The business strategy
The business plan is a strategy indicating the balance of costs against income (introiti/reddito). It is one of the most relevant aspects that even fashion designers should know how to set up if they want to start their own business.
The financing needed is based on the costs of the materials (fabrics, needles, pins, etc.) the equipment (serwing machines, steam presses, iron press, dress dummies etc.), trim (buttons, clasps, buckles, lace, etc.) accessories, workers’ payment, facilities to rent and utilities to pay, and finally what the net income will be.
Before even starting it is also imperative to plan the price of products along with the expenses for publicity.
Expenses will always be subtracted from profits.
What Makes a Good Business Plan
Once all that is done the next step is to find financing. There are different options: one is financial banking through a bank loan, meaning that the plan presented to the bank must be sensible, well planned and financially practical. Banks always protect their investment and ensure that they will be paid back.
A second option could be attracting investors willing to finance the new brand.
According to statistics, most fashion startups begin to make profit in the third season, therefore the first two years are characterized by sacrifices that at times might be also discouraging, nevertheless a detailed and well thought out business plan is the solid basis for success.
Finally, whether through a bank loan or investors financing will be easier to obtain if the brand covers a product area that is innovative and affordable to potential consumers, a need for it must be created and the product made desirable.
The Promotional Mix
The main goal of businesses of any type, whether a fashion designer company, retailer, manufacturer or service provider, is to make itself well known to public, therefore promotion is vital for any company’s success.
Promotion, or “marketing communication” is an umbrella term that comprises a good mix of the following:
- Advertising consists in paid for communication from company to company or from company to consumer. This is also called an “above the line” activity since the promotion is clearly made by the company producing it. .
- Sales promotions consists of in-store activities including short-term discounts (sconti). Personal selling uses sales personnel (personale di vendita/addetto) catering to (provvedere, fornire un servizio) customers.
- Public relations entail a less clear form of promotion and are sometimes referred to as “below the line” activities because it is not always clear whether the information originates from the company or if it is an editorial comment, they may include product placement in magazines or television advertisements, or ads; there are many PR agencies dedicated solely to fashion in the most important fashion cities.
- Direct marketing instead consists of mail shots (materiale pubblicitario distribuito per posta) and emails, SMS communications linking directly to purchase, such as quick response (QR) codes.
However, no amount of promotion alone can sell a product if it is not wanted by a customer, if it is not at the right price point or if it is not readily available.
The five elements of fashion forecasting
Another relevant element for a new business is to have information regarding new trends.
Understanding and predicting (prevedere) the needs and desires of everchanging consumers’ tastes and whims (capricci) is useful for designers, retailers and manufacturers to make well-informed decisions that can lead to early business success.
The five elements that must come together to follow the right direction are: the right product, the right time, the right place and in the right quantities priced for the right costumer.
This is where fashion forecasting becomes important to avoid launching a product for which customers are still not ready and for which they may need more time to familiarise with the new look; or for a retailer to buy too little of a merchandise leaving customers dissatisfied and being unable to maximise sales opportunity, or buying too much risking to have an oversaturated market and ending up with unwanted stocks that result in loss of revenue (reddito).
© L. R. Capuana
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