How to fund your Fashion Business?
This is a very common question, I receive almost every day from fashion entrepreneurs like you, that they want to start a fashion business or they want to grow their existing ones BUT they don’t have the capital to do it.
A few weeks ago I wrote about How To Start a Fashion Business with NO MONEY, but this blog post is more about how to find the best ways to fund your Fashion Business.
So let’s dive into this 6 WAYS TO FUND YOUR FASHION BUSINESS.
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If you have money on your side, this is the easiest way about how to fund your Fashion Business.
This is when you use your own money, usually savings, to finance your start-up or your existing Fashion Business. To make sure your finances are handled correctly and go towards the right things to keep your business afloat, the services of an accountant should be highly prioritized. Small businesses may find that using business accounting software is also highly beneficial to keeping operations moving along without any financial hiccups, especially if it’s exclusively your own money on the line. In regards to self financing, you must be very careful with this option, because you are using your personal money, and in my experience it can be very stressful.I just want to remind you my personal story, when I started in 2006 my Fashion Company, Maiden-Art ,I used my personal savings and all the money I was earning from my teaching daily job in Italian Fashion Academies.AND things went wrong..so I became in DEBT of USD 50K dollars.
I almost lost all my personal savings.
You can read my story here.
FAMILY AND FRIENDS
You can ask to your family and to your friends to support you.
Unless, you are very comfortable with this option, please consider all the pros and cons, because your relationship with them can be risky.
GOVERNMENT GRANTS AND FUNDS
Funding supplied through state channels usually has no or lower interest compared to loans supplied by banks.This is one of my favorite option, and when I started my Fashion Business, I got a full support from Italian Government Grants.
However, competition is very high, so make sure if you want to apply for your Government Grants to do it very early and to present a very clear fashion business plan.
If you don’t know how to write a killer business plan, you can check my Easy Fashion Business plan in 1 Hour guide.
An angel investor is an affluent individual who provides capital for a business start-up or for an existing business, usually in exchange for convertible debt or ownership equity.Today many angel investors invest online through crowdfunding or angels networks.You can find angel investors online or you can look for them in your local area.
When you ask for a bank loan, the bank will lend money to you and charge interest on the loan so that when you pay the loan back, you will also be paying the interest rate back too. Your loan application is more likely to be accepted by the bank if you have a good reputation and a high credit score. If you already know that you have a poor credit score, or perhaps a nonexistent one if you have never had a credit card or direct debit, then you’ll need to find ways of building credit to show that you’re a trustworthy borrower. You’ll also need to prove that your business idea and your finances are stable. There is a variety of documentation to show to the bank, when you ask for a loan:
* a business plan
* your financial statements
* your credit status
Once the bank analyze your documentation, will decide if you are a good candidate to apply for a loan. You can definitely ask for a bank loan, but make sure you know very well the risks and the interests you must pay back to the bank.
It is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet.Crowdfunding is a form of crowdsourcing and of alternative finance.You can use it for your Fashion Business in 2 ways:* You can raise money before producing your fashion products or creating your fashion services.* You can test your designs or services to the market and understand if it works.Want to learn more?
Check my complete guide to Crowdfunding for Fashion Business.
Hope you enjoyed this article about How to Fund your Fashion Business and please feel free to post your questions or comments below!
I’d love to hearing from you soon!