How to Grow a $100 Million Brand: Strengthening Your Foundation | BoF comments

BoF Insights is an in-house Fashion Business consultancy. We partner with fashion and beauty retailers and investors to help them grow over the long term. Get together to find out how we can support your business.

This article is the third part of a BoF Insights series that outlines today’s playbook for translating culture heat into business success. Read the first part and the second part.

For most fashion designers, generating buzz is the easy part. Where these creative visionaries often struggle is how to build a strong business foundation that will allow their products to grow.

For that, they need help.

“You can drive a business by being a very hot brand where the customer asks and wants it and wants it. But it’s only one part that makes this brand successful,” said Christopher Burch, the founder and managing director of investment firm Burch Creative Capital, which invests in LA-based fashion label Staud. “If you say to me [that] you are very creative [founder]I can tell you, now we need the best CFO or COO in the world.

This is especially true in today’s cold financial market. Leaders who make good decisions about funding, who choose the right path to profitability and are willing to take a close look at their brand’s DNA are primed for success.

“The world has changed,” Burch said. “VCs around the world have learned that profit is more important than growth.” Brand leaders need to flip through the growth playbook and get the basics down before jumping into risky, high-paying ventures.

By strengthening their internal cash flow position, hiring executive talent and strengthening the unique DNA that gave them their first start, independent labels can lay the foundation for a sustainable journey that translates buzz into action.

In an interview with BoF Insights, Business of Fashion‘s in-house consultant, independent brand leaders and investors have explained the importance of leading business processes to secure future growth. In the third and final part of this series, BoF Insights uncovers how to turn social media into long-term business success by strengthening your brand’s fundamentals.

Writing Up

Investors and experts believe that the lack of senior leadership is one of the main obstacles to unlocking growth beyond the $10 million revenue mark in the fashion industry.

Key roles such as chief executive officer, chief financial officer and chief operating officer are natural additions to the skills available to creative founders. By recruiting management skills, creative founders can prioritize the development of the vision and culture without sacrificing business discipline.

“[2024 is] a year of working on foundations,” said Frederic Court, founder and managing partner of venture capital and growth investment firm Felix Capital, which invests in fashion labels Ami Paris and Anine Bing among other brands. “It’s a good year to hire people. There is a lot of uncertainty in the groups [so] it’s a good time to support talent and attract talent. “

According to Court, Ami Paris creative founder Alexandre Mattiussi brought in chief executive Nicolas Santi-Weil while Ami was making around 1 million euros (about $1.09 million) in annual revenue and year. Court said the hire played a key role in the label’s successful journey. As of 2023, Ami Paris generates more than 300 million (about $327 million) in annual revenue.

Emela, the British streetwear label, found itself on hold until it brought in new director Paul Spencer to complement the team it founded in 2022.

“Before I hired my CEO . . . “I felt like I was out of my depth when we were 20 to 30 million, and everyone was working more than they needed to,” said the founder-‘ fellow George Heaton “But when [Spencer] came in, put a very strong team. . . [and we] they were able to move up at a faster rate than we could before. ”

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Setting Your Own Pace

In times of slow economic activity, growing brands should put measures in place to protect their financial position. To do so, several indie labels have turned away from external funding to focus on organic growth as a means of enforcing discipline and cost control.

“We have good relationships with banks and debt funds. It was organic [growth] from the beginning,” said Emily Adams Bode Aujla, founder of American luxury label Bode. “I wanted to make sure that we kept coming back to my mission statement of what I wanted to create, and not talk outside the box.”

This approach helps brands to control their growth rate and avoid burning out too quickly. Bode reiterated that he knew it was the right time to open the first token based on natural demand signals. “It was the feeling that it was time. We had enough people coming to [studio to shop for private appointments that,] if I sell two more jackets, I can rent them,” he said.

Bode has also raised fashion royalties as a primary source of funding to fuel early business growth. He won CFDA’s Emerging Designer of the Year award in 2019, as well as CFDA Menswear Designer of the Year in 2021 and 2022. He was a LVMH award winner and a Woolmark award winner in 2019 and 2020 respectively. However, while the prize money was a boon to Bode in the beginning and encouraged him to set a steady growth of the plants, the work and travel required to compete for these titles can make the prize money difficult. be an unreliable source of funds.

Brands that choose to receive external funding can maintain a steady pace of growth by ensuring a clear agreement with prospective investors regarding timelines, goals and performance metrics.

“[Brand leaders] we shouldn’t be afraid to ask where the money comes from,” said the Council. “They shouldn’t be afraid to share success [with investors]because if success for an entrepreneur is running a business for 10 years before he wants money and [the] the investor is five years old, that will be a problem. ”

Regardless of the financial strategy, cash flow discipline is a key choice for successful brands. Profitability is necessary, and in order to ensure a strong cash position, companies must follow strict cost control. For some, this may mean halting aggressive monetary expansion activities for the time being.

“The fashion industry as a whole is out of fashion for a while because it’s so important . . . organic growth and cost control is the only way forward,” said Stefano Martinetto, director and co-founder of Hosasane, a platform for the growth and development of fashion brands. In this area, the traditional heat is I took the label so far. “You can be very precious and completely broken. So it is important to believe that its importance is important as it translates into a sustainable financial system. ”

Keeping the Limit

For many investors, clear DNA is a key ingredient for a brand’s staying power. This may mean looking at specific values ​​and reports at common stages in the growth journey.

Péter Baldaszti, chief executive of Budapest-based contemporary label Nanushka, said the brand was “still looking for souls”. [to define] who we are and what we stand for” amid today’s tough climate for indie labels. This enabled the company to develop its approach to expand into other categories such as bags and “gave us this good foundation of … what the Nanushka bag should be, in terms of symbol, shape, form, material, size,” he said. “We really needed to solidify that piece of identity to be able to deliver these features.”

In an industry where innovation is at a premium, brands that can break through the homogeneity and commit to maintaining the cultural value that gave them their start will stand out. “There must be something very specific because there is a lot of noise in the world. . . you need to have a unique voice,” said David Belhassen, founder and managing partner of NEO Investment Partners, which has invested in luxury brands Victoria Beckham and Ami Paris among others. “The [brand] DNA is what makes the difference.”

Without access to free money and cheap digital advertising popular in the 2010s, focusing on the basics is now more important than ever. Products that reach the $100 million revenue threshold will be the ones capable of long-term business transformation by combining cultural value with well-managed, timely business games.

“It felt so easy to begin with [an independent label] at some point. I’m afraid that opportunity is long gone now,” Martinetto said. But I also think there is justice in that. Financial aid and [enabling] successful independent brand [to survive]it is not a given; it’s one in a million or one in 10,000 or one in 100,000. And so be it, because the reward is very great.”

This article is the third part of a BoF Insights series that outlines today’s playbook for translating culture heat into business success. Read the first part and the second part.

BoF Insights is an in-house Fashion Business consultancy. We partner with fashion and beauty retailers and investors to help them grow over the long term. Get together to find out how we can support your business.