Life long entrepreneur. Tons of advice in the startup, apparel, and retail space. Success and failure, I know both.
Advice - I have a ton of it. I have run many businesses in my life. Some very successful, some failures. I have experienced all the highs and lows that one can experience. You've had sleepless nights – I've been there. Running on fumes and want to know how to keep making the right decisions – I can help.
Since 2010 I have been working on developing and launching Shifthub - and employee scheduling and communication network for SMBs. In November 2012 the Shifthub team successfully graduated from the Extreme Startups Fall 2012 cohort with great traction, sales channel partnerships, and an aggressive roadmap for 2013.
I have over 18 years experience in the apparel industry. I have owned and operated a sales and distribution company where I specialized in launching new brands, importing specialty brands from California including Paul Frank Ind., and developing private label programs for major retailers.
I also ran a chain of outlet stores for 3 years, before exiting in 2010.
Kamal's answer is pretty spot on, but I would like to add that it's important to stipulate that their shares vest over a period of 3-4 years. A one year cliff is also appropriate.
Inventory - Manage it properly!
Watching the rate of sale of every category of inventory is critical for success. For example: Did you sell $2000 worth of category 'A' last week? Sounds great, but is it? If you only had $10K of that category in stock, then you have done a great job with your buy as you only have 4 weeks left of inventory in that category. If you currently have $50K of inventory in that category you may be in trouble as you have 24 weeks left to sell inventory that could get dated prior to that point, forcing you into a markdown situation. As Lisa said, cash is king and this will hurt your cash flow in two ways: initially, too much cash tied up in a bad buy, and less cash coming in down the road.
Another helpful tip: if you are going to monitor sales by category, then you must buy your inventory by category, and not by brand. It's much easier to create and maintain budgets this way.
A dynamic community and active following sounds like you may have the opportunity to drive revenue with the merchandise. That being said, my advise would be to start with the right margins so you don't have to adjust your retails as you scale. At the very least, start with a 50 pt margin. I suggest a 60pt margin - you will encounter costs you weren't expecting and this will help you maintain profitability. The correct way to calculate this would be the following example: let's say you can have a mug produced for $5. Your retail price should be about $12. Take $5 / .4 = $12.50 then round down to $12, leaving you with a 58 pt margin.
If you have ideas about wholesaling, then you would have to adjust this strategy slightly to allow for aligned retails between you and your retail customers. Normally adding a 35 pt margin to the cost price and then calculating the 60 pt margin on top of that would suffice.
Great call with Jeremy. Set me on a wise path to take with my business and had similar stories to what I'm trying to solve. Will call again.
Jeremy provided great insight and strategic direction
I got 5 very actionable business ideas that Jeremy explored himself. So I am rolling up my sleeves and starting the action. Thanks a lot, Jeremy!
Great advice! My business makes too many different things and I needed an outside perspective to help focus on the best avenues. Jeremy has been wise and efficient at focusing on the low hanging fruits (easiest dollars to grab) as well as seeing some untapped potential that would be fairly easy to grasp new revenues for my company.
My last call with Jeremy was very beneficial. Our time and conversation was full of actionable steps, encouraging and candid. I enjoy Jeremy's straight forward style I left feeling challenged professionally and invigorated as a startup founder.
He is a life long learner entrepreneur in the trenches and a great resource.
Jeremy is on the cutting edge of entrepreneurship. He gave me more than what I asked for.
I really enjoyed my discussion with Jeremy, great insight, advice and willingness to help (so refreshing!!!). Thank you.
Jeremy's biggest strength is being specific. He'll listen to everything you're thinking, trying and worrying about, and then tell you exactly what he thinks you need to do. Highly recommend.
Jeremy was helpful both when discussing specific questions as well as considering bigger picture issues. Very forthcoming, obviously knowledgeable and generous with his insights.
We went completely through a new business plan in no time. Lots of great insights!
Straight shooter, helpful, insightful and much more!!!