14 Funding sources for your Clothing brand

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How to finance your clothing brand? Here are 14 funding sources you could use to kickstart your project.

Creating clothes and prototypes can be quite expensive. This is all the more the case if you use expensive, eco-responsible materials, if you manufacture in a developped country or if you include high quality details into the clothes.

If you wonder how you can make your dream of launching a clothing brand come true, this list might comes in handy.

1 – Self-financing via your own savings

Among all the available funding sources for your clothing brand, the most straightforward and obvious is self-financing.

In other words, you invest the money that you already own in your bank account. This money can come from savings you have made throughout your life, from previous jobs or contracts. It can also be money that you have inherited. (Or consolation money from a divorce)

By self-financing, you are indebted to no one but yourself. You don’t have to be accountable either – aside from your employees and the government of course.

However, the risk is entirely on your shoulders. In addition, you still need to have enough money left to be able to live because the chances of you being able to afford a salary for yourself at the start of this adventure are slim.

2 – Self -financing your brand through freelance contracts

Another way to finance your first clothing collection is to take freelance contracts in parallel with the launch / development of your brand.

If you have a skill set and can offer your services to businesses, this can also be a way to fund your collection. Freelance contracts, depending on your bargaining power, can result in a lot of money.

There are often requests for developers, community management or marketing specialists if you had another life before launching your brand. And if you’re a stylist or pattern maker, you can find great deals from fashion companies or other designers as well.

With the right kind of legal status, you may well be able to make these contracts fit into your corporation.

3 – Financing your clothing thanks to a side job

You can also consider taking a small part-time job alongside your brand to fund its expenses.

Nothing prevents you from working in the morning on this side job, and in the afternoon and in the evening on your brand. Hustling is actually quite common in the fashion industry.

You can take a job as a salesperson in a store, which at the same time allows you to understand what makes people buy this or that piece of clothing. You can become a real estate agent and do apartment tours or ou can be a host or hostess. In some cases, you can even work on your brand during downtime. Of course, this is not always rewarding, but it brings in money while saving you brainpower.

Don’t hesitate to do a quick google search or go to the facebook job groups. There are plenty of opportunities.

4 – Self-financing your clothing line while working full time

In the same line of idea, you can also (continue to) work full time and develop your brand during your evenings or weekends

The salary you have then allows you to finance your project. And since you’re full-time and potentially in a better job, you normally earn a lot more than part-time.

It takes self-discipline because you have to manage 2 jobs (the one you have and the development of your brand) at the same time. You will therefore have less energy to devote to your brand. Be careful not to procrastinate and to keep your ultimate goal in minde.

However, this allows you to try and start your clothing company without much risk. If your brand doesn’t work, you will always have a source of income to rely on.

5 – Passive income

Passive income is income that you get from a one-time job that continues to bring you money even when you sleep. It is passive because you did the job once, and it will continue to work for you afterwards.

These include, for example, the royalties for on a book you wrote, income obtained through membership or an annuity that you receive from the rental of real estate.

Of course, creating passive income requires work too, but it can help you for the rest of your life, even beyond financing your clothing collection.

6 – Love Money

Another option is to borrow money from loved ones. It’s called Love money, because these people are going to lend you money just because they know and want to support you.

You can borrow from one or more people. If you opt for this solution, it is better to tell them to consider this amount as a donation, because you do not necessarily know when you will be able to return it to them.

The advantage is that you can quickly get cash even if you don’t personally have it. However, althought you don’t have interest on that loan, it may put you in a moral debt towards these people. You might feel more pressured o than with any other funding sources.

Sometimes it is more difficult to owe money to someone you know than to an institution with which you have no affection.

7 – Find a business partner with money to invest

Another way to finance your collection is to find a business partner who can bring in capital and help you fund the collection.

Ideally, these people, in addition to having capital, have complementary skills. If you are a stylist for example, it might be interesting to partner with someone with marketing or finance skills.

Of course, the association is not to be taken lightly. In your entrepreneurial journey, your partner (s) are the people you will spend the most time with. You will also have to work together to make the decisions and they will also have a say in what clothes you want to release.

8 – Bank loans

Another way to finance your first clothing collection is to take out a loan from a banking institution.

The problem is that banks very rarely agree to finance cashflow and stocks. Banks generally prefer to invest and lend money for equipment or real estate. So if they fail, they can still get their money back by selling your machines or the walls.

Likewise, they will prefer to lend money to proven business models, such as a restaurant or a hairdresser business. It’s tangible and they have had precedents with success.

However, some organizations can act as guarantor for your loan and facilitate your application. If you also have a good relationship with your banker, you may also be successful in getting a loan by yourself.

9 – Subventions

There isn’t a lot of subventions available for new stylists and fashion designers.

They are also subject to conditions. As a matter of fact, a thorough study of your files and your business plan will surely be conducted. You must be able to provide a realistic, yet ambitious, forecast and a cash flow plan. Sometimes, you will even be asked to pitch your project.

However, don’t hesitate to give it a try. If you don’t try, you won’t know. Better have failures than regrets.

10 – Rewards from fashion or start up contests

Competitions are frequently organized to highlight the latest innovative concepts and new talents.

Participating in fashion contests or contests for start-ups can help you get the funds you need for your business

Rewards can come in the form of money, mentoring, storage or a place in a permanent boutique.

11 – Pre-order sales

Pre-ordering is purchasing an item of clothing before it is produced. Many brands (DNVBs for the majority) are created just like that. They announce their release, their project and offer their audience to pre-order and reserve the first designs for them.

Of course, especially in fashion, it’s better to have a prototype that you can show off and have someone try on. The more pictures or drawings you have that let people better see the future clothes, the better.

On the other hand, it will allow you to produce your collection without having to advance funds, to verify your market fit and to start building your customer base.

To get pre-order sales, you can use your website or use a crowdfunding platform.

12 – Crowdfunding

It is one of the most popular funding sources. Many fashion brands have started doing this.

Crowdfunding is about mobilizing a community to fund your project. In exchange for real or virtual rewards (a goodie or a product from your future collection, a thank you email or a mention on the website for example), mrs A or mr B can help you finance your project.

You can also offer preferential prices for people who pre-order through this fundraising campaign. It will attract more attention and people will feel like they also got a good deal.

On one hand, it allows you to fund your collection, verify your market fit, and your community’s enthusiasm for your product. On the other hand, for people who contribute to your project, it is psychologically rewarding because they help give life to a project they believe in.

Crowdfunding is time-limited. On top of that, depending of the platform you use, you might to need to hit a specific fundraising goal to collect the money. Keep in mind that all platforms are different and that crowdfunding requires preparations. You need to be ready to spend a whole month or more promoting, pitching your project and selling.

13 – The business angel or sponsor

You are talented or you have caught the eye of someone with a lot of money. They decide to bet on you and lend you the money you need against a share in your business.

Obviously, finding a patron or a business angel is not easy and is often a good dose of luck.

However, a business angel or patron can also be a mentor. He or she can also open up his or her networks to help you in your development.

14 – Investment funds or venture capitalists

We write it down here for your own culture, but it’s one of the funding sources that are more suitable for brand development.

Investment funds or venture capitalists are companies that bet on the success of a company and either finance their launch or their acceleration in exchange for shares.

If we say this is funding more suited to brand development, it’s because you often have to show evidence of success and benefits. The whole point of investment funds is to build wealth and they will only bet on you if they see can earn money in the end.

However, if you are looking to own a boutique, if you already have a history of successful fundraising, or have an innovative concept, you may want to explore this funding source more in depth.

Note that bringing a fund into your business is not to be taken lightly. Indeed, if you are, for example, in slow fashion or ethical fashion, capitalist logic can go against your values.

If you have not started your project yet, think well about the funding sources that you will use as it will have some impact on the way you develop your business. And if you already launched, feel free to let us in the comments which funding sources you used.

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