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Fashion,

10 WAYS TO FINANCE YOUR FASHION BUSINESS

by celebritycurryMarch 26, 2020no comment
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FINANCE YOUR FASHION BUSINESS

As an entrepreneur, you must be well-equipped with capital to set up and then operate any business. However, being on a firm financial footing is even more critical if you own a fashion brand. Because fashion trends keep on changing quite frequently and you cannot stick to the products that are out fashion. Besides, you must have enough money for smooth cash flow until your stock is completely sold.

These challenges could take a toll on your company’s reserves, and no business expert would be able to rescue you. If you are in the middle of a financial crisis, all this can sound pretty bleak. But, guess what, there is a way out.

Many business people who have been successfully running their fashion brands today also underwent a similar situation. They managed to pull themselves back and arranged adequate money by exploiting the following means:

  1. Table of Contents

    • Bootstrapping
    • Angel investors
    • Crowdfunding
    • Friends and family
    • Venture capitalists
    • Grants
    • Microloans
    • Factoring
    • SBA loans
    • Peer-to-peer loans
    • THE FINAL VERDICT

    Bootstrapping

Many entrepreneurs do not like to share power with their business partners. If you are one of them, bootstrapping could be your cup of tea. Bootstrapping is also popularly known as self-funding. Going by this method, you will have to arrange money through personal savings, assets, starting a side gig, etc. Bootstrapping has become popular in the presence of the best merchant cash advance loans, which is indeed a remarkable feat.

The standout feature of self-funding is that you will enjoy an enormous amount of freedom. No outsider can force you to take a certain business decision that does not appeal to you. More often than not, this process of financing proves to be time-consuming. An individual needs 3-5 years at a minimum to become self-sufficient. So only opt for bootstrapping if your business plan is going to be relevant in the future.

Experts of the opinion, you should not put all the home-equity at stake to accumulate funds. Because it will serve as a financial crisis in case your fashion products do not get the expected response from the audience. So, be wise while deciding as the fashion industry is quite evolving.

  1. Angel investors

Every industry has some successful individuals who are willing to put their money on the potential proposals. The fashion industry is no different. If your business plan has got the spark, finding an angel investor will not be a tough nut to crack.

Remember, investors are people with vast experience. You cannot attract them without a well-designed roadmap. So, make sure your business plan is free from statistical and analytical errors.

  1. Crowdfunding

10-15 years from now, no one could have imagined that one day the internet would be used to raise money. But things have changed so drastically. Today, many websites facilitate fashion businesses for crowdfunding.

The biggest benefit of crowdfunding is that you do not have to pay back the received amount. Instead, you will be entitled to give away something like a t-shirt or other fashion accessories to the respective donors.

When it comes to crowdfunding, most of the people support brands that associate themselves with social causes. So if you can conveniently communicate that your brand will play an active role to make the world a better place, people will stand behind you.

  1. Friends and family

A well-documented study reveals that more than 53 percent of American entrepreneurs get business funding from their inner circle. Namely, friends and family members.

There are occasions when your business plan extremely triggers unknown investors but still refuse to sanction money. It is because they do not know whether you have got the potential to execute your plan or not.

But since friends and family members share space with you for years, they have an exact idea about what you are capable of. The absence of trust-deficit is the reason why you are likely to get money from loved ones. Hence, family and friends are a potential way to finance your fashion business.

  1. Venture capitalists

The words venture capitalist and angel investor are often used interchangeably. While there are some similarities between the two, they are not the same. The biggest difference is that venture capitalists offer you a larger amount of money and their network is also widespread. Typically, venture capitalists believe in playing safe. They only like to invest in well-settled companies. So, if your fashion brand is well-settled, then go for this option.

  1. Grants

Getting a grant is hands down the best way to finance your fashion business because it is free money. Yes, you are not obliged to pay back. Being rewarded with a grant is not a cakewalk. You will have to walk the tight line of rigid criteria before cracking the qualification.

The philosophy behind grants is to lift the financial condition of minorities, single mothers, veterans, and so on. If you fall into the category of these people, grants are worth trying out.

  1. Microloans

A fair proportion of small business owners cannot put anything as collateral. That is where the option of microloans swings into action. A microlender can approve 500 to 35000 dollars. Unlike traditional banks, microlenders do not get to the bottom every single document of your organization, which eventually leads to faster approval of the loan. So, you can get microloans to boost your fashion business in style.

  1. Factoring

Of late, the popularity of this type of financing has skyrocketed. So we can safely say that this method works. Factoring involves selling your account receivables and in return, getting money from the purchasing party. The purchaser will pay you depending on the quality of your account receivables.

Preparation is the hallmark of a smart businessman. Therefore, you should measure the quality of account receivables before putting it on sale. It is not a difficult task. You can do using a simple formula, and it suits fashion businesses.

  1. SBA loans

SBA (Small Business Administration) does not directly sanction money. It rather plays the role of a guarantor between the lender and the borrower. Since the government backs SBA, lenders do not have to worry about getting their money back if the borrower defaults. Hence, you will easily get the required amount without any hassle. This is a brilliant option for small fashion brands to finance their operations.

  1. Peer-to-peer loans

Peer-to-peer (P2P) loans are obtained without any physical heel-dragging. All you have to do is to post your business needs and amount on a reputable P2P channel. The interested lender will navigate through the proposal and subsequently get in touch with you for further negotiation.

THE FINAL VERDICT

Small businesses heavily contribute to the economy of our country. Keeping this mind, government and private sectors try to provide funding to fuel small-scale companies. The above ten financing options are the best in the lot. You should utilize them and take your fashion brand to the next level.

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