Whether you are an entrepreneur or a more seasoned professional, starting your own fashion business is never easy. It may be easier for some, but it is not easy for anyone.
Fashion business mistakes are easy to make and hard to correct. Seemingly small, they can fast lead to the death of your business in a matter of months or less.
No one is perfect, and running a fashion business requires so many varied skills and know-how, which explains why studies suggest that as many as nine out of ten new businesses don’t make it past their second year.
The fashion industry, as attractive as it may appear, is one of the hardest and riskiest industries in which to enter, crack, and run a successful business.
So when businesses go under, usually there are commonalities that can be spotted that led to the bitter, sad end.
So here are the most common fashion business killjoys.
#1 Fashion Business Mistakes: Lack of Market Need
Many entrepreneurs make the mistake of starting a fashion business based on what they think they want and cannot find on the market. While that in itself is not wrong and many successful businesses have started just that same way – filled a void and made millions – more often than not, that just doesn’t work. Why?
Well, just because you (and your best friend perhaps) need something doesn’t mean the market out there also has that same need.
So, identify the product you think you (and the world) are missing, and test your idea. Make a prototype and go outside of your family and friends (they will always tell you what you want to hear!) and try selling it to strangers. Until someone is willing to part with cash because they really want your product – their enthusiasm means nothing.
Prove there is a need for your idea and a willingness of customers to spend money, and you may stand a chance.
#2 Fashion Business Mistakes: Cashflow
No matter how far down the line you are in your business, if you haven’t worked out how to keep the cash flowing in a steady manner and ensure that you have funds to pay your bills, keep you afloat, pay your VAT and have some stored away to cover unexpected situations – chances are you will grind to a halt sooner rather than later.
When you start out, working with an accountant or bookkeeper from the outset of your business is imperative. Knowing your fixed costs and variables on a weekly and monthly basis is essential, and allows you to plan ahead.
Most creatives are not great with numbers, which is why the most successful fashion businesses are the ones that team up with someone who fills that gap. This can be a partner or a paid service. Whichever one you choose it makes no difference – just get one!
Once you are up and running, maintaining a good level of working capital that allows you to keep going but also to keep growing, becomes an issue. So this is the point when many fashion business owners start looking into external financing. The two most common mistakes are not raising enough funding and leaving it too late.
Whatever you think you will need to get from A to B, add more to it. Chances are you have forgotten something crucial, or your business landscape will change simply with time and progress, and you will need that much extra.
Plan your growth.
Related reading: Financing a Business: Start up Guide to Funding your Business
Knowing your numbers intimately and having a strategy simultaneously will allow you to guesstimate when you will need to raise capital. Once you know that, start before you really need it. Fundraising takes longer than anticipated. Many have made the mistake of leaving it to just when they need it and then while the process takes its time, they run out of cash. Or they make rushed decisions that cause more harm than good.
#3 Fashion Business Mistakes: Overstock
Naiveté is a wonderful thing. Without it, many a business may not exist. But equally, it is one of the biggest fashion business killers.
In fashion, manufacturing is a daily challenge in as much as you need to balance quality, price and volume of production. Often, we commit to buying a large volume of stock. Why?
The reasons vary from being blinded by your own belief in your product, or by the enthusiasm of a close circle of people who are not your customers. Or it can be that you think that by making more of something and getting a better price for it, you will also sell more of it. Or your raw materials have large minimums, which in turn you think means you need to make more.
Whatever the reason, the reality is that selling is not so easy these days. The marketplace is over-saturated and even if you have great sales skills, selling volume of your product when you are starting out is not so easy. Yet the stock you don’t sell is cash you cannot use and put back into your fashion business. As time passes that stock may get damaged or dated, and oftentimes you can’t get rid of it even if you want to give it away for free.
So think twice before you commit, and don’t over-commit without a clear proven plan how you will sell the extra you make.
#4 Fashion Business Mistakes: Lack of Sales
Creative people by and large do not make good salespeople. Obviously, that is not always the case – but sadly, more often than not, it is.
So if you can’t sell your product, find someone who can.
Your product will not sell itself no matter how amazing, commercial, desired (fill the blank) it is. Or it might for a short time, but not long term.
So put a plan in action of how you will generate sales. In today’s world, it may mean finding someone skilled at website SEO and online marketing who will optimise your online store. Or it can be a full or part-time sales rep, or a sales agency. Knowing your target market is 50% of the hurdle. Selling to your target market, reaching them and presenting your product in the best possible way so they buy takes skill, time and an execution plan. If that is not your area of expertise, find someone who specialises in it.
Good people like this cost money, sure! But in many cases, the money you pay is be based on results (commission-based). So if there are no results, you don’t pay.
#5 Fashion Business Mistakes: Inability to Make Decisions
Being an entrepreneur and a fashion business owner means that from the word GO until the very end, you never stop making decisions. Small or large, they need to be made daily, if not hourly. More often than not they cannot wait. Not making that decision costs your business time, money and opportunities.
Making a bad decision is better than not making any decision. If you were wrong, you will soon find out and then you can correct that. But if you don’t take a decision and wait for something to just happen, a “sign,” or for someone else to make the decision on your behalf – you will never know what was the right thing to do and that indecision can be costly. Even worse – you are not in control of your fashion business.
If decision-making is not your thing, then practise harder. No one is born with that skill, it is acquired over time. Start small, practise and just like in sport, that skill will strengthen and you will build confidence and experience, and it will get easier.
But whatever you do, do not sit around and wait for someone else to make decisions for you.
#6 Fashion Business Mistakes: Poor Fashion Business Strategy
The success of your fashion business is largely dependent on the time you put in planning and engineering that success. To do this – you need to put a strategy in place. That strategy needs to be a mix of proven tactics and a small element of risk. It needs to cover all the main areas upon which the success of your business depends. Once your strategy is in place, focus on execution. Or in simple terms, what do you need to make it happen and how would you do that.
If you are just starting out, research your market and get some help from people who are in business already.
While your strategy does not have to be set in stone, you need to be fairly confident that what you have put together as a working plan is strong and will deliver on the goals you have set and commit to working with it.
If you have a poor strategy, you will change your plans too often and will be swayed by new ideas, never giving time to anything to yield results and ultimately it will lead to failure.
So plan well, commit and execute. Keep an eye on your strategy, tweak occasionally as necessary but keep a steady course above all.
#7 Fashion Business Mistakes: Competition
One of the biggest fashion business mistakes most successful businesses face at one time or another is ignoring the competition.
Competition can come in the form of your idea or product being copied – exactly the same perhaps, or better, or cheaper… No matter what and how you are copied, it hurts emotionally and more importantly it costs your fashion business time and money.
Having processes in place from day one of your business, documenting the creation and evolution of your idea or product is essential. Registering your designs with organisations like ACID cannot be underestimated. Taking these steps early on will pay dividends later when you need to stop your competitors in their tracks.
Another form of competition may be more subtle. Often bigger brands or competitors start plotting and scheming behind your back. Leveraging their commercial power or brand name and trying to prevent you from being stocked in a shop is one common tactic. Threatening to move out large volume production of a manufacturer if they agreed to work with you is another. There are plenty more scenarios of what could happen when your competitors feel threatened. It is imperative to be prepared for this, know that it can and probably will happen to you at one time or another, and have a Plan B.
Whether it’s money or competitors, these fashion business mistakes can be faced by any business in any industry. What sets apart those who make it past the second, third, fifth and more years is the planning and preparation they put into their business in terms of resources, financial or emotional intelligence.
After all, as the proverb says, failing to plan is simply planning for failure.