Financing fashion: 10 mistakes designers make

I had a rare pleasure yesterday, that of interviewing Gary Wassner, president of Hilldun Factors for this post. Frankly, I expected Mr Wassner to be nothing other than a stodgy, narrowly focused financial manager type. He was none of those things. Rather, while he has 25 years in financing fashion, Gary is a philosopher and a multi-book author. He graduated Phi Beta Kappa with a master’s degree in philosophy. His works of fiction are highly and favorably reviewed -but I digress. This is an interview ostensibly covering the top 10 things fashion designers do wrong when seeking financing. I explain his background so you’ll see his introspection provides an insight to fashion talent beyond the numbers on a balance sheet. Financing start ups -too young and small with little or no credit history- can be fuzzy but Gary has a gift for picking talent worth funding. Towards that end, here are Gary’s insights on what designers do wrong.

In no particular order or priority:

1. Don’t believe your own press
While making the pages of Women’s Wear Daily or Vogue is a feather in anyone’s cap, it’s not a million dollar deal. You’re not a star. There is no instant stardom. Making it in the fashion business is not an overnight accomplishment; the product is what it’s all about. It’s not you, it’s your product.

2. Spend now, worry about it later
Designers get caught up in the whirl of PR and putting on fashion shows and waste a lot of money thinking they can pay the bills later. Gary says there is no later. Factors will be focused on your spending priorities. Invest in your product, not your PR.

3. Wanting to be in certain stores
Designers will underprice their goods in order to have certain prestigious stores buy their lines. Designers reason they can raise their prices later but Gary says it never works. Those stores bought you to fit into a certain price point. Slip out of it and they won’t be buying your next line. It may work in one season but not for the life of your company. Factors -in spite of funding you by season- are in it for the long haul. Gary says it’s a mistake to think that increased volume will cover the shortfall of underpricing. It only works for off-shore mega producers but by then, you’re not a fashion forward line anymore are you? Most fashion forward lines are domestic producers.

4. Shipping on time
In some ways, the fashion business can be very unforgiving. You can’t ship one season late; that will be your downfall. Credibility is everything.

5. Production
You can’t job this out, not if your name is on it. You have to watch all aspects; the fit and finish must be perfect. Your products must match your samples! The returns will not be kind, fashion is brutal.

6. Credit worthy stores
Designers make the mistake of assuming a prestigious beautiful store is a good credit risk, bypassing mainstay stores. Gary says the store is beautiful because they spent a lot of money on it, leaving them less money to pay you! Don’t assume a beautiful store will be a credit worthy customer. You have to take a hard line; honorable long term businesses aren’t built on weak credit.

7. Don’t speculate
Do not -do not- over produce. Do not cut extra goods with the potential of reorders in mind. As it is, you’ll get some goods returned (those beautiful stores going out of business) so you’ll end up with more inventory on hand than you’d expected. Pushed for a figure, Gary says you should never cut over 3%-5% of total orders.

8. Never sell on consignment
Consignment amounts to lending; why would you lend your customers money? Besides, you never know what you’ll get back. You won’t be able to use it or resell it to anyone because it’ll be -in a word- shopworn. If a retailer wants the goods on consignment, they’re not committed to you. You’re much better off selling on straight terms, on a straight PO -even with an 80% sell through guarantee than consignment.

9. Hands on all aspects
Don’t rely on consultants. Gary says many designers will often job out production oversight to consultants and production managers but you can’t rely on them or abdicate your responsibility. Somebody must watch the watchers and that’s you. A consultant is not vested in your company like you are; they can get another job if your line flops. Another thing, ditch the marketing plan; you don’t need it. Keep it simple, this is a cash business. The sooner you see that fashion is a one season, cash flow business, the better off you’ll be. In short, focus on the long term by minding details at arm’s length, keeping unnecessary extraneous expenses low.

10. Don’t allow one store to dominate your sales
Above all, avoid concentration. It doesn’t matter if it’s Sak’s or Barney’s, one account should not dominate your customer portfolio. If one account dominates, you can be hit hard if they drop your line. Diversify. One customer should not account for more than 25% of your sales.

I hope you’ll take Gary’s advice seriously; it’s amazing how much we agree on things coming from different ends of the business that we do. He is a very unusual and admirable person who also agrees that this is a great business to be in. Maybe he’ll write for us at some point; I did extend the invitation.

In a later post I’ll describe the characteristics of a fashion line likely to be funded. It goes without saying that a fashion line with any of the above problems is less likely to be financed. Be sure to read yesterday’s post too; Factoring invoices: Financing a fashion line

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  1. Karen C. says:

    Great advice. Thank you, Gary, and Kathleen. I will especially heed the advice about underpricing and consignment (both of which have been entering my thought processes lately).

  2. Excellent pair of articles! I think number 9 is invaluable advice; keeping your fingers in your own pot ensures that you can maintain the standards that you’re aiming for, and ensures that you are aware of what is happening around you. However, remember there is an enormous difference between being aware and micromanaging! Delegate to the people that you know will do the best job, and everyone will be stronger for it.

  3. Thomas Cunningham says:

    I’ve know Gary for seven years — since I was a cub reporter at Women’s Wear when he kindly bought me lunch and explained the factoring business to me.

    I can’t say enough good things about Hildun, especially when it comes to working with smaller designers. Tim Moore, who handles much of Hildun’s new business development is a fixture at Gen-Art events and other small shows — and a great guy to boot.

    I don’t work with Hildun now because I am factored through my factory, but if I were to get a factor for my own account, it would be these guys.

  4. big Irv says:

    I have heard of this company before. I have worked with factors for many years and find them to be suspicious, judgmental, and very wary of new business. Refreshing to see that some new ventures are given hope that at least one factor sees them as credit worthy and worth pursueing.
    Mr.Wassner’s advice was very accurate. Good viewpoint from a financing angle. I would hope that Gary can continue to contribute here as this is one area in which I feel DE’s can either “make it or break it”

  5. Jessika says:

    Thanks for posting this! Being in the start-up phase myself, this is the kind of information I need to keep in mind as I venture forward. I’ve only just recently discovered the blog and it is FULL of useful information!

  6. Diza says:


    I read the comments about not sell to consignments but what if you are on a budget where you cannot afford to have your own shop or if you plan on having a website, you have no knowledge of html or just dont have the time for? Then what?

  7. Diza says:

    Yes, I was offered wholesale too, but I felt that the person who offered me wholesale, his website had some products I wouldn’t buy, so thats why I didn’t do a deal with him. So let me guess, wholesale is better than consignment because with wholesale, you are buying a bundle of items from a designer and consignments is when you get a certain percentage. But please tell me what is wholesale if I am mistaken.


  8. Diza,

    You are exhibiting a serious lack of understanding of the fashion industry. A good place to start would be to buy Kathleen’s book. It’s amazing. Definitely worth several times it’s $60 price tag. Look for the link at the top of this page, on the right:
    The entrepreneur’s guide to sewn product manufacturing.

  9. another wish says:

    GREAT article. I love posts like this. I feel like they help me SO much!

    Question: What if you overcut to allow for spoilage?! is that still a no-no? i have to overcut at least 2% for a spoilage allowance that another vendor requires of my goods.

  10. imani says:

    How does a new designer approach a factor? Do you approach the same way you do a banker-with a business plan? Or is there another way?


  11. Gladys Goldsmith says:

    All your comments are great. However, unless your label is one that the stores must have you are really at their mercy. When they ask for you to help them out with markdown money your hands are tied. When you are one of the giants you can call the shouts and just walk away.

  12. Gary Wassner says:

    Not really. They ask everyone and they only get it from some. Enough designers feel pressured and succumb. In a way it’s blackmail and you should not allow anyone to blackmail you when you are trying to build a business. I hear it all the time and I give the same advice every time. Say no! Every label starts small and has to build a following. Besides, selling the majors as loss leaders is never a healthy policy. Tell them no and walk away. If the product isn’t selling, they’re not coming back for more anyway. Sometimes you need to help them buy, guide them, maybe encourage them to buy just a little less, styles you’re more sure of. If you’re not dependent upon them in a serious way then you can move on.

    For a high end designer, the specialty stores around the country are crucial. They can be loyal, they don’t discount you unfairly and they have consistent customers who look to them for the labels they promote, for the consistency in the products that they carry. Build your base around them.

  13. shin says:

    Thanks for the insightful advice. I will definitely take the advice to heart. I do have a question about domestic production? I understand that designers have a much better control over domestic productions, however I have run into quite a few problems including bad and/or inconsistent quality and high production prices. One solution I was given by a friend in the industry, was to bring the production overseas. Their reasons being that manufacturers overseas (ie. China) have the latest machinery and is able to pretty much do everything inhouse making the entire process much easier, significantly cheaper and provide consistency in the production line. I have a few concerns including quality, and higher produciotn numbers. Since I am new to this, I am definitely hesistant about the entire process. Any suggestions?

  14. gary wassner says:

    Overseas production can be an important thing to consider at a certain point in your business. You have to be able to meet the production minimums. It doesn’t pay to produce small numbers overseas, particularly China, and in fact, most production companies have high minimums – 100 pieces per style/color at the least. You lose a bit of control as well and usually you need to open a letter of credit before they will ship. Prepaying can be dangerous. An L/C give you much more protection against late delieveries and quality issues if you require an inspection certificate, and if the manufacturer will accept that requirement.

    If your production runs are still small, you just need to find the right factories here. Much too depends upon the price point. It’s hard to compete in the moderate and lower markets with domestic production, but it’s not difficult if your product is in the designer price point.

  15. 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…

  16. julia says:

    Gary, there is a lot of talk about the pitfalls of selling to department stores if you are a newbie, (net 30 days and chargebacks), but I was thinking… if you hire a factoring company would’nt you be covered for the chargebacks? Just curious. Also is it hard for a newbie to hire a factoring co.?

  17. Tom says:

    Aaron, there’s AMEDIMAC, the Fashion Designers Association of Mexico, Guillermo León is the president and he’s got all the info that you’re looking for regarding financial aid. I don’t think they will help you personally but they can surely get you in contact with companies willing to pay a tuition overseas (patrocinadores)… you have to compete with other students though, and prove that you’re their best bet since.. as you probably already know.. there’s no money to spill in Mexico.. unless you have a few relatives up above. if you know what I mean.

  18. Wonderful ! Thanks so much for all this advice. I am a milliner who bumped into the business by mistake and I have designed my clothing and accessories line, now looking for funding. I’m glad I came across this blog today. Learned a lot !

    Dear Gary, Do you finance designers who are not based in the US? I would like to discuss more on this if that’s ok. How do I get in touch?

  19. Frances Renee' says:

    It is awesome to get information from the headliners in th industry. I must add, though, that for small boutiques, stores, personal services; people buy into YOU as wellas the product. For the few years I have been in the fashion industry and developing and selling products, I have learned that when a person or a company have an awesome product, but they are cold, uninviting, over pushy, just about the money and not the experience, it causes people not to even want their product or service regardless of how good it is. So YES people buy into YOU as well as the product. Now of course on a department store level and huge mega stores, customers are more surrounded by products that they are dealing with product more than people, so it can be a little more about the product then….

  20. Serina says:

    The point on never ‘sell on consignment’ is a difficult question to say if it is wrong or right. It really depends how long you’ve been existing and how much marketing you are sticking in for your products to take off. After the financial crisis and even more so now, many boutiques are reluctant to take on new products or designers. As a business person, one just has to see the situation; meaning using a mixture of your instinct and facts on which sales strategies you will implement in your sales plans. Consignment is sometimes not a bad idea. Naturally one just has to have a gut feeling about the shop you are doing it with. I’ve noticed, it can go very well and it’s a great way to introduce your products on the market. Depending on the agreement, it can definitely be a win-win situation! And sometimes, it is like a trial period and then the boutique will place there order.

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