| Inc.com staff
Jun 14, 2010

How to Break Into the Fashion Industry

 

Breaking Into Fashion: Get the Financials Straight

Considering that manufacturing, importing, distribution, and sales are in your future, unless you're particularly numbers-savvy, you'll mostly likely want to enlist an accountant and a legal counsel to help advise on business incorporation and how to set up your financial accountability.

Nemphos suggests that too many independent clothing and accessory designers don't work with advisors, and instead end up simply setting themselves up as a sole proprietor of their company without exploring other incorporation options.

"As a sole proprietor, you are on the hook for everything – so we advise them to not do that necessarily. Setting oneself up as an S-Corporation could also affect them if they are possibly going to seek financing in the future," he said.

Creating an LLC might seem more complex from the start and for tax purposes, but doing so can give business owners organizational flexibility – and doing so ensures there is a corporate entity comfortably wedged between your business and your personal liabilities. It also allows some flexibility in terms of changing your form of business incorporation later without harsh tax penalties.

Scotto-Dinan said her top advice to a bootstrapping fashion entrepreneur would be to invest in a good accountant and a good attorney. "Definitely speaking to a good accountant about your goals so that you can set your business up, and to be careful about how you set it up, because while at the moment it might not feel like a crucial decision, it absolutely is a wise investment."

If you decide to keep accounting in your own hands and file for incorporation yourself, which Hayward successfully did, you might want to consider educating yourself first. And, no, Googling isn't sufficient.

"It's really important to take some tax classes," she said. "That's the least fun part about running your business, doing your taxes. But the city often offers bookkeeping classes, and they can teach you how to create monthly income statements. Absolutely do those, then it makes it a lot easier at the end of the year."

From the start, you'll also want to protect your label from trademark infringement. "If you have a service mark or trade name, you're going to want to file with the patent and trademark logo. Once you have done that, you can use that on a label, for events, and on your website," Nemphos said. He also warns that brands should be proactive about promoting their brand online, because simply getting your name out, and attaching it to products, protects your use of it. He suggests registering URLs with your brand name right away, and using the brand name prominently on products and labels. Doing so doesn't hurt marketing, either. "Brand development comes from just being out there and known, and that you take the steps to show off your product and your concept."

Once you have a legal counsel and accountant in place, remember that they likely have a great deal of expertise in the industry – and can serve as valuable advisors to your business. Don't be afraid to ask questions – doing so can open your eyes to everything from money-saving options to marketing trends.

Dig Deeper: How to Incorporate


Breaking Into Fashion: Build Your Production Model

Today, in the era of super-simplified online sales via eBay, Etsy, and a host of other online storefront options, it's easy to start small. You can learn how to set up an Etsy store.  Inc.com also has guides on setting up shop on eBay and how to use your local market as a business incubator.

Hayward could be considered model of how to make a sustainable, and truly profitable, business that exists solely through an online storefront. But she's planning big: she'd like her own boutique, complete with sewing lab – as well as to use the space to offer educational courses in designing and sewing. She's anticipating hiring her first employee soon: another seamstress.

"You can start small – you can do custom wedding dresses or bridesmaid dresses. Start small with a very focused audience," she said. "But I'm getting to the point where I'm working late evenings, and I'd like to create every dress myself, but I'm going to have to expand production."

Scotto-Dinan, on the other hand, knew from the beginning she'd need a production facility. She read Womens Wear Daily to learn about the industry, and found advertisements for a variety of New York factories in its pages. Once she found a handful that seemed aligned with her goals, she interviewed them, and found one "that was a good match for what I was planning. I aligned myself with one local facility – and to this day I'm with them."

Scotto-Dinan, who is based in New York, knew that she wanted to work with a local producer. However, sourcing a product abroad is a popular – and often money-saving – choice, though doing so creates myriad shipping, customs, and quality control issues.

When you're ready to sign on with a production house, mind the contract, attorneys caution. "The cutting houses and factories will throw a contract at you. There's a standard contract that they give you, but some of them come back and say, once you're working with them, that they own the patterns. You can't let that happen," Nemphos said.

One way to preempt disputes is to have a legal confidentiality agreement and a development agreement ready. Also, if you're using unique patterns or fabric designs, you might want to consider trademarking them. Yes, that's right: patterns are considered intellectual property and fit into the trademark purview rather than being considered patentable.

Then again, if you're developing a new fabric, or chemical compound that creates a fabric, you should consider patenting that process, Nemphos says. "There's a great deal of change in the materials that are used in apparel. A lot of it is specially designed and created – and that material has to find its way into contracts, because you have a trade secret on your hands," he said. "That can, and should, be patented."
 PREV  1 | 2 | 3  NEXT 


Christine Lagorio is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is executive editor of Inc.com. @Lagorio