There are different financial aspects in running a business. You need consistent cash flow to ensure that your business runs without interruption. As a business owner, you need to be on top of your finances. Let’s look at four main financial areas that you need to closely monitor:

1) Expenses
2) Budget
3) Funding
4) Accounting


These are the different things you invest in as you start your business. Some of them become recurring expenses. Let’s look at some of your major expenses:

1) Branding development
This not just your logo, but your messaging and the planning of campaigns to consistently communicate that message to your audience. Your brand will be why they buy from you – why they will buy your product over the competition. A solid brand will not only get you noticed in the very competitive game, but it will create the demand and customer loyalty you need to sustain.

2) Equipment
Commercial sewing machine, computer, fax machine, printer, drawing equipment.

3) Web development
Domain name, website design, content creation and maintenance fees.

4) Pop-up stores or trade show booth
Rent for space, registration, promotional materials like flyers for these events, and signage (pop up banners are economical and effective – the UPS Store has better pricing than display companies).

5) Advertising and marketing
online and social media ads, high quality printing of catalogs and brochures

6) Fabric
Your main raw material that needs to be in stock in varying colors and textures

7) Software
CAD, Adobe if you plan on doing all of that in house. Contracting that work out in the beginning may be the way to go, but you will have to have a solid process and procedure in place to avoid errors and miscommunication.

Other big expenses include:

1) Rent
2) Insurance
3) Permits
4) Utility deposits
5) Legal advice
6) Other office supplies

There are also other unplanned expenses that may come your way such as fabric shipping errors, production mistakes, wrong labeling, equipment repairs or maintenance, warehousing, travel expense for trade shows, shipping of items, sample production, and more. You need to have money allotted for unexpected expenses like these.

While there may be a lot of expenses as you start your business, there are also ways to cut down on some of them.

You need to know where you need to splurge and where you can skimp. Here are some ideas to help you cut down on costs:

● Leverage word-of-mouth advertising instead of paying for a lot of ads
● Make trades with contractors like giving them clothes for their services
● Tap friends as models for your photo shoots, catalogs, and fashion shows
● Keep tabs on your air miles and use them when travelling to trade shows
● Provide a design service that wouldn’t cost you much in terms of raw material


There are two types of budget that you need to plan for, the startup budget and the operating budget. Startup budget is mainly the money you will allot for everything you need to launch your fashion business. If you will start your business at home then your startup budget will definitely be lower.

Operating budget is the one allotted for recurring expenses like utilities, rent, insurance, and more. It’s important to set aside three to six months’ worth of personal living expenses. This is the industry’s rule of thumb. You need to be prepared for days when there are no clients or sales coming in.


If we’re going to be realistic, most of your startup funds will come from your own pocket. But if this is not enough, you need to source for additional financing.

With a well-crafted business plan, you can confidently approach investors and lenders who can potentially fund your business. But this is not enough. You also need to present a loan proposal that shows the following:

● Amount you want to loan
● Personal assets and collateral
● Time it will take for you to pay it back
● Where you plan to spend it
● How you plan to pay the loan

There are different factors that can encourage the approval of your loan such as:

● Collateral value
● Personal capacity to pay if business fails
● Your character based on what the community says about you
● Personal credit rating
● Completeness and clarity of business plan
● Business viability
● Your ability handle pressure and business responsibilities
● Your experience and expertise in the industry

On the flip side, there are also factors that can discourage the approval of your loan including:

● Insufficient collateral
● Loan request is unclear
● High-risk business idea
● Unclear and incomplete business plan
● Your lack of enthusiasm and confidence
● Insufficient financial capability and commitment

Another option you can explore is applying for a line of credit from a bank. This process involves having a revolving credit with monthly interest. As you pay the principal amount, your credit becomes available again. The advantage of a credit line over a loan is that you don’t pay for interest for the amount you don’t use.

Aside from the documents you need to prepare, there are also other means to get funding easily.

These include:

● Asking for referrals to your potential investor
● Making extra copies of your business plan for distribution
● Dressing and speaking professionally
● Bringing your creations and being passionate about them!
● Keeping an open mind especially if you get declined

Other sources of funds may include your family and friends, private venture capitalists, and private placement companies. Keep in mind that this process of acquiring funds involves part preparation and part passion so go out there and present your big business idea with confidence!


Accounting and banking involves tracking your finances closely. You need to make sure that you know how to balance your chequebook. You also have to keep your finances organized in preparation for tax season. The last thing you would want is turning your place upside down to find lost receipts.

Some of the things you can do to help balance your books include:

● Hiring an accountant (can be part-time initially)
● Opening a business account in the bank
● Getting business checks
● Keeping a paper trail of business account transactions (avoid electronic payments)
● Reviewing your profit and loss statement regularly

Knowing where you are financially will help you anticipate your needs better. Have a proactive than a reactive approach when it comes to your finances.

Other Business Details

One of the things you shouldn’t forget is the legal side of your business. It is best to consult a business lawyer when it comes to ownership, contract review, trademarks, and other agreements.

There are four types of ownership:

1) Sole proprietorship – you’re the sole owner of your business and have full control of it
2) Partnerships – when you start your business with another person
3) Corporations – making your business a legal entity apart from yourself
4) Limited liability companies (LLC) – similar to a corporation but cannot sell stocks nor form a board of directors

You also will be needing help for business licenses and trademarking your label. All of these can be easily done with the help of a business lawyer. Taylor McCaffrey LLP has a great startup service that includes one hour of free consultation to determine your business needs specific to your startup and will provide you with a customized quote that eliminates the guesswork of legal costs. Contact if you would like a referral to arrange your free consultation.