From Small Business

Selling your design business

Someone I will call Jody writes:

Do you have any articles or information about how to sell or license a design? Although I have streamlined and have one full time helper, the business has grown too big for me to handle on my own and I am interested in finding out if there are any companies out there that would be interested in buying my designs and brand. I have a small business making xxx from post-consumer apparel.

I've published several posts on selling your business which I'll link to as is appropriate to sort out these issues.

  • What is she selling? The business? A license? The brand? The designs?
  • How marketable are those elements as they would interest a buyer?

Background: Jody included a link to her website. Personally, I think her products are awesome (and you know how I resist making such pronouncements) and priced well (commensurate to their value) but there are two core problems that can affect the sale of businesses like hers.

First the downsides: With respect to licensing -this isn't going to happen, or it shouldn't. Only someone who is really green would buy a license and these people tend to not have much money so its a zero sum game. If you are toying with the idea of selling a license, keep in mind the option is limited to celebrities or very well established brands. A license is only good for an add-on product, it's not a take-over of your primary one. In other words, Ralph Lauren can sell a license to a sunglasses manufacturer but the license is worth nothing if RL stopped producing -which is what Jody wants to do. So unless you're Beyonce, Martha Stewart or Hello Kitty, cross licensing off your list of options.

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Is a CAD rental and training business viable?

I found a question on LinkedIn I thought to answer here since more people might find it useful (I don't know if that link will work for you unless you belong to that group). Anyway, the individual in question (Michelle) said (paraphrased and snipped):

I want to start a business where young designers can rent time on CAD software and equipment that I will buy. I think there is a need for this kind of studio - there are many young designers coming straight out of school who could benefit from CAD software.

Has anyone heard of this kind of business? Is there an existing business model I could learn from? If this kind of CAD studio were available in your area at an affordable rate, would you be interested in the services? What kind of needs would you expect this studio to meet? I am interested in any kind of feedback or information you can offer.

I think this could be a viable business but I also think the focus needs to change somewhat. My first approach would be to ask CAD trainers one simple question: Who wants to use CAD systems?

The answer is businesses. Meaning, there is a mismatch between your mission and the market. I completely agree it would be awesome to provide CAD access to independent designers but most of them need hard patterns because their lots are so small. Also, while they may have acquired some training in school, there's a big gap between school vs good production patterns to say nothing of knowing how to grade them. I'm not saying you shouldn't provide access to them -you should- only that CAD access alone won't pay the bills. What will pay the bills is training.

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NEW! Wholesale fabric show, low minimums NY

You're hearing it here first, the first public announcement of a new wholesale fabric trade show designed specifically for independent designers who need to source low minimum fabrics, leathers, trims, guts etc. The show is so new that it doesn't have a name, a website or way to register for it. Considering everything it took to organize and pay for it, those are very minor details. Trust me. For now, all you need to know is this:

Hotel Pennsylvania
New York City
February 6-7, 2012
Hours: 9:30 to 6:00

I strongly suggest posting a comment (even if it is lame) or these vendors might get the idea this is not such a good thing to do. More importantly, it is critical that this go viral -promote this show to all of your friends, colleagues and contacts because not sharing the details can kill a show like this faster than anything. If you don't make an effort to tell -oh let's just say ten other people- don't be dismayed if this is the first and last year this show is held. If you don't tell ten other people, I never want to hear you complain there aren't any shows for small designers.

You should promote this show even if you don't live in NY or plan to attend! If this show doesn't succeed, the vendors will not be convinced to do it anywhere else. Meaning, if you want a show like this to open in a location more convenient to you, the best way to make it happen is to do what you can to make a show you're not even going to, a rousing success. Make sense?

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Using interns or consultants for sourcing. Or, the blind leading the blinder

A new trend has emerged in that start ups and very small companies are using intermediaries like interns or consultants to make recommendations for pattern makers, technical designers, production etc. I understand that an owner may be using an intermediary to save themselves time or because they don't feel qualified to assess candidates -but it is likewise a mistake to presume an intern or consultant is qualified to do it. At worst, it is likely that one is sending an unintended message. Using someone other than the owner to source in this stage is a problem for at least six reasons I can think of:

  1. Leaves the impression that the owner has more "important" things to do.
  2. The assumption that interns (and often consultants) are qualified to assess skills.
  3. A failure in understanding the product development process.
  4. Leaves the impression the owner thinks service providers are an interchangeable commodity.
  5. Miscommunication in work assignment.
  6. And to service providers I direct the last -getting paid can be a problem.

1. That the owner has more "important" things to do:
As the Wall Street Journal said (paraphrased) once management decisions are made, the pattern maker is the single most important person in the factory with the greatest impact on costs and quality outcome. The matter of product development is so pivotal that the owner of a start up should make the time to do the research even if they're not qualified to assess the skills of those they'd hire. It is in the search process that one learns to discriminate and acquire critical lessons that will affect every facet of their profitability. Books and internet searches are useful to learn assessment skills. Better yet, you could just read this and this. There is nothing wrong with getting help in locating services but the person who does the hiring should make the first approach.

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Business plans for funding are over-rated

Continuing from yesterday (Guessing the market: targeting for your business plan), now is when people are going to get mad at me. The size and spending of your market doesn't matter unless it is highly specialized. Here are some examples that require targeted data:

  • Product: Flight suits for female pilots. The number of women holding private pilot's licenses is important.
  • Product: Clothes for girls aged 7-14 who have Downs Syndrome (ditto special populations such as little people etc).

I know at least half of you think I'm wrong but projections mean nothing. Being able to define the size of a market doesn’t mean you're going to get any of that pie. Clothes aren’t cars, TVs or houses. Sure, it's possible to calculate a range of possible sales of technology items or durable goods but it's impossible to know how many high school girls will buy a short red knit skirt. Companies who can forecast this sort of thing are those who have a track record -which is where their projections come from plus or minus whatever other trend is going on in the market that they happen to know about because they have experience and established relationships. If you don't have these things, you're flying blind. Welcome to my world.

That doesn't mean you shouldn't do this, not at all. My worry is that too many focus on meaningless numbers over which they have no control versus that which they do. Most of the time, market size doesn't matter. What they spend doesn't matter either. You may as well crib data from anyone else putting together a business plan because you don't know how much of that market you're going to get until people see what you have and have to have it.

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Guessing the market: targeting for your business plan

N writes:

I am working on a business plan for my women's contemporary clothing line. I'm stuck at the market analysis portion of my business plan as I cannot seem to get my hands on the information required to complete it. I just need to find the current market share for womens contemporary wear, industry sales revenue, demographic data showing spending patterns within these categories, market trends, etc. Where can I find such market analysis without paying a data research company hundreds on dollars?

I did a search for "total apparel sales 2010", "apparel sales 2010" and got several promising returns so I wonder what kind of search terms people are using. In using the year "2010", I intended to find all news related to apparel sales published in 2010 as opposed to data that applied to 2010 because it is too recent to be widely free (as in, US Government data). It's one of those things you watch, courtesy of a subscription to WWD or the WSJ. By the way, this article with data from NPD Group has most of what you're looking for.

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Open tabs 5/4/11

Following the previous entry of open tabs (tagged News From You) and the ADHD side effect of having too many windows open, here is today's edition.

I should mention the open tabs thing is worse now that I've upgraded to FireFox 4. Now you can group tabs according to different subjects in the background (I love it!). Mine are production scheduling, business, cotton and vanity sizing. I have 33 37 55 open...

Manufacturing: Yet another mega consulting firm has realized that outsourcing doesn't work. Here's a quote:

[...]Accenture found that 61 percent are considering moving some of their manufacturing back to their home market. Ferreira and Heilala describe this as being a "secret shift" and a "quiet trend."

Many manufacturing companies that shifted production offshore "likely did so without a complete understanding of the 'total costs,' and thus, the total cost of offshoring was considerably higher than initially thought," write the two analysts. "Part of the issue is that not all costs of offshoring roll up directly to manufacturing; rather, they impact many areas of the enterprise."

Not that I've ever said differently, (I know folks e-pat me on the head and wink behind my back over my irascible inflexibility) I still think the best move anyone can make is to start their own sewing factory because you'll be much better positioned by the time everyone else figures they need domestic cut and sew and finding any open production slots in the US will be an even harder scramble.

Speaking of, many domestic cut and sew operations are expanding. This operation in Olive Hill KY is hiring 200 sewing machine operators.

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Great and under rated wholesale shows (pt.3)

Continuing with the trip report (links to previous entries at close), to recap I went to two shows. One was OASIS and the other was a "room" show. The OASIS show you can discover for yourself; the room show is private, owned by an individual who runs it. There are some critical things about the private show I can't say publicly but you can read more about it in the forum. Even though some private shows are successful and great places to buy and show at (only reps can exhibit), they're very hard to discover often because the owner is technology adverse. I heard a lot of complaints about that.

But back to OASIS, there was one rep that was doing something very interesting. Interesting in that other sales reps thought it was a good model to the extent they wondered how they might put something like that together for themselves. It also could affect you in how you might decide to align yourself with another manufacturer who produces items that are complimentary to yours and so, create more opportunities for yourselves jointly than you'd have singly. I'll explain.

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Great and under rated wholesale shows (pt.2)

[Judging from today's title, I still don't have a good one.] This entry comes in continuation of Amazing (and underrated) wholesale tradeshow opportunities, the post I wrote on the OASIS trade show last week. To recap, I went to the OASIS show on Friday and Saturday. Sunday I attended another local tradeshow which has been held here for 25 years. While the OASIS show was gifts and of a southwestern flavor, the other show featured a mix of lesser known and major brands everyone would recognize.

I should backtrack a little. The real reason I went to the OASIS show was because I was hoping I'd get a line on this other trade show; it's a hotel show or as reps call it, a "room" show. I've long known this show existed but it's not listed in any of the fashion calenders and it doesn't have a website. In other words, you have to know the right person to find it and then it's a whole other hurdle to get in the door. So at OASIS, I did find someone who could tell me about it so I went. In the end it wasn't hard for me to get in but I don't think they'd ever had anyone from the press to show up for it. I do think it would be harder for a DE to get in; I don't know how the show management would take to the concept of walking a show before deciding to exhibit. That's the other thing. The smaller shows are often reps only so you couldn't exhibit if you wanted to although it would be the perfect place to find a sales rep to represent your line. Like I said before, nearly all of the market shows started with a couple of sales reps getting together and pooling resources. Many of these sales clubs are non-profit membership organizations with by-laws and such. There was one manufacturer exhibiting at the room show but this firm has been at it for so long (easily over 30 years) that I wouldn't be surprised if they'd joined the organization themselves, probably back when manufacturers still could have if they'd been of a mind to do it. But in those days, manufacturers called more of the shots so they didn't need to.

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Amazing (and underrated) wholesale tradeshow opportunities

oasis_gift_showThere's three levels of wholesale trade shows for clothing designers and manufacturers. First are the biggies, so large as to be international aka first tier (MAGIC, Outdoor Retailer, shows in NY and LA etc). Second tier are shows in so called secondary markets; there's constant debate which those are but definitely include shows in cities like Dallas, Atlanta and Chicago. The third tier or tertiary shows are regional market shows and are held in many cities with a convention center and a population base of half a million or more. This would include cities like Houston, Minneapolis, Kansas City, Phoenix and Albuquerque. The latter is what inspires this entry.

I know nothing about regional shows, I stick to the majors because I only need (or thought I only needed) the high points so I'd never been to a regional show until today. I feel like such a dope but these shows can be an incredible opportunity. What was I thinking? I should have made an effort to figure this out long before now. Okay, so maybe you knew all about regional show but I didn't. I'm jazzed, the OASIS show I attended today was great!

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