Check out our video teaching series to help you grow your fashion brand for people, planet, and profit. Today we discuss the 5 forms of funding you can seek to get your business launched now.
1 | Self-Funding
Pretty self explanatory, this means you fund your business yourself. People that are able to go this route either have a great deal of wealth to sustain themselves and start their business, or have saved up for a period of time and are ready to pull the trigger. This is a great option however not open to everyone and there are a lot of other great options.
2 | Investors
The traditional route of investors can come in two different forms. Angel investors are typically people you may know personally who believes in what you are doing and would like to personally invest in your company. Of course there are also professional angel investors these days but unless you live in Silicon Valley you may not have any connections to them. Another form of investor which is more traditional is a venture capital firm. As a business, VC's will typically be more aggressive about you getting them their return on investment (ROI).
The biggest thing to remember here is investors are not free money. It actually takes a lot of work to create a pitch deck that works, i.e. convinces them this investment will make them money. So how will you build sales? How will you enter the market? After you have that, you have to set up multiple meetings with many investors until you find the right ones. Some won't want to invest in you, and there may be some you do NOT want investing. As an investor they'll have some say in your company so you should make these decisions carefully.
3 | Factors
Factors are like a bank for fashion brands. They will give you a loan which you pay back with interest. Where factors offer more value than a bank is that they also work on your behalf as a collections agency to make sure you are getting paid by your wholesale accounts. You'd be surprised how big retailers can be who still don't pay their brands for months and months.
4 | Banks
Traditional debt either in the form of a traditional loan or credit card debt is an option, although please please proceed with caution here. I would never recommend taking on any debt you aren't sure you can pay back and with a concept that has no sales and is unproven it is better to test the market before you resort to accumulating debt on your name.
5 | Crowdfunding
That is why crowdfunding is by far my favorite form of raising money for your business. Crowdfunding allows you to create designs/samples, show people what you're making, and sell it before you place the production order. So you're putting sales before the production and ensuring you'll have the funding you need to meet factory minimums.
But crowdfunding actually does more than just raise capital! Crowdfunding builds your brand awareness because you are hustling during this time with extra marketing, press, and buzz to ensure a successful campaign. Next, it proves your demand in the market because you are literally building sales in the process. This product-market fit is what an investor is going to want to see proven anyways. Lastly, it allows you to raise money without giving away equity or going into debt.
There are a couple crowdfunding platforms you can choose from but for a fashion business I think you really have 2 options, Kickstarter or iFundWomen.
If you have questions about crowdfunding, set up a free 15 minute call with me to chat about how crowdfunding could work for you. What if this is the year you finally quit your job and work for yourself full time? Aren't you ready for that?
Maybe you just want to join a community of fellow brand owners who are hustling to build a business for people, planet, and profit. Join our Deadstock District community today to get connected, find sustainable resources, and learn how to build your business. The first month's free, and you can cancel at any time, so there's really no reason to wait!