Running a successful fashion business takes focus and determination, but understanding why fashion businesses fail can help you avoid some of the same pitfalls.
It’s no secret that the majority of small businesses started each year end in failure. Unfortunately, this holds true for the fashion industry as well. Growing a successful fashion business is a constant battle. While looking to today’s successful brands can help you discern a recipe for success, understanding why other businesses struggle can help you avoid making the same mistakes. Here are four common reasons why fashion businesses fail:
#1 Lack of Market Understanding
All too often, fashion entrepreneurs rush into design and production without a keen understanding of the customer and market they are targeting. New ideas and innovation help drive the fashion industry, but only when there is a sustainable business that can deliver that innovation to the consumer. Don’t set yourself up for failure by launching your business only to find out there isn’t a market interested in or large enough to support you.
Do your research. Understanding your market is the key to long term success.
Start with trying to understand your target customer. Not only who she is but what she wants and needs. Consider other factors like where she chooses to shop, what other brands she buys, and how much she spends?
Are there other brands already offering a similar product to yours? Although being the first on the scene may seem like the perfect advantage when starting a new business, knowing you have competition confirms that a market exists for what you have to offer.
Particularly in the case of fashion, where trends come and go very quickly, be sure that interest in your product is growing and not on a down swing. Getting your brand off the ground will be the first challenge. Growing your company into a sustainable business will mean expanding in a market that is capable of supporting your growth.
#2 Lack of Resources
Early on, it’s difficult for startups to keep up with the amount of work it takes to get a business launched and growing. Successful entrepreneurs need to have a “can do” attitude, but can also get caught up in trying to do everything themselves. Having to manage all aspects of a fashion business can quickly lead to burnout. And as the business grows, so too will the amount of work necessary to keep the business on the path to success.
Ask for help. Successful businesses aren’t built on the backs of one individual.
Hiring an assistant or interns can go a long way in helping to manage the day-to-day tasks of your business while freeing up time for you to focus on more important issues.
If you don’t have the money to hire employees at the onset, try outsourcing. Professional contractors will be less costly than hiring an employee to do the same tasks.
And if you do have employees, work on boosting staff morale and rewarding your current team to get everyone through the challenging times when your business is understaffed.
#3 Lack of Funding
All too often, new fashion businesses either run out of cash or can’t find funding to keep the business afloat. Long lead times in our industry can put added stress on the cash flow of your business. As an entrepreneur, it is important to always know how much cash you have on hand and how long that cash will keep the business operations running.
Unexpected or uncontrolled growth, although good for the brand, can be too high of a cost on a business still in it’s early stages. Cash needed to fuel growth is often taken at the expense of day-to-day operations and puts stress on a business that can be difficult to recover from.
Plan for the worst. Experienced business owners know that bad things can and do happen, and successful entrepreneurs plan for these unforeseen events.
You shouldn’t expect your business to produce a profit for at least the first two years. Start by creating a detailed budget for those two years. Then, to be safe, add fifty percent to the amount of capital needed to run the business. Once you have your budget, stick to it. Early on, growth can be exciting but patience is the key.
#4 Lack of Clarity
Particularly in the fashion business, entrepreneurs can quickly get caught up in the glitz and glamour of what makes it such a high profile industry. It’s easy to put too much of your focus on marketing events and dressing celebrities. In an image-conscious industry, these things can be great for building brand awareness, but they can just as easily destroy the operational budgets of a business.
Stay focused. Try to avoid getting caught up in the hype and concentrate on running a business.
Marketing is an essential element of any business startup but not at the expense of your core competencies. Focus on product development, improving your supply chain, and engaging directly with your customer. These areas will help to establish a solid foundation for which to scale your business. Growing your brand image is important but image doesn’t necessarily lead to business growth. You can’t pay your bills based solely on the the popularity of your brand.By Eric Fitzgerald || fashionbusinessinsider.com