Five financial tips for planning your cash flow in the first 18 months of business. Hey guys, it’s Syama and congratulations on being able to get started on your fashion startup, having capital, having funding. It’s a very, very exciting place to be and I’m thrilled that I get a chance, hopefully to impact a few of your key decisions for your fashion startup business plan in this really integral time of your company.
Now, the first 18 months are so valuable and so important. In fact guys, once you move outside of the startup cost phase, which is really sampling, branding, website development, all of those startups, once you move into operating costs and the monthly cost that it takes to run your business, this can be the most make-or-break time period for you because in these first 18 months, you’ve got to find your customer. You’ve got to nail down your fashion startup business plan and make sure that your shipping and logistics are great. You’ve got to make sure that your product development, your styles and SKUs, everything. This is the time when you are capturing the customer, driving home great messaging and building a business to last.
Within the first 18 months, it’s likely that you’ll be trying lots of different experiments. And after that time period, you’ll say, “Hey, these are the things that worked and this is what didn’t work.” So, let’s dive in a little bit into the five things that I’d like for you to consider as you move into this phase.
Number one, plan to spend a whole hell of a lot more money on marketing your fashion startup than you might think. Marketing is really going to be one of the biggest areas for you to gain attention and market share. Without dollars there, not going to happen.
The next thing is to be your own sales rep. So, when we start to think about how it’s best to get on the ground word-of-mouth and messaging. Being your own sales rep is going to give you a lot of experience under your belt, where hiring an outside group may not necessarily the best for you.
The next one is to really think about not sacrificing on your product quality. Certainly, when we go into production with the first round, everything is perfect. But guys, when it comes to delivering the product to your customer consistently, effectively, time and time again, you do not want to sacrifice on your production. So, make sure that you have the bells and whistles that you want to have for every single collection. And then you’re able to make pivots and changes through that within the different seasonality.
Next, plan to spend on what you can’t do yourself. Now, this might seem like a very easy concept to understand but trust me, there are lot of fashion startup owners out there that are not hiring out people in order to fill in core competency gaps. Now, all of us are not perfect. I personally can’t draw if my life depended on it. And trust me, if I was starting a fashion startup, I wouldn’t sit there and try to sketch and draw things if that wasn’t something that I was strong in. I would likely hire out someone who is within my budget, in my scope and where I wanted the brand to be headed into, and hire them to execute on things that I was not good at.
Sometimes we fail to see that our biggest weaknesses can sometimes be trying to do everything ourselves. When you take the time to actually source and find the right people to help you execute on things, you’re going to actually end up spending less money and less time doing things that aren’t actually helping the bottom line of your business. You might be saving a few hundred dollars by doing something yourself, but is that to the detriment of the business, or is it going to add to the business? Your time is as valuable as money, as is the time and value proposition of everyone else that you might be looking to hire. So please guys, make a list of the things that you are great at, the things that you want to be doing within this business, and then make sure you allocate resources to hiring other people. Even if it’s something that you’re kind of good at, but you’re not really good at, get the right people to do these things for you. You’re going to be so much happier that you did.
And lastly, guys, we want to make sure that we stick to a budget. It’s such an important part of any fashion startup business plan. I know it’s so easy when you’re first starting up a business to have a whole line item of things that you are going to be spending money on. And man, those fashion startup costs can be costly. It can be expensive. However, when it comes to operating cost, I get it. You’re trying different strategies. You’re working with different approaches. It can feel limiting or somewhat boxed in to have to ascribe numbers to certain things that you’re doing, to have to put financial goals onto activities. Because you’re right, what you are doing is an experiment. However, an experiment that goes unmonitored, that’s not being pivoted and that’s not having some boundaries on it, is actually not truly an experiment. Experiments have variables. Experiments have a structure, in order to see how they perform. If you’re just doing things and you’re trying random things without any kind of game plan, without sticking to it, you’re not experimenting and it’s not even a strategy. You’re just kind of throwing pasta to the wall, which is fun but doesn’t always yield in the results that you want.
Now lastly guys, when it comes to planning your operating costs, be strategic about your money. I know oftentimes brands will say, “Oh, I’m going to just pay for things as I have money and I’m just going to do it ad hoc and whenever I can,” but that again is not strategic. If you have a certain amount of capital that you’re investing for the entire year, make sure you know what that looks like. If you have a certain amount of capital that you’re investing in the first six months – even if you don’t have all of it at once – make sure what that looks like and where you plan on spending the money, and how you plan on seeing those results. For every line item on your operating cost sheet, you should know exactly how it is affecting your bottom line. Is it fixed? Is it variable? What is the triple ROI on that particular expenditure?
All right guys, I hope you found this to be useful. I know it’s stressful when you’re thinking about budgets, cash flow, planning, and how you need to spend money on the different aspects of your fashion startup business plan. If you need help and assistance with getting your business off the ground, connections to the right CPAs, the right bookkeepers, knowing what kind of software platforms are going to be best for your business to launch and grow on, please shoot us an email at email@example.com. We’ve helped to shape many successful businesses from a financial planning and strategy side of things. And for further reading, make sure you check out our blog post on how to determine if you need a retail consultant. We know you guys are seeing so much out there about fashion business strategists, retail consultants, what exactly are these things? Who are these people? What do they do? If you’re wondering what we do over here at Scaling Retail, head on over to our website at scalingretail.com. We’d be happy to walk over with you all of the ways in which having a retail strategist by your side can really get you to your goal faster, better and stronger than doing it alone. We’ll also explain how we can strategize for your fashion startup business plan based on your unique positioning, goals and needs. Check out the blog post… I think you’ll find it to be super interesting. And in the meanwhile, make sure you download your fashion startup cost planning sheet. This is going to go over the basic fundamentals of how to plan your startup cost. Right now, we talked about operating cost and the flow and ebb and flow of that business model, but startup cost is super important and we’ve got an amazing worksheet for you.
All right guys, comments below. You know the drill. Head over to Instagram, say hi @scalingretail at Instagram and I would love to hear from you. We’re always looking to partner up with great businesses and where we can make an impact, help you drive business, help you get traction. Because guys, if you look good, we look good. All right, talk to you soon. Bye.