The fashion industry is one of the high-paying industries that guarantee a reasonable return on investment (ROI) when properly set up. Setting up an organized fashion brand, however, requires proper funding, amongst other important requirements.
Funding a business as significant as a fashion brand involves proper planning. You have to first ensure that you have enough funds to set the business up to a certain level.
You can secure funding for your fashion brand with any of these 6 effective ways:
1) – Friends and Family
This funding method is almost in the same category as self-funding. Lending funds from friends and family to start up your business cannot be compared to taking bank loans. The pressure to pay back is way less, and there may be little or no interest involved.
2) – Self-Funding
Self-funding may not seem like a sufficient method for funding your fashion business, but it is one of the best options. Starting up a business with debts is not all bad as long as you have a strong financial plan on how to utilize and pay back the borrowed funds. Self-funding, on the other hand, allows you to start up your business in a relaxed state and at your pace. If you are worried about how to raise the needed funds, it doesn’t have to be all at once. Working on the side is one of the easiest ways to self-fund your business. You can run your business while having a side job for support. Investment options, like cryptocurrency, are one of the best ways of earning enough money to fund your business. You can run cryptocurrency marketing campaigns on sites like https://redaccs.com/cryptocurrency/ or others to help improve your status in the crypto community, which in turn guarantees your success in the crypto space, providing you with enough funds for your fashion business.
3) – Grants
Starting up your fashion brand with grants is an excellent funding source for a business. Grants are usually non-refundable, meaning that you do not have to pay back. You, however, need to meet up with certain criteria to qualify for a grant. Having a good business plan, and an excellent grant application increases your chances of qualifying for the grant.
4) – Loans
While taking a loan is a reliable method for funding your fashion business, it involves a lot of risk, compared with the 2 methods listed above. Having to pay back a loan is not so easy for start-ups, but it is achievable when properly planned. Another challenge involved is the interest on the loan. The longer it takes you to pay back the loan, the higher the interest. Different loan agencies give start-up businesses loans, but taking from the bank is a better option.
5) – Angel Investors
Angel investors are mainly those who are well-grounded in business and have the capacity to fully fund one. In this case, you need an angel investor(s) with years of experience and knowledge in the fashion industry who is willing and able to invest in your brand. Angel investors do not only help to fund businesses, they also provide opportunities and good business ideas. While using this funding method may seem like your best option, especially as it comes with many benefits, it also has its disadvantages. Angel investors usually ask for 20%-25% of any businesses they invest in. If you are willing to share the ownership of your fashion brand, you are good to go.
6) – Venture Capital
Venture capital is when big investors provide you with the needed funds to start up your fashion brand. The key to getting these types of investors interested in your business is crafting an excellent business plan. As long as you have a brilliant idea and plan, you can attract the interest of big investors. The disadvantage of this method of funding is that a significant part of your brand can be owned by the investors.
Conclusion
There is no such thing as being too careful when considering a funding source for your fashion brand. Before using any of the listed funding options, ensure that you do a thorough research on it. Carefully analyze each of the sources of funding and pick the one that works best for your brand.
Self-funding, assistance from family and friends or applying for grants are all great funding sources for your fashion brand and can be argued to be the best.
The other 3 funding sources are excellent as well, but their disadvantages are significant. If your start-up brand can withstand the impact of clearing debts at an early stage or sharing the ownership of the business with investors, feel free to go for any of them.
