Analyzing business plans pt.2

Based on the comments from visitors to part one of this series, I realize I should have I recommended that you read Factoring invoices: financing a fashion line and Financing fashion: 10 mistakes designers make as well as part one of this series. You may also wish to read about a bare bones but modest and simple business plan in How to start a clothing line. Picking up where we left off in the sample business plan (the complete list of entries in the series is at close), the bulleted list of long term goals are:

Long-term goals:

  • Develop a leading market position
  • Begin foreign sales in markets such as England, and France
  • Sustain the commitment to the quality of the end product through quality fabric, workmanship, and design.
  • Increase sales beyond the $1 million mark by 2011

I don’t think it’s very productive to scrutinize these goals because it’s the long term goals that change the most and we all know it. How many of us even had a plan when we started? It seems that anybody I know who’s succeeded -success is a process, not a goal- has fallen into it. It’s rarely planned. Still, assuming we’d had business plans, would the long term goals we would have written yesteryear resemble anything like how things turned out? It’s doubtful. Accordingly, I’m analyzing the long term goals in matters of form and cognition, rather than questioning the viability of the ideas.

The line reading “develop a leading market position” doesn’t mean anything to me so I’ll pass. Selling in foreign markets is just dandy. Most US citizens tend to be leery of shipping off shore. It is far away and it’s scary. I think it’s great if people look to develop relationships abroad. After all, the best way to practice what you preach is through commerce. That renders the longest lasting social change. However, I don’t think I would have itemized England and France specifically but rather, would have referred to the EU . There’s not much difference in selling to France than there is to selling to most countries within the EU. Saying so makes us look less provincial.

The point on committing to product quality, I really don’t know what that means either, other than that in the long term, the commitment to quality will be sustained. One would hope this would be the case so I don’t know that you need to say so unless you were planning to actually increase product quality by some easily communicated standard. Say, a goal to go from producing mid range sportswear up to bridge or something like that. I’d include that but otherwise, I’d leave it out. Add another bullet point of marketing mumbo-jumbo if you need to fill some whitespace because I agree that a 3 point bullet list looks kind of wimpy. You have to put in something; everyone’s uncertain of the long term and resists writing it down lest we be tortured by posterity.

The last line though (increase sales beyond $1M) deserves an aside; not to say that a million in sales isn’t doable because it is. It’s worth discussing in another way, that the numbers in your plan must all agree. I realize this isn’t a spreadsheet but even soft numbers have to be in agreement. For example,

  • the short term goals list first year sales of $125K
  • the mid level goals list an annual growth rate of 25%
  • the long term goals list sales of $1M in five years.

If you project 25% annual sales growth, based on $125,000, the result will not equal anywhere near a million dollars in five years. Even though these are soft numbers, they have to add up. Otherwise, any projections or legitimate research you may have included with your plan will be considered equally suspect. The math in your soft copy matters; if your math is off, your plan doesn’t look well thought out or well constructed. And just because you didn’t notice it doesn’t mean that nobody else won’t notice it either. I see this in business plans all the time .

By the way, $1 million in sales is not unreasonable in the fifth year, depending on what you’re doing. It helps if you’re selling pricier goods. Pushing the upper limits, I wouldn’t consider projected sales of close to 3 million in five years unreasonable. I mean, it’d be ambitious. You could do it if you had it together, were growing responsibly (cutting to order) and staying private. By private, I mean growing according to growth rather than pushing it. Some people are tempted to find and take on investors and potential partners but the best advice I ever got was, don’t take on partners if you can avoid it. I feel like I’ve dodged a bullet with all the horror stories I’ve heard about partnerships. Over half of all partnerships -like marriages- don’t survive and you’ll have to get a divorce. Again like marriage, some divorces are amicable and some aren’t. By the way, divorcing partnerships are a big source of design theft. Maybe not design theft but the ownership of the intellectual property (designs and patterns) is often contested and it’s not uncommon for ex-partners to compete with each other (at least initially) drawing from the same well. Not pretty. I’m sure you all have plenty of partnership horror stories too.

Part three of the business plan analysis will cover Mission and Keys to Success. That will be a long entry so I thought I’d break it up here. Besides, I’m under the weather and not very productive lately. Have a great weekend. I’m going home.

Entries in this series:
Analyzing business plans pt.1
Analyzing business plans pt.2
Analyzing business plans pt.3
Analyzing business plans pt.4
Analyzing business plans pt.5
Analyzing business plans pt.6

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  1. Analyzing business plans pt.3

    Before I get into the content of part three, I want to make it clear that those of us who review a lot of plans, know that the primary reason that people send them to us, is that they hope…

  2. Analyzing business plans pt.4

    Catch up with parts one, two and three as needed; the next section of the plan that we come to is Industry Trends. Again, this is something you have to put in a traditional business plan but as I mentioned…

  3. Analyzing business plans pt.6

    Finally we come to the end of the series (see parts one, two, three, four and five as needed) analyzing the average business plan I get. Remember, this plan is typical. Today’s entry continues where we left off at the…

  4. julia says:

    I was wondering if anyone could tell me how to go about figuring what my projected sales for launching a new line would be. (I design handbags in case this would figure into the equation). In Kathleen’s book she states that this is one of the questions that a contractor should ask me, I am getting ready to meet with my contractor in a few days and I really have no clue how I will answer this question, which quite frankly worries me a bit- am I putting the chart before the horse?

  5. Ursula Jassi says:

    I too would like to get into the apparel business. I have a clothing line concept, my questions are:
    1. How do I find a reputable company to create design and samples;
    2. How do I find a reputable contractor; are their any contractors that can also create and design the samples;
    3. Is it better to use domestic contractors and/or manufacturers (those in the U.S.);
    4. How do I protect my creations from being stolen and used by others such as those who create the sample, and/or contractors; and
    5. Additional advice surrounding this is most welcomed and appreciated.

    Thank you.

  6. Leticia Precious Slaughter says:

    I am new to this forum. I found this site looking for sewing contractors. I am a fashion designer of a children’s clothing line. I needed someone to do the logo for my clothing line. The logo is really a message within itself. I have been working on this line for 10 years now. I’m sewing clothing on the side to earn the money to get a Toyota embroidery machine. This would enable me to do my own logos & embroidery. I have had such a time with trying to fund my own clothing line. Interns from the art colleges are a help and take the heavy load off if you can find them in time. Most inquire at the colleges so it’s good to let the art colleges know what you’re doing.

    Through faith, I’ve had the strength not to give up and pull the plug on my dreams. I have size labels, name labels, washing instructions, domestic machines, material, industrial machines, notions, appliques, drawings, displays, clothing racks, a vision statement, a business plan etc. We were affected by the storm that hit in 2005. I gave away a lot of things in order to lighten the load. I held on to some filing cabinets, material, desk, clothing racks, sewing machines etc. My clothing line is my baby.

    Like most of your inquiries, I have this fantastic idea and just don’t know what to do to really get it up & operating where I would like it to be. I believe I really have something here. So much was invested in starting this clothing line.

    Researching on the web for clothing contractors was a tedious task in itself. The phone & internet connection was time consuming but search engines have improved since 2 years ago. So, I can really find sites that target the questions I need answered. I’ve taken so many notes from your site. It’s full of great information that I can use.

    A company digitized my logo (that I drew myself) on some shirts & sweaters in an attempt to get business. This was marvelous and exciting. I’ve waited so long to see the logo done professionally. A Christian business directory suggested them to me.

    The embroidery company owner came & picked up the logo and label designs at my location. I had them prepared in color and ready to go. He was impressed with the artwork. I have my logos on college sweater & jackets now. It’s a great feeling when you’ve prepared for something that you believe in and have so much passion for.

    Trade marks are so expensive. Embroidery is expensive as well. I need a sewing contractor as well as an expert seamstress & pattern maker. I’ve been told you can find them quicker at the craft stores, being most of them are stay at home moms or grandmas etc. Can you help?

  7. amra g. says:

    I am starting a fashion collection; however I now need to do a business plan to acquire the monies for launch this endeavor. I don’t know all of the information that is needed to do this, especially the financial projection part of the plan; if there is anyone who can help me with this I would be grateful.

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