latin fashion journal

 

fashion financing

Small Business Administration
 
With an SBA loan:
 
1. If the bank agrees to lend to a  borrower,  SBA agrees to guarantee 50% to 85%  of the loan amount.
 
2. If the borrower defaults, SBA pays the bank the guaranteed portion of the loan.
 
3. SBA pre -qualification commits to guaranteeing the loan before the bank sees it
 
 
REGULAR BANK LOAN
 
1. Bank gives borrowers a set amount of money for a set amount of time
 
2. Borrower agrees to repay  set amount of money plus interest
 
3. The  loan will include restrictions called covenants on the business and the owners
 
 
17,000 resources to lenders, training, and support to start and finance your own business.
 
 
 
Financing fashion:
10 mistakes designers make ( source Fashion Incubator) 
 
 

1. Don’t believe your own press

While making the pages of Women’s Wear Daily or Vogue is a feather in anyone’s cap, it’s not a million dollar deal. You’re not a star. There is no instant stardom. Making it in the fashion business is not an overnight accomplishment; the product is what it’s all about. It’s not you, it’s your product.

 

 

2. Spend now, worry about it later

Designers get caught up in the whirl of PR and putting on fashion shows and waste a lot of money thinking they can pay the bills later.  There is no later. Factors will be focused on your spending priorities. Invest in your product, not your PR.
 
 

3. Wanting to be in certain stores

Designers will underprice their goods in order to have certain prestigious stores buy their lines. Designers reason they can raise their prices later but it never works. Those stores bought you to fit into a certain price point. Slip out of it and they won’t be buying your next line. It may work in one season but not for the life of your company. Factors -in spite of funding you by season- are in it for the long haul.  it’s a mistake to think that increased volume will cover the shortfall of underpricing. It only works for off-shore mega producers but by then, you’re not a fashion forward line anymore are you? Most fashion forward lines are domestic producers.
 
 

4. Shipping on time

In some ways, the fashion business can be very unforgiving. You can’t ship one season late; that will be your downfall. Credibility is everything.

 

 

5. Production

You can’t job this out, not if your name is on it. You have to watch all aspects; the fit and finish must be perfect. Your products must match your samples! The returns will not be kind, fashion is brutal.
 
 

6. Credit worthy stores

Designers make the mistake of assuming a prestigious beautiful store is a good credit risk, bypassing mainstay stores. The store is beautiful because they spent a lot of money on it, leaving them less money to pay you! Don’t assume a beautiful store will be a credit worthy customer. You have to take a hard line; honorable long term businesses aren’t built on weak credit.

 

 

7. Don’t speculate

Do not -do not- over produce. Do not cut extra goods with the potential of reorders in mind. As it is, you’ll get some goods returned (those beautiful stores going out of business) so you’ll end up with more inventory on hand than you’d expected. Pushed for a figure,  You should never cut over 3%-5% of total orders.
 
 

8. Never sell on consignment

Consignment amounts to lending; why would you lend your customers money? Besides, you never know what you’ll get back. You won’t be able to use it or resell it to anyone because it’ll be -in a word- shopworn. If a retailer wants the goods on consignment, they’re not committed to you. You’re much better off selling on straight terms, on a straight PO -even with an 80% sell through guarantee than consignment.

 

 

9. Hands on all aspects

 Don’t rely on consultants. Many designers will often job out production oversight to consultants and production managers but you can’t rely on them or abdicate your responsibility. Somebody must watch the watchers and that’s you. A consultant is not vested in your company like you are; they can get another job if your line flops. Another thing, ditch the marketing plan; you don’t need it. Keep it simple, this is a cash business. The sooner you see that fashion is a one season, cash flow business, the better off you’ll be. In short, focus on the long term by minding details at arm’s length, keeping unnecessary extraneous expenses low.

 

 

10. Don’t allow one store to dominate your sales

 Above all, avoid concentration. It doesn’t matter if it’s Sak’s or Barney’s, one account should not dominate your customer portfolio. If one account dominates, you can be hit hard if they drop your line. Diversify. One customer should not account for more than 25% of your sales.