I have read that the number one reason new businesses fail is lack of money. I believe this is true. But there is more to the story than not having enough money. Lots of times they do have money. There have been many entrepreneurs that I have run across who have told me they spent $50,000, $100,000, or even $200,000 and they have nothing to show for it. So they really did have enough money to, at the very least, start small and then build from there.
So what is the problem? As I see it, it is two fold. One reason is many emerging designers just don’t know where to start. Their beginnings are somewhat chaotic as they jump from task to task without a plan. They don’t even know who their target customer is. Or they think they do but haven’t done any research to insure that they are right. They do step 5 before step one. I have even seen people spend years on their brand and yet haven’t had any sales because they make it the last priority. One entrepreneur I know put $1 million of inventory in his warehouse before he even started to think about how to sell it.
Another issue I see is brand owners who spend their money on ineffective marketing. They jump around trying a little of this and a little of that. I had one client spend $50,000 a fashion show in Europe yet sold no stores and had no plans to do so. And how many people do one $10,000 trade show with no orders placed, not realizing that it is a building process and takes many shows before they see results. Or they try to do so many things but do not consistently pursue a few targeted strategies that will ultimately build results.
Yes, not having enough money makes it hard to be successful but spending what you have unwisely is the biggest culprit of all.