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how to start a fashion business the first step is creating a fashion business plan in today's video we are going to learn how to create your fashion business plan in 20 minutes you must be wondering why 20 minutes your typical fashion business plan takes days and weeks to create but here's the thing perfect business plan is a myth studies have shown that what separates successful fashion brands for unsuccessful ones in not the perfect business plan but the ability to turn profitability before running out of resources the way to start a successful fashion business in not to spend weeks creating your perfect business plan but going out and talking to your customers and modifying your business plan to adapt to the customers needs the trying time is a critical resource when you're starting a clothing line and you should not fall into the analysis paralysis path at this point our goal is to create a snapshot of your initial thinking with respect to your customers product unique value proposition revenue stream and so on so you can establish a base line as you create your clothing line and then modify an update based on customer feedback so in this video we are going to use a simple tool called lean canvas to create our fashion business model plan in 20 minutes so we can get started and get on with our business [Music] welcome so the tool we are going to use to create our fashion business plan in less than 20 minutes is called lean canvas and in order to get to that we will go to a website called leave stack comm so one of the tool the lean stack has is called lean canvas so as you scroll down you will see under resources you see in canvas you click on that and you sign in so they have a paid version as well but I think free version works it just as fine so you don't need to worry buddy getting the paid one so once you sign in you can click here to create a new project while already created one so I'm just going to click here and open it up and let's say I want to create a new lean canvas and I am going to call it fashion business canvas we're gonna save and this is how your fashion business model is going to look like it's one page model so you don't have to worry about creating spending hours and weeks and days into it because the goal here is to create a snapshot of your fashion business plan and not to spend a lot of time doing it so as you can see it has nine quadrants and we are going to fill out each quadrant one by one so we can have a better understanding of where we stand today and where our businesses so as the time progresses we can modify and change it so for this particular lean canvas we're gonna consider a company so one of my friends has a company and they make customizable shoes for children so we are going to use that business as an example because then it will be a lot easier for you to follow along and you can see how it fits your particular business so first section we are going to hit is called customer segments so this is very important to understand the difference between customers and users a customer is the one who pays you and a user does not this would be a simple distinction between a customer and a user so for his example he wanted to target parents and even among parents I think the main decision-maker for them will be women moms who are actually buying the product will decay so we are going to distinguish between customers and users so customer customer would be moms and then user would be the kids so the kids can be you know boys or girls so this way and by the way you can add and change whatever you want but just by clicking on it and this help you distinguish that the moms are the one were actually much more likely to be the customer than the father and the users could be boys or girls as the shoes are applicable for both gender so now another segment of customer is we need to define who are your early adopters you know we all want a product that would be used but everyone but we want to define our early adopter because we can so we can focus our marketing strategy towards that niche segment you know Ralph Lauren you know designs everything under the Sun at the moment but they started out by designing just one tie for men so it's very critical to find out who your early adopters are so you can focus on them so let's say for our particular case we are going to look at moms but daughters who are less than let's say ten years old and the reason we picked this segment as our early adopters because it's a pretty niche segment so I know these are the moms who actually have kids especially daughters were less than ten years old and who are much more likely to use the product than the older kids so defining our main umbrella as a customer segment and then defining a niche market under the earth customer segment as my early adopters helped me focus to which target audience I want to market to first so after customer segment is defined next you want to define the problem so here you should identify at least top one two three problems your product would solve for your early adopters you know a typical technique that I use to recover a problem is called 5y analysis which means like you start with a customer problem or their surface symptom and then ask why that problem exists and you do it five times and it helps you to get to the core of the problem that the customer is facing so at this particular shoe company we can say that that the parents want kids to do certain activities together and kids want a product they want to personalize things so they want something that reflects their personality their interest their style so the main problem let's say from parents perspective we want to solve as parents can or would like to do activity to spend more time with their kids because one of the shoes they also offer is as sighs for moms as well and since the customizable shoes the mom and daughter can have a similar type of shoe similar style and they will look cute together so that's one of the problems that they're trying to solve so for kids we can have they want products they can personalize and it reflects their personality style interest right so you can find whatever your particular product is and how what are those top three problems that you can solve and you can list all these three problems here because these problems would eventually lead to the solution and in Section number four so here you want to look at what is the current situation of your of your customer which means which fashion brands are they using what are your competitors are you know things like that and even when they're not using this product all they don't have any alternatives that's still an option like doing nothing is also an alternative so this information would be very beneficial when you want to properly position and value your fashion line so for this one you can look at let's say you know company a that also make customizable products and the activity either the consumer actually does to do it so this can from your particular role and from your particular product but you should definitely look at which your existing alternatives are because that will help you define what solution would it be and how you would create a cost structure around it so in this section we are going to look at three blocks together so which is solution unique value proposition and revenue streams because these three structures would help us determine what the minimum value product should be so an MVP is the smallest solution that delivers customer value and solve customer problem so this you can look at the problems that you had that you identified in previous steps what would be the solution at this point so here for this particular example where we were making customizable shoes the solution would be that the shoe is provided as an empty canvas and kids or moms can actually put different embellishments on it so would be like a different buttons flowers whatnot so one of the solutions can be let's say existing blank canvas shoe that kids can can't type kids can put embellishments on it spell embellishments correctly punishments on it it's easy to use and there's like variety of embellishments and that can be customized okay I can't spell embellishments part anyway so this one here you can see so these are the existing shoe as a blank canvas it's easy to use you even for embellishments you have multiple varieties that kids can use and identify it so the next block we're going to cover is the unique value proposition so this is a single clear compelling message that turns an unaware visitor into an interested prospect so when you're starting a clothing business you're an initial battle is to get noticed by the potential customer and here you can define why parents would want to pick your product why kids would want to pick your product and if there's an activity they can do together that also becomes part of your value proposition so let's say for this for example we can look from parents perspective so let's say since mom's we picked that as our early adopters we use that some moms and spend more quality time with their kids by doing an activity together and for the kids especially daughters let's you want to say so they can customize their shoes to reflect their particular style so you customize your shoes to reflect their factor style and they can also do like an activity together that gives you a neat value proposition and the next step from unique value proposition is the high level concept so this is something that's done in multiple startup is called like elevator pitch for example that is something that we you can give reference to a particular product and person just understands what exactly it is so biggest example I can use here is like litotes so litotes high value pitch would be unlimited apparel and accessory rentals each month or Birchbox which is a monthly makeup rental service their high level concept would be sample personalized beauty products delivered right to your door for this particular example what they can do is if I have to tell somebody what this company does in less than five words I can say these are customizable shoes for capes so when I give this high-level concept it to somebody they actually understand what it is so figure out what your product is and what would be your high-level concept page for your particular product so the next section we're going to move into is the revenue streams so pricing price determines your customers you know Gucci and Prada prices are different than the price of gab and anthropology store their price bonds determine which customer segments their target so when you're starting out your fashion company your prize that will help you determine which customer you should need to target you and how much money you can spend according them but one thing you should also keep in mind is I see a lot of people doing cost based pricing versus value-based pricing especially in fashion pricing of your product on a perceived value is much better way of pricing than pricing your product based on cost structure yeah and also keep in mind and check which are the alternatives available to the existing customer and what their price points are so you can position yourself accordingly so for this particular model there they looked at their competitors they looked at you know what valued provided and how much parents wanted to do the activity with their kids how much were they spending for shoes so their MSRP lens and about 50 bucks for example and their revenue stream so I I don't know what their profit margins are some just going to say it so let's say their gross profit is 20 bucks for example for each shoe sales so now this gives you a quick an idea that your revenue stream is going to look like about 50 bucks per sale and you're making $20 per sale as a net profit from this particular endeavor so the next section we are going to look at is channel so channels is a path to your customers so something channels is something you need to start thinking about a building from day one but the good news is you don't have to build all your channels from day one but you can start with handful of channels and build on them so these will be the ways how are you going to acquire your customers so it could be you know selling through boutiques online sales trade shows converting blog readers to customers social media advertising and multiple ways and one thing you should also look into is differentiate between the scalable and unscalable channels so unscalable channels would be something that's very rigid you have to put in an effort into it in order to grow them but the scalable channels will be something that they can automatically scale so that can be you know referrals content marketing in the Salesforce that you have and and so on so for this particular case we are going to define what will be like the top top five channels that would help them grow so one of the things we can look into so first they were going to start with friends and family so that's one channel they can reach out to the second one is let's say local schools so you can partner with local schools and you know give some money to the charity if you like next one could be local boutiques another one would be I would say trade shows and since we're targeting you know kids less than ten years old so you can even partner with childcare centers and that can help you at least get you started so you can add as many as you want so these are just the basic ones that I will start with but you can eventually move on to because these one don't cost you any much any money so this is something that's unscalable but you have to put in a lot of sweat equity into it so if you wanted to go more into the scalable one but the scale of one will cost you money example you know doing content marketing or doing Facebook advertising or Google advertising those things are much easier to scale but then you need money to spend into it so this would be something then you can start with and once you have proof of concept you have initial customers then you have some money to spend on marketing then you can go into the scalable channels which would be like Facebook ads and so on and so forth so the next section we are going to look at is key metrics so these are the key set of numbers that tell you how your fashion business is doing as moment of time so key metrics will change as you add more products your line or as your business grows but even from the beginning I like to have two set of key metrics one is defined by the activity then I can see that okay if my users are doing this particular activity about around my product I know it's a positive feedback even though they might not be spending money and the second key metrics would be revenue focused that these many people are coming to my particular site so let's say a1 if we define one key metrics could be activity-based so that key metrics for this particular example would be that the kids playing with the shoes shoes and positive feedback from parents so this is an activity-based key metric so as long as I'm getting positive feedback I know I'm moving in the right direction second one would be like a revenue based metrics so which could be let's say I want to make at least 10k per 10 key sales per per per month and month after month I want to see at least 50% growth month over month so this will be my revenue based key metrics so to revamp again this is very important so because this will help you determine if you're moving in the right direction so do one key metrics that is activity-based that tells you people are actually liking your product and the second key metrics would be like a revenue based which you shows you they look at this is how much money I need to make and this is how much growth I need to have from month for months so I know I'm moving in the right direction so the next section for your fashion business would be a cost structure so this will determine how your revenue stream is going to look like how your your profit is going to be and in this section you list your fixed and variable cost so fixed costs will be something that you pay either one-time cost to start the business or that is consistent and you pay the same amount month or month variable cost would be it will depend on depending how your business is doing it if your business is doing grade your costs would change if your business is not doing so but your cost is less so help you determine what it would be so fixed cause for example would be lets say if I do fixed cost so fixed card for me would be if I'm using Shopify store so that would be like a Shopify store cost so which is fixed at the moment but I still have to pay month over month and if I get more users then it can change and I'm jump to a better hosting platform so that could be one of them variable cost so this cause be if I'm being affiliate marketing it could be like Commission then I am paying to my sales people Commission's I'm paying to sales people or it could be the cost of my initial inventory etc so you know your business better so you can see which are the cost is going to change and which other cost they're going to be same so this will help you determine how much money do you need to have in your bank all the time in order to survive month after month after month and another if you have any employees that employee calls their salary their medical benefits you know insurance all this stuff will they become part of your fixed cost and last but not the least is unfair advantage so unfair advantage is something that cannot be easily copied or bought so this section you will list how will you defend against your competition so sometimes I've talked to like lot of fashion designers and they say they there unfair advantage is because they have a brand new product and to be honest brand new product is not really an unfair advantage because if you have something that's very brand new very unique you will have to spend a lot of time and money and on advertisement to make the customer ver customer aware of your particular products so that might end up costing you more money that actually would make you more money so think of example as like Google and Facebook so these guys were not first to market but they were fast followers I think Facebook was like 10th or 11th social network you know Google was 7th or 8th search engine but they adapted and they didn't job much better than who were the market leaders at the point so your unfair advantage is something that cannot easily be copied part and another thing that's not an unfair advantage is having more colors or special fabric or more sizes these are not unfair advantages but then what is an unfair advantage so unfair advantage for your fashion company could be your personal Authority maybe you are a great blogger and you have a loyal audience you know you have a dream team you have existing set of customers that are very unique and very difficult to get to or you have the right celebrity endorsements you know you have a huge community and you have great core values so this is where for this particular product we were going to look into or you have special access to international boutiques that is not available for everyone else so write down what your unfair advantage is here so let's say we will do celebrity endorsements like access to international boutiques log following and grade board of advisers that can connect you to bigger brands and bigger places where you can sell your product a lot more so as you can see this is your quick snapshot of your fashion business model or fashion business plan as you want to call it and these sections gives you what your current thought should be at this particular moment of time and now you have a starting point so rather than spending days and weeks and months into creating a perfect business plan this one-page sheet will tell you exactly where you are what your thinking process is how you're going to target your customers what your cost structure is how you're going to make money and so on so I would use this as a starting point and then every you know two weeks or every month when I get more data and visit more customers you can come back and keep revising this until you get to a point where then this becomes a second nature and works perfectly for you so I hope this is helpful to you and this is Vishal Collier from rogue lines CO and if you like this video please give us a thumbs up and if you have any particular questions regarding your creating your fashion business model or starting a clothing line please leave them a part of the comment and our be more than happy to answer so thank you very much for your time and have a wonderful day