I have had the privilege of working with many startups as a consultant. I, myself, started two companies from zero and built them to multi-million dollar businesses, selling to the top stores in the U.S. and Canada. Unfortunately, not all of the startups I have worked with had the stamina and persistence that this business requires to make it through the first tough years.
Believe me that until your business takes off, it will feel like you are riding a bike uphill. The following are five of the reasons that fashion startups fail.
1. The entrepreneur has no experience.
They have an idea, but do not know how to execute. Rather than hire someone knowledgeable, they just “wing it” and figure they will learn along the way. They end up spending thousands of dollars on activities that bring little or no return.
2. They don’t have a USP (unique selling proposition).
The fashion industry is not a robust industry. It is not really growing. So in order for someone to buy your product, they have to buy less of someone else’s. If you do not have something special and unique, buyers will not buy your product. You don’t need to invent something new. But you do need to bring a unique perspective to your brand. Start by downloading this USP template that will help you create yours.
3. They don’t know who their customer is.
Many times when I ask someone who their customer is, they either don’t know or they say everyone. You need to focus on a specific group because you can’t be everything to everyone. When you really understand your customer intimately, everything from design to marketing will speak to that person.
4. Their marketing is inconsistent.
They jump around trying a little of this and a little of that. I had one client spend $50,000 on a fashion show in Europe yet sold no stores and had no plans to do so. I have also seen many people do one $10,000 trade show with no orders placed, not realizing that it is a building process and it takes many shows before they see results. Or they try to do so many things but do not consistently pursue a few targeted strategies that will ultimately build results.
5. They run out of money.
Unfortunately, many startups underestimate what is involved in starting and building a business. While you don’t need millions to get started, you do need to have enough of a budget to carry you through the first few years when you are not profitable. Not having enough money makes it hard to be successful, but spending what you have unwisely is the biggest culprit of all.
Planning for all aspects of your business can increase your ability for success. That is why making a business plan including a financial plan is really important. It forces you to answer questions that flesh out your business and helps you prepare for all contingencies. But, be prepared to evolve and adjust your plan based on the results of sales. Remember it takes a few years to get your business off the ground so staying power is key.