HOW MUCH DOES IT COST TO START A FASHION BRAND?

HOW MUCH DOES IT COST TO START A FASHION BRAND?
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Isn't that the million dollar question?

Unfortunately there isn’t one answer to this question. The answer depends on many aspects such as the product type, target market, price point, business concept, strategy etc.

In order to build a strong fashion business with real chance in being successful you must spend money to make money!

Just like with any other business.

More so, with the complexity of creating a product from scratch you can’t cut corners and you’ll need to plan ahead.

By planning ahead I don’t mean creating a wish list with what you’ll hope would happen re: I would like to sell in 50 stores in the first season, be profitable after the first year, have a markup of 80% etc. I mean a detailed, well thought of, step by step plan with a strategy, milestones and cost for executing the plan -  in other words, you need a business plan.

The biggest financial challenge that start-up fashion brands face (which unfortunately most of them are either not aware of  or simply ignore) is cash flow. As a fashion brand you are creating a product from scratch and are responsible to pay upfront for everything involved in making the product, you will than wait anywhere from 3-6 months before your customers pay you for the product and In the meantime you will also need to pay for the development of your next season.

This can adds up to a big investment,

For example, although you might only need 10k to start the business and develop your first season you will still need maybe 100k as an investment to get you through the first 2 years considering the circle of cash flow described above.

Than how can you figure out what it will cost you to start your fashion brand? Here are the steps to help with that:

• Market Research - You should start with that, take the time to do your homework. Do the research and define your business vision (at least for the first year).
• Vision - Once you gather the above info, decide on what products you will offer, your price point and market positioning and how you’ll market and sell your fashion product.
• Calendar – Now that you decided on your business concept and strategy create a calendar for executing it.
• Start-up investment - Create a budget sheet and start plugging in the numbers to get a better understanding of your start-up investment.
• Project your cash flow – Using the cash flow section on your budget sheet, look at the first year in business and project your income and expenses for the year, than based on that decide how much money you’ll need to get you through the first year. If the amount is too high, go back and see what can be adjusted to make it work better for you. Also keep in mind that you don’t need to have all your investment ready on day one, you can spread it over few months ( and who knows, maybe you wouldn’t even need it all after all).