Your Business Health Check

Transcript:

Hi, guys. I’m Syama Meagher, CEO of Scaling Retail. And today, we’re going to answer a really important question for fashion startups, which is, how do I know my business is on track? This is a very important question. Why is that? Well, you want to know, is the market receiving the product well? Am I getting enough traction? Now, let’s not confuse being on track or traction with profitability. We simply want to be able to see whether or not the market is actually responding well to your product because that’s ultimately going to tell us whether or not you should pivot or pursue.

Now, profitability and revenue, as well as your traction, are all three different mechanisms by which you can understand the health of your business. Profitability is what money is left over after all of your costs of goods, labor, operating expenses. This is what the business has at the end of the day with your sales minus everything else that you’re spending on that.

Now your revenue stream is simply your top-line sales. Revenue is simply how much money is coming in from a variety of different channels. And then traction, guys, is a totally different concept, a concept that was really made popular when we think about a lot of tech startups. Because a lot of tech startups were able to get a lot of funding, not based on revenue and not based on profitability, but because of the traction and the user base that was using and consuming their product, and they were able to get a lot of data and feedback out of that. So traction, as it relates to a fashion startup, is really important, guys, because it’s going to really help us understand how the market is perceiving us and whether or not we should be pursuing or pivoting.

So let’s unpack sales analysis, looking at press, and determining what the right metrics and goals are going to be free to know if this is successful or not. So, guys, press is a really important topic and a significant aspect of your fashion marketing plan. And the reason why press is really important for traction is it helps us to see how the market is talking about the business. Are influencers coming to you or are you pursuing them? Are online editorials and magazines choosing to write about your product? Are the bloggers giving you some coverage and features? Being able to have some visibility and some social proof in the market is a great way to know that you’re getting traction. People think about you. People care. People are talking about it. Your Instagram channel, how many followers you have that are increasing. How many people like your Facebook page, if you choose to focus on that? How many people are following your Pinterest board, again, if that’s a channel that you focus on? Whatever it is you choose to set yourself up on, those particular platforms are going to be important for you to understand how to maximize them, and how to use them to see if you’re gaining traction. Traction should be a result of both organic reach, as well as the strategies in your fashion marketing plan.

Now the second thing about traction. Traction can also be in terms of what your sales are. How are people purchasing the product, right? It doesn’t have to be with having huge amounts of revenue, but are you able to make sales, and are you able to sell beyond just friends and family? This is very, very important, and this is why we spend so much time at Scaling Retail talking about different marketing strategies and ways of testing the viability of your business model. A lot of our fashion startup clients go through lots of different market research studies. They do focus grouping because they simply want to know, is this brand going to have traction before they even launch the new product or this new brand into the market? You too want to have a better understanding of, will someone buy this product? Am I designing or developing this for sales? So sales is a very important factor to consider as well. Configure your fashion marketing plan and budget to accommodate primary research. The results make the investment worthwhile.

So at the end of the day, when we think about whether or not your fashion startup is getting traction, it ultimately comes down to, do you need to pivot or pursue? Pivoting means we’re making a few different adjustments to our existing business model. Maybe we’re changing some of our product development. Maybe our marketing channels are shifting, or are we pursuing the existing channels and taking new leaps and experiments on channels that we want to tap into?

Now, this notion of pivoting or pursuing doesn’t just happen after year one. You should be evaluating your business quarterly and you should be doing lots of aggressive testing on what the market feedback is that’s going to be done through channels like in-person market events. You may be thinking about doing some focus grouping. You may also be running some advertising for brand awareness or checking to see how certain kinds of copy and images are landing on your advertising channels.

There are lots of different ways of approaching the pivoting and pursue element here. But at the end of the day, it’s the traction that’s valuable. Because, guys, as a retail fashion startup, you may not be seeing profitability in your business within the first year and a half. Oftentimes I tell clients, give yourself about 18 months to really see what this business is turning into. And within those 18 months, make sure you’ve given all of your strategies and channels a very proper execution. The one thing that I hate seeing is when clients come to me, and they say, “Yes, I’ve been trying all of these different things,” but they’ve never documented those experiments. They have no idea how well they’ve performed, and therefore they have no data. They actually can’t tell me if they should pivot or pursue because they’ve never done the homework themselves.

So, guys, please, as you’re within this first 18 months of your fashion startup, definitely make sure you’re keeping track of your experiments and circling back to your fashion marketing plan, your sales strategies… You’re finding out what’s working. And beyond that, once you know that your business is profitable or even once you know that there’s a real essence and a core driver within your business that consumers want, that is a good time to say, “Okay, these are the core marketing strategies that we know perform well for us, and then each month, we’re going to invest in different traction drivers.”

Maybe Instagram turns out to be your favorite platform, and you really nail it. And then you move on to the next traction driver, and maybe that’s your Facebook page or Pinterest or in-person marketing events, right? So whatever it is, guys, please make sure that traction is on your radar and that you make sure your business is getting plenty of it. All right, guys, I hope you see how important traction is. I hope you see the immense value that this brings to your business by simply keeping your eyes aware of all the different factors that help you build your social proof and help you understand how your business is moving.

Now, to get more information, please read our in-depth blog post on how you can land more press to get more traction, and how you can get more interviews as a brand owner, again, in order to help get in front of more people and build that traction. And if you’re really interested on staying on top of what the retail calendars are, please make sure you download our NRF 3-Year Calendar. The National Retail Federation has an amazing calendar that goes over all the major dates and holidays. This will become extremely important, guys, as you’re planning out your sales, as you’re planning out your press, all of it. So make sure you download that NRF calendar. It’s going to be the backbone of your fashion marketing plan.

Lastly, please leave a comment below. Do subscribe to the channel. We always look forward to seeing you on Instagram @scalingretail. And when you’re ready to launch and scale your business and really take your business to new heights, please do email us at hello@scalingretail.com. Thanks, guys.

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