It is possible to get your fashion business right the first time without falling into the same pitfalls those ahead fell into.
By Wonuola Okoye
I am going to change the fashion business narrative in Africa.
I know it’s a bold and audacious statement, but at Big Startup, we THINK BIG and start small. There is an underlying narrative that says fashion is for hobbyists and isn’t a real business. Well, let me give you some stats –
Zara is a Spanish fast fashion retailer. It is the main brand under the Inditex group, the world’s largest apparel retailer. Zara has more than 2200 stores in 96 countries and in 2017 started to manage approximately 20 apparel collections annually!! The company has grown overall sales by about 50% in five years to $17.5 billion.
LVMH is a French multinational luxury goods conglomerate which was formed in 1987 under a merger between Louis Vuitton and Moet Hennessy; a mix of fashion & leather goods, perfumes & cosmetics, wines, and spirits. It controls around 60 subsidiaries that each manages a small number of prestigious brands and operates over 2,400 stores worldwide. In January 2018, LVMH announced record sales of 42.6 billion Euros for 2017. In the same year, the net profit increased by 29%.
Hermès International is a French high fashion luxury goods manufacturer established in 1837. It specializes in leather, lifestyle accessories, home furnishings, perfumery, jewelry, watches and ready to wear. Known for its luxury goods by 2008, Hermès had 14 product divisions that encompassed leather, scarves, ties, men’s and women’s wear, perfume, watches, stationery, footwear, gloves, enamelware, decorative arts, tableware, and jewelry. In February 2015, Hermès announced an increase of its turnover of 9.7%, which represents more than $4 billion in sales.
The difference between these brands and yours is quite simply, YOU. Are you daring to dream big? Are you treating your fashion business as a hobby? Have you put the right structures in place to ensure that your business is sustainable? Or are you releasing one collection every 2 years and expecting your brand to go global? These are some hard questions you need to answer.
So how do we change the fashion narrative in Nigeria? We need to start by seeing fashion as a business. In my book “The Startup Star” I talked about 6 important things you need to do to get your business right the first time.
1 – BRAND IDENTITY
This is everything from the name of your brand to the logo. From your use of colors and fonts to how you communicate your brand. Your brand identity is the first thing people interact with, whether it’s something overtly tangible like your logo to the more subtle things like your tone and color scheme. Your brand identity should be an extension of your brand and should give insight into what your mission, vision and overall business direction is.
2 – LEGAL STRUCTURE
The structure of your business is important for a few reasons – Tax, liabilities and being able to operate legally as a business entity. There are a few options to consider depending on the nature of your business. Whether you want to be registered as a business name or an NGO, you’ll need to understand how to stay on the right side of the law.
3 – BUSINESS MODEL
Simply put, your business model is how your brand makes money. It is a snapshot of your business and comprises of 9 main blocks – Key partners, Key activities, key resources, Value proposition, Customer Relationships, Channels, Customer segment, Cost structures, and Revenue Streams. Looking into each of these aspects of your business will give you a better understanding of your customers, your unique selling point, the resources you need to deliver value and whether your business can generate enough revenue from your target market. The key is to go out and test your products and services with your target market in order to determine its viability.
4 – GOALS AND OBJECTIVES
I’m sure you’ve heard the saying “if you fail to plan, you plan to fail” – truer words have never been spoken when it comes to building a successful business. You need to create short, medium and long-term goals for your business or project. The key is to make sure they are SMART (Specific, Measurable, Achievable, Realistic and Time Bound). At the beginning of the year, you need to set goals based on your business strategy, direction and values then review at the end of the year to see how well you have done. Businesses that set goals have a better chance of achieving success.
5 – FINANCIAL POSITION
The numbers may not “be all” but they are surely the “end all”. I believe that businesses should make a profit from the moment they start (I don’t mean break even, I mean being cash flow positive). One of the ways to do this is using the profit first method (Read more on mikemotorbike.com). Being on top of your financial position is very important and you can do this by keeping good records, pricing your products and services correctly, reviewing your progress frequently, etc.
6 – MARKETING AND COMMUNICATION
Once you have your brand identity right, you then need to communicate and promote it. With the advent of social media, we are closer to our customers than ever before. We do not need to expend our entire budget on promotions as there are many more cost-effective ways to do it. Knowing who your customers are and where to find them is the first step, the second is communicating clearly and concisely in a language they understand. New techniques like influencer marketing and sponsored adverts are a great place to start.
Fashion entrepreneurs can build brands with strong identities. Brands that know who their customers are and are meeting their needs. Brands that are creating a seamless shopping experience, brands that are investor ready and are generating the sales of their dreams. They need to start by seeing fashion as a valid business, then taking the bold steps towards achieving it.
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read more articles.