The business of fashion is about more than apparel and accessories. Gorgeous designs and a great PR buzz can only go so far, and whether you’re creating, sourcing, producing or outsourcing fashion, there’s one thing that will make or break your path to success: finance. Here are some top finance tips for fashion startups:
1. Spot funding trends
Like fashion, the art of funding relies on current trends. Classic routes involve finance from banks and investors. Fashion startups can now explore alternative avenues like crowdfunding to give projects more of an edge.
2. Budget costs reasonably
A startup can rack up too many expenses, so be firm with your finances. Budget for the key costs that are required for starting up, and try to minimise ongoing costs. Bulk-buying may mean lucrative discounts, for instance, but you may end up buying – and therefore spending – more than you need.
3. Prices That Suit
You’ll have many expenses to factor in when pricing your products and services. Remember to include peripheral costs like packaging, and ongoing operational costs like wages and rent.
4. Boost your cash flow
Your business can’t run sustainably with a poor cash flow, so take steps to ensure that you’re always getting paid for your products and/or services. Useful measures include banking in deposits immediately, as well as stating payment terms clearly on invoices, with penalties for late payments. Businesses can also opt for invoice finance in order to obtain advances on unpaid invoices.
5. Cut currency exchange costs
Businesses dealing with international currencies can save on money transfer costs by outlining their currency-buying strategy in advance. Choose from a range of solutions that allow your business to secure favourable exchange rates upfront – this will help mitigate the risks of currency fluctuations, saving you money in the process.
6. Recover from unforeseen circumstances
Unfortunate circumstances can sometimes happen. From bulk-buying the wrong trimmings to your primary supplier going bust post-payment, you’ve got to be resilient enough to face the challenges that come your way. Consider minimising your potential losses by reviewing all known risks and opting for the relevant insurance.
7. Get a guarantee of payment
Fashion startups trading with overseas suppliers, manufacturers or distributors should consider opting for trade finance. If you’re exporting, you’ll be issued with a guarantee of payment. If you’re importing, you’ll be guaranteed shipment of the goods ordered.
8. A/W and S/S aren’t the only seasons
Major catwalk seasons aside, it is vital that fashion businesses consider significant shopping seasons. UK businesses should start planning for Christmas much earlier in the year, anticipating the need to secure the credit and stock needed for the upcoming December retail rush.
One more thing…
Starting up is an exciting time. You get to shape a brand-new business, so ensure that you’ve looked at all possibilities for saving costs and minimising losses in order to give your brand more opportunities to save, scale up and grow.