The other day I had an interesting conversation with the owner of an apparel company.  The subject of budgets and plans came up.  Or, maybe I should say, I brought up the subject of budgets and plans and asked him how he was planning and budgeting.  His response was “Well, I kind of come up with my budget for the year and forget about it until next year when I have to plan it all over again.”  Talk about lost opportunities!  So I asked him what he used to create a sales plan.  His response was “Well, I kind of have a number in my head and that’s what I use.”  Then I asked him if he communicates this sales plan to his sales and merchandising team.  His response was “Not really.  The design and merchandising team builds the line and the sales team sells it.”  Oh, dear. 

I’ve known this guy for a long time and he does relatively well in his market space.  His sales volume is between 12 – 15 million, so he’s not really in the Big Leagues, but he has a great opportunity here to get much greater control and understanding of his business than I think he realizes.  No business is too small to take advantage of this relatively simple function called “Planning.”

Step one:  Start with a budget.  Be realistic about what you need for your operating costs, salaries, overhead, insurances, rent, materials, etc.  If you have never built a budget like this, take a few hours to meet with your accountant – What!?!?  No Accountant?!?!?  Seriously?  O.K. start the process by working with an accountant to build a financial plan.  You really need this, more than I can tell you in a blog.  In order to truly understand your business all the way down to the gross margin level, you need a financial plan.  You need to know your expenses in order to understand how to cost your products and how to determine your true gross margin after all is said and done. 

Step two:  Build a financial plan based on what you think your company will be able to sell and be realistic!  If you’re a 5 million dollar company this year, don’t expect to hit 20 million next year.  Analyze this year’s sales versus last year’s sales.  Have you added customers or lost customers?  Have you added market share or lost market share?  Now think about what next year’s realistic goal should be.  Are you looking to add product categories?  Will that open new doors for you?  Or are you expecting to do about the same as last year.  Neither of these is the wrong answer, by the way,  you just need to know how to plan.

Step three:  Work with your sales team to create a sales plan.  How can they plan to meet your sales goals?  What do they need to do?  Continue business as usual? Open 10 new accounts each at a dollar volume of 20,000 per account?  Let them know what you’d LIKE to see and have them come back to you with what they see.  Oh, and perhaps you can tie some of their compensation to meeting the sales goals you both establish?  This way, they’re just as invested in the business as you are.

Step four:  Work with the design and merchandising team to develop a merchandising plan that meets the needs of the sales team.  If sales thinks they can sell the heck out of dresses but pants and skirts are trending down and your designers are only designing pants and skirts, maybe you need to stop and review everything before moving forward.  The goal of a merchandising plan is to give the design team an understanding of what types of product, categories and price points they should be building to meet the needs of the customers. 

By tying the merchandising plan to the sales plan and the sales plan to the financial plan, you start to see how the business works toward a common goal – profitability.  Everyone likes to be profitable, no?  Now, when it comes to planning for the next year, you’ll know what your expenses are, you’ll know what your gross margins are and you can start thinking about what the next steps for your business should be.  Raises, anyone?  New office space?  Better computer systems?  At least now you’ll know if you can afford any or all of that. 

Looking for accounting or financial planning help?  Check out the FBI’s list of consultants and financial services. 

I recently had the opportunity to speak with Kelli Nelson of FindFashionRep.com to discuss how she came up with the idea for this terrific website.  FindFashionRep.com provides designers and manufacturers with the information they need to make informed decisions when looking for sales representation.  Using the service is very simple.  Kelli has done all the work to make the process as painless as possible.  A designer or manufacturer logs into the site, answers a few questions about the type of product, the target market, price points, etc.  After selecting a territory a list of suitable reps is provided.  The designer or manufacturer can then view the other lines being offered by each rep to help determine if their products would be a good complement to the existing offering.  It may take several tries to find the right rep, but once the designer or manufacturer selects a rep they will receive contact information, price points and product descriptions of the other lines.

What Kelli has done is take the guess work and the leg work out of finding quality sales representation across the U. S.  It’s hard to imagine how much time and energy it must have taken her to develop this database, let alone the time it takes to keep it up to date.  Sales reps are encouraged to update their line lists, price points and other relevant information on a regular basis in order to make FindFashionRep.com the most comprehensive of its kind. 

New FBI member Kelli Nelson got her start in the fashion industry in 1988, while still in college.  Working as an assistant sales rep to the West Coast sales manager of Z. Cavaricci, Kelli learned the ins and outs of representing a major brand to retailers of all sizes.  She quickly moved up the ranks at Z. Cavaricci, acquiring more responsibility and more skills.  Kelli started her own company, In Harmony, in 1995.  Using the knowledge she acquired at Z. Cavaricci, she built In Harmony into a multi-million dollar business.  The one issue that always nagged at her was how to find the right sales representation for her brand.  “It’s not enough to know a few good sales reps,” Kelli said in our interview “it’s about finding the right rep for your product.”  The trick to finding a great rep is understanding the labels or products they carry and who they are able to sell to.  Unless she flew to a specific sales territory she would spend countless hours on the phone trying to locate good reps through recommendations and referrals that were already closely aligned with her target stores. 

 In 2006, Kelli decided to start compiling an extensive database of independent sales reps in the 12 major U. S. fashion markets.  Her goal was to cover all categories of mens, womens and childrens clothing and accessories across all major U. S. markets. Many hours of work went into developing what is now known as www.FindFashionRep.com

We’re excited to have Kelli on board as a new FBI member.  I encourage you to check out her site and services.  It’s a great idea and long overdue.

Jill Mazur is an independent apparel business and technology consultant working with Fashion Business, Incorporated.  Email:  jill@fashionbizinc.org