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How to write a fashion business plan
A successful plan will lay the groundwork for transforming an idea into a functional business, and help get investors on board.
What do fashion giants on Fifth Avenue and budding designers working in basements have in common? Before they started manufacturing dresses and hiring app developers, they all had a business plan. Perhaps you want to turn your creative vision into a fashion label. Or you’re ready to disrupt the old guard with a game-changing startup. But you have to start with a plan.
“The business plan should come before your designs,” says Hillary France, founder and chief executive of Brand Assembly , an organisation that helps emerging designers build their businesses. For fashion startups with resource constraints, a plan helps crystallise what, how and to whom you’re selling; establishes what makes you unique; identifies your competitors; and most importantly, shows that you can make money.
Research the market
For creative types, writing a business plan can feel a little overwhelming. But business courses and access to market research and competitive analysis are available. Aspiring fashion executives based in New York, for example, can apply for one of the 25 spots in the FIT Design Entrepreneurs annual programme. Market research firms like Euromonitor and NPD also regularly release reports about market trends and growth rates. While these can cost over $1,000, excerpts are readily available.
It can also be helpful to consult blogs written by venture capitalists like Fred Wilson and Brad Feld for advice on writing a business plan, says Sutian Dong, a partner at Female Founders Fund , which has invested in Rent The Runway and Eloquii . Not only do these provide general advice, but they’re also a window into how successful investors think.
But not all research can be done behind a screen. “It’s about doing the legwork,” says Haeni Kim, founder of direct-to-consumer womenswear label Kitri . Kim thought she had a niche as a “bridge between high street and contemporary”, so she visited bricks-and-mortar shops to gather data and experiences from sales associates to confirm her hypothesis. Kaelen Haworth, the designer behind direct-to-consumer womenswear brand Second Sight , cold-emailed designers who found success in a similar space for advice and found that they were happy to help.
Use family and friends
When raising funds for a business, don’t forget that everyone consumes fashion. “Using people around you is very helpful and very eye-opening,” says Kim, who polled her friends and family via Survey Monkey to develop her deck of consumer insights.
That’s also the case when doing the actual work of plugging numbers into a business plan. Haworth suggests recruiting a friendly MBA student, either as a favour or for a minimal fee, to help create financial spreadsheets. “I’m much more visual, so for me to plug in a number — like, ‘I make 25 of this, what happens to my potential for profit?’ — is hugely helpful,” she explains.
But fashion is ultimately a visual business, and the plan could then lead to a prettier, summarised “pitch deck”, which is used to present the business plan to investors when asking for funding . The pitch deck can also be used to solicit advisory board members, who can use their experience to test a design vision against reality. J eanette Nostra , executive-in-residence at FIT’s Design Entrepreneurs programme, suggests pulling together an advisory board, which could consist of designer mentors, past professors and friends and contacts with experience in law and finance.
All of this requires patience. Kim and Haworth both estimate that putting their numbers and business plans together took around a year before launching their brands. Here’s a template, which should be organic and fit your business.
This section covers the “elevator pitch” for your unique idea as well as a one-sentence mission statement. Summarise your brand and explain what differentiates it. Also, quickly outline your target market, target revenue goals and timeframe. The executive summary should be written last — after all the numbers have been run. It should be no longer than two paragraphs.
Here is where a brand presents its founders’ relevant experience: education, past jobs and unique skills. Also include the form of business entity , based on your location, and list any appropriate partners. Detail your product specifications and manufacturing process. Plus, include how often you will fulfil orders and where/how you plan on distributing and selling. Finally, list the significant challenges you anticipate facing.
This is a chance to show off meticulous market research: identify and detail the opportunity and size of your specific market, your competitors and your target customers.
Manufacturing process and operations
Determine and identify manufacturers and suppliers required to produce your line and detail the costs. Remember to include the costs of samples and account for currency fluctuation if suppliers and manufacturers are based overseas.
Marketing and distribution
Lay out what channels (wholesale, department stores, boutiques, direct-to-consumer) you will use to sell your product while detailing the launch timeline and marketing efforts. If you plan on hiring a showroom or distributor, explain that relationship and costs. Also, how will you scale the brand?
Whether calculated via Excel, Quickbooks or another number-crunching format, this section is crowned by the income statement, which lays out your revenues, expenses and profits and losses over a specific period. Also, present your three-year sales projection to illustrate annual growth plans and a cash flow statement to break down liquidity and assess funding needs for the future. Lastly, include a sheet detailing initial startup costs.
Fashion Business Manual by Fashionary: A visual, step-by-step guide to launching and scaling a fashion label.
Blue Ocean Strategy by W. Chan Kim and Renée A. Mauborgne: Instead of battling your competitors, the authors describe how to identify and tap whole new areas for growth.
Employees First, Customers Second by Vineet Nayar: As a creative, Rokh designer Rok Hwang says this book was “essential” for understanding how to build and manage his business.
Lead image by Sandra Semburg.
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BY Vogue Business
Jan 06, 2022
Dec 02, 2021
Nov 19, 2021
Nov 04, 2021
Example of a Business Plan for a Fashion Designer
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Whether you’ve graduated from Parsons School of Design or a smaller fashion school, you can’t begin to create your fashion empire without first creating a business plan. Running a fashion business is challenging and time-consuming, but the results can fulfill your dreams – if you are committed to sticking to your plan. A business plan for opening your own fashion studio must include an executive summary, company vision, market and competitive analysis, and the ways your company will position itself to take advantage of your targeted market.
The Executive Summary
The executive summary of your fashion business plan is the equivalent of an elevator pitch that boils everything down to two paragraphs. It should include the name of your fashion business, the area where you want to operate, the type of clothes and accessories you plan to create, and your target market.
For example, if you were designing high-end, haute couture dresses, your summary could include, “XYZ Haute Couture will cater to wealthy women from 40 to 55 in San Francisco. Our location in the heart of Union Square will help us attract the wealthiest shoppers in the city who are looking for designer-quality clothing at less-than-market prices.”
Express Your Vision and Selling Proposition
This section helps prospective investors understand the type of clothes and accessories you’re going to offer in your fashion business and the market that you want to attract. For example, if you’re going to make hip-hop street wear, you must explain how that street wear will meet the wants, needs and tastes of your targeted market. More importantly, you must also express a unique selling proposition, which is the thing you believe will set your clothes apart from anyone else in the industry. For instance, if your hip-hop street wear is made using sustainable fabrics, it can help differentiate and brand your fashion business.
Create Your Market Analysis
Defining your target market is essential to helping prospective investors understand how they will get a return on their investment. The biggest mistake fashion designers make is to define their market too broadly. For example, if you’re designing comfortable beachwear and you write that your target market is “women between 30 and 45 who love spending time at the beach,” you’ve failed the target market test, because your market is too broad and undefined.
To make it more specific and targeted, you would write that your target market is, “active women between 30 and 45 who earn $50,000 or more per year and spend an average of $2,000 per year on casual clothing and accessories.” Your market analysis must also explain how your business will capitalize on existing fashion trends, how your pricing structure compares to that of your main competitors, and how your business will fulfill an untapped niche in the market.
Explain Your Manufacturing Process
Designing fashion is one thing, but manufacturing clothes and accessories for a product line requires a detailed plan. Questions you must answer in this section of your plan include: Where will you manufacture your clothes? Have you obtained estimates with several manufacturing companies? If you’re using an overseas manufacturing company, how does the pricing structure change when converted into American dollars?
Explain Your Distribution Process
After you’ve made plans to design and manufacture your clothes and accessories, you have to explain your distribution plan. You may want to hire a distributor to help you gain access to retail stores in the area as well as big trade shows where you can showcase your designs and secure orders from independent fashion retailers.
Include Your Financial Plan
Your fashion company’s financial plan must include financial statements that show the relative health of the business and provide investors and lenders with vital company data. An income statement shows how much revenue the designer expects to generate, as well as the costs the designer expects to encounter as the clothing line develops. The financial plan should also include a break-even analysis that tells investors the threshold of profitability.
For example, you could write, “XYZ Streetwear will adopt a moderate growth plan, with the goal of always having a positive cash balance. Our payment options will include major credit cards, cash and checks. The break-even analysis based on average costs and prices has been completed. With fixed costs of $6,000 and $50 in average sales, and $25 in average variable costs, the business requires $12,500 per month in sales to break even.”
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Sampson Quain is an experienced content writer with a wide range of expertise in small business, digital marketing, SEO marketing, SEM marketing, and social media outreach. He has written primarily for the EHow brand of Demand Studios as well as business strategy sites such as Digital Authority.
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Starting a clothing business requires a passion for clothing design and fashion. But in order to create a successful fashion line that lasts, you also need a business plan. If you’ve ever wanted to break into the fashion business, you may want to check out our clothing and fashion brand business plans.
Shops, boutiques, clothing design, and eCommerce are all covered here to give you ideas and planning elements to successfully launch your own business.
Or to develop a more modern business plan, that fits your retail business perfectly we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance that helps you spend less time planning and more time designing the next big fashion trend.
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Fashion Business Plan Template
Written by Dave Lavinsky
Over the past 20+ years, we have helped over 5,000 entrepreneurs and business owners create business plans to start and grow their fashion businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a fashion business plan template step-by-step so you can create your plan today.
Download our Fashion Business Plan Template here
What Is a Business Plan?
A business plan provides a snapshot of your fashion business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a fashion business or grow your existing fashion business you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your fashion business in order to improve your chances of success. Your fashion business plan is a living document that should be updated annually as your company grows and changes.
Source of Funding for Fashion Businesses
With regards to funding, the main sources of funding for a fashion business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a fashion business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a fashion business.
Finish Your Business Plan Today!
How to write a business plan for a fashion business.
Your business plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of fashion business you are operating and the status; for example, are you a startup, do you have a fashion business that you would like to grow, or are you operating a chain of fashion businesses.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the fashion business industry. Discuss the type of fashion business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of fashion business you are operating.
For example, you might operate one of the following types:
- Fast Fashion : this type of fashion business identifies current fashion trends and brings them to market quickly.
- Haute Couture : this type of fashion business offers high end fashion.
- Bespoke Tailoring : clothing designed for the customer as the result of a consultation.
In addition to explaining the type of fashion business you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the fashion business. While this may seem unnecessary, it serves multiple purposes.
First, researching the fashion business industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards street fashion, it would be helpful to ensure your plan calls for a line of urban clothing.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your fashion business plan:
- How big is the fashion business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your fashion business. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your fashion business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of fashion business you operate. Clearly baby boomers want different fashion items than teens.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other fashion businesses. Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes non-fashion oriented apparel and used apparel among others.
With regards to direct competition, you want to detail the other fashion businesses with which you compete.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What products do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior products?
- Will you provide products that your competitors don’t offer?
- Will you make it easier or faster for customers to acquire your products?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a fashion business plan, your marketing plan should include the following:
Product : in the product section, you should reiterate the type of fashion business that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to clothing, will you offer items such as accessories, shoes, bags, etc.?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the items you offer and their prices.
Place : Place refers to the location of your fashion business and your distribution method. Document whether you will sell your fashion items yourself through a storefront and/or website. Likewise, document if you will sell your products via distributors and who you expect they will be.
Promotions : the final part of your fashion business marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Making your fashion business’s storefront (if applicable) extra appealing to attract passing customers
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Social media advertising
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your fashion business such as serving customers, procuring inventory, keeping the store clean, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 10,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.
To demonstrate your fashion business’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in the fashion business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in fashion businesses and/or successfully running retail and small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your fashion business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a distributor approached you with a $100,000 order, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for supplies, equipment rentals, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a fashion business:
- Location build-out including design fees, construction, etc.
- Cost of equipment like furniture, sewing machines, etc.
- Cost of maintaining an adequate supplies and inventory
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.
Fashion Business Plan Summary
Putting together a business plan for your fashion business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the fashion business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful fashion business.
Download Our Fashion Business Plan PDF
You can download our fashion business plan PDF here . This is a business plan template you can use in PDF format.
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Fashion Business Plan FAQs
What is the easiest way to complete my fashion business plan.
Growthink's Ultimate Fashion Business Plan Template allows you to quickly and easily complete your Fashion Business Plan.
Where Can I Download a Free Fashion Business Plan PDF?
You can download our fashion business plan PDF template here . This is a business plan template you can use in PDF format.