Category Archives for "Vibe Consulting"

Jul 13

The Fashion Industry Is Not For The Faint Hearted

By Maria Pesin | Vibe Consulting

The fashion industry is not for the faint hearted.  Let’s face it.  It is a tough business.  Stores are having a hard time being profitable.  Collections are struggling to do business.  The industry finds itself competing with other industries for consumer dollars.  Before people bought mostly clothing with their discretionary income.  Now they are buying cell phones, computers, flat screen TV’s, renovating houses, and hiring personal trainers.  There is a lot of competition for the same dollars.

That doesn’t mean that their aren’t companies out there doing incredible businesses.  Brands like Free People,  Steve Madden, and Zara are on their game and their results show.  However,  the industry is challenging so it is important to run your “A-game” if you are going and stay consistent.

I spoke with two young entrepreneurs this week who both told me the same thing.  They hit obstacles in their businesses and lost motivation.  They found themselves slacking off and were no longer doing the things they knew they needed to do to drive the business forward.  The important fact they forgot is how you deal with obstacles is what defines you and your business.  Every business hits obstacles. And every business owner gets discouraged.   That is a fact of life.

“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.” –  Michael Jordan

When I started my consulting business I was very committed to its success.  I had no plan “B” if it didn’t work out.  I only had plan “A”.  Which was to keep working on my business till it became a success.  Like all businesses I hit snags. It is how I handled them that made my business flourish.

“Things never happen on accident. They happen because you have a vision, you have a commitment, you have a dream.” –  Oscar de la Renta

How are you going to approach your business?  Are you in it for the long haul?  If so, pick yourself up and dust yourself off after any stumbling block and keep on keeping on.

 

 

Jun 27

Fashion Industry Profit Margins for Newbies – Don’t Get This Wrong!

By Maria Pesin | Business , Fashion , Vibe Consulting

 

Fashion industry profit margins for newbies!     Since the question of how to figure out margins comes up a lot with my clients I thought I would try to explain it in a way that a beginner would get it.

First what is a profit margin?  A profit margin is the difference between sales and expenses and is shown as a percentage.  For example:  If you have a dress company and your sales for the year is $500,000 and your expenses (including cost of goods sold “COGS”) is $400,000 than your profit is $100,000.  Your profit margin is 20%.

ProfitMargin

In order to get to your profit margin you need to calculate your margins on the way.  Gross margin is the difference between sales and cost of goods sold, or COGS, also shown as a percentage.  If you have a t-shirt that cost $10 to make and you charge $20 then your gross margin is 50%.

gross m

Ideally when you plan your margins you want to make sure that there is enough gross margin to cover the cost of goods sold and the overhead of running your business.  I say “ideally” because that doesn’t always work out.  I have seen owners price their line without considering whether their customer will pay the price.  Recently I spoke with a potential new client who priced her line based on production costs.  Unfortunately the price was three times the price of her competitors.  Of course that was a problem.  Further more the garments did not warrant the price.

What should you do when that happens?  

  • Step one — revisit your production and make sure you are not overpaying.
  • Step two — reevaluate the item and see if you can make it cheaper by using different materials or taking something out of the garment.
  • Step three — rethink the style and whether you should drop it from the line.

Understanding and planning your numbers is key to success.  If you are still confused, email me at maria@vibeconsulting.co and I will help you figure it out.

Jun 02

4 Direct To Consumer Business Models For Fashion Brands

By Maria Pesin | Fashion , Sales , Vibe Consulting

 

I love the direct to consumer model.  I suggest it to almost all my clients.  The control you have over your presentation is a great reason.  The margins are high.  You can connect with you customer in a more intimate way and create a strong brand experience.  Also you can really get a handle on what your buyer wants, needs, and what they say about your line.  The education is invaluable for making your product even more relevant for your shoppers.  What options can you consider?

  1. Mobile/On Line – Selling through your website is a great way to sell your product.  The cost to set up is relatively inexpensive.  You are open 24/7.  And you can make a website that looks very high end.
  2. Own retail stores – This is a more expensive method.  You have the overhead of the store plus the cost of building the store.  You also have to have enough product to fill the store.  A retail store will give you terrific exposure.  You can design the environment to enhance your product and contribute to the brand story.
  3. Trunk shows/In house parties – This is one of my favorite methods. It involves going to people homes or businesses to present your product.  You can do this one on one or with groups.  I believe that this model will continue to gain momentum. Consumers more and more are gravitating to brands where they have a personal connection.  What can create a more personal experience than having a one on one with your customers in their own settings?
  4. Events/Fairs – This could mean many things.  From street fairs to rock concerts.  Usually you buy a table or booth and sell your wares.  I know a young women who sells her t-shirts at comic-cons.  She rents a table for about $300 and sells on average $5,000 in product.  Of course there are no guarantees your product will generate that much volume but it is another option to consider.

These days it is very difficult to get a store to buy a new brand.  By going direct to consumer you can develop your customer base so that when you are ready to sell to stores you have a history of success you can show the buyers.

May 27

Create Raving Fans For Your Fashion Brand

By Maria Pesin | Fashion , Sales , Vibe Consulting

 

As a brand owner you should always seek to create raving fans for your fashion brand.  A raving fan is someone who is so devoted to your company that they wouldn’t dream of shopping anywhere else and is always sings your praises.

Think about products you love that you would never give up.  Maybe it is the perfect shirt or shoe brand that is your go to.  Don’t you tell all your friends about your wonderful find?   This is the kind of adoration you should work to develop with your customers.

Making a phenomenal product is one part of the equation.  The other part is your customer service.  You can have good customer service, great customer service, or knock your socks off customer service.  A great example of knock your socks off  customer service is the legendary story of a family vacationing at the Ritz-Carlton in Bali.  Because of their son’s food allergies, the family was always careful to bring their own supply of specialized eggs and milk. In this particular instance, however, the food was ruined en route. The Ritz-Carlton manager couldn’t find any of the special items in town, but his executive chef recalled that a store in Singapore sold them. The chef contacted his mother-in-law, who lived there, and had her purchase the items, then fly to Bali (about 2.5 hours) to deliver them. Amazing!  The press on that alone was worth the time and effort and cost.

Are you doing all you can do to create your “raving fans”?

The final secret, according to Ken Blanchard, author who coined the phrase “raving fan”,  is to decide what you can do for the customers, and deliver it, plus 1%. Ask yourself what little extra you could do to give yourself the plus 1%. You don’t need to be 50% better, just 1 little percent makes the difference between a satisfied customer, and a raving fan.

May 19

There Is Power In Focus For Fashion Entrepreneurs

By Maria Pesin | Business , Productivity , Vibe Consulting

 

There is power in focus for fashion entrepreneurs because a lack of focus leads to scattered resources.  Focus involves the ability to pay attention to things that will help and avoid distractions that will hurt your business.  I speak about lack of focus a lot in my blogs because to me  it is one of the single most destructive thing I find fashion entrepreneurs suffering from.  I call it the bright shiny penny syndrome, some people call it business ADD.  But whatever you call it doing it is not a good thing to indulge in.

Recently I sat down with a client.  She showed me several new lines she was thinking of taking on.  She was also thinking of adding the West coast trade shows to the list of shows she was doing.  The problem was she is just one person.  She had not even come close to building her business with the lines she had and they had huge potentials.  The new lines would be for different buyers so she wouldn’t be able to leverage existing relationships.  Finally the East Coast was so underdeveloped that just building that would be a full time job.  These were things that I convinced her were not something to take on yet.

When your resources are limited focusing is a powerful tool.  Concentrating your activities will help your business gain momentum because each step builds on the step taken before.  Instead of doing a task here and there that do not relate which builds nothing.

Think of it like you would compound interest.  Albert Einstein called compound interest  “the greatest mathematical discovery of all time.”  In terms of money, compounding is the exponential increase of an investment. But in simpler terms, compounding is interest you earn on interest.

Applying the same principle to your fashion business by focusing your efforts you can compound your results on selling, marketing, and generally building your fashion brand.  That is the power of focus!

 

 

 

May 17

When Should a New Fashion Brand Start a PR Campaign?

By Maria Pesin | Vibe Consulting

 

When should a new fashion brand start a PR campaign?  This is a question that comes up with a lot of my start up clients.  While there is no true right or wrong answer,  I have definite opinions about this.  I believe you should not start your PR campaign until a customer can buy your product.  If there is not a place for the customer to shop (it can be brick and mortar stores, on line, in home events , etc.)  than your consumer will be frustrated.

At the very minimum there should be an announcement of when the line will be available.  Target does a great job collaborating with top designers such as Marimekko and Lily Pulitzer.  They announce the date it will be ready to buy and create a huge buzz around it.  This way the customer knows when it will be available and doesn’t have to wait too long.

The famous quote from Microsoft creator Bill Gates says, “If I was down to my last dollar, I’d spend it on public relations.”  A Public relations campaign is essential to building  your business.   As soon as you have locked in your brand look and messaging and you have product to buy you can begin engaging your target audience(s).   PR is expensive to do in both time and money, that is why a new fashion brand should choose to initiate the campaign when the opportunity is there to get the best results.

 Most importantly  you need to be ready. If your product is not the best version of itself you most likely will get no press or even worse  negative press. And believe me, there is such thing as bad press. So, make sure you are completely ready before employing any PR strategies and make sure your message is clear, focused, and interesting.

May 06

5 Tips For How To Have An Awesome Trunk Show

By Maria Pesin | Vibe Consulting

 

I like to write about things my fashion entrepreneurs ask about.  This week I was asked about how to have an awesome trunk show.    Typically a trunk show was a preview of a designer’s latest fashion collection at select clothing stores prior to its general distribution.  Nowadays it could include any kind of an in store visit where samples are sent to a store for the salespeople to show the stores customers and take orders.

Trunk Shows are a time and money investment so of course you want to do everything you can to ensure their success.  The following are 5 tips for how to have an awesome trunk show:

  1. Only do trunk shows in stores you believe have the best chance of success.  You want to be in successful stores that do good businesses and have loyal customers.  It is also key that the product in the store sells to the same demographic that you do.
  2. Do all you can to promote the event.  Contact local magazines and newspapers.
  3. Incredibly important!!  Have the sales people call their best customers to personally invite them to the event.  Make sure to do a Skype product knowledge before the event with the sales people so they know what you are bringing and can tell their customers.  Of course send postcards and emails to the stores client list.
  4. They say timing is everything so choose a time of year that makes the most sense for your product and choose a day and time when the customers for the store will be available.  Some people have more time on the weekends, some nights, some days.  That is something the store buyer will know.
  5. View the event as a party. “It’s not just a showing,” Have food and beverages and also models if applicable.  I once had a psychic do readings for my customers.  I think they liked that even better than the wine.

I like trunk shows for so many reasons, selling product, meeting your end customer, etc.  But the best reason is to build brand recognition.  Be professional in everything you do and make sure you do not disappoint a customer and not ship something they order.

Apr 22

Why Too Many Product Categories Can Kill a New Brand

By Maria Pesin | Vibe Consulting

From my experience too many product categories can kill a new brand.  I work with many start up fashion brands.  One of the questions they always ask is: “How big of a collection should I make and how many different product classifications should I do?”  This is an excellent question.  One of the ways I can answer this is by looking at their budget.  Since most new entrepreneurs have limited funds the answer is usually asking another question; how many can you afford and will there be enough styles to interest a buyer?

One of the ways to create a line that makes a statement without having to make 50 styles is to narrow your product assortment to 1 or 2 categories.  So rather than having 2 t-shirts, 1 jacket, 1 pant, 1 belt, and 1 skirt.  You pick one item and make a strong presentation.  For example you can have 6 skirt styles and become a brand that stands for skirts.  Your sales, marketing, production, and sampling is concentrated on this product.  You can then become the go to brand for this.  Once you build your business in this area you can then layer on additional product categories.

skirts

I have seen companies like Ugg and Crocs take one item and build huge businesses.  What they do that sets them apart is they make that one product as exceptional as possible.  Then they put all their sales and marketing efforts to create a buzz for that product.    When you look at the line below you can see the styles are variations on one product.  The brand is  synonymous with sheepskin boots.  The brand is so well known that when you own a pair of Uggs, you don’t call them my boots, but rather my Uggs.  That speaks to the prestige that Uggs created around their brand.

photo26061345049pm1

Don’t kill your brand before you start by being all over the place with your product.  Find the product category that you feel has the best potential for you and really do it right.

Apr 01

5 Things To Look For When Hiring An Independent Fashion Sales Rep

By Maria Pesin | Vibe Consulting

 

What are the 5 Things To Look For When Hiring An Independent Fashion Sales Rep?  A good sales rep can make a big difference in your business.  They not only sell stores and take orders, but, they give you market information, such as: what is selling in the stores, what is trending, and how business is.  A good rep has strong relationships with their buyers so they can get and give you honest and valuable feed back on your line.   They also give you exposure to stores that you might otherwise not see.  The  5 things to look for when hiring one are as follows:

  1. Do they have lines in their showroom that sell the same customers as your brand does?   You want to make sure that your collection is seen by stores that would buy your kind of product.  If not then chances are you wilt be successful with this rep.
  2. Do their lines that compete with yours?   While not being in a showroom with a direct competitor sounds like a no brainer, sometimes a business owner hopes by being in the showroom they can be as successful as the competitor.  The truth is if the rep already has a substantial business with the competitor the buyers are not going to see the need for also bringing in your product.
  3. Do you feel you can work together?  Having a good relationship with your rep is a must.  Remember they are not your employee but more like your partner.  So having a good rapport will go a long way in building a business together.
  4. The rep has good communication skills.  It is important to work with Reps that return calls in a timely manner and share results of shows and meetings.  The more information a rep shares with you the better your chance of success.
  5. The rep has excellent follow through.  This is key for your company but also for the stores they sell.  This is an integral part of the relationship building process between your company, your rep, and the buyer.

 

Mar 29

What Scenario Should You Cost Your Fashion Product For? By Boaz David

By Maria Pesin | Vibe Consulting

WHAT SCENARIO SHOULD YOU COST YOUR FASHION PRODUCT FOR?

As a start-up fashion brand, costing your product for the first time is one of the most challenging parts of your fashion business.

When you source a factory you will have their costs for making both a small run of your product (i.e. 50 units) and a bigger run (i.e. 200+ units). For many designers, the first season is experimental and you might not know exactly how many orders you will get. So the big question is: Should you price your product based on the cost of a small run or the cost of a big run?

To better answer this question let’s think generally about your business. As a start-up fashion brand your first year in business is most likely going to be all about testing! This will be a test run for your concept, your product, your development and production chain etc. Realistically, you will most likely only start to see profit in your 3rd (or more) year, so these first years become about building your brand/ business, not about making money.

That same assumption should be carried into costing and pricing your fashion product. The first couple of seasons you will produce small runs and therefore you will pay high cost for production, resulting in your margins being far from where you would like them to be. Which by the way, is VERY NORMAL for any start-up business in any industry.

Therefore, when you cost your fashion products you should start with deciding on the market that you are looking to compete in (in fact that part should have been decided back when you created your business plan but just in case you haven’t yet, now is the time to do so), and decide on your retail price based on that market, then open your cost sheet and cost the following two scenarios:

Low units – this will reflect the cost of your fashion product in the short term when producing small runs (30-50 or any other minimum units that you are allowed to do).
High units – this will reflect the cost of your product in the long term down the road when your brand is built and you will produce the higher units (200, 300 and more).

Now plug-in your desired wholesale and retail prices into these two scenarios and see what kind of margins you have for both. The things to look out for are:

That when producing the lower units you are not losing money and hopefully even have some revenue margins (anywhere from 30-40% is normal for this stage)
And when producing the higher units your margins are where you need them to be for your business to be healthy (normally around the 50% is good).
To sum this up, your goal when costing your product is to have a view of both your fashion business today as well as 2-3 years from now. You must make sure that your plan for today’s cost allows you to stay in business meanwhile make sure that when you‘ll build your production units down the road that your cost will allow you to have the margins needed to have a healthy, profitable business. If neither one of these two points are met you will need to find a way to either adjust your product, your costs, or your wholesale/retail prices.

Need a cost sheet? Click here for our cost sheets, they are simple excel sheets and already have built in formulas for the 2 scenarios.

Need more help with costing and pricing your product? Check out our Costing workshop here or click here to book your one on one costing session.

By Boaz David of HumanB