By Frances Harder, November 5, 2015
After hearing a number of alarming and disturbing stories in recent months about new apparel startup company’s investing thousands of dollars with various specialty services; I feel compelled to write about what any new company needs to fully understand before signing any contract, or making any type of full payment before a service is satisfactorily completed. Paying a deposit is, of course, fair and normal practice but to pay, fully up front, for a service prior to the work being completed is CRAZY!! It is obvious that new apparel startups are very vulnerable, overeager to get started and all too often ignorant of the full production process. This seems to lead them into blind trust without verification of the “expert” services and what they purport to offer. Many new companies are often their own worst enemies as they don’t know what exactly they are looking for in the consultant and will blindly assume that the consultant or service will solve all their problems and answer all their questions.
Consulting Exists in Every Industry
The main reasons a new business would seek expert assistance from a consultant or services is purely to hand off certain tasks that need to be accomplished, e.g. patterns, samples, technical specifications (techpacks) to name a few. Unfortunately, it is all too often assumed and expected that an industry consultant possesses a more in-depth knowledge of a specific industry, or field of expertise than the new or existing small business. Companies in need of these various experts will often hire consultants on a temporary basis to provide them with a given service, or information and insight. This service could be provided through hourly rates, retainer on monthly bases, or for the estimated full package of the service provided. Consultants may either be independent contractors, freelancers, or self-employed professionals who go about finding organizations in need of assistance, or they can work for a larger consulting firm that finds projects and consulting jobs for them.
Here are examples of some of the types of specialty services that are often sought after for a new apparel company:
- Pattern-making and sample service
- Grading & Marking
- Cutting & sewing for Production
- Screen Printing
- Legal assistance
- Sales Representatives
- Packing & Shipping
- PR & Marketing
- Finical Advice
- Graphic & Web design
Now for a Few Examples of the many stories I have heard about from some of our members of the Fashion Business Incorporated (FBI), and a couple taken from my own experience…
Pattern and sample making service, or a full package service –
Case #1 – Paid $15,000 upfront to have patterns made and samples produced but half way through the process the full package service asked for another $7,000 to begin the creation of patterns for the next season: Total: $22,000! I can personally witness that maybe one of the 20 + samples were commercially usable!!! Contracts were signed but unfortunately not fully understood as to the content and meaning of the verbiage used. In this case the victim is a very bright individual in their own field of expertise but unfortunately has been taken serious advantage of. They are now trying to get a refund and have found a new pattern and production service. This story continues….
Case #2 – Paid $6,000 upfront to have patterns and samples developed. Having connected with this particular service at MAGIC Sourcing in Vegas they felt confident that the services would be professional. MAGIC Sourcing is a Trade show and it must be clarified here that they cannot guarantee the product of those who pay to exhibit their services at the show. This new company operates in a state in the middle of America and the pattern and sample making services in another mid America state. No samples were received when promised for months and when they eventually did arrive they were pathetic and unusable. The company had tried unsuccessfully to connect with the service but all the many emails and calls were ignored. After receiving no satisfaction and a great deal of frustrations they flew out to this full package service facility to check the progress of the samples. Sadly most of the styles were not made to the provided techpack specifications. After many months of frustration the service provider informed them that they had completed the samples and that they would be shipping them. However, the next frustration was that the boxes of samples were shipped via US postal services with no tracking and took a couple of weeks to eventually arrive. Upon opening the box and inspecting the samples, none were usable and did not relate to any of the techpacks. They are now trying to get the patterns for which she paid so that all the pattern changes can be made by a new full package provider. This story continues….
Cutting & Sewing Services – Insurance Issue – When I had my name under license to a Japanese manufacturer in the early 90’s I had the samples and duplicates made in downtown LA. Once the garments were completed we would ship them off to Japan. The day before I was to collect one particular batch of garments the factory was broken into and all my shipment was stolen. This was very strange as only my garments disappeared! All the other production for other labels that were ready to be picked up was not touched! So, were the garments insured? This is a point that most of us forget to ask, me included. No they were not! The factory owner agreed to remake the garments if I purchased the fabrics. This we agreed to and we resolved the issue amicably as I really believed that this situation was an inside employee and not connected to the owner. I suppose I should be flattered that only my garments were stolen!:)
Screen Printing – One of our members came to me with their tale of woe when dealing with having screens made by a printer of their original designs. Once the screens had been made and the garments had been printed they were very unsatisfactory and the quality of work was not acceptable. They asked for the screens so they could take them to another printer. After all, they had been paid for, and as far as the client was concerned the screens belonged to them. Well, they were dismayed when informed that the screens belonged to the printer. Please note that it is important to have a written agreement as to who owns the screens, the artwork including graphics and the patterns. Make sure you are the owner of them all!
Sales Representatives – Oh boy, this topic has many sad stories on both sides of the showroom. I am asked nearly daily if I can help find a sales rep for a new line. I have often been known to say, “Finding a good sales rep is like finding a husband, or wife”! It takes time and then it must be fully understood as to their expected rolls. Sales reps often require a monthly showroom participation fee which could be anywhere from $300.00 to $1,000 per month, plus a percentage of sales. Percentages are usually between 12% for clothing and 15% for accessories. Should you find a representative for your line they will most likely be a multi-line rep. This means that they represent a number of different labels in their showroom.
This story is in fact unfortunately very common. A new FBI member came for their member consult and was telling me that they found a sales representative in New York, and that they were paying $800 per month for showroom participation fee. Unfortunately they had not had any orders written over the few months since hiring the rep. I advised for them to get on a plane ASAP and visit the showroom. This they did only to find that the samples were in a back storage cupboard and not on display! This rep had around 15 lines in the showroom. Do your math! $800.00 x 15 = $12,000 a month is good pay before any commission on any sales are made!
This story actually happened to me personally when I had my own line. I had connected to what I thought was a good sales representative. They asked me to make duplicates samples for their New York showroom. This I did but was surprised after market closed to be informed that there were no written orders. So I asked a designer friend who lived in New York to check on my line in this particular showroom. My friend informed me that the good news was that my line was in fact hanging in a great prominent spot in the showroom but NOT WITH MY LABEL ATTACHED! My label had been removed and changed out for another manufacturer’s label who the showroom had been working with for years! I suppose I should have been flattered that they choose to take my designs to rebrand with someone else’s label! However, at the time I was not flattered and as I had lost a season, and considering other issues that were happening in my life at that time, I decided to walk away. But there is Karma! A few years later this stories’ ending proved to me, in fact, that there is justice! But another story for another time!
Web Design – General warning! When finding a web designer please check their work to see if they have good recommendations from their clients. There are great Templates out there to build your own interesting site. Warning! Make sure any artwork, logos, graphics created belongs to you! When choosing a company name make sure the domain is available.
In Their Own Words: # 1
“I was working with a full package service to do my development, in the hopes of placing production. We verbally and electronically agreed on terms (which I saved all my email correspondence). After months of waiting for samples and strike offs, still nothing was presented. When I confronted him, he gave me excuses that my product and designs are taking longer than he had anticipated and that they were more intricate than he expected. Furthermore, since his workers were spending more time on my product than his budget allows for each customer and in order to continue working and complete my project, I would have to start paying hourly for his employees’ wages. At this point, I decided to cease development and informed him of such. I had already paid over $5k and only received a very poor set of 1st and 2nd prototypes. I requested that my IP (Intellectual Property) and everything be returned to me, including any fabric and pattern work that was paid for. He replied saying that I owe him for an invoice for screens/films that had already been created. I said that I would pay for them only if he furnished me his printer’s contact info so that I would be able to continue working with him and use the screens when I moved to another factory. He refused saying that his printer is proprietary. I countered by saying “If I’m not able to use the screens then they are no use to me so why would I pay for them?” His answer was “I won’t give back your IP, patterns, samples, etc. until you pay for the invoice. If you don’t pay, I will get my brother-in-law, who’s a lawyer, after you.” A few weeks later, his lawyer proceeded to send threatening letters for a while but then stopped.
My key learning from this experience is to have agreements and contracts in place, stating clearly what is covered and owned. Do not be swayed by vendors promising you the world. Always look at product they have produced that is the same product type and quality you want to produce. If they can’t furnish product to you providing their industry expertise, then they are not the right fit for you. Vendors will try to convince you that they can do any product category. But if it is not their specialty, most likely their workers, pattern makers and sewers will not be able to handle your product type, hence not achieve the quality you are looking for. It’s best to work with a factory or full package service that has a track record of your product. And be able to prove this by sharing with you past products and current customers.”
In Their Own Words: # 2
“I asked about the patterns and corrections on samples in an e-mail and I did not receive a response from anyone. In the same e-mail I also asked for the samples to be corrected. They have not done what they agreed to but only halfway, which is as good as useless! I have been treated like some unimportant customers whose money is not as important as someone else. This was so very frustrating and makes starting a new company so much harder when I cannot trust the factory I am working with. For example: It was agreed on that FedEx would be used for any communication between the factory and my business. Instead regular USPS was used and no tracking number let alone insurance. This shows how much xxxx does not care for their customers. I honestly feel so frustrated that xxxx did this on purpose! I have been taken advantage of because it is thought that there would be no consequences by not giving me the service promised. Now it appears that they are going back to correct the patterns and possibly the samples. But is this how business should be done? I have lost $6,000 and a whole season of possible sales!
I was afraid to go overseas because I didn’t want to get ripped off and so far the best customer service I have gotten at this point is overseas. It’s very sad. “
What to look for and ask when seeking a consulting service?
Don’t be intimidated. Ask questions and get referrals!
- What industry experience or expertise in the consulting area you’re seeking do they have?
- Can they show examples of three other clients’ work for which they have provided their services? Can you personally speak with them?
- Do they have experience giving presentations, seminars and solving difficult problems? Experts who are respected are often sought after to speak or present at trade shows. But still don’t be fooled and make sure to do your due diligence.
- Can they provide you with examples of any contracts you are expected to sign? You then should take those contracts and show them to a trusted industry expert to check if the substance of the contract is fair and reasonable before signing.
- If you have a contract for a new sales representative make sure it is professionally written and agreed to by them. The sales rep will also expect you to sign an agreement for their services. Make sure their contract is fully understood by you! Don’t pay in advance for more than a month, or at the MOST three months if any monthly fees are required up front. Make sure you can cancel their services after a given time usually 6 months.
- If a service is providing production, then make sure all the State and Federal licenses are current and that they are compliant with the law. Ask to see them. California and New York have very strict laws for manufacturers and sewing contractors. You are defined as the manufacturer if you purchase the fabric and give instructions to the contractor or sample maker.
- IMPORTANT Read and understand all contracts and written agreements. Remember Frances’s Rule! Good idea to wait 24 hour before signing anything and try to get three quotes for any work that is being contracted out!!
The Other Side of the Coin – Consultant’s fear of working with a new company
I have to admit that after consulting for the past 20 years I am often reluctant to take on new companies as clients. They are all too often very needy, over confident, naïve, and require a lot of hand holding. Thus, unfortunately, due to their lack of specific industry expertise they don’t usually realize, or appreciate what real expertise and the usual industry standards should be for reasonable fees. For example; to become a good experienced pattern maker it takes years to gain the expertise to create an effective pattern for e.g. swim suit, a bra, or for a fully lined tailored jacket. Creating GOOD patterns and the directions for sample making, technical specifications and production methods take true talent and experience. I often hear new companies complain about the fees to create patterns with a qualified service for 1st patterns and samples, and then they may decide to use another less expensive service. SUPPRISE! They are then upset with the lack of industry quality for the final garments.
The average cost for one pattern and first sample for a simple garment is usually approximately $300.00. Then if you should require a more tailored garment, or couture evening dress you could be looking at $500.00 to a $1,000 plus. I have often heard from many good experienced consultants and sales representatives their own tales of woe when working with new startup companies. Or, from sales reps who never received their commission for the sales they have made. Also from consultants who had to do twice the work because the new company did not understand the basics of the apparel industry.
Foot note: I wrote my books Fashion For Profit, Costing for Profit and Branding for Profit, plus, I also created a CD with many forms, techpack templates and necessary contracts needed including a sales reps agreement when starting a new apparel company. I created them so that new companies could prepare and educate themselves prior to getting into the business. My book Fashion for Profit is now in its tenth edition and validated by 32 industry experts. It is also now available as an eBook. I have also created three different DVD’s based on my books for those who would like a one hour quick overview. I often hear that these educational publications were the best investment a new company made. My whole business startup package saved many hours of costly mistakes to gain important industry insight and knowledge from the many industry experts who also contributed to the book. Fashion For Profit www.fashionforprofit.com.
Additionally, as I had also personally experienced many of the above sad tales and common difficulties when I started my own two new businesses and was often asked from my students about the “how to” start a new fashion label. This lead me to found in 1999 the educational not for profit 501c3 Fashion Business Incorporated, which provides many industry specific services, education, webinars and resources to new companies. Plus, we have developed fast turn modules for retaining displaced workers, or for those working but looking to retrain and gain the technical skills expected within the industry. I am so proud of the organization and the many new companies we have helped over the past 16 years! www.fashionbizinc.org. Check us out!
Final words: Gain as much information and education as you can, do your research and understand the many components that go into producing a garment or accessories before jumping into creating a new business. There are many moving parts. Things will go wrong so be prepared to handle them and not lose your savings due to lack of prior industry know how! GOOD LUCK!!!