Half of Success is Showing Up...

At a very successful company I used to work for, which I'll refer to as Andi James, the owner, Andi would always go to trade shows with the sales reps.

I am no less than positive most of the reps found this completely annoying. I mean didn't he trust them to do their jobs? And furthermore weren't there a million other things he could have/should have been doing than hanging around and giving buyers that fake European kisses on the cheek-- asking them about everything from their businesses to their kids.

Yes he was already very successful...his name was big but even like Mega star Beyonce (personally promoting her line at a trade event in the pic above), he always seemed to realize he was no bigger than the people who supported him.

In contrast I've seen many designers ship off their sample lines to a trade show in a big UPS box then wait by the phone to hear the sales rep either show and prove with some great orders or ramble on about how the show was slow and people just weren't buying.

The message in all this is to be involved with your showroom and the entire sales process.

The relationship with your showroom is a partnership but obviously an outside showroom is not your company. And if for whatever reason things don't work in the short or long term it will have been important to have always protected your interests.

So what are your interests?

1. Your Relationships. Andi went to those trade shows to build personal relationships with buyers--that could possibly outlast his relationship with the showroom. He made it clear that he appreciated their business and was there to personally stand behind his company. He understood his customers were his everything...much too important to be left entirely in the hands of another.

2. Your Insights. In most organizations the sales people are the biggest knowledge keepers. Yeah you can look at the numbers but the people on the front lines are the only ones who know the whole story. Why isn't this selling? What makes this piece so hot? The non-verbal cues, expressions, side comments they all add up to a full picture that can be translated into action steps to grow your business. Insert yourself in the mix and get these insights for yourself.

3. Your Visibility-- The press are a staple at trade events. They want to get good interviews and create interesting stories that can be turned around as quickly as possible. Would it be better for you...or perhaps the entry level sales assistant the showroom has dedicated to your line to help build intrigue, give quotes and secure press coverage? Don't leave it up to your sales rep or your press kit...go to the show and make your story come alive.

All this being said, of course there is a right way and a wrong way to do everything. Having a good relationship with your sales partners is of the utmost importance as well. You definitely don't want to piss them off prancing around like an uninvited diva.

Perhaps you only attend the largest events, and only stay for a few hours during peak traffic. Also talk to the sales manager about the best role for you to play....Silent observer? Special guest? "The designer wanted to travel here and personally greet our customers." Buyer thinks...what a nice touch..none of the other designers came... Hey I've always wanted to ask you..yada..yada..yada...

You get the picture. Play your position. You are the owner, which means at the end of the day the whole shebang is your responsibility. If things go left there is really no one else to blame. And even if there was you can't really take blame to the bank.

My bottom line--Take some time to stay personally involved in the sales process...you can't afford not to.

Fashion Financial Forecasting

Fashion Financial Forecasting

A Simple Way to Project Profits for Your First Season and Beyond…

Since fashion is a passion driven industry many entrepreneurs find it hard to resist the temptation to overestimate potential sales. I do agree..its only fair to believe that if you put your heart and soul into your collection that it will fly off the shelves and be the next big thing.

But at the same time if you rely financially on this wishful thinking it could leave you up the proverbial creek without a paddle. Many new brands have the idea that if they could just get started…big profits will jump in and help them fund their operational costs.

Unfortunately unless you’re operating a very grass roots business it can take quite a while before profits become a signfigant source of funding. Many times for boutique driven lines profiting even 5K in the first year is considered a big stretch.

So how can you determine some legitimate possibilities?

Here’s a simple eye-opening exercise you can do to figure out your likely bottom line. I’ll illustrate the process by brainstorming some rough but realistic projections for the 1^st season of a high end clothing line….

Step 1: Think about your strategy.

Since we’re talking about a higher end line in this example let’s assume for the 1^st season we’re focused on selling to a hand-picked batch of boutiques. Getting the big volume business of department stores is unlikely to happen in any company’s first season.

If you hire a salesperson since they know your market they may be able to clue you in as to how many stores you’ll be able to get into your first season as well as the average number of pieces a store may buy. These numbers will be the foundation for your financial estimates.

In this instance based on our sales strategy we estimate we’ll be able to land this line in 10 boutiques. Be careful in exaggerating this number. Many buyers are hesitant to buy from spanking new lines…so you’ll need time to build momentum.

Step 2: Set your profit margins.

Keep in mind…the only money you will make exists between the production cost of your product and the wholesale price you sell it for. This is your profit margin.

Start by doing the math to determine the average profit margin for your line. To do this first tally up all the costs it takes to produce your product (fabric, cutting, sewing, trims, hangtag, shipping…etc).

Then set the wholesale prices that you will charge retailers for your product. For this you normally work backwards from your suggested retail price. You want to ensure whatever you sell your product to retailers for that they can mark it up at least 120% to get to your suggested retail price.

Step 3: Get to the Bottom Line….

To get come up with a bottom line you’ll have to induge yourself in a few more basic calclutions…

In this example we’ll assume the average cost to produce our products is $20. And based on our positioning in the marketplace our average retail price is $80.

Working backwards we know in order to allow our retailer to markup to our $80 retail price (again a fair markup is approx 120%)….. we’d have to sell our products to retailers at a wholesale price of about $36

That gives us our average profit margin---- $36 (wholesale price)- $20 (production cost)= $16 per piece profit margin.

To take it a step further….since the boutiques we sell to are small ----based on our sales strategy we estimate each of the 10 stores will buy about 12 pieces. (again…sales reps can also give you an idea of an average order size # so its most realistic).

Finally we get to our overall projection…

10 stores x 12 pieces each x $16 (profit per piece)= $1,920 seaonal profit.

And just for the fun of it lets knock off 15% for either sales commissions or sales costs.

That leaves us with grand total profits of $1632 for our first season.

We’ll also probably end up deducting from this final number with things like damages and discounts as well.

If the potential profits you come up with just won’t do…. you can do things like tweak your costs, position your brand for a higher retail price, or decide to produce a collection that is more likely to result in higher volume.

By doing this bit of mental legwork beforehand you can be much more proactive in adjusting your strategy and ensuring you’re financially setup to succeed.