HOW TO SET A BUDGET FOR YOUR BUSINESS

HOW TO SET A BUDGET FOR YOUR BUSINESS

It’s going to be difficult for your fashion business dreams to become a reality if you don’t have enough money to fuel your business. Understanding all the finances will make you well prepared to factor everything into your weekly, monthly and annual budget.

What is enough budget to begin with anyway?

Making sure that you have enough budget to pay for a minimum of two collections without relying on any sales coming in is going to be BARELY enough. You’re going to be playing a dangerous game of relying on potential profit during your first season, as it will surely take time for your brand to build any momentum. Especially if you’re talking about consigning your products to a store, wherein these stores take about 30 to as much as 120 days to release sales income. Where will you get the funding for your next collection while your money is invested in your previous collection is something worth considering.

Here are the top 8 expenses/costs you will have to cover for regularly:

1. START-UP EXPENSES – Trademark fee, company registration fee, business permits, etc. They are all going to cost you money right before you even start selling products.

2. PRODUCTION COSTS – These include materials, production, collection designing & development, sampling and warehouse storage.

3. OPERATION COSTS – These include insurance coverage, accounting, equipment, studio rental/setup, travel expenses, petty cash, salaries, taxes, staff welfare, transportation and office supplies.

4. SHIPPING & LOGISTICAL COSTS – Your inventory, transportation, online purchase, fullfilments and product shipping are all included here.

5. MARKETING & PROMOTION COSTS – These include product photography, branding materials, events, social media promotional costs, public relations agency retainer, fashion shows, online marketing, networking, sponsorships and lookbooks.

6. SALES COSTS – These include joining trade fairs, showroom fees, logistic fees with showcasing your collection including creating props and added manpower.

7. WEBSITE & I.T. EXPENSES – These include SEO fees, website hosting, domain registration, website design and development, IT technical support, networking, internet and phone bills. For website hosting, domain registration and website design and dev, check out hostrident.com (they created my website).

8. RETAIL STORE EXPENSES – These include your renovation, rent deposit, store rent, sales staff, store fixtures (racks, poles, hangers, rails, shelves, mannequins, POS (Point of Sales) system, cashier counter and not to mention insurance plus security (manpower and/or hardware).

You may get away with “winging it” in the first few collections, but you’re going to fall flat on your face once the bills start piling up and you don’t have enough funding to run your business for 2-3 collections/releases. The sales income could stop, but the payable won’t. This is one reason why 90% of start-up fashion brands shut down in less than 3-4 seasons, because they could not sustain the business financially. A strategy I suggest that is used well by many is “BOOTSTRAPPING” a business, meaning not getting anything from the initial funds until a certain income total is reached. So whatever is made for a year by the business, stays with the business. In other words, you as the CEO, partner or owner, don’t get any sort of salary for yourself, but your team members will, as part of your expenses.

Question of the day: Did you set up your own budget for your startup business? How did it go during it’s first year?

Social Media Share

What people talk 1 Comment

December 14, 2020 Khel Lawrence

I have a micro business that focuses on food. Honestly, what I really focused more for my business is the raw materials, since I am just selling my items thru facebook. These tips can be really helpful if my venture would grow further.

Thank you.

Leave a comment, suggestion or a reaction...

Back to Top
Back to Top
Close Zoom
Context Menu is disabled

Subscribe To My Newsletter!

Join my mailing list to receive the latest news and updates!

You have Successfully Subscribed!

%d bloggers like this: