14 IDEAS TO BOOTSTRAP YOUR FASHION BUSINESS

In the fashion industry it’s common for new businesses to be financed solely by their owners and develop organically.   Bootstrapping is the term used to describe the challenge of financing your startup without relying on outside funding and instead relying only on existing resources such as personal savings, materials equipment and workspace.

It's what I recommend to clients and students going through the Fashion Entrepreneurs 3 X Launch Formula and in my experience that's what I recommend for most people unless of course you already have someone ready to invest and they are willing to wait a while to receive a return on their investment.

There are many reasons why I recommend this:

• If you obtain funding too early your investor might not be aware how long it can take a fashion business to become profitable and if they don’t see a return on their investment early on could pull out.  
• In the early stages you need some time and creative space to build your customer base and develop your products organically without the distraction of an investor breathing down your neck to make sales.  
• Looking for capital can distract you from growing your business.You need time to develop your artistic, aesthetic style and vision…. And also to build a team that aligns with your vision.   
• When you do eventually look for investors you will be in a much healthier position and more likely to find a good match who will understand the complexities of your business, are on board with the time it can take to become profitable and who lets you flourish creatively.  
• Investors will want to assess the financial health of your company and that can take a couple of years to improve.  
• As a startup you have few or no tangible assets which puts you in a very weak contractual position. 

Before trading ensure you have access to enough cash to get you through the first two to five years.   Many floundering start-up designers don’t make it past the first year because they underestimate the time it takes to make a profit and as a result run out of money after their first collection.

Another mistake floundering designers make is that they try to compete with the large established companies.    This is like a toddler competing with an olympic athlete at the 100 metres race.     The chances of winning are impossible!

Instead you want to focus on your unique product and your strengths as a small brand.    There are many things you can do that large companies cannot.    For example you are faster to react to trends whereas large companies with a lot of moving parts are really slow to adapt.      

To survive the start up stage these three things are crucial:

•  Focus on your zone of genius as a designer.
•  Keep expenses at a minimum.
•  Look for a sustainable form of income.

In the Fashion Entrepreneurs' 3 X Launch Formula I help my clients and students with funding suggestions for all stages of their business from the startup stage to 2 to 3 years into their business when they are looking for outside funding.   

Here are 14 ideas to fund the start up stage of your business: 

1. Your own savings
2. Friends and family
3. Keep your day job
4. Part time job
5. Consultancy or freelance work
6. Private clients
7. Credit cards - used responsibly to help with short term cash flow only
8. Bank overdraft or loan - Used responsibly and paid back on time.
9. Government grants
10. New Generation Sponsorship
11. Competitions
12. Incubators
13. Crowdfunding
14. Equity crowdfunding

The simplest solutions are to borrow from friends and family or work in a side job.   If borrowing from friends and family tread carefully because the rollercoaster of business can take a toll on personal relationships.   

If you work part time discipline and structure are crucial.    Allocate the hours per week you will spend to bring in an income and the hours per week you will spend on your collections.  Working part time will of course mean that you have less time to focus on and grow your business but it does have some benefits so don’t knock it.    The benefits of working part time, especially if it's in the fashion industry, are:

• Reduces financial anxiety.   If you are anxious about money you will not be in the creative state of mind necessary to produce your best designs.
• Help you develop a network of professionals.
• Can give you extra validation as a designer. 
• Provide a break from the intensity of your business
• Learn new things from that company that could help your business.

Fashion businesses need a lot of capital due to the production cycle.  It can take six months from design to getting paid and during those six months you need finance for design development, sampling, materials, manufacturing, wages, marketing, sales activities and all the day to day running of your business.  Therefore at some stage most businesses will need an extra cash injection from an investor .   When you are ready start deliberately and strategically looking for investors.  The training portal in FEA can help you do this.  Every business is different so that could be after 1 year, 2 years or 5years… 

So, what are investors looking for?    Coming out of the pandemic investors are interested in companies that have the following attributes:

• A clear brand story; 
• Solve a problem for their potential customers; 
• Have something unique to offer; 
• Don’t burn their money and manage cash flow; 
• Care for the planet; 
• Are going digital;
• Have an organic way to grow their audience to prove they can scale their business. 
• Have a business plan.

Before looking for investment it’s important that you:- 

• Carefully consider your previous business activities to determine your financial requirements and why the money is needed. This should be done accurately because underestimating or overestimating the amount of investment required will be detrimental to your business! 
• Accurately calculate your short and medium term needs, how long you will need to borrow the money for and when you will have cash available to make repayments.
  
• Decide where the capital will come from and that they are aware of the seasonal cycle of fashion.
  

I'll leave you now to decide which of the 14 ideas you'll use to fund your start up.  When you establish that come and join us in Fashion Entrepreneurs Academy to learn the next steps to becoming a New Age Fashion Entrepreneur and building your successful fashion empire the new fashioned way!     Enrolment will be opening soon so click HERE to be the first notified.