Starting a Fashion Business? Here are 4 Tips to Help You Kick Ass At Financial Management
Starting a fashion business may seem tempting, especially since start-up funding in India has consistently attracted big investors from across the globe. However, the only drawback in India’s explosive start-up world seems to be its struggling economy. This is further impacted by the outbreak of Coronavirus and the lockdown this year. Multiple start-ups have declared a loss in revenues and permanently or temporarily shut down.
Now, if you are planning on starting a fashion business, you must know that it is not going to be all runways and parties. The back end work that goes into starting a fashion business is just as tedious as any other business and it is absolutely essential to know how to effectively manage your finances in order to ensure growth, success and the longevity of your business. So here are 4 tips to help you manage your finances while you build your fabulous empire!
1. Don’t Let a Single Rupee Out of Sight
Keep an eye on your coin! This goes without saying, but you must always know where every single one of your rupees has come from or gone. Most start-ups fail for a variety of reasons, but running out of cash is the most common one.
Starting a fashion business is no small ordeal, and with a new business, you are going to be accosted with expenses left right and centre. And if you don’t track every rupee, the bills will add up and one morning you won’t know what hit you, or rather, your bank account.
Hiring someone to handle your accounts right at the start may not be feasible, so accounting software may be the way to go. You can find one with a quick Google search, or if you want a completely expense-free route, just use excel or Google sheets and do it yourself!
Recordkeeping does not have to be a complicated chore. The key is to stay organized and never wait till the end of the week/month to add in your expenses. Do it as soon as the money comes in or goes out. Not only will this help with financial management, but it will also make your life easier when tax time rolls around.
2. Lean Budgeting
Right when starting a fashion business, keeping your expenditure as low as possible is the key to longevity. You don’t need a big fancy office in the heart of Bombay to run a fabulous business.
Operate in a way where you can put your profits back into the business to catalyse growth. Implement lean budgeting. Lean budgeting denotes prioritizing value streams over projects. It is a set of practices that minimize expenditure by funding Value Streams rather than projects. A value stream is defined as an end-to-end business process and the associated steps an organization takes to deliver customer value, or it may refer to a line of business that delivers value, typically a product or solution, to a customer. As organizations evolve, the shape of their value streams evolves too. For example, one value stream could involve purchasing inventory essential for sales, another one could be activities or projects that give you the highest returns (social media campaigns etc). So basically, analyse what brings in the most coin, and put more money there, and not into other areas that may ‘seem’ like better investments.
3. Hustle Baby!
Rarely do business begin with a windfall of cash, and you never really know what the outcome of your business may be. So be prepared for the worst-case scenario is a good way to keep your expectations in check while making sure you don’t have to file for bankruptcy.
If you’re set on starting a fashion business, don’t put all your eggs in one basket. Multiple sources of income will make sure that you are never in a spot that compromises your personal life. So don’t quit your day job and eliminate your main source of income until your business can replace that income. And if you really do want to quit your day job, make sure you have a few side hustles planned out that will help keep you afloat until your start-up takes off.
4. Financial Well-Being Is Part of Overall Well-Being
It can be very tempting to prioritize business over every other aspect of your life, especially when you are just starting out and are pumped full of adrenaline and ambition. It would be wise to resist this temptation and work at a pace that not only helps support your business, but also your health.
Make time to understand and look after your personal finances, so that the pressure of your personal expenditures and bills do not hamper the finances of your business. Keeping your business and personal finances separate is essential, especially in the beginning stages of your business. If your personal finances are causing you stress, that will surely translate into your business. But if you are stressed about professional finances, and know at the back of your mind that you have no reason to worry about paying your rent and other bills, chances are you’ll deal with it in a healthier fashion. So make sure to pay yourself, and then reinvest your income into your business.
Financial worries are one of the main causes of stress. So, in a sense, taking care of your finances is taking care of yourself. Like exercise, meditation, and a balanced diet, taking time to understand your financial position and making a plan, is part of looking out for yourself. Stress will do no good for your business and could lead to you taking hot-headed and sporadic decisions that could potentially be disastrous for your business. So, make sure to allocate time to your personal health, since prevention is always better than cure. For entrepreneurs, taking the time and effort to invest in financial well-being is what makes businesses more sustainable in the long run.