5 STEPS TO MAKE A PROFIT
You want your business to evolve and to be successful in order for you to keep doing what you love. Of course, you want to make a profit, but it doesn’t happen by itself. Look over your processes and every step along the way to envision how you want it all to enfold. Plan for profit from the beginning and don’t leave the numbers to chance. The first step is to plan for it.
Consider these 5 steps when making your plan:
What do you want to achieve? We encourage you to put in some time and effort and work on your business plan the first thing you do. Ask yourself why you are doing this and what you are aiming for. Set clear targets, and then make a plan for how you should get there.
2. Make a budget
Running an apparel business involves spending a lot of money in the start-up phase before you get any revenue. Typical posts where you will spend your cash is studio rent, office supply, computer, phone, Internet connection, web site, advertising, photo, branding, marketing, sales, salaries / consultant fees, and of course the product development. Before you start spending, make a detailed budget plan, have a look at financing options for your business and a potential plan B in case “things” happen.
It doesn’t take a great entrepreneur to spend a lot of money.
3. Use costing sheets
To help you keep track of all costs associated with each product design/development, you can use a costing sheet. This is a list of all the costs embedded in one garment, everything from fabrics, trims, making, labels and packaging.
The margin is what keeps you in business. The margin should give you enough money for you to reinvest in your business, and for you and your employees to live off. The budget and costing sheets will help you calculate your margin so that you can stay in business. To ensure the right margin you have to look at your pricing strategies. If you price low with the intention of raising prices later, you risk having to find a whole new customer base and positioning of the brand.
5. Keep the costs down
If you have little capital you can aim for bootstrapping: doing as much as possible yourself and finding smart ways to start up with less money. The downside of bootstrapping can be that the launch takes longer time, or you can have a tough time making your business grow in a required pace.
It doesn’t take a great entrepreneur to spend a lot of money. It is much more difficult to be profitable from the start, but you should definitely aim for it. See to that your margin covers your costs including overheads. Make a realistic budget to help you achieve your goals. The product development cycles are long and with a clear plan you don’t loose yourself and your money along the way. You will need the profit to reinvest in your collection and to manage larger demands and production. It is all doable, but you need to stay in control.
Price your products so that you have the option for both direct to consumer and wholesale strategies.