Guest post by Macala Wright Lee, Editor-In-Chief of FashionablyMarketing.Me, the largest, international digital fashion marketing magazine online. Wright Lee has been a consumer marketing consultant for 10 years.
During Magic in February, Los Angeles fashion industry executives Frances Harder, Dana Fried, David Perry, Rob Greenspan, Staci Riordan and Ernesto Mantilla examined the various aspects of planning, merchandising, branding, sales and international marketing opportunities for a US fashion business.
The panel offered these expert tips before starting and expanding your business in a global market place.
Develop A Business Plan or Strategic Roadmap
If a designer wants to make $1 million their first season, they need to have $250,000 in liquid capital. It's easy for new businesses to make a $10-, $20- or $50,000 mistake their first year. As a new company, designers have to be very frugal; ditch the Starbucks and make coffee at home.
A designer can start a line with less than $250,000. Successful lines have launched with $12,000 to $50,000 and made $1 million to $2 million in their first 24 months. Those lines had both a business plan and a strategic marketing plan. Designers must have a business plan, especially if they're seeking investment funding.
When designers start their business, they need to know their market space; identify your target market, competitors and sales outlets; work them into your plan and marketing strategies.
Insider Tip: Ask yourself, "What does your brand promise? What's your brand's message?" Knowing who you are and what you stand for is key to developing a successful business plan. If you don't know how to brand your product, you will never be able to monetize it.
Expert Manufacturing and Product Development Advice
Sourcing and manufacturing are "seamless" operations. Regardless of how a designer plans their line or who their partners are, they have to be prepared. Things don't go they way you plan them. If something can go wrong in production, it will.
Do your research, conduct all product development in America before you send production overseas. As a designer, know who you're working with, go to the facilities and inspect them (even if it's in China).
Insider Tip: If you're a designer in California, do you have your manufacturer's license? If you don't, the state can confiscate your product.
Digital Resource: Fashion Incubator. Author, Kathleen Fansella, is a 27-year apparel industry veteran and author of The Entrepreneur’s Guide to Sewn Product Manufacturing. The site is a must read for any one starting their own line.
Legalities of Fashion: Advice from Staci Riordan
In order for your company name to become a corporate asset, you must trademark it with the United States Trademark Office.
In the US, a designer gets common law rights to their brand name when they use it, but if they don't legally register it, they can't sell it, license it or prevent cybersquatting. It can cost up to $2,000 to $3,000 to register a name and can take up to 24 months to get it registered.
If you are going to use your own personal name as your trademark, consider registering the trademark in your name as an individual, as compared to the company, and then license it to the company for a nominal fee. Please note, though, if you have partners, this will be very challenging.
Insider Tip: Companies come to trade shows (such as Magic), take the listings catalog, walk the floor and take designers' names and register them. Designers and brands can spend up to $20,000 to get the these names back. If a webmaster, hosting company or individual is cybersquatting on a designer's or brands' federal registered name, know that it's illegal and can be taken care of easily with a lawyer.
Finding Sales Representation
When a sales rep takes on your line, they want to know that you have finances in place and are able to fill orders for their clients.
Sales reps are usually paid every 90-120 days, and the average sales commission for 2010 is 12 percent. Don't be surprised if showrooms or sales reps ask for cash up front; many have monthly base fees of $550 - 1500 per month just to have a designer's product line in the show room. Most sales reps and showrooms don't take lines if they have no sales history because of the high risk of not being able to fulfill orders.
Start identifying showrooms in your product development phase. Show how your brand is different to showrooms, get them excited about you and try and generate demand before you come to market.
Insider Tip: If the showrooms are asking for money up front, a designer needs to ask them, "What guarantees or incentives do you offer designers who pay you $1500?" For high showroom fees, designers should also ask what kind of promotion, trade shows, PR or marketing the showroom does in order to help promote the designers.
Digital Resource: How do you find good sales representation? Online, of course! FindFashionRep.com, digital resource for brands and sales reps to connect online, last month.
FindFashionRep.com own Kelli Nelson offers this advice to brands or designers seeking representation:
"Have a clear understanding of who your customer is. Observe trade shows and showrooms and then speak to the reps at the show rooms that you'd think would be a good fit for your product line. Always check references of the showrooms and sales representatives you wish to work with."
The No Risk, No Sales business panel was extremely enlightening for brands and designers who wanted to take the time to build their businesses correctly.
Photo Credit: i slam