Do I need a formal one or just business plan basics?
This is a question that many startup businesses ask, especially when you’re presenting your idea to a fashion consultant, manufacturer, or buyer. In our opinion no – you do not need a formal business plan, unless you plan to pitch investors and even in that case one is not always required. Complete business plans can be 20-50 pages long, which will take you a lot of time to put together. We’re not saying to not take the time to do your research, just don’t waste your time putting together this extravagant document. You do need some business plan basics to get started with your company, and we’re here to share exactly what those are. For more in-depth information on business foundation, check out our online course Fashion Biz Foundation.
Business Plan Basics
First and foremost, you need to start with what your company is all about. Begin by describing who you are, what your products or services are, the benefits of those, and why your company will be successful. Things you might want to include are your mission statement, vision, USP, leadership team, location, and growth plans/future goals. Keep this brief and to the point so it’s not a huge executive summary. You simply need someone to have a basic understanding of what you’re doing now and where you want to see it go in the future.
No matter who you work with, they’re going to ask who your target customer is. This part you want to be very specific and do some research as well. Start with their demographics, which includes the gender, age range, race/ethnicity, education level, income, and profession. Then once you have these basics down, move to geographics. Where is your target audience? Are they online, in major cities like New York or Los Angeles, or smaller towns in the Midwest? After you know their basic profile and location, go into their psychographics. This is what many businesses neglect to do, and it’s honestly probably the most important of the three. You need to find out your customer’s interests, feelings/emotions, and likes/dislikes. Getting into their head and trying to figure out what they would want is essential when targeting the right audience.
This is probably the most time-consuming but crucial step with what you need to know. Market analysis is your market research, so you’re going to have to do a little homework. There’s really 2 parts to the market analysis: internal factors and external factors. Internal factors are things inside your company, and external are factors outside your company. The best way to organize and understand the marketplace better is by doing a SWOT analysis. This separates the information into Strengths, Weaknesses, Opportunities, and Threats. Strengths and weakness are your internal factors, so here you would list your company strengths, USP (unique selling proposition), and then anything your company lacks. On the other hand, opportunities and threats are external factors, in which you would list room to grow in the market, dangers from competitors, and anything else happening in the world that could potentially affect your company.
You have to know who your direct competitors are when starting a fashion business. One because you don’t want to copy what someone else is doing, but two because you have to look at what is out there so you can make your company better. This is all about having the competitive advantage, which is crucial to be successful and make your business stand out. How do you plan to beat your competition? Are you going to compete on price, value, or something else? You also should have some idea of who you are competing against in the marketplace to learn more about your target audience and the products you should be making.
It is critical to know your budget before moving on with any marketing or plans of actions. You need to have an accurate number in mind to invest for your business that won’t leave you in debt or hard times. This step will also help you figure out if you need funding for your business, and how to go about it. There’s many ways to raise money for your company, such as doing a crowdfunding campaign, which we teach in our online course Cracking The Crowdfunding Code. Additionally, you can get bank loans for your business, and get help from family or friends.
Marketing & Sales
Last but not least, you have to think a little about your marketing plan – which yes, is a bit different from your business plan. After all your research, you have to decide which marketing tools you want to use for your brand. There’s no single way to approach a marketing strategy, as it should fit the needs of your company and target audience. This is where you need to figure out where you want to sell your products and showcase them. Plan out your channels of distribution, whether you want to sell online (ecommerce), in department stores, or small boutiques. Then plan out your marketing techniques, whether you want to do direct marketing, digital marketing, social media marketing, email marketing, etc. And don’t forget about customer retention strategies! Getting a customer is the first step, keeping them as a customer is sometimes a lot harder. Finally you’ll want to organize all of this into what’s called a Marketing Funnel or a system that is used to get a lot of people in and then filter them out so you only have the ones who are going to buy at the end of the day. This all ties into your sale strategies, which is important for you to know as you are starting your business.
For additional help, we break all of this down and make the process easy for you with one of our online courses, Market Research Made Easy.
I hope these tips and tactics will help you get your business plan started! Did we miss anything? Comment below!
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