$200K sales in first season yet almost out of business! A true story

When starting a business, the unknown is bigger than the known. Where do I find….? How do I…? What is the best….? Are normal questions to have and having the right answers, answered by the right people for your business, will make the process smoother, more effective and much less expensive.

Congratulations on starting your own brand, what now?

About 10 years ago I was hired by a designer, for the sake of this story I will call him Mark, who by then had a very successful career as a creative director for big brands (RL, Nautica), to join and help him as he was starting his own brand. He had a very clear vision as to what the product should look like and the concept of his brand (since he’s done that successfully for these other brands for nearly 20 years).

But when it came to starting his own business there were many aspects that he wasn't familiar with. While working at these bigger brands, things such as sourcing, costing, developing, producing and selling the product where not an issue, or at least not issues that he had to deal with. This time he was starting as a small business with a limited budget – a big difference.  Dealing with all the above tasks on his own were now his own responsibility and he was not ready for that.

Yes he had industry professionals who worked with him in these companies and were willing to help and advise him, but their experience was working for bigger brands as well. Therefore just like mark, the challenges they faced in their work were very different than what a small start-up businesses faces. For example, meeting minimums for buying fabrics/trims, getting the attention of buyers, or negotiating good prices for production are some aspects they had zero experience with. And these areas can be deadly for a start-up! Mark’s contacts were used to having vendors chasing them for business not the other way around.

Great sales and no Profit? Are you sure?

By the time I came on board, he already had about $200K in sales for his first season (which is an amazing number for a start-up) and was already getting orders for his second season, sounds great so far, right? but when I took a quick glance at his wholesale prices, I froze! His cost sheets were done by his friend, a  production manager in one of these big brands, therefore needless to say that the cost was based on prices and quantities that a huge company would produce, which was far from the reality of his small business. His wholesale prices should have been about 50% higher in order for him to make a profit!

To make a long story short, that season we worked our butts off around the clock, doing as many things as we could ourselves, pulling favors from anyone we knew or could think of….. and all in order to just try and break even. Can you imagine having $200K in sales and struggling to keep the business??? it was a nightmare.

Where do I go from here?

As I mentioned, by the time I joined Mark, he was already selling his 2nd season and we couldn't just raise the prices that much at that point. After that 1st season he was exhausted mentally and physically,financially unstable, and was ready to quit and give up his dream. Luckily, he was able to find a financial backer and we ended up changing the product offerings which allowed us to change his price point to where it needed to be… and fast forward 10 years, nowadays he has a very successful brand!

Looking back at it, his main mistake was that he got advise from the wrong people. They were all experienced professionals, doing their best with great intention to help him but since they never started their own business, or worked for a start-up before, their set of skills was not what he needed.

Start-up is a different animal

I started my women’s brand after 7+ years of working for start-ups and small fashion brands. Being there and seeing what it takes prepared me to start my own line. I didn’t have all the answers right away but my previous experience allowed me to find these answers and more so. it helped me to avoid big and crucial mistakes, just like the one Mark had, that could have put an end to my business.

So if you are looking to start your fashion brand, make sure you are listening to an advise of those who've done it before. Small business (especially start-up) is a different animal than an established one, the challenges are different and facing them with limited resources requires a different set of skills and experience.

This is why I started Human B, I wanted to channel my start-up experience and knowledge to help designers and entrepreneurs like you achieve their business goals. If you are ready to take the next steps we designed a full day workshop geared specifically for fashion start-ups with three industry experts who will walk you through everything you’ll need to know before you start. Our next workshop is Saturday November 16, 9:30-4pm at Mood Fabrics store in NYC. Your investment is $349 and it includes complimentary light breakfast as well as lunch, a full package of industry forms ($75 value) and other industry discounts. Space is limited. For more info and to register visit www.startafashionbrand.com 

Need help with the financial planning of your fashion business?

Our finance bootcamp will help you build a strong financial plan which is the first step to having a succesful fashion brand.