Raising Funds for Your Fashion Business
Raising funds for your small business can be difficult at the best of times and is particularly challenging during periods of wider economic difficulty. Because fashion is a volatile industry banks can be slow to offer loans and you may have your work cut out for you in persuading them you've got what it takes. Don't give up. There are other ways to access money, and perseverance will be rewarded.
Funding NichesWhen seeking funding, you need to think about why somebody might want to fund you. The obvious answer - that you have a good business model and are sure you will be able to pay back the money - isn't always the best one to give. Whilst it remains important, most funding is given out according to other criteria. These focus on which niche groups your business fits into.
A good example of this is geographically based funding. Most cities have some areas that are doing well and others that are in need of redevelopment. Local funders will be happier to provide you with grants and loans if you are located in the latter type of area, because you will be making an economic contribution where it's really needed. Similarly, poorer cities may receive funding unavailable elsewhere. Sometimes this is enough to justify relocation.
Funding can be available on the basis of factors like your age, your educational level, and your family situation. Your local business support centre can help you to access lists of available funds that you might be eligible for. These can often seem obscure and can take a while to work through, but when they pay off it's well worth it.
Fashion Specific FundingLike many areas of industry, the fashion sector has dedicated funding bodies which can help out in some cases. If you're based in London, try contacting the Creative Capital Fund. The Centre for Fashion Enterprise, meanwhile, helps out promising newcomers to the industry all around Britain and UK Fashion Exports can provide support if you're aiming to exhibit your work internationally.
Besides these agencies, you'll find that industry bodies such as the UK Fashion and Textile Association can help you to find good sources of funding for specific projects. Be careful to check out what's on offer before you join every group you come across, however, as some charge expensive fees and may not offer very much in return.
Managing FundsWhen applying for funding you may find that much of what is on offer is restricted to paying for particular types of activities. You might, for instance, be offered funding to go on a course or buy computer equipment when what you really need is money to buy fabric. Generally speaking, it's worth applying anyway, especially if what's on offer is a grant rather than a loan. This is because any such input boosts your business and makes it look more deserving of input from other lenders.
When you receive targeted funding you may be able to move money you had previously allotted to those areas into paying for the things you really need. Even if you only had thirty pounds in your computer budget to start with, that's still an extra thirty pounds you can put towards that fabric. You may also find that your funding contract allows you to sell funded equipment on after a certain period of time, helping you to finance other things at that stage.
Alternative Finance ModelsIf you're still struggling to raise the money you need and you can't access enough in bank loans, what else can you do? One option is to try microfinance. This involves attracting a large number of very small loans - sometimes just a few pounds each - from ordinary people with an interest in helping businesses like yours. It can be more effective than you might think. You'll find several helpful microfinance websites online, so shop around to find one that could suit you.
In the absence of money, it's also possible to approach business by focusing on material items. This is best done by networking with other similar businesses in your area. Can't afford a new sewing machine? Maybe you can borrow someone else's in return for assisting them with transport. This informal approach to business can make all the difference in difficult times.