How To Start A Clothing Line If You’re Broke
Published 2nd November 2020 by Nicole Obidowski
Money can’t buy taste, and inspiration doesn’t wait for an investor. You might be overflowing with creative drive and ambition, but find yourself with no cash to fund your start up. Can you start a fashion brand for free?
The quick answer is not quite. But If you have a great business idea, don’t let that stop you – if you are willing to proceed carefully and think creatively, it is possible to set up an independent clothing business with very little outlay.
This article seeks to detail key tips that you can use to eliminate as many start up costs as possible and take advantage of funding options that may be available to you as an emerging designer. With due dilligence and patience, there is every possibility you can succeed even without a large initial investment.
Create a Detailed Launch Plan
If you don’t have funds to spare, you will not be able to afford any unnecessary trial-and-error in development. The good news is, planning ahead is free.
Take your time thinking through each garment in detail, finding the most sustainable and durable materials, gathering reference garments and photos for your pattern cutter, and considering the balance of your collection from every angle.
There will always be changes to make during development, but the more clear and focused you can be from the start, the fewer prototypes you will need to go through to get it right.
While it’s exciting to design a full range of products from tailoring to t-shirts, it’s also very labour intensive and expensive. To make sure your first collection is well executed and doesn’t break the bank, you will want to limit your style count as much as possible. Launching with a collection of 5 perfect pieces is far better than putting out 30 styles you didn’t have the time or money to resolve well.
Another good strategy is to stick to one or two product categories to get the most mileage out of your patterns. If your first collection offers several iterations on one theme, it stakes your territory and effectively solidifies your brand image. Think of Molly Goddard’s babydoll dresses, or Rooper’s furoshiki bags.
Work Out Your Budget Beforehand – and Stick to It
Before you spend a single penny, take the time to fully cost out your launch. How much money will you need for prototype development, equipment, marketing, photo shoot, freelancers, website, and overheads?
Be thorough, and get quotes from your intended suppliers to ensure your estimations will be as accurate as possible. Allow extra contingency for unexpected expenses and don’t forget little things like courier costs, which can add up quickly.
Only proceed once you have secured the money you need. If you can’t close the gap, you will have to rethink your collection plan to make it work.
Take Advantage of Loans and Grants
Look into government-backed startup loan schemes, such as Fashion Angel in the UK, which offer low-interest loans to new fashion enterprises and often also include networking and mentoring services. Loans tend to be small but easily accessible.
It might also be worth looking into peer-to-peer lending schemes such as Ratesetter or Zopa – these small personal loans often have lower interest rates than a regular bank loan, but will still require you to have a good credit score.
Grants are the most beneficial source of start-up funding because you don’t have to pay them back, or give up equity in your business. The UK government offers several different grants and allowance schemes, such as the New Enterprise Allowance, which provides weekly allowance payments to unemployed persons starting a new company, or the Tradeshow Access Program which offers grants to cover the expense of traveling overseas for trade shows.
Some councils operate local start-up grants, and there are schemes to help founders from minority or disadvantaged backgrounds, or businesses operating as social enterprises. It is well worth taking the time to research grants that may be available to you depending on your individual circumstances and location.
Prepare for the Possibility of Failure
The hard fact is that the vast majority of fashion startups will fail. No matter how savvy you are, adverse events beyond your control can easily spell disaster for your business. If you don’t have a financial cushion, that will remove your room for error, making eventual insolvency more likely.
Failure is common in the fashion industry, and many successful business owners have previously faced the bankruptcy ringer. But they learned from their mistakes and bounced back stronger the next time. So don’t let the fear of defeat stop you before you’ve begun.
That said, do make sure that you aren’t taking on too much personal financial risk. Set up a Limited Company from the outset, rather than operating as a Sole Trader. Be aware of the terms of any loans or financing agreements you are taking out, and always read the fine print to make sure that if the worst does happen, you won’t lose the roof over your head as well as your business.
Be Prepared to Moonlight
Fashion businesses are rarely profitable in their early years. High development, marketing and overhead costs typically leave designers struggling to get out of the red for quite a while. So if you don’t have a comfy pool of finance to dip into while you are getting on your feet, you will need to find alternative ways of covering the rent in the meantime.
Taking on a part time job or freelance gigs will go a long way to keeping you afloat, and will take pressure off of you both mentally and financially.
Set Up at Home
Studio overheads are huge expenses for an early stage clothing business, especially those based in major cities like London. Reducing these costs by setting up base in your own home will go a long way to making your income stretch much farther.
You may worry that it appears unprofessional to operate from your kitchen table, but it is more common than you might think. Many agents and suppliers will be used to visiting clients at home offices, and often take it as a good sign that you are being pragmatic about your expenses.
While there’s no reason to be embarrassed, your house might not be the best place to hold meetings for a variety of reasons. You can always ask business contacts if you can meet them at their office instead – they will usually appreciate you saving them the commute.
Learn Some New Tricks
Hiring permanent staff is a commitment and a responsibility, and shouldn’t be taken on lightly. While there is a lot of work required in running a fashion company, salaries are an overhead expense you won’t be able to afford until you start turning a profit. Until you are consistently profitable, you will have to turn your hand to a wide variety of tasks, wear a lot of different hats, and push yourself out of your comfort zone on a regular basis.
That said, do be strategic about bringing in freelance help when you need it. An experienced pattern cutter will be able to turn around better patterns in a fraction of the time it would take you to do it yourself. Over-stretching yourself in areas where you lack experience may result in costly errors down the road.
One cost efficient method can be taking on the services of a fashion consultant or brand coach. There are a wide range of Fashion Consultants with differing backgrounds and areas of expertise, ranging from digital marketing to sustainability. A consultant will meet with you to discuss the areas you are struggling with, and set you up with the skills and tools you need to get it right.
While the initial investment might seem expensive, it is much cheaper when compared to hiring the services of an experienced freelancer season after season, without ever learning how things are done. The old adage of teaching a man to fish is very true here.
Don’t Forget About Production!
You’ve managed to sample your first collection, and you’ve already hit the jackpot – a major department store wants to place a substantial order. Great, right?
On face value this type of quick success seems exciting, but excitement can quickly turn into frustration if you discover that you do not have access to enough funds to produce the order. Stores with big buying power often demand 60-90 day terms, and rarely offer deposits, meaning you will not see any income from their orders until well after you have delivered the goods. But you have to buy the fabric and pay the factory their deposit before manufacturing can even begin.
Once you have been trading for a while, and paying your suppliers on time, they may begin to offer you terms, allowing you to close the cash flow gap. However, until then, you will need to figure out another way.
Options such as invoice financing or factoring can help, but you may still find that you can’t secure payment from your finance partners until the finished goods have been delivered to your customer.
Ultimately, if you can’t find the money to fund your production, you will run into all kinds of trouble. So try to leave some money in your launch budget to cover not just development but also your first production run.
Don’t be afraid to restrict the volume of orders you take if you can’t afford to produce higher units. Your growth will be slower, but you will also be setting up a much more stable foundation for your business. Creating an aura of scarcity around your brand doesn’t hurt either!
How About Made To Order?
Made-to-order or pre-sale business models resolve the production financing conundrum by selling your goods direct to the consumer before they have been manufactured. Under this strategy, you show your samples to your customers either in person (at an event) or online. Your customers can then order which styles they like and pay upfront. You would then use that money to order materials and launch production.
More and more new brands, such as Grey Milk, By Megan Crosby and Olivia Rose The Label are operating entirely made-to-order, and finding success in this business model. Other brands such as Birdsong and Cawley Studio have also shifted from traditional wholesale to incorporate pre-orders, normalizing the idea for a wider audience.
Besides improving cash flow, pre-sales also build strong and intimate relationships with customers, and reduce the impact on the environment by eliminating wasteful unsold stock.
Of course, with anywhere from 2 weeks to 3 months wait between placing an order and receiving your purchase, this model may not work for every target demographic, and you will have to make sure your product is truly worth the wait.
Starting a business is never a decision to be taken lightly, and it might not be the right choice for everyone. If you don’t have much money, you will already know that things don’t come as easily for you as they may for others.
You will have to compensate for this by being on top of your game and always thinking two steps ahead. You will need to work extra hours to ensure the rent gets paid, and build in contingency plans so you don’t overstretch yourself financially or emotionally.
Above all you will need to have patience, and accept that without the option to invest large sums in your business, it will need to grow more slowly than you perhaps would want it to. But remember that slow progress is still progress, and is often much more sustainable.
This list is of course merely a starting point. After careful consideration of all the possible eventualities you may feel daunted – but with perseverance you can make it work, as many have done before you. So don’t give up before you’ve even started.