As a lecturer, I have the opportunity to spend a lot of time with students who want to start their own fashion brand once they completed their degrees. This is great, as each of us has something unique to bring to the world and entrepreneurship has never been easier to access.
On the other hand, many fashion schools focus the entirety of their degree curriculum on the creative component of collection design, while putting much less emphasis on any other dimension of starting and running a business.
In this post, with no intent to discourage readers, we’d like to discuss some of the things a fashion entrepreneur should consider before embarking on an entrepreneurial adventure.
In this blog post we are going to discuss:
It’s capital intensive. In a time like today, access to entrepreneurship has never been easier or inexpensive. We are very much used to hearing about tech startups which were created by two people in a garage and in a few months were able to acquire millions of customers and make the cover of the prestigious magazines. This is great, but building a prototype in software development can be much less expensive than in many other industries.
Fashion, for instance, is a very capital intensive business. With no access to capital, getting a brand to take off is barely possible. This higher threshold of access limits the number of entrants to the market, but at the same time ignites more ‘creative’ approaches to funding.
Bootstrapping in fashion is very hard to do, and because of the need for capital, founders may Develop alternative forms of financing. This can be done with crowdsourcing or crowdfunding. This is not really an ‘easy workaround’ to the money problem, but at least it allows an entrepreneur to address a steep learning curve, and understand how much money is necessary to develop, produce and market a product.
Alternatively, we can see how many companies in the fashion industry actually developed a brand, only after having started other ventures in order to better manage cash flow more efficiently.
Poor cash flow management is often the reasons why companies fail, not just in fashion, in every industry. As a designer moves through the creation of a value chain, costs are high and profits unsure. A whole strand of management – called lean management – has been developed to address cash flow problems, but in the reality of business, an entrepreneur is required to spend a lot of money before any potential financial reward can be even hypothesised.
It’s an all-encompassing endeavour. If everyone has a chance at becoming an entrepreneur, not many succeed at becoming one. This, however, is not just because of timing, luck or other variables. On the contrary succeeding at creating a company depends on the intimate characteristics of each individual.
Entrepreneurs need to take risks, need to manage uncertainty and need to have faith in what they do. For most people, this means that an entrepreneur might live in an existential condition of worry. You may start worrying about your business first, but eventually, you get to worry about many other things too, like the people involved with your firm and the sustainability of your own future.
Failure during the startup stage of a company is almost a certainty. What makes a difference in the long term, is how entrepreneurs react to failure, how they persist and ultimately succeed. Entrepreneurship is not a matter of ‘having a million dollar idea’ as much as ‘having a million dollar character’.
Much of the entrepreneurship literature revolves around how you build a company, but very little writing (by comparison) is devoted to building the necessary character to be an entrepreneur. Starting a business challenges everything: from your own values as an individual, to any relationship you have, to the very perception of good and bad.
This is also why when assessing business ideas, funders tend to consider the character and mindset of the founding partners, as this variable is as important as the product they are selling.
You need business training. If you look at your daily schedule you will realise that in reality what you are doing most of the time, most of your workdays is looking after the business. Much less time than you may expect is spent on the creative and design processes. As we will discuss in greater depth in the next section of this post, research and development (in this case collection design) comprise only 25% of the value creation process of a company, the remaining 75% instead relates to managing relationships with producers, developing marketing strategies and taking care of your customers.
This is why, if you are serious about starting a company, a degree in fashion design may not be enough. You need to learn about how businesses work, and how to manage an organisation efficiently.
By this, we don’t mean that you need to go back to school and spend more money re-starting your education. On the contrary, so much can be learnt on the job, with sufficient curiosity and dedication. Being a CEO first and a Creative Director later is a necessity for most businesses, as it will take years before you can ‘pick and choose’ the things you enjoy doing the most.
The issue in most cases has to do with the way in which the fashion industry is represented. If on the one hand, the fashion catwalks and top models create a dream factor which can be hard to resist, on the other hand, the complexity of the fashion pipeline will challenge any designer who is unable to manage a firm’s value chain.
What fashion students study in school, is fashion design as it’s certainly the most important thing to focus on, but it’s not nearly enough of what you need to know if you want to start a company. The process of coming up with a unique, interesting product can take years of research and years of trial and error, however, this is just the starting point a much longer process, which entails 4 distinct stages of value creation: research and development, production, marketing, distribution and sales.
The final value delivered to the customers is the result of these four stages, each entailing a series of subprocesses and substages.
Let’s see each one individually:
All in all, getting a second degree in business or an MBA might not be such an overkill after all. At the same time, however, starting your own company allows for a great learning opportunity, and in (relatively) no time, one can learn about the complexity of the fashion pipeline and all that it entails.
Again and again, the character or the entrepreneur seems to be the most important key success factor when starting a fashion company. At the same time, however, we can suggest a few guidelines to help you get started.
The point of this post was not at all to dissuade a fashion entrepreneur from starting a company. On the contrary, we very much encourage risk-taking in business. At the same time, however, as one sets out to pursue a dream, it’s necessary to have a comprehensive understanding of what managing a fashion company entails.
Ultimately it’s a matter of character, but knowing the underlying elements of the fashion business goes a long way in helping a fashion company stay afloat during the startup stage of its growth.
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