The Complicated Business of Building a Major Fashion Label
It's New York Fashion Week. That means a literal invasion of designers, hairstylists, makeup artists, and models. And they mean business.
The global apparel market grew by 5.8 percent to $1.7 trillion in 2012 from a year earlier, according to researcher Euromonitor International. As the largest apparel market, the U.S. accounted for 21 percent of total worldwide sales in 2012.
Despite these metrics, the fashion business is a veritable no-man's land for professional investors. Save for publicly traded fashion conglomerates and startups within the fashion-tech space, the investment community typically steers clear of the fashion business.
"When investors do invest in fashion they [often] wait until it's a later stage company," says Jasmine Aarons, the founder and CEO of VOZ, a nearly three-year-old fashion brand in New York that collaborates with Chilean artisans. While she managed to raise more than $400,000 from grants and investors, she admits the process has been arduous. "Even some investors who've said they like me just won't invest in fashion."
To succeed in an industry where the opportunity for fast growth is slim, you have to work harder to get attention. Some of the founders at Fashion Week demonstrate how to do exactly that, through partnering with sharp business minds or amping up their own business acumen.
Aarons who studied engineering at Stanford University's d.school before launching VOZ relied as much on her business sense as her fashion sense when it came time to raise funding. "Most of my investors have invested in me because they like the brand and the clothes," she adds. "My education or the peer group I'm around also helped me create a tight business plan."
Still, Aarons is an anomaly among emerging designers. "Oftentimes they don't see themselves as entrepreneurs; they see themselves as designers," says Bob Bland, the founder of Manufacture New York, a two-year-old business incubator for fashion designers.
That's a mistake, says Bland. Failing to think of yourself as an entrepreneur or your creations as a business can not only hold you back from producing more ambitious projects, but it can also stunt your growth potential. "Fashion has to move into a more inclusive mindset," she adds.
To close this gap, there's a something of a movement within the fashion industry to professionalize new or "early-stage" designers--getting them ready not only to run their own businesses but possibly pitch investors down the road.
Like Manufacture New York, a number of other organizations and companies have sprouted to tackle this problem. Perhaps best known among them is Made Fashion Week, which aims to put emerging designers on stage and on the map. There's also VFILES, an online fashion community and e-commerce site, which is giving four independent fashion designers runway space at Fashion Week based on the strength of their online profiles, which may be comprised of illustrations, lookbooks, and GIFS (a.k.a., photos that have movement).
On the business end, FashInvest, which has been around since 2009, aims to connect emerging fast-growth retail, branded goods, and fashion-tech businesses with resources and investors. And before becoming Manufacture New York's Chief Strategy Officer, Rob Sanchez founded Fashioning Our Industry, a networking group offering to connect entrepreneurs with experts in fashion, law, branding and finance.
"We are creating an ecosystem that allows emerging designers to benefit from an established network and infrastructure and gain similar cost benefits as a company with strong backing," says Sanchez.
At Manufacture New York, which is based in Manhattan with plans to move to a larger space in Brooklyn, 15 designers are enrolled in the incubator, while about 50 other members use the facilities in some respect. Among other things, the company offers business and product development resources. There's an industrial sewing room, a conference room, and computer labs.
"We try to give them a clear roadmap and then build out from there," says Bland, who both worked on the corporate fashion side of the industry and founded her own label, Brooklyn Royalty. "Business 101 is a huge part of this education process for a designer to create a sustainable business."
What's more, this week, Manufacture New York is hosting an eight-day fashion event called LaunchNYC. There will be runway shows featuring its incubator members, as well as a pop-up shop and wholesale showroom.
"There's been tons of major high impact press coverage and attention to these designers," says Bland. "That's really what it takes to get these businesses going and get a chance to get them off the ground."
DIANA RANSOM | Features Editor
Diana Ransom is features editor at Inc. She has been covering the never-dull world of small business and entrepreneurship for years at a variety of publications including The Wall Street Journal, SmartMoney.com, the New York Daily News, Fast Company magazine and Entrepreneur. She lives in Brooklyn, N.Y.