Venture Capitalists: Few focus on the fashion industry, but those that do often go after large currently established brands that are looking to grow their business. A few new firms are concentrating on that of a growing design business, but by growing they mean upwards of $5 million and proven success in design concept, not for the beginner’s beginner, but an excellent way to look for an extra boost for an already steady business.
Angel Investors: No guarantee, but the best place to look when an entrepreneur is in the stages of a purely start-up business. These fund-raisers are independent and looking to put their money in something that will make a profit. A tight business plan with detailed information on estimated dates of Return on Investment (ROI) is necessary, as well as numbers of projected yearly goals. Another mandatory contract is that of business roles. Angel Investors do not always come from a fashion background, therefore detailing who will be in charge of what decisions is essential right at the beginning of the agreement.
Throughout the process, investors might offer you input as to how to further make your business a success. Take all of that information seriously, but never loose sight of the original goal/plan in the first place. It is important that you believe in the strategy you want to pursue from beginning to end.
Banks: The best place for the initial start-up capital, the idea is that the bank lends the business owner money, and the business owner pays the bank back with interest. Credit history is crucial when it comes to applying for a loan, especially when there is little collateral given to the back in return for the money. Banks are taking their loan applicants more seriously than ever before, therefore business plans, research and even relationships come into play now more than ever. A business owner should go back to the bank they had their first savings account in and re-develop that already existing relationship.
Banks are often the stepping store to further investments. They are proof that a business pays their bills on-time. Financial lending institutions are also proof that given a bit of capital, this is how a business can grow. It re-affirms the original business plan goals and displays how an entrepreneur has the ability if given minimal assistance can maximize gain. A business with positive history is a business an investor will consider.
Factors: Factors are lending institutions that give based on current orders. They see the amount of orders placed, take a cut and provide cash up-front so the designer can complete the manufacturing, deliver orders and complete the business transaction, which will in turn lead to more revenue, which can achieve larger orders and on and on in a cyclical effect. They take on the risk of collecting the money once the orders are delivered.
Learning which type of financial assistance is best for the specific business is essential even in creating the beginnings of a business plan.
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