2. How Do You Write a Fashion Business Plan? | #BoFEducation Video Lecture | How to start your own Fashion Business: Fashion Business Basics - Entrepreneurship

so part two of the business of fashion
basics is really about writing a
business plan and how to think about
writing a business plan of course we
can't cover all the minutiae of it today
but what I really wanted to cover was
the main things that you need to address
in a business plan and also to
understand what a business plan is for
so let's start with that and that's
really about like well why do I need a
business plan in the first place why do
I need a business plan in the first
place a lot of young designers think
that a business con is something you
need to raise investment potential
investors certainly are one key audience
but a business plan is also a
communication tool and a device that
enables you to ensure alignment amongst
the different constituencies in your
organization whether that be your team
your wholesale partners or your board of
directors having a well-thought-out
business plan provides clarity about
where you want the business to go and
means that at any given time you have
something to share with people who ask
about your strategy a business plan also
helps you to measure progress against
your goals and milestones every few
months you can go back to your business
plan and have a look at where you stand
however a business plan is not written
in stone it is natural as a young
business that your plans will change as
you learn more about the market and as
you get feedback from your customers in
this way you can treat your business
plan as a living breathing document that
changes over time what helps to ensure
you are on the right path to achieving
your goals at the end of the day the
business plan helps you to attract the
people support and your and money that
your business needs to succeed what are
the key elements of a business plan and
what are the key topics that you need to
cover as you think about putting a
business plan together there are five
essential components to a fashion
business plan the first is an executive
summary which provides an overview of
the business plan
the second is vision and objectives
which helps people to understand
your overall goals and objectives for
the business the third is to provide an
understanding of the market and the
competitive landscape to help people
understand what part of the market
you're playing in and who the other
players are how quickly the market might
be growing the fourth is an
implementation plan a plan that helps
you explain and understand exactly what
it's going to take to deliver on that
and the fifth is financials and this
helps you to identify both how you see
your business growing from a revenue
standpoint but also how you see the
business's needs growing from a cost
standpoint and what that implies for the
funding investment that you might need
what is an executive summary an
executive summary is typically something
that I would recommend you do at the end
of the process but it sits at the
beginning of your plan and what it will
do is become what some people call an
elevator pitch so say you bumped into a
real Andrew Rosen one of the most famous
investors in early-stage fashion
businesses and say you are introduced to
him at a dinner or you are introduced to
him at a cocktail party and you had one
or two minutes to introduce yourself
and what your business is about that's
what should be in your executive summary
it encapsulates all of the key points
ideas and objectives of your business in
a very very short concise statement
probably no more than a page so if you
got rid of the entire business plan and
you only had one page to walk around
with and talk to people that would be
your executive summary and that's why I
recommend you do it at the end because
until you go through the whole process
of putting the business plan together
you're not necessarily going to know
what that overall summary is the second
part of a business plan is the vision
and objectives and when I spoke earlier
about bringing something unique to the
market this is really the part of the
business time where you can
bring that unique point of view to life
it might be that you're going after the
contemporary segment it might be that
you're involved in the footwear market
what is it that you're going to bring to
that market that's different what is
your special sauce what particular
market need are you trying to fill and
which customer are you targeting helping
the investor and all of the partners and
other people who read your business plan
understand what your vision and
objectives are will make it much much
more clear in their heads exactly what
the market is that you're going after
and to indeed identify that there is a
need in that market going through this
process yourself will also help you to
understand is this really where I should
be focusing my attention I see a lot of
young design businesses almost
instinctively go after the luxury end of
the market they think if I'm going to
work in fashion I need to be luxury
actually you know on reflection a lot of
designers discover that the products
they're creating might be better suited
to other segments of the market like the
contemporary segment you know if you can
bring for example a high fashion point
of view to a low lower price point or
more accessible price point then not
like me a really interesting vision or
objective for your business you're
finding that opportunity so once you've
identified the vision and objectives of
your business the specific opportunity
that you're going after it's important
in part three of a business plan to
drill down into the market and
competitive landscape and this section
of the business plan really goes through
that market in detail how big is the
market how quickly is it growing what
evidence do you have that this part of
the market is an interesting opportunity
you know investors will want to know who
are the other competitors in the market
are they growing what is their
positioning in the market what are you
going to do that's different to them if
you really really are able to kind of
describe that landscape describe that
competitive environment you'll be able
to build confidence in the investors
eyes that there's really an opera
they're just because there are other
players doesn't mean it's not a good
market opportunity so for example if you
want to get into a new market that's
growing very very quickly then going
into a market that's growing quickly
even if there's lots of competition it's
not necessarily a bad thing it means
that the market is growing and you may
have heard the expression a rising tide
raises all boats right that's what
happens when you're when you're going
after a market that's growing very
quickly if you're going after a market
that's not growing that quickly that
means in order to grow in order to take
a position in that market you have to
steal market share from other people or
other companies and those companies
might have certain weaknesses or might
not have seen certain things that you
have seen you have to be very very clear
about what it is going on in that market
landscape and why you believe there's an
opportunity that's the really key part
of this section part 4 is an
implementation plan so you you know
you've identified the overall objectives
of the business you've got a sense that
this is a growing market what is your
plan to go after that opportunity what
are the specific actions that your
business will be taking in order to make
that opportunity happen and that's going
to include everything from how you
communicate as a business what are the
things that you'll do in terms of the
staff that you'll hire the space that
you'll need the outside expertise in
terms of marketing or communications or
PR it's like what is your overall plan
this is probably the largest and most
detailed section of your business plan
and it really should on a step-by-step
basis in a chronological order
possibly season-by-season talk about
what you're going to do for the
foreseeable future in terms of actions
you know in the first season you know I
need to hire two or three people mostly
in design and production and maybe I'm
going to work with a sales agent and I'm
going to try to secure between three and
five accounts
and sell approximately $20,000 per
account so I'm expecting revenues of
$100,000 indices in that first season
and you basically need to get into that
level of detail of exactly what you need
to achieve the goals that you've set for
yourself and in terms of your
implementation plan and every season
after that should become you know the
business should be seen as growing but
you should be able to identify that the
resources and people you'll need at each
stage to continue that vision and
objectives that you've set out this is
actually quite a detailed section of the
business plan so you should really be
thinking very carefully a lot of other
businesses will think in years or
they'll think in months but I think
enough in a start-up fashion business
thinking on a seasonal basis and what
you want to do on a seasonal basis is
probably the best way to kind of outline
that and I would expect if I was an
investor a kind of three year
implementation plan a three year plan
for how you're going to take the steps
to achieve your long-term vision and
then finally you have the section called
financials which is probably for many
designers the most scary section but
it's actually one of the most important
things to get right and you may need
some help from other you know advisors
or partners or individuals to help you
put this together but it's absolutely
critical and basically the financial
section answers you know how will this
business grow in terms of both profit
and revenue and what financing will you
need to make it happen this includes
both an income statement which is also
known as a profit and loss statement
showing the top-line growth of your
business but also the costs for
delivering that growth and this
basically will project when you will be
profitable in an early-stage fashion
business I wouldn't expect that you
would be profitable in the short term
but over time as the business grows and
it's scales you can expect that you
might start earning a profit but many
many early-stage businesses are not
profitable for a very long time because
all of the money that you're earning
you're reinvesting it
into the business and more the second
essential part of the financials is a
cash flow statement and it's really one
of the most important parts of your plan
as it shows the peaks and troughs of
cash on a monthly basis and identifies
what funding need you will require in
order to finance the growth so you might
be profitable on an income statement
basis but cash flow statements and
income statements are completely
different cash is what you actually have
in the bank an income statement is your
kind of overall profitability over a
period of time that's kind of the core
elements of a fashion business plan
you