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Although every effort has been made to ensure that the content of this ecourse is free from errors, this publication is sold with the understanding that the authors, editors and publishers are not responsible for the results of any action taken on the basis of information in this work, nor for any errors or omissions. The publishers and the authors and editors expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and of the consequences of anything done or omitted to be done by such person in reliance, whether whole or partial, upon the whole or any part of the contents of this publication. If expert advice is required, services of a competent professional person should be sought. Website Referrals: In this e-course there are several references to Websites that have additional information in relation to the topic. We are not responsible for the content of any websites. Due to the constant development of the Internet, links and content can change on these websites. We carry no responsibility for the information that may be changed or omitted on these websites.
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This publication of How to Become a Fashion Designer and Start your Own Fashion Label is copyright 2010 by La Mode Group, trading as La Mode College of Creative Industries. La Mode Group has the exclusive propriety rights under the Copyright Act to make and distribute copies of this course. No Part of this course may be reproduced, revised, or distributed in any form or by any means (including photocopying, emailing, recording, and uploading in the net) without prior written permission. Unauthorized copying of all or part of this course will infringe on copyright and may result in legal remedies and damages.
To build a business asset that you can sell or leave to your children You dislike working for other people/ or your current boss You enjoy leading a group of people You have identified a need in the market for your product or service To have personal pride of ownership
Disadvantages of business ownership To help provide a realistic picture of business ownership, it is important to understand some of the potential disadvantages of going into business: Long working hours can cause physical and mental stress and strain, especially in the early stages of the business High levels of responsibility Varied income: you may need to have another income source for the first few months of operating your business; until you start earning a profit. (From family, partner or 2nd job) You may lose some employee benefits, such as holiday pay and sick leave There may be a large set-up cost involved with starting your business.
Being Prepared for Business Are you ready to venture into business? Operating a small business is not just about working for yourself, it's also about having the necessary management skills, industry expertise, technical skills, finance and of course a long-term vision to grow and succeed. In any circumstance, the most important thing when starting a business is to make sure you are well prepared. A lack of adequate preparation is the main cause of small business failure. Before making any concrete decisions, start by asking yourself the following: What type of business do I want to be involved in? What do I know about the industry and the current market? Am I prepared to do a business plan and deal with issues of employment, marketing, sales and financial management? What training do I need to help me gain skills and knowledge in areas Im not familiar with? Do I have sufficient funds for my personal needs until the business starts generating an income/ profit? How much money do I have to invest into the business?
What resources and support do I have to help me set-up my business? (Government support, resources such as equipment, finance and training, support of friends and family.)
Experience shows that your business is more likely to be successful if there is a matching of your skills, experience, knowledge and interests with the business. Your business should build on your talents and be one in which you will remain enthusiastic and aware of your customers' needs. Firstly you need to establish a business goal, mission statement and objective. The mission statement should be a paragraph, or even a bold sentence summarizing the main mission for your business. Your Business objectives and goals can be set-out in bullet-point format.
Market research is a most valuable tool for all businesses. Its the process of gathering information to help you make informed decisions about the marketing of your business. Statistics and other market research data help you understand your potential customers and their needs, as well as what your competitors are doing. Getting a good understanding of market trends is essential for you to make the most of your business opportunities. Look for information in market reports, government statistics, trade publications and industry association publications. There are two types of market research: Primary research - Information collected for you through surveys, interviews, talking to customers and businesses. Secondary research - Information gathered for other purposes, such as government statistics, trade publications.
Conduct some research to see whether your idea is really feasible. This will involve gathering, analyzing and evaluating information to help you formulate your business goals, and what you want to achieve from starting your business. You should include research and information on your Target Market.
Some questions to consider in your research: What product/service will you provide? Is your idea feasible? Who is your Target Market? How will you protect your idea? Is there a market for your product/service? What skills do you need? Who are your competitors? What difference will you bring to the market? Do you have the financial capacity?
You can use The Australian Bureau of Statistics to help you with your market research. The Australian Bureau of Statistics is Australias official statistical agency. It provides statistics on a wide range of economic and social matters.. (www.abs.gov.au)
The third factor in starting up a business is to assess the value and viability of the business. To start and operate a successful business, you must first gain a thorough knowledge of the business and potential customers and competitors. You will also need: Technical know-how to produce a product or service Sales and marketing skills General management skills Financial ability to plan and control the money matters Start-up Capital
If you lack any of these skills, you may need to bring in partners, employees or consultants who have them, or acquire the skills yourself. From the Market Research that you conducted in Step 2, you will need to assess whether your business idea will be viable or not. You will also need to consider: Licensing Requirements: For small businesses, your local council can inform you of any licenses and regulations that may affect your operation. Intellectual Property (IP): Will your business infringe on IP and how will you protect your Intellectual Property?
You can also contact your nearest Business Enterprise Centre for free advice and support. (www.beca.org.au) Visit IP Australia's Smart Start website for more information protecting your intellectual property. (www.ipaustralia.gov.au) on
There are many things that have to be taken into account in order to arrive at a fairly accurate estimate of the annual costs of running a business. When starting a new business, you will need to spend some time researching the likely costs, so that you can estimate your weekly or monthly "break-even" point. You can use the following list of costs to help prepare your estimate. Not all costs will be applicable to every business, and depending on your particular business, there may be additional items that need to be considered.
COST/ EXPENSE
Marketing Costs: Photo-shoot costs (model, photographer, hair and make-up) Brochure /Catalogue production costs Advertising costs Website costs (set-up costs as well as ongoing costs) Trade Fair Costs Travel Costs: If you need to travel interstate for appointments with Buyers (flights, accommodation) Business Costs: Accounting costs Business Registration Costs Public Liability/ Insurance Costs Bank Fees/ Merchant Facility Fees Tax: GST and Personal Tax Training costs/ courses Rent Costs Wages: Cost of hiring help where required Owner Drawings (your wage)
COST/ EXPENSE
Marketing Costs: Brochure /Catalogue production costs Advertising costs Website costs (set-up costs as well as ongoing costs) Travel Costs: If you need to travel interstate for appointments with Buyers to buy stock (flights, accommodation) Business Costs: Accounting costs Business Registration Costs Public Liability/ Insurance Costs Bank Fees/ Merchant Facility Fees Tax: GST and Personal Tax Training costs/ courses Rent Costs Wages: Cost of hiring help where required Owner Drawings (your wage)
After you have realized all your business Expenses, Conduct a breakeven analysis. Your Break-even Point is determined by your sales, cost of sales, the time required to achieve those sales, and your overheads or start-up costs/capital. Here is an example: Your total costs and expenses for setting up your business in the first 6 months is $15,000. Your business Primarily sells designer dresses, of an average sale price of $200 per dress. The cost of producing each dress is $100. The Net profit per sale is $100. (100% mark-up.) To Break-even you will need to sell enough dresses to earn a net profit of $15,000 to cover your set-up costs. ($15,000 divided by average profit of $100 is 150 dresses.) So to break-even you will need to sell 150 dresses. Your Break-even point would be how long it will take for you to sell 150 dresses. If on average you were selling 5 dresses per week, it would take you 10 weeks before you would sell 150 dresses. So, your breakeven point is 10 weeks. After this point, your business will have paid off its debt of start-up costs, and be running at a profit!
Some (but not all) of the advantages and disadvantages of the three types of business structure are set out below. It is important to choose the business structure that best suits your needs. Your accountant or solicitor can help you determine which structure will be best for your needs.
Advantages
Sole Trader / Proprietor easy to establish with little cost or formality all profits to owner owner has full control losses can be offset against other income Partnership tax liability can be split greater access to capital and skills share responsibility for running the business Proprietary Limited (Pty Ltd) Company separate legal entity shareholders liability is limited can be formed by one or more persons not terminated by death or bankruptcy of a shareholder shareholders can include minors
Disadvantages
Sole Trader / Proprietor limited to the funds and capital available to the owner owner is personally liable and responsible for all debts of the business
Partnership unlimited liability of each partner decision making can become deadlocked personality problems may arise Proprietary Limited (Pty Ltd) Company higher establishment costs and ongoing costs company structure is more complicated liable for company tax dissolution can be complex/costly Directors have substantial obligations
Executive Summary Business Goals Description of the Business Management Plan Market Research and Analysis Marketing Plan Operational Plan Financial Plan Action Plan
ASIC, PO Box 4000, Gippsland Mail Centre, VIC 3841. After you have registered you company or business, you will need to apply for an Australian Business Number known as ABN. This is a number that all businesses must have if operating in Australia. You can get an ABN on-line at: www.abr.gov.au. You can also register for a tax file number for your business on this website as well.
Types of Finance
Short Term Finance This form of finance is commonly called "working capital", required to fund the day-to-day running of the business. Working capital should not be used for long-term projects as it is generally more expensive (in terms of interest rate) than money paid back over a longer period. Some examples are: Bank overdraft: An overdraft can be used to cover cash flow shortfalls from day to day. The interest will be calculated on your daily outstanding balance and is usually charged on a quarterly basis. Depending on your financier, an overdraft facility may also incur other fees. Commercial bill: An arrangement where money is made available for a short period, at the end of which you must repay the borrowed amount. Commercial Bills can be drawn for terms ranging from 30 days up to a maximum of 180 days. They are commonly used to meet the seasonal funding needs of a business. Debtor finance: An arrangement where a finance company provides a cash advance to the business against sales made (invoices). The "loan" is repaid when the debtor pays the invoice. Trade credit: A short-term source of finance obtained by buying goods and services that do not require immediate payment. If managed carefully, this can reduce the capital investment required to operate the business. Medium Term Finance Usually required for a 3-10 year period, this is principally used to finance equipment, business expansion and development of new products. Examples are: Term loans: A loan paid back over an agreed period (term) where principal and interest rate are paid off in monthly repayments. It is commonly used by businesses wanting to structure their loan repayments to correspond with the income produced from equipment purchased or sales of new products. It may be for a five or 10-year period. Personal loans: Where it is not possible to arrange a loan in your business name you could consider arranging a personal loan. This can then be contributed as equity or as a loan to the business.
Leasing: The financier purchases the equipment you require and then leases it to you in return for regular rental payments (usually monthly) for the duration of the lease period. At the completion of the lease term you are offered the option to purchase the equipment at an agreed residual value. (i.e. motor vehicle) Long Term Loan This type of finance is used to fund the purchase of assets such as the business itself, land, buildings, plant or machinery which will directly or indirectly contribute to profit over a period of years. Term loans would be the most common way to structure long-term borrowings.
Security Lenders usually seek some form of security from you, such as: Assets such as real estate or shares in public companies; Surrender value of an insurance policy; Personal guarantee. You're more likely to succeed in your loan application if you provide a well researched and presented business plan. Your local Business Advisory Service can offer you one-on-one advice on your financing options and how to access accountants in your local area. It also offers low-cost business and financial planning workshops. Call 1300 650 058.
Government Grants
The following government grants exist currently in Australia;
This program aims to encourage restructuring and to reduce the burden of transition experienced by firms, workers and communities, particularly in TCF dependent regions. The program has three elements: Access to the Job Networks Intensive Support including Intensive Support Customized Assistance Program, to assist retrenched TCF employees to secure alternative employment; administered by Department of Employment and Workplace Relations. The TCF Restructuring Initiative Grant Scheme, to assist TCF firms to consolidate in order to secure a more viable future; administered by the TCF Policy Group, Department of Innovation, Industry, Science and Research. Supplementation of the Regional Partnerships Program, which provides assistance to communities adjusting to the consequences of TCF industry consolidation; administered by the Department of Infrastructure, Transport, Regional Development and Local Government. 5. $27 million for the Expanded Overseas Assembly Provisions (EOAP) The Expanded Overseas Assembly Provisions enables participants to assemble certain goods overseas from predominantly Australian fabric and leather. Assembled goods can then be imported for local consumption, with duty payable only on the cost of overseas processing and content. See separate EOAP fact sheet. 6. $20 million for a Supply Chain Efficiency Program from 2010 to 2015 Details of this program will be available closer to the implementation date. Full details of these grants and how to apply for them are available on the AusIndustry website at www.ausindustry.gov.au.
Provider: Department of Education, Training and the Arts Amount: Min: $5,000 Max: $50,000 Closing date: Ongoing Objective: To support excellence in the arts by providing one-off project funding across all art forms. For more information see: www.qld.gov.au/grants. Youth Engagement Grants 2009-2010 Provider: Department of Communities Amount: $200,000 per year ($20,000 each region, 10 regions statewide) Closing date: Guidelines and/or dates have not been finalized for the next round Objective: To support community groups to facilitate regional youth engagement initiatives across Queensland. For more information see: www.qld.gov.au/grants. Regional Arts Development Fund Provider: Department of Education, Training and the Arts Amount: Various Closing date: Ongoing Objective: To support the professional development and employment of arts and cultural workers in regional Queensland. For more information see: www.qld.gov.au/grants. Spark Provider: Department of Education, Training and the Arts Amount: Various Closing date: Guidelines and/or dates have not been finalized for the next round Objective: To assist talented young and emerging Australian artists or art workers (aged 18-26) to establish a professional career in the arts. For more information see: www.qld.gov.au/grants.
Business Considerations: what you need to know before going into business!
Once you have determined that you are ready and able to take on starting your business, there are many practical things you need to put in place right at the start to establish your business. Considerations Include: Legal Considerations Setting Up Your Finances Operating Your Business Promoting Your Business Keeping Pace
Some tips on how to avoid business failure: Don't underestimate the capital you need to start up the business. Understand and keep control of your finances - income earned is not the same as cash in hand. More volume does not automatically mean more profit - you need to get your pricing right.
Legal Considerations Decide how your business will be legally structured. (See Business Structure for more detail.) If you choose to be a sole trader, you can trade using your own name or register a business name with the Office of Fair Trading. If your business is a company, your company name needs to be registered with the Australian Securities and Investment Commission (ASIC). Register for an Australian Business Number (ABN) with the Australian Taxation Office. You can register online for an ABN at the Business Entry Point. Register for the relevant taxes, including GST and PAYG. See Taxation for further information on what relevant taxes apply to your business. You may also do this via the Business Entry Point. If you intend to employ staff, obtain information on awards, superannuation policies, workers compensation, PAYG taxes, as well as other relevant employment information. See Employment Conditions. Check on what licenses/registrations may be required for your business through the Office of Fair Trading.
Check with your local council regarding zoning, health regulations and whether you need to lodge a Development Application or Building Application. Develop an Intellectual Property register for logos, trademarks, patents, copyright and designs. Contact IP Australia for more information. Register your website domain name if you want a strong Internet presence. You need a legitimate business or company name, e.g. through the Office of Fair Trading, to get a .com.au address. You can search for and register a domain name at www.auda.org.au/domains/au-domains/. Draw up your Will, especially if you are a sole shareholder/director.
Setting Up Your Finances Set up a business bank account (if you have registered a business name you will need to have your Certificate of Registration of Business Name). Discuss your financial position and any loan arrangements with your lender. (the section on Raising Finance will help you think through what type of finance you should be seeking.) Consider merchant facilities (for instance EFTPOS and credit facilities for your customers). Choose your accountant and set up your financial record keeping system. Set up a system to monitor the financial performance of your business, e.g. cash flow budget. Consider benchmarking your business against profiles available from your local Business Advisory Service.
Operating Your Business Identify the benefits and disadvantages of purchasing property versus leasing property versus working from home. See Commercial Leases on what to take into account when negotiating leased premises. Negotiate and sign any lease/purchase documentation in consultation with your solicitor. Arrange for business insurance, including public liability, vehicle, fire, burglary, professional indemnity and sickness. See Insurance for further detail. Arrange for connection of utility services, such as electricity, water, telephone and gas. Purchase business equipment, fittings and furniture.
Develop an asset register. Order and purchase stationery, tax invoices, letterheads, business cards and record keeping book. Arrange for a suitable filing and accounting system. Order and purchase trading stock and determine terms of payment, delivery and freight.
Promoting Your Business Make sure you identify and promote your business at every opportunity, e.g. through your stationery and other promotional material. Determine your advertising and marketing needs. Decide on the cost/benefit of using an advertising agency. Think about how you could network with other businesses to promote your products or services. Determine how e-business could work for you. Develop a marketing plan that will not only sell your products but also promote your business
Keeping Pace Make sure you have a well-prepared business plan, one that you review over time as your business develops. See Business Planning to help kick this off. Join a trade association/chamber of commerce. If you are in a partnership, consider obtaining a Power of Attorney for you and/or your partners. Review your Will from time to time to ensure it reflects any change in your circumstances. Stay up to date with changes in your industry, customer preferences and business regulation system. Undertake further training and build professional relationships to build your business capability.
The Australian Securities and Investment Commission can be contacted on 1300 300 630 or visit www.asic.gov.au.
Commercial leasing
You might consider a lease if you want to start your own fashion boutique, or if you need office space or a sample room to create your designs. A lease provides you with the legal right to occupy premises. It protects you and the landlord by setting out all the agreed terms of occupancy. When taking out a commercial lease you first have to decide on what premises and lease will be right for your business, then you have to clarify with the landlord in writing all issues about the lease and the premises before signing the document. Questions to Ask Yourself when finding a Retail space or commercial office/ work room: What location and how much space would best suit your business? How much rent can you afford as your starting rent and can you afford an annual increase? How long do you need to be there to recover your costs and make a profit? How long do you need the lease to be? The longer the lease the higher the security, but the less flexibility you will have to expand or move premises.
Before Signing a Lease You should have detailed discussions with the landlord/agent before signing and also seek advice from business associations, your solicitor and accountant. Obtain a draft lease and check: What is the lease duration? Does the lease have an option to renew? What is the rental and how often does it have to be paid? If you sell the business do you have the right to transfer the lease to the new owner? Does the lease allow for the type of business you want to
conduct? Can you sub-let all or part of the premises? If so, under what conditions? Who is responsible for council rates, water costs, legal fees, stamp duty, security, cleaning, etc. under the lease?
Specific Issues to Consider Commercial leases are normally non-standard documents prepared by solicitors acting for the landlord. Be aware that all aspects of the terms of the lease are negotiable. Within the lease contract, you should consider: Rent How is rent calculated? Is it including or excluding outgoings? How and when will rent increases be calculated? What happens if the space becomes unusable or your use of the place is disrupted by maintenance or construction? Do you have to keep paying rent? Can you get out of the lease? Can your landlord end the lease? Other Outgoings Do you have to pay a security bond or deposit? (Often three months rent is required.) What equipment and/or services are included in the lease? Do you have to pay for repairs and maintenance of the premises? Other Obligations What do you have to do when the lease ends - either at the end of the agreed term or because your landlord or you have ended the lease? Are there any general rules that apply to all the tenants in the building or centre? If the landlord claims that you are in default, how much notice are you entitled to before the landlord can terminate the lease? Are you entitled to have a chance to rectify the default first? Permitted Uses and Access Are there others with the same or similar businesses in the same centre/location? If the landlord has promised not to allow any of your competitors into the centre or building is this set out clearly in the lease? Do you need any licenses to operate your business? Are there any restrictions imposed by council zonings, other local/state legislation or the lease?
What hours can you access the premises? Will this be a problem? Will there be any restrictions imposed by the landlord or council regulations? Can opening hours be easily changed, if required?
Location and Building Design Does the location and space suit your business and can it be used for the intended purpose? Will the building need to be upgraded or renovated to enable the proposed use or to meet legislative requirements? Who will pay for this and any ongoing maintenance? If fit-out is required, what will be needed and who will pay for and maintain it? Who will own the fit-out and do you need approval to change it? Does the fit-out have to be removed at the end of the lease? Insurance Will you have to take out any insurance? What type - public liability, building, glass, for your fittings? How much will it cost? Will you have to get consent from the landlord about things that might affect his/her insurance? Do you have to contribute to the landlord's insurance as well as paying for your own? More Information Your local Business Advisory Service can offer you one-on-one advice on taking out a commercial lease. Call 1300 650 058.
Insurance
Insurance is an essential part of running any business. If you are operating a small business you need more than just property insurance. Taking out the right insurance will help protect your business and minimize its exposure to risk. Your insurance requirements will vary according to the type of business you are operating, but you should be aware that some forms of insurance are compulsory, such as workers compensation and third party car insurance. When youre in business you deal with a variety of potential risks each day. Risk is not something you can avoid, but it is something you can manage. Risk management will increase the probability of success and reduce the probability of failure of your business. See the topics below for information about different types of insurance. Workers Compensation You must provide accident and sickness insurance for your employees workers compensation - through an approved insurer. Workers compensation is covered by separate state and territory legislation. Personal accident and illness If you are self-employed you wont be covered by workers compensation, so you need to cover yourself for accident and sickness insurance through a private insurer. There are several types of life insurance. Some are investment-type funds where you contribute over a certain time and get back your investment plus interest earnings at the maturity date. Others are designed to cover risk - things that could happen to you. Types of cover include Income protection and disability insurance. Superannuation If you are running a business or employing people, you are likely to have superannuation obligations to your employees. If you are selfemployed you also need to provide for your retirement superannuation is generally used to provide for a retirement plan. Public Liability Public liability insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or pure economic loss resulting from your negligence.
Professional Indemnity Professional indemnity insurance protects you from legal action taken for losses incurred as a result of your advice. It provides indemnity cover if your client suffers a loss - material, financial or physical - directly attributed to negligent acts. Product Liability If you sell, supply or deliver goods, even in the form of repair or service, you may need cover against claims of goods causing injury or damage. Product liability insurance covers damage or injury caused to another business or person by the failure of your product or the product you are selling.
Trade Shows
Using Fashion Trade Shows to Promote Your Designs There are two sorts of marketing, which most followers of fashion are aware of - selling directly to the public, and promoting high fashion designs on the catwalk. In reality, however, the fashion industry is largely structured around a third - the trade show. Trade shows occasionally include catwalk fashion shows, but they are not open to the public. They are aimed at bringing together designers and retailers to see how they can help each other. You'll find trade shows advertised in the fashion industry press (different from mainstream magazines about fashion) and on the Internet, and you'll hear them discussed at networki ng events. Before you consider going to a trade show, find out which buyers are expected to be there. Booking a booth at trade show costs money, so you need to know that it's likely to be worth your while. Actual goods and money rarely change hands at trade shows. The aim, for booth holders, is to generate sales leads. Be ready to talk enthusiastically about your designs and make potential buyers feel welcome. If you're lucky, you'll collect some business cards with numbers, which you can call the day after the show closes. Always make your calls promptly. Buyers will see lots of other designs at the show and if you're not quick about things they may forget yours!
Setting up a Trade Show Booth A trade show booth is not like a stall in a marketplace. There are several things you should prioritize: Display the right items- Take just a few of your strongest designs ones that look good together - and use mannequins to show them, as they would look when being worn. Have a catalogue available for buyers who want to see more. Create the right atmosphere-Bring fabric to drape around your stall, covering up tables and hardboard walls. A banner featuring your name and logo will make you more memorable. Make your work look good- there are usually floor ports available for plugging in electrical devices, so you can use spotlights. If you can afford it, a plasma screen television playing a short advert for your work will really get attention. Have interesting things to take away-As well as your business card and promotional materials featuring your work, you can offer free sweets or small promotional items. Making the Most of Trade Shows As well as giving you the chance to promote your own work, trade shows present a great opportunity to take a look at other people's. Despite the high-pressure environment, you'll find that most people at trade shows are friendly and you may pick up some useful tips. At larger trade shows you'll meet designers whose target markets are very different from yours, so that you're not in competition, and they may be willing to trade business secrets. Trade shows are great for networking so do your best to be nice to everyone and collect business cards when possible - you never know when they might come in useful. Attending a trade show can be a nerve-racking experience, especially the first time you do it. Many buyers go to trade shows specifically to look at the work of new designers, so you won't be short of opportunity.
Brisbane Convention & Exhibition Centre Tel +61 (0)7 3308 3000 http://www.reedgiftfairs.com.au/ JAA AUSTRALIAN JEWELLEY FAIR 2009 Aug. 30 - Sept. 01, 2009 in Sydney Expertise Events Unit 4 / 1 Skyline Place Frenchs Forest NSW 2086 Tel:+61 (0)2 9452 7575 Website: www.eventseye.com/fairs
Consider these questions when addressing this section of your business plan: What are your location needs? What kind of space will you need? Why is the area desirable? The building desirable? Is it easily accessible? Are market shifts or demographic shifts occurring?
Put dot points under each heading which realistically and honestly reflect your research and self-assessment. Your business plan needs to develop strategies to deal with identified issues. Your management plan should answer questions such as: How does your background/ business experience help you in this business? Who will be on the management team? What are their strengths/ weaknesses? What are their duties? What are your current personnel needs? What are your plans for hiring and training personnel? What salaries, benefits, and holidays will you offer?
Your marketing plan needs to cover the strategies you will put in place to capture and keep customers. This includes how you will make your product/service available; how you will promote them and build your business image (including networking); and your pricing policies. Identify your customers by their age, sex, income, educational level and residence. At first, target only those customers who are more likely to purchase your product or service. As your customer base expands, you may need to consider modifying the marketing plan to include other customers. The Business marketplace is highly competitive. You need to know youre your competitors are, and establish a unique point of difference from them. Outline what you do differently to your competitors in your business plan. Your pricing strategy is another marketing technique you can use to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with competitors in your market area and if they are in line with industry averages. Some of the pricing strategies are: Competitive position Pricing below competition Pricing above competition
How you advertise and promote your goods and services may make or break your business. Having a good product or service and not advertising and promoting it is like not having a business at all. Many business owners operate under the mistaken concept that the business will promote itself, and channel money that should be used for advertising and promotions to other areas of the business. Advertising and promotions, however, is the lifeline of a business and should be treated as such. Devise a plan that uses advertising and networking as a means to promote your business. Remember the more care and attention you devote to your marketing program, the more successful your business will be. TIP: Use the Marketing Plan Template in Tutorial 9: Fashion Marketing to help you formulate your plan.
you need? (See Raising Finance.) What your business break-even point is, i.e. what level of production is needed to cover all your costs?
Don't: Be unrealistic about what you can achieve or base your projections on wishful thinking. Underestimate the challenges in growing a business. Be afraid to ask for help. Don't spend too long creating the "perfect" marketing or business plan. Many businesses get bogged down writing huge documents. More Information Industry Associations and your local Chamber of Commerce and Industry offer advice and services to members. Your local Business Advisory Service can offer you one-on-one advice on developing your business plan. It also offers low-cost workshops covering all aspects of business planning. Call 1300 650 058.
The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It enables the owner/manager to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses. As monthly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation. As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows the owner/manager to compare actual figures with monthly projections and to take steps to correct any problems. Industry Percentage In the industry percentage column, enter the percentages total sales (revenues) that are standard for your industry, which are derived by dividing Costs/expenses items x 100% Total net sales These percentages can be obtained from various sources, such as trade associations, accountants or banks (see FMRC Business Benchmarks). Industry figures serve as a useful benchmark against which to compare cost and expense estimates that you develop for your firm. Compare the figures in the industry percentage column to those in the annual percentage column. Total Net Sales (Revenues) Determine the total number of units of products or services you realistically expect to sell each month in each department at the prices you expect to get. Use this step to create the projections to review your pricing practices. What returns, allowances and markdowns can be expected? Exclude any revenue that is not strictly related to the business Cost of Sales The key to calculating your costs of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all products and services used to determine total net sales. Where stock is involved, do not overlook freight costs. Also include any direct labor. Gross Profit Subtract the total cost of sales from the total net sales to obtain gross profit.
Gross Profit Margin The gross profit is expressed as a percentage of total sales (revenues). It is calculated by dividing Gross profits Total net sales.
Variable Expenses Salary/Wages Payroll Expenses Legal/Accounting Advertising Motor Vehicles Supplies Repairs & maintenance Outside service Base pay plus overtime Include paid holidays, sick leave, Superannuation Outside professional services. Include desired sales volume and classified advertising Include charges if personal car is used in business, including parking, tools, buying trips, etc. Services and items purchased for use in the business. Regular maintenance and repair, including periodic large expenditures such as painting. Include costs of subcontracts, overflow work and special or one-time services.
Fixed Expenses Rent Depreciation Utilities Insurance License/Permits Loan repayments Miscellaneous accounts. Net Profit (loss) (Before taxes) Taxes Net Profit (loss) (After taxes) Annual Total Subtract taxes from net profit (before taxes) For each of the sales and expense items in your income projection statement, add all the monthly figures across the table and put the result in the annual total column. Calculate the annual percentage by dividing Annual total x 100% Total net sales. List only real estate used in business. Amortization of capital assets. Water, Electricity and Gas Fire or liability on property or products. Include workers compensation. Any licenses or permit fees required to establish or run the business. Interest on outstanding loans. Unspecified: small expenditures without separate
Annual Percentage
The Business plan that you write can be for your own fashion label, or a fashion boutique. You can also choose if your business will sell wholesale or retail. Remember there is no limit to where or how you will run your store, or label. For Example your boutique could be an on-line store! You can choose the type of merchandise you store or label will sell: childrenswear, bridal, lingerie, shoes, high-end designer fashion, fast fashion or maybe even vintage! Remember to include in your Business Plan: Business structure Business Name Business expenses Pictures or examples of type of product you will sell/ design
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