So many creative entrepreneurs know that the financials of their business are important, but knowing how to budget, learning ways to cut costs, and figuring out where to spend money can be intimidating, especially when funds are limited.
Making money, spending money, saving money…all three is necessary and at times confusing. Thus, sharing a bit of financial information can be a lot helpful to one’s fashion business, especially young fashion designers and other creative entrepreneurs.
Set Financial Goals
The first thing you want to do is set some financial goals for your business. You don’t stop there. Once you set those goals, you need to think about how, specifically, you are going to achieve them. You also want to think about the money that is required in order to achieve them. This will shape a better budget because you can recognize the amount of money you will need in the future to really grow your business to you want it to be.
Here are some questions that you can ask yourself to get the ball rolling:
- How much money do you want the business to make this year?
- How much money do you want to make this year?
- What revenue streams are you going to use to make this money? (Wholesale, eCommerce, Pop-ups shows, etc.)
- How much product do you need to sell over the next year (and at what profit margin) in order to reach my business financial goal?
- What are your fixed expenses?
- What are your variable expenses?
Create a Budget
Once you have your financial goals in place, your next step is to create a budget. A good budget is one of the keys to growth and success. A budget is a detailed account of how much money you are bringing into your business and most importantly, how you are spending your money. Many businesses have multiple budgets for multiple time periods and for various sectors of their business; to start off, just have a monthly budget for a 6 month or 1 year period.
Invest in Marketing
Marketing is an absolute must and much of marketing take money. One of the biggest mistakes young brands and creative industry entrepreneurs make is spending all this time designing and creating a beautiful product and launching it to the world with no real idea of how they’re going to get people to see it.
You don’t need excessive amounts of money to successfully market, but you do need something. So get comfortable with the fact that you will need to invest in marketing. As your business grows you will start to invest in more marketing initiatives.
Have an Event Fund
Many young designers and creative entrepreneurs are focusing on direct-to-consumer sales via their websites. Getting offline and meeting your current and potential customers is so important. Get out there and meet people. If you start a fund for doing in-person events, you’ll be prepared when an exciting opportunity presents itself.
Consider Smaller Collections
Many independent creative entrepreneurs, especially fashion designers, feel compelled to create large collections; multiple styles offered in multiple colors and patterns. And that is definitely not expensive.
One great way to cut cost down is to rein in your offerings. This is especially doable if you’re focused on direct to consumer sales because you’re not answering to retail buyers demanding a large assortment. Also, launching a few styles in one or two colors can help you learn what your customers really want before you spend a lot of money producing samples. From there, you can decide how often you’d like to introduce new styles and colors