered for the medium/long term.

If you need machines or computer programs to create your products, resist the temptation to buy brand new and see if you can hire them to start with, or if you can find them second hand.

Product Development

To begin with, one of the biggest chunks of money will go on the cost of developing your samples. In order to rein in these costs, it is advisable that you:

Plan your collection well

Take advice from your peers and people in the industry that are farther ahead of you, and find the balance between not too big and not too small a collection. A good collection is one that is well-structured, clearly thought out, well represented in terms of styles, and that strikes a good balance of commercial and creative pieces.

If you are launching a single product, decide if it would be best to launch it as a single colour or in multiple colours. Buyers often like to see all colours represented, but often for financial reasons it is not possible to make every sample in every colour, however there are clever ways in which one can address this issue.

Talk to your factory

Find out from your factories how they charge for sampling as often there is a surcharge added to the sample cost. Also, find out from your material suppliers what the minimums are as often there are fabric, trim and leather minimums.

Read the Dos and Don’ts of Communicating with Factories here.

Don’t plan that your first sample will be the correct and final one as often – especially in the beginning – it takes a few samples to get it right, for both you and the factory. Plan for this and don’t let it be a surprise.

Suppliers often have sampling and production minimums. Be aware and know what these are, and if they will work for you. The last thing you want is to launch a collection, have someone make an order, and then find that you cannot meet the production minimum and have to cancel the order.


You need to spend time with your makers no matter where they are. Starting a new business and working with new suppliers – especially if you are not the maker – means that you need to build upon these relationships too.

There are sourcing shows, such as Le Cuir that you may need to attend as part of the research for new collections. So plan some important business-related travel into your budget.

PR & Marketing

Many will tell you that here is where your budget will go. We will have to disagree on this and advise against it – at this early stage at least.

Why? Well, no one (read: PR/Marketing Agents) will tell the story of your business better than you, the founder. And, with the availability of social media networks, it is easier to do nowadays.

Most PR agencies charge a lot per month, and in reality, it takes three to six months to generate some publicity. Even if a PR firm is hired, it often doesn’t translate into sales. So, there are no guarantees of return on your investment.

Therefore, at this crucial stage of your business, you are the best person to be shouting about the business, and why it is so awesome and purchase-worthy. There is a lot of information out there on how to do it and how to do it well, as well as the media contacts that you need. It will take time, and yes, you will need to be consistent in your efforts.

But if you do it well, you will be rewarded with having saved money and rather than being frustrated and broke, you will have something to show for your time, and you might have even encouraged some sales out of it.

Marketing is crucial for both new and established brands, and we are so lucky to live in an age when almost daily there are new tools and apps created that make it easier to create good marketing materials, even without being a Photoshop whiz-kid.

Using available free tools (see our resource list below) you can create lookbooks, invitations, posters, business cards – you name it and you can do it.

Social media is also crucial when spreading the word of your business, but find what’s right for you and your business. Not every platform will be right and moreover, you do not have to be on every platform. Start with the one or two that you’ve decided will work for you and focus on doing them well by building good content, knowing your target audience, and by being consistent.

Remember to value your time and what you set out to deliver by scheduling posts in advance, this will save you time and there are free tools available.


In today’s world, a website is pretty much compulsory for any business. And, in today’s digital age, you cannot afford to not have an online presence. So, launching with a website, even a simple one, is a must.

If you can stretch to making it transactional, even better. With so many platforms to choose from, and with more and more of them being simple and user-friendly, it is possible. If you feel that you are not confident with technology, ask around and take on someone to do it for you. It does not have to cost the earth and eat away at your budget.

Make sure that whoever works on your website makes it possible for you to maintain it, add-on products and edit the whole website easily. It is imperative that your website can change as you so wish, and that you can manage sales internally if they are transactional, and do not have to rely on someone else and therefore spend more of your budget.

Some easy-to-use platforms for your website, depending on your requirements, are WordPress, SquareSpace, and Shopify.

But whatever you do, make sure that your website is on brand, the images are good and sell your product well, there are no spelling mistakes, and that it looks professional overall. Ask yourself if you would buy from your website, and if not, why?


Once your samples are done you must have a plan by now of how you will sell your product. One of the most underrated and often forgotten areas when putting a budget together is Sales. Yet without it, there is no business.

Let’s face it, if you are not selling what you just created and not meeting your minimums, then you don’t have a business: you have a hobby.

Read 3 Top Tips for Better Pricing here.

So plan for sales, as this will make or break your business. If you are not great at it, find and hire someone that is. They can even be seasonal hire – there are plenty of freelancers around. You could even hire a friend who is great at selling. Whatever you decide, there will be some costs along the way, so plan for them.

You may decide to go and take part in a trade fair, or hire a space and organise a launch as part of your sales strategy. The costs for these acts are substantial, and you need to be clear on your strategy and plan for it.


Let’s assume that you have launched and taken orders. What comes next is the harsh reality of being a new business: you will have no credit history and trade references, so everyone will ask you for payment in advance.

If you are lucky, shops or buyers who placed orders with you will agree to pay for what they ordered, but depending on the size of the shop, they may not pay in advance – not even a small percentage. They may insist on paying on 30-day net terms, at least. If you agreed to supply a shop or buyer with your product on consignment terms, then there will be no money in the near future to speak of.

So, you need to finance this first production run. You need to pay for the materials and manufacture. And at the same time, it is likely that you will be in the full swing of developing your next seasonal collection.

You need to make a good plan: be clear on your collection size and sampling requirements, on your materials and production minimums, and try to find a balance and forecast that spend.

Miscellaneous/Working Capital

No matter how much you plan and forecast there will be surprises. So plan for them by setting some money aside, if possible.

You will also need money to counterbalance the difference between the cash coming into your business and the cash going out of your business. This is cash flow. In a growing business, the amount of working capital tends to grow quickly as payments are made, but not received for weeks or months. So as your business grows, the costs do too.

Overall, it turns out that running a fashion business is not so much fun, and being a designer is the smallest part of it all. There are bigger tasks that need doing. But as scary as it may seem, if you think before you do anything, keep it simple and determinedly plan against failure – whatever that may mean you need to do – the chances are that your business will survive.


Next Time…

In the next instalment of our series, we will focus on the process of Design & Development. While it is important to stay creative and open to ideas, it is also important how you communicate with your team or suppliers, in order to have your ideas translated into products correctly.


List of Resources

For scheduling on social media:

For creating marketing collateral and image editing:

Website Platforms: