How To Start A Fashion Company

How To Start A Fashion Company

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This post is based on an interview I did with the co-founders of Metazashi, which is a high end fashion company specializing in denim. Check out his custom denim company and enjoy the interview.

What Does Your Company Do In Fashion?

We currently sell men’s denim. We have a small manufacturing facility where we control every aspect of the garment from design and fabric selection, to sewing and finishing. We operate in the high-end market. Our jeans are made from the highest quality Japanese denim. This is a niche albeit a prestigious market with a lot of competition. We have been in the denim industry for several years and have noticed a fair lack of differentiation in the market in which we operate. To that end we decided to start a new line that is heavily influenced by contemporary and impressionist art, which are personal interests of ours. This is why we also offer works of art on our e-boutique in addition to jeans.

Does Location Matter For This A Fashion Line Boutique?

Location is quite important in the fashion industry. Beyond the obvious location issues of retail stores, another important point to consider is where the headquarters of the company should be. That is also critical to a start-up or small company. We have encountered numerous difficulties in regards to our location as far as accessing local markets. We are located in Vermont where there is a very limited market for premium men’s denim. With that being said, the Internet and wholesaling to retail stores can alleviate some of the difficulties you can run into with a small local market. The biggest hurdle is expansion, if your small business grows to the point where you need to start hiring people with industry specific skills, you may need to relocate. This is true for many industries, and is something that needs to be considered by any small business owner with a focus on growth.

How Much Money Do You Need To Start A Fashion Company?

The amount of money you need depends on many factors. Starting in the fashion industry is not necessarily very costly. Since the industry is not largely consolidated, and most firms are not very vertically integrated there are not huge barriers to entry. You do not actually need any experience in the fashion industry or knowledge of garment production to start (not that it would necessarily be a good idea to do so). There are companies that specialize in production. There are firms which act as sales reps, and a myriad of fashion boutiques always looking for new products.

Your goals for the company’s direction will dictate how expensive it will be to compete in the market you wish to. The most costly areas are marketing and distribution. For us, the denim industry (even though we compete in a small niche) is quite large and we compete against companies that are very well funded. You need to find ways to differentiate yourself, be it by brand image or product features. While having a large budget certainly helps, there are certainly opportunities for individuals to start a fashion company and succeed at any budget.

What Are The Licenses And Permits Needed?

The licenses and permits that are required vary state by state. At the minimum, one needs to establish a lawful business in their jurisdiction, comply with local and state tax codes, and follow all of the FTC guidelines on sewn products. It helps your credibility and brand equity if you hold or have applied for a trademark from the USPTO and have an RN number from the FTC, which is essentially a registration for textile producers. It is a consumer good with a modicum of regulations but it is not overly burdensome to get into the fashion industry and comply with all the regulations.

What Are Some Of The Biggest Costs?

If you are small company like us that manufactures their own goods then setting up a factory (however small) is quite costly. Obviously materials are quite expensive. Denim is the biggest expense (after factory set up costs), but when you consider all the trimmings on a pair of jeans like rivets, buttons, labels, patches, thread, and the like, it adds up to be a significant part of your manufacturing costs. If growth is your goal, then marketing costs can quickly become your largest expense. This does not mean just funding paid editorials and print ads but attending trade shows, putting on fashion shows, and the like.

How Do You Get Clients?

Just like any small business the first clients are usually friends or people you have met during the process of starting your business. For our niche market there is a fairly large online community which makes gaining access to our target market possible.

Online marketing for product is largely via SEO, but social media marketing can be used to promote products as well.

How Many Hours Do You Work Per Week?

We work seven days a week, pretty much all day. Even when we are not doing something directly associated with our business (like cutting and sewing) we are still doing something work related. In my spare time I am usually reading art books or going to museums or reading fashion articles, keeping up with industry trends and checking out what our competition is doing. For anyone looking to start a business, they need to be willing to work all day, every day, and possibly for years before they even see any benefits to their hard work (whether that be monetarily or business growth). Starting a business is a lot of work so you have to love what you are doing, and the best way to keep going is to dream big but win one small step at a time.

How Many Employees Do You Need?

Currently we do not have any employees. The business is just the two of us founders. For the most part, a fashion company can have fewer employees per amount of revenue than an average company because so much of the work can be contracted out to third parties and only absorbed internally when it makes sense financially. For example, you can keep contracting out your pattern making until the expenses get to the point where you would get more productivity for your money if you simply hired someone in-house.

How Do You Manage Inventory?

We are unique in the all of our garments are made after orders are taken. This has the benefit of leaning out the production process so we do not have excess inventory. But this is done mostly because all of our styles are limited to a certain number produced, so it only makes sense to make them once they are ordered.

What Are The Product Margins? What Is The Most Profitable Thing You Do?

Product margins vary quite a bit. The biggest difference is the margin between wholesale and retail sales. If we wholesale a product, we will sell it to a retailer at 50% of the retail price. Our biggest margins are made when we sell direct-to-consumer, which is why so many fashion companies are trying to decrease their dependency on independent retailers and sell direct to consumer. You must keep in mind though, that there are added costs to selling direct, and remember that when wholesaling, you are essentially “paying” the retailer for their expertise in selling, which they likely do better than a company that is more vertical.

Do You Feel That This Is A Good Business To Get Into?

It depends what your goals are, and what you want to get out of it. Obviously, there are huge amounts of money to be made, but you can never expect to open a fashion company and become a billionaire celebrity designer in two years. Even people who seem to have made it overnight put in years and years of work behind the scenes.

Anyone who has a passion for creating things can get into this business. But I would caution against opening a fashion company because you like fashion. Just because you like fashion does not mean you will like owning a fashion company, and because you went to design school does not mean you have all the tools you need to run a fashion company. It is hard work, and just like any business, you can only succeed if you have a true vision and a work ethic to see that vision through. It is more work than anyone could possibly imagine at the onset.

What Is The Ideal Client?

The perfect client is one that is educated not just about the brand but about denim in general; my favorite client is someone who buys something for themselves and not to flaunt for others. Fashion is a form of personal expression and impressing others should have no bearing on a decision to purchase any garment.

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