Welcome to everyone wanting to or have recently started their own businesses.
I’ve been helping “fashion” start-ups for well over 10 years now and am happy to advise and answer the question that will help you win the battle that’s ahead of you.
All our businesses are unique but many owners share the need for advice and support in the same specific key areas.
Funding: So where is the money coming from to finance this new business of yours??
If you already have your own funds in place, congratulations!! That puts you ahead of most of your rivals. Please think very carefully before spending your money. If the money is from someone else they will put restrictions on your spending. If it’s your own money – no one to tell you what to spend it on, so please be careful.
If you need to borrow money, where can you go and have a realistic chance of getting the funding you need??
High St Banks: They are not too happy about supporting fashion start-ups. If you have a lump sum of over £7000 the banks tell me that they will try and lend you the same as you put in. Usually 3 years repayment period, monthly direct debit repayments and interest rates vary but, once they say yes to your loan, providing you make your repayments on schedule, you will be left alone to run your business without interference.
Last Resort Loan Fund: These loans are specifically for start-ups that have been turned down for funding by a bank and have a letter from the bank confirming this. Amounts range from £5000 to £10,000 often for 3 years repayment period, the interest rate is of 4.5% above the Bank of England’s base rate. These ‘soft’ loans are generally available through Business Links (www.businesslink.gov.uk; www.businesslink4london.com;) and Enterprise Agencies. (www.nfea.com)
These are the main sources of funding for start-up businesses. There are many creative organizations that offer small amounts of funding subject to very tight set criteria, details of which are available on Fashion Capital under Business - Funding/Grants and BSO Orgs. Most of these smaller funds are competitions with only a handful of businesses winning these annual awards. YOU CANNOT ACCESS ANY OF THE FUNDS MENTIONED WITHOUT A CLEAR BUSINESS PLAN.
Business Plan: A good business plan is clear and precise; it paints the picture of exactly how you will run the business. What monthly sales will you make in the first year, what will your monthly costs be also in your first year. These should be presented to 12 to 15 pages of words and 5 or 6 pages of figures.
Each financial institution have their own format that you will need to follow but most of the questions you are asked throughout the different formats, lead to the same answers.
The words in your plan must be based on fact or research that you have carried out. This information should clearly show why this business will be successful. The Bank Managers see many business plans that are NOT based on reality, it takes more than waffle or inappropriate pie charts to get the help you need from the bank.
There are 5 ‘magic’ questions that all potential funders want positive answers to before they will consider lending you money. All the various business plan formats ask these questions, but not in direct terms, often cloaked in jargon that may confuse you.
The 5 questions are:
1. Who will your customers be? 2. Why will your target customers buy from you? 3. How will your target customers find out about your business? 4. Who are your competitors? 5. How will you beat the competition?
