Research Paper: Fashion Business a Review

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Fashion Business

a Review of Research Literature

There are a number of how-to articles available that give at least a basic overview of how to start a fashion design business. Amed (2007) highlights an interview with Marc Jacobs regarding what it takes to break into the fashion design business. Jacobs, of course, is a famous designer. He notes that the prospective fashion designer who has just graduated from fashion school should probably understand the realities of the fashion design business. Often, they will spend only 10% of their time designing, with the rest going towards things like accounting, managing production, dealing with suppliers and sending samples to magazines.

Jacobs also discusses the interpersonal skills that are needed to start a fashion business, including "tenacity, endurance and dedication" (Amed, 2007), probably because so much time is spent on the business side of things. Jacobs also notes that to help with these tasks you will need a team. "You will not be able to do everything by yourself." Then there is the question of money. Jacobs notes that while there are many potential sources of financing, these can be difficult to cultivate and raising enough money to start is something that usually takes quite a bit of time.

The final bit of advice that Jacobs offers is that you really need to think about your business concept. "What is it about your business that will be unique? Is it the design, the price, the value or the dream that people are buying into?" This goes for the customer and the investors both. So the article covers a lot of things on a very conceptual level, highlighting that not everything you need in terms of resources is physical. A lot of being successful in the fashion industry lies with having the right assets in terms of skills, abilities, and attitudes.

Part 2 of this article talks a bit more about money. It does not give a dollar amount, but rather is points out that when preparing the financial part of a business plan, you are being forced to price things out, and that will make a difference in figuring out who much money you will need. For example if you need an assistant, that needs to be priced out, and your business plan will also talk about rent, and materials and what those things cost as well

Anderson (2013) gets advice from fashion entrepreneur Erica Kiang. Concept was mentioned here as well. Location was noted as important, though maybe more from a retail perspective, but location also affects things like the cost of rent, and the access to the market. New York might cost more, but it gets you into the heart of the action. Akron, Ohio is cheap, but you are cut off from the fashion world. So you have to think about things like that. Also it was noted that there are different approaches to budgeting. Kiang notes having done everything on a shoestring budget, but that the most important thing is that you stick on budget.

Back to Amed (2007) and some other parts of the same series, which offers the most comprehensive advice online and comes with information from industry insiders. There are specific discussions about the types of investors that are available -- debt, equity, venture capital and more. Having the right mix of investors lined up is important because even with a bare-bones budget there is considerable startup capital needed to run a fashion business. Manufacturing done in America is costly, but can deliver high quality and offer the designer more control over the production process. Overseas manufacturing delivers a low price, maybe good quality but maybe not, but it also requires travel overseas to find the right suppliers. Flights to China are not cheap. Then there is the lead time to produce a season and have the revenue from that season returned to the company -- this process can take the better part of the year.

There are a few different ballpark estimates for startup costs. Empowered Traditionalist argues that $2,500 is reasonable for marketing expenses although this is not a reliable source and the figure is for the absolute low-end. This is also mostly for manufacturing and marketing costs, does not include salary or rent, nor does it include working capital, operating expenses and many other variable that could potentially be a factor. Another blog argued around $12,000 in the first year just for inventory and promotional costs ("I am the trend," 2012).

To understand some of the paperwork, some research needs to be done on things like the types of business organization. The IRS talks about this on a section of its website, and it looks like there are some costs and paperwork associated with incorporating the business (IRS.gov, 2013).

This does not look like there will be high end legal advice needed, but definitely some sort of accounting software will be necessary to handle that side of the business. There are definitely little additional things that go into the management side.

The website StartupFashion.com is a resource for people who want to get into the design business. There is a blog and some workshops, none of it authored but providing a little bit of advice. One tidbit was that if your budget is too small, it might be best to start with accessories or something else that it not apparel. One of the more interesting ideas from this website as far as resources are concerned was the recommendation to seek out mentors. There are four types noted: business development, techie, retail & sales and someone from within the industry. Again, the source is highlighting the need for non-financial and non-physical resources as the key elements to starting the business and getting it going.

- Analysis of the Findings

The different sources often have different takes about what is really required to start a fashion design business. The first thing that was highlighted by multiple people who are in the industry is that you need to have a concept. Clearly, there must be a purpose as to why you are in the business, and it has to be quite specific. Without that, you are randomly designing clothes, and it will be hard to communicate either to retailers or to customers what your clothes are all about. So that is a big takeaway.

It was also interesting to note what Marc Jacobs said about not spending much time on designing, but this is interesting for me because I can tell that from this research there is a lot of work that needs to be done on the business side. I will spent a lot of money on marketing, I will need to spend time on accounting. If I have somebody to help with that side of things, as Jacobs always did, then that will help. So human resources is an important consideration because the other person will either need to be a partner in the business or will cost money in terms of needing to be paid salary.

It was a bit frustrating that there were not great sources for the precise cost of the business. There was fairly honest discussion about the fact that there are many different ways to run the business, in terms of where to locate, where and how to produce and other factors. Clearly, there is a long lead time to making a return on your clothes, so you need to have capital for a year, but that amount can vary. Finding investors is possible if you have a great concept and especially if you've been able to build a reputation for yourself but no matter how much money you need you just have to be realistic that it will take time to get your investors together so that you can start. Many sources of funding, like venture capitalists and banks, are not likely going to talk to somebody who does not already have a halfway viable business.

What I liked about the research was that there was at least some honest information, and that it was possible to get advice from people in the industry, or that are directly relevant. The IRS allowed me to realize that a corporation is the best approach to the business, as this allows you to hire staff more easily and to minimize the downside risk that you face. A site that I did not get a great source from but that had potential was the Small Business Association website (SBA.gov), which is a portal for resources relating to starting and managing small businesses in the United States. It is actually valuable at this point for me to simply familiarize how people think about these sorts of issues.

So far, I have mostly been able to gather information about what to think about, but it is clear that a lot of the work is going to be done myself, especially as part of the business plan. I am seeing how valuable a proper business… [END OF PREVIEW]

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