The appreciation of Australian fashion apparel is universal. From the runway looks to the high street and retailers across the globe, the Australian fashion industry is coining it internationally and putting the country on the global style map. The industry nets $12 billion for the Australian economy every year. But the likes of David Jones, Willow, Bec & Bridge and Dion Lee did not get there with sartorial savvy and sketch pads alone. Being a breakthrough designer is as much about understanding textiles as it is about the appreciation of sharpening vital business acumen.
Understand the Business Basics
Business acumen includes understanding the tax implications of various business models; namely, CC, PTY, partnership or trust and importing and selling any products across the border, keeping a spreadsheet of wardrobe stock and being on top of cost control at all times. Invariably, designers usually use closed corporations or buy shelf companies if they’re operating in a jurisdiction where they can’t register new CCs, and incorporate as a PTY (Ltd) later.
CCs are popular as they don’t have burdensome auditing or financial statement obligations. But, in order to be taken seriously or when needing to issue shares to raise share capital, a private company is preferable. Most investors want to know what an entity’s market capitalisation is before investing or the number of shares yet to be issued and the projected revenue that can be raised through this.
One practical way for young designers who typically shun numbers to undo financial aversion is to expose themselves to share acquisition and trading. Online platforms such as those offered by IG.com bring visibility to the market while an IG demo account provides online trading practice and a sense of how the markets and other elements (like CFDs) function.
Understand the Fundamentals of How Well-Oiled (Sewing) Machines Work
Speak to any established designer and they will most likely attest to the fact that it was, initially, all about staying afloat. Young designers need to have a firm grasp on the concept of retailer distribution models, and how much of the product price for a garment they’ll receive each time a sale is made in Woolworths, for example. It’s also valuable to know when a big retailer like Woolworths reconciles their books and pays over profit to the designer.
Some retailers work on profit per garment; others buy collections outright. Savvy designers need to understand who their market is and what the buying implications are during the conceptualising stage of a range, not afterwards. It is during this phase that input costs such as labour, fabric versatility and textile durability become critical. These affect pricing and long-term saleability and profit.
Some questions every designer has to contemplate include whether asking for cash on delivery versus delivery against payment is pertinent and how the business would be insured against risks such as defaulting creditors. Defaulting creditors are not necessarily solely big companies. They could be private clients who need urgent, priority dressing but possibly pay late, incurring design houses penalties along the way. This is where mentors become invaluable.
New designers often dream of interning at a well-loved label such as Romance was Born. This is when they should be asking those mentors to unpack their actual operational business models while taking their raw skill to new levels.
There’s definitely a place in the Australian economy for design entrepreneurship. How well the ship is steered will depend as much on the financial acquisition and management skill of the entrepreneur as anything else.
