Why contractors won’t partner with you

I’ve been emailing back and forth with my friend “Susana” (a sewing contractor) about some clients who have been giving her grief. The story is long and involved but other than what I will be printing in this entry, they were pulling some passive agressive moves and trying to bully her into giving them her sources when they hadn’t even paid her -talk about poisoning the well. By the way, here is one (unrelated) example of why your contractor may not want to tell you their sources:

No, I’m not sharing my suppliers with my clients. I have worked too hard to nurture the relationships I’ve got. I did share once, 5 years ago, with a particularly intimidating lawyer whose wife had an idea she wanted to produce. I shared a fabric supplier with him, and he hounded the daylights out of them (“send me a sample of everything you’ve got”). Finally the supplier called me up and said “from now on – we deal only with you – don’t send these people to us – they work through you”. Fair enough.

Why do some guys do this? It really bugs me when people get heavy handed (remind me to tell you about the guy who is trying to blackmail me). Anyway, the deal was that my friend was going to help them out with their project. I thought she was getting in a little too deep with these guys so I asked if they’d paid her thus far, and she said no. So I told her she should invoice them for what she’s done so far (design work and line planning) even though she wasn’t at the stage of producing any demonstrables yet. Which brought things to a head because she asked them point-blank what they’d budgeted for start up costs -and then you find out they didn’t intend to pay her anything! -Oh bother, my friend tells it better:

Hi Kathleen. I’m sure you are curious about the whole project I told you about earlier, with the two guys Charles and Pedro [not their real names] of LCM that were gung-ho on producing a very high-end line. Here are some of the emails.

{I wrote this one after a phone call – they wanted to know the prices up front. Reasonable enough request, so that’s what I wrote down in this email.}

Hi Charles and Pedro,

It was very enlightening speaking with Pedro yesterday and today, in order to understand your vision and to allow us to move forward.

Fashion by its very nature, is short-lived. The styles and colors are going to change from season to season. But these are a little different, because women will buy them by color, styling and fit and she might wear it for 3 years, if she is really pleased with it. That’s why I suggest one season per year, containing lights and darks, and to keep a particular style number going as long as we can, perhaps even longer than a season if it is hot seller. If it is selling, let it run. If it does not, pull it out.

Starting with 24 garments in 6 collections [per year] is very ambitious. Not to mention, expensive. The industry is completely different than the rest of the garment industry as I mentioned before. There is a reason why no one gets into it. It is expensive and not everyone knows production, let alone pattern making, because of the complexity of the garment and the specialized knowledge. I happen to do all 3 (design, pattern making and grading) plus I do all the sourcing and management of your project from start to finish.

My question is this: how much have you budgeted for the actual collections for this first release? Not advertising, or marketing, but actual cost of goods? For example, you’ve now jumped from 3 collections to 6 for the launch, that will certainly double your initial outlay. No question about that. Do you realize the numbers that amounts to? The current goal is 6 collections, 24 garments in all with 9 sizes for the one garment type, 3 sizes of the long ones, 3 sizes of the shorter ones and 3 sizes in the remaining garment type. You’ve asked me to do one garment in each size, so that will be 18 garments x 6 collections. That is 108 garments. You also want 3 colorways per collection, that becomes 324. And so far you have ONE each of everything.

You have indicated that you would be likely to do 3 of everything for a beta store plus one copy of each for salesmen’s samples (so 4 of each seems reasonable). That makes 1296 garments in time for the show next August and to supply one beta store. If you assume that each garment on average is running $30, that totals $38,880. If you do 2 beta stores in two locations, double that figure to over $75,000. That’s for 2 stores and samples to show. $75,000 for the cost of goods plus $21,000 in pattern development, prototype making and sample making fees. So just under $100,000. However, if you assume that on average each garment will wholesale for $100 (which is what you’ve indicated), then the total revenue realized from 2500 garments and 2 stores is $250,000. If you sell to 10 stores, or 100 (which you claim to have in line), the patterns and related development fees don’t cost any more. But the profit margins suddenly increases exponentially.
Susana Sewing Contractor

Charles and Pedro respond:

Dear Susana

Thanks for your last few inputs. I have finally been able to put some numbers down and find out whether we can get into business or not. By this, I mean if the cost is to great and the risk is unmitigated, we would be irresponsible to get started. Usually, when people start businesses they have either experience in the business or a trump card which can turn into positive cash flow for the business. At this point we have only one thing going for us and that is that you can put a product together that will fit. What we do not have is a designer that everyone (at least in the industry) knows and a distribution network to get the stuff into the hands of the consumer. The first problem is significant in that if a known name puts a design out, chances are that the industry will buy on reputation even if the stuff looks like shit (and I have seen a lot of shit put out by the couture guys that sells; a bit like the emperor’s new clothes). The second problem is more manageable because we can develop this network given enough time and the only way we can buy enough time is to have sufficient cash flow to sustain the business. Therefore, we need to hit the ground running.

To answer your question directly, I have budgeted $0 for our startup costs. It is my goal to get into business the cheapest way possible in the hopes of being able to buy enough time to get the business on an even keel. It is also my goal to develop the assets required to sustain this business beyond the initial cut of fabric. By assets, I mean people who are willing to take a risk with us now in hope that there will be a sustainable payday for the foreseeable future for all parties. To this end, all who get involved at this ground level will be considered founding members of the business and will be compensated accordingly. I am not into gamesmanship or messing around with people who are willing to risk with me. Therefore, if you a genuinely interested in being a founding member of our venture, let me know what you want in terms of comfort so that you are assured of your position going forward.

What we require at this present stage is enough ammunition to walk into a boutique and sell the owner on our merchandise. Without the couture name recognition and hype, we are definitely behind the eight ball. This is especially true when it comes to top end pricing as the owner will be asked to make a significant investment with no guarantee that it will check in his or her store. We may even have to put this stuff in on consignment in order to get over this hump. If we have to do consignment work, it will seriously stunt our ability to grow our distribution network in a responsible manner. Therefore, we need to stitch up enough different collection samples so that we walk in looking like a substantial player.

Ideally, what I would like to do is pay you a premium for your samples and then go out and sell the line. Ken’s store presents a beta site opportunity for both designs and price points. If the stuff doesn’t sell, the rest is academic. Either we need to lower our expectations on price and place them in a different bracket or get a new designer because her stuff doesn’t cut it or both. For the stuff placed into the beta store, I would like to have the same arrangement as the samples; i.e., a premium per piece. As far as paying for the sketches your designer designed for us, she will need to wait and find out if her designs are worth anything and then I will gladly give her the money she requests.

I hope that I have sufficiently laid my card on the table for you. If anything needs further clarification, let me know. What I need to know is how much each piece will cost and payment terms. I look forward to hearing from you.

Charles and Pedro

Susana writes:

Dear Charles and Pedro
We don’t wish to go ahead any further with LCM.
Please return our original design boards within the next few days.
I wish you success in your future endeavors
Susana Sewing Contractor

Charles and Pedro respond:

Susana
I just got your email. I’m taken aback by your response. You sound insulted. I wanted merely to give you my perspective on the project as it affects me as an investor into a startup venture. It is strictly business with me and I feel you are taking it personally. Obviously start-ups are not your bag and I appreciate that. When we met in June, your main focus was helping us get going and you said you were willing to do what it takes to get the line off the ground and that money was a secondary issue. You also alluded to the partnership issue and we were prepared to address that by giving you a piece of the action. It is apparent that you had no intentions of this scenario. In the future, I suggest you get down to business and avoid giving different signals. It is an incredible waste of time to do any differently.
Charles and Pedro

Below is an email Charles and Pedro then sent to Susana’s designer

Dear Dorothy Designer

You may have heard by now that Susana does not wish to move forward with us. I am not quite sure where the problem lies (I think we have a language barrier). Nevertheless, we see potential in your designs and are willing to purchase these designs from you as well as hopefully cultivating a relationship for further releases. It is my understanding that Susana was going to pay you $1000.00 per collection. I have no problem with paying this amount for the designs. In addition, if you are willing to source the fabric for the designs, I would be willing to pay for your time and expenses to perform that task.

We will be in the process of making other arrangements for patterns, grading and producing a sample line. If you have any thoughts on an appropriate source, I would appreciate your input.

Look forward to hearing from you.
Charles and Pedro

Susana writes (to me)

Dorothy forwarded the above email to me. They ended up calling her directly and she told them she wanted the money for her designs. They tried to get info out of her re: sources, pattern makers etc. She told them that she could share info once they paid. They actually told her the check was on the way, but they were “in a time crunch” and needed the info NOW. She told them that when the check arrived, she would phone them with the info they requested.

Of course, no check has arrived. Neither have the original design boards.

In one email, they said her designs weren’t worth anything, and in the email to her, they think they “have potential”.

Although Dorothy doesn’t blame me, I should have got the money for her design work ahead of sending them out. So that part is my fault. I let myself believe they were really serious. But I knew it wasn’t going anywhere when they said they budgeted $0 for startup costs. That was the last straw. So I quit.

Dorothy is going to use the same designs and fabrics in a design competition that [big name design organization] is hosting. I hope Charles and Pedro see “their” designs in the pages of Elle.

My advice to all designers/pattern makers. Do NOT send out anything without the money in your hand. Do not let your designs/patterns out of your sight without the money up front.

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19 comments

  1. J C Sprowls says:

    Boy… he’s all over the place!

    In one breath he says: “if the risk is unmitigated” [he won’t invest in his own company]. And, in the next, he says he’s looking for someone else’s sweat equity upon which to build his business. I don’t see any mention of X shares in his company in exchange for her services – so, she’s certainly not a partner, like he insinuates.

    Unfortunately, there is no way to foresee this lark. And, I don’t blame Susanna Patternmaker. She’s clearly a professional; and, took her role seriously.

    She called a halt as soon as she smelled a fish, which is all she can do. Fortunately, she has a strong enough relationship with her network that she can recover. Luckily, her loss didn’t involve inventory and other collateral damage (i.e. vendors, suppliers, etc) beyond the one designer. She is now in a position to review her business rules and put procedures in place to weed out this type of jamoke in the future.

    The email thread looks as if she has performed sufficient due diligence on her end. I would ask her to cut an invoice and send it to the client via registered mail. The client can, of course, refuse to pay. She might have sufficient evidence that she can take it up w/ the local magistrate to pursue a judgment or a lien against the company. If her invoice is booked before they become an LLC or C Corp, then she might be able to attach a lien against their personal property.

  2. Mike C says:

    Real-world business glossary:

    Whenever someone suggests a “partnership” in business, what they really mean is “we’d like you to take all the risk.”

  3. Thomas Cuningham says:

    oh, that was good for a laugh.

    Those guys are morons but having said that, I also think that Susana would have been a lot smarter to lay out some rough costs during the first meeting with the chumps, I mean ‘clients’

  4. Ann K. Hand Dyed says:

    This is outrageous and there’s only one word to describe this guy—CHUTZPAH! Or perhaps there’re two words—con artist. Good for Susana for making the smart move without hesitation.

  5. Kathleen says:

    What I thought was really stupid about them is that they were willing to pay Dorothy (or rather they said they were willing) for the sourcing and design services and were on the look out for new pattern services -for which they’d also presumably pay- but they weren’t willing to pay Susana who’d already done the work.

    I can’t tell you how many pedros and charlies I run into. For the life of me, I don’t know what advantage they think they’re bringing to the table. I don’t need their ideas, they don’t have any skills, they don’t have any connections and they didn’t want to pay money. Who wants or needs them? What for? I cannot imagine what advantage they imagine they have.

  6. Susan Cassini says:

    Wow! And I thought I had some horror stories. Those guys are just jerks among many. As a custom dressmaker I have learned to ask for a “consultation fee” ahead of time as I was sick of people wasting my time picking my brain. I then credit it to the final invoice once the work is done. For regular clients I know I can count on I skip the fee.
    How’s this scenario? A store orders a dress in a sample size and then after I deliver it they want me to do the alterations for free! I have one store owner that I have let get away with this for too long and I finally said something. What manufacturer does that?!?

  7. Eric H says:

    Someone in the apparel industry should be able to make a fortune on these guys. After all, with cajones like those, they must have to get their pants custom made.

  8. Miracle says:

    You know, I would have gotten the boards back before telling them I quit. That’s just how I am, sometimes you have to play games with them like they play with you.

    BUT…

    When they said they wanted 6 collections a year, wasn’t that the tip off that they didn’t know what they were doing?

    I suppose I’m trying to figure out at what point should it be clear that you’re dealing with people who have no idea what they are getting into?

    It’s one thing to be clueless, another to be clueless and broke.

  9. J C Sprowls says:

    Eric,

    It’s not the trousers that need let out… rather, their hats.

    Miracle,

    My intution tells me these jamokes aren’t broke. They probably can’t afford to pay for anything beyond their 6-figure salary(ies). It’s been my experience that schmucks who don’t pay bills are typically eating themselves alive.

    Re: symptoms of sour deals…

    I suggest that any order that is ‘too big’ is suspect. I recommend enforcing limits and trial periods until relationships are proven. Even then, only risk what one can afford to lose.

    My favorite client first came to me with a raw sketch of a suit she wanted made. I walked her through the process and refined the design so it was appropriate for her shape, style, coloring, &c.

    Her 2nd order consisted of 13 garments. As big as my eyes were, I asked her to pick 2 or 3, then we would reconvene afterward to discuss the rest. As big as my eyes were, I could only afford to lose 3 weeks of labor.

    It turns out she gives herself a clothing allowance each April – which is substantial; but, she and I only work on 3 garments at a time. Maybe the day will come that she’ll find a different tailor. But, she likes doing business with me, now – which I all I can ask for.

  10. Thomas Cuningham says:

    I agree with JC’s assesment — these guys probably DO have money. I think you give them too much credit by calling them ‘morons’ and the like — people like this aren’t stupid. They are smart and manipulative and they will keep doing what they do until they find someone who will give them what they want.

  11. Kathleen says:

    Thomas/JC are right; these guys aren’t morons (per se) altho they take others for morons. Thomas is right; they are manipulative and imo, passive aggressive jerks playing the good cop/bad cop thing with my friend (which I think distracted her from the issue at hand). They have plenty of money but just because somebody has money doesn’t mean they’ll give it to you -even if/when you’ve earned it. They’re definitely earning in the high six figures if not low seven.

  12. Man, this could have been a conversation I had 5 years ago with a software entrepreneur. These types are everywhere. “We have a great idea, and we’re going to get rich off it, but we want YOU to do the work for nothing!” Hah! I worked with these types when I was in supply chain and they are not worth the phone calls or emails. Unfortunately, it takes time and sometimes hard experience to recognize these guys. Thanks for this post, I think you have saved a lot of people a lot of headaches!

  13. Carrie says:

    I think the pattern maker was very professional. I admire the way she handled the situation.

    Getting into the industry I met with many suppliers and contractors who were wary of exactly this kind of “company” (LCM). It made my life difficult that’s for sure. I had to do a lot of work to convnice suppliers that I was serious and worth their time. But now that I have my own business I understand their trepidation when it comes to new people. I’ve encountered a few charles and pedros of my own. I think they recognize that they don’t know what they’re doing and try to seek out people who do. I think it’s a case of wanting to be in the industry but not wanting to put in the time going to school and working for someone else first. And they don’t want to pay someone else for their experience.

    To me this is a phenomenon that plagues all creative industries. It stems from the fact that the creative arts is not taken seriously as a profession. For example, many people feel that they can be a fashion designer or a painter and start their own business with absolutely no training or experience. But you don’t see many people trying to be a lawyer or doctor without training.

    Likewise, creative professionals are often offered less than the going rate (which is already lower than in many other professions). Or they are asked to do work up front or “pro bono” as was the case with pedro and charles. I’ve never heard of someone walking into a lawyer’s office asking for legal advice and expecting to walk away without paying. A lawyer goes to school for many years to acquire specialized knowledge in her field. We pay an hourly rate for her time so that we don’t have to go to law school ourselves to solve our legal issue.

    It disappoints me that people do not give the same credit to creative professionals.

    Pattern makers, designers and all of the other talented people in the fashion industry have, in most cases, gone to school for a number of years or learned from someone else on the job.

    It’s disappointing and frustrating to hear about people like perdro and charles preying on those professionals. With people like them out there we can’t assume that anything is a paid job. I guess we all need to keep our eyes open and spot them so we can maximize paid time and minimize wasted time.

  14. Tom says:

    Wow. I just got into the apparel manufacturing side as an owner, and these customers sound like a few I’ve encountered. At first I thought it might have been my inexperience, until I realized I was been taken–what’s especially galling is the manipulativeness and the feigned “personal affronts” that’s displayed. Yeah, right *eye roll*

  15. Kathleen says:

    …it’s a small world after all, it’s a small world after all, it’s a small world after all, it’s a small, small world…

    Pedro and Chuck have resurfaced. They called a friend of mine and talked a good story to the extent that my friend called me to discuss the deal, maybe there would be a piece for me too. I told her all about their past dealings. Now my friend is going to call her friends and I don’t think P&C will be able to hire talent on the North American continent until they pay up. Susana, what’s their outstanding invoice? Susana did send word a week or so ago that they finally returned those design sketches. Months after the fact. Who knows how long they shopped those around?

    This business is really small. If you’re on the outside looking in, it looks big but like I keep saying, people are connected in the most unlikely ways. Word gets out eventually.

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