Event Recap: Financing Your Fashion Business: A Conversation with Gary Wassner of Hilldun Corporation
There were many insightful and honest pieces of advice that Gary Wassner, Co-CEO of Hilldun Corporation, a financing company in New York's Garment Center gave emerging designers at the Financing Your Fashion Business meetup.
Gary, an industry veteran began his career working with Betsey Johnson when she started her business. Over the decades, he has worked with major names like Vivienne Westwood, Jason Wu, Thome Browne, Alexander Wang and Nanette Lepore. He is also a member of the CFDA advisory board, was named one of Fashionista's 50 Most Influential People in Fashion and is dedicated to helping young talent grow their fashion business.
For over 50 years, Hilldun has helped designers with factoring, one of the oldest forms of lending which allows designers to retain equity of their company while also helping them to increase cash flow. To do this, they work with brands to put a system in place in order to effectively work with retailers, help collect funds on behalf of a company with an approved purchase order and assume the risk of that invoice. They also offer production funding which allows designers to create goods for the season if they do not have the capital to do it on their own.
Throughout the conversation there was one important message that rose to the top: focus on your product. First and foremost, to build and grow your business, create strong designs, offer impeccable fit, buy fabric early and work on production for on time deliveries. Gary stressed that not shipping to stores on time will not only decrease your time on the sales floor, but also ruin a relationship with a vendor along with a chargeback penalty.
These are also just some of the factors that Hilldun looks for when deciding whether they want to take on a client in addition to a designer's business trajectory and success in past seasons.
Here are the other key takeaways from the conversation:
Get business partner: Find an active business partner to help keep you grounded in the realities of the company. For example, Alexander Wang is still a family-owned business with a few members that focus on the financials so he can concentrate on design.
Funding: Financial institutions don't give apparel brands the same respect as tech companies. That's why factoring is a strong option. Angels such as friends and are family are the type of investors that can provide funding as well when you are starting out.
Cash flow: Cash flow is everything! It allows you to fund your business, deliver on time and grow without giving up equity too soon.
Brand strategy: Know who you are as a designer and be able to articulate that clearly by having a strong point of view. Designers must have their target customer defined and from there, select stores where the product can resonate. Know that you cannot design for a store, so be sure to focus on delivering a good product.
Pricing and development: Understand what consumers will buy and at what price. From here, develop your product. Keep in mind that it costs so much to produce intricate work and most consumers don't care. Ultimately, you must know what they are interested in and design into that market.
Selling to buyers: You can't sell buyers a totally new item so make sure it's something that hangs in their store, but also fills a void so you give that customer a reason to buy. If it's just not a fit with retailers, it may be time to assess your collection by starting over or even diversifying your offerings so items are more salable.
Working with major retailers: Some of the major department stores are asking for high guaranteed sell-throughs. If you don't make these numbers, you will owe markdown money. Read your purchase orders carefully so you understand their terms.
Consignment: Designers shouldn't accept consignment because it's not considered revenue unless the items are sold. "It's death!" You're lending merchandise and often times it's not returned in the way that it was sent.
Budget allocations: Don't waste money on fashion shows. Even if you are offered a sponsored show, you need to be able to show a strong product and that you can produce. Designers shouldn't spend money on public relations either because the product should speak for itself. In the beginning, the focus should be on the product and sales.
Showrooms: Sales is what brings in revenue and one way to get orders and feedback. Designers may want to consider a group showroom because it offers more visibility for young brands because buyers are coming in for appointments. However, it's important to vet the showroom to understand it's a right fit and that it's worth the investment. If a show room doesn't believe in your product, they won't sell it and you're products are just there to pay the rent.
Trade shows: Trade shows are becoming less important, but if you are going to do one, make sure it is the right one for your business. Location is everything.
Marketing: Leverage made in New York and made in the USA. International consumers want this.
Social media: Social media wasn't around years ago and now there's so much that can be done to build awareness for a brand.
Feedback: The criticism is much better than the compliment in fashion. The compliment is not going to help you build your fashion business.