It may be tough for green designers to stay profitable while discouraging consumerism, but it’s not impossible. The key is this: When it comes to developing your business model, you have to be equally if not more creative than you are designing your collection or product. I have always said my biggest challenge with Uluru wasn’t figuring out how to design sustainably. Rather, it was managing cash flow.

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MONEY MATTERS

Even within the framework of a conventional business model, the fashion industry poses challenges. Seasons overlap, so while you’re working on the upcoming season, you still have to pay your factories for the prior season’s production balances, not to mention collect money from your customers.

Even within the framework of a conventional business model, the fashion industry poses challenges.

If you don’t have a nice chunk of change in your bank to self-finance your development a year in advance, you have to depend on your clients’ payments, which don’t always arrive in time to pay for your production, if at all. This cash pickle has nothing to do with sustainable design and everything to do with the fashion calendar, credit availability, market interest rates, your relationship with your retailer, and your core clients’ financial health.

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DESIGNING YOUR BUSINESS

The reality of a global economy makes sourcing “sustainable” materials and manufacturing a moral and financial gamble. It’s a practice that requires independent designers to bust out their own moral compasses, not only to make calculated and informed decisions, but also to provide consumers with transparent explanations for the many gray areas.

The reality of a global economy makes sourcing “sustainable” materials and manufacturing a moral and financial gamble.

Having said that, designers can design their own business models—models that work better for them, the needs of the stakeholders, and the development and production of their products or collections. This is where designers can really stand out, innovate, and get an edge. There are pioneers doing just that, including Alabama Chanin, Tom Ford, Bonobos, Dosa, and Patagonia. These are just a few examples.

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FORMULA FOR SUCCESS

I earned a degree in business before I studied fashion at the California College of the Arts, and I like to collect business models as a hobby. As part of this pursuit, I’ve compiled a list of 11 factors that contribute to financial sustainability and the success of a business. These 11 factors are not absolutes but rather common themes I’ve observed in both brands with staying power and growing companies that are surviving the economic recession.

It’s important for designers to own or develop partnerships with key constituents of their supply chain.

1. Rethink success: For the past decade or so, the end goal of many fashion brands has been growth, particularly growth through a public offering. Public companies, for the sake of quick quarterly growth, tend to sacrifice good design in favor of getting the maximum amount of goods out the door.

Innovative, thoughtful, sustainable design, on the other hand, often requires a longer development process. Plus, private ownership allows greater control, innovation over time, and natural growth, as well as fruits of success that return to stakeholders rather than shareholders.

2. Think vertical: It’s important for designers to own or develop partnerships with key constituents of their supply chain, including production, retail, and e-commerce. Getting everyone in the supply chain in sync isn’t easy. For example, farmers need to know market demand for organic cotton at planting time, which is typically eight months prior to sales market for fashion.

3. Secure your materials early: I’ve always believed we need a CSA (community-supported agriculture) system with cotton farmers. Today, with global cotton shortages, it might be the only way that smaller companies can secure cotton and have it available when they need it. The largest global retailers buy up the entire supply.

4. Partner wisely: Family funding or other equally invested/aligned partnerships are like winning the lottery. One of the biggest mistakes entrepreneurs make is going into business under-capitalized or choosing partners hastily.

The healthiest companies I have seen have partners with different and complementary strengths. There is someone who designs and another who manages the business, but they both share a long-term vision. You may be talented enough to juggle both tasks, but there simply aren’t enough hours in the day to design and manage simultaneously.

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5. Grow your business through equity versus debt: Some short-term debt against sales is necessary to leverage production, but it’s not always available and often expensive. Reinvest profits as much as you can. Taking loans out for reasons other than paying for production (based on confirmed orders) is a high-stakes gamble.

Designers need to connect and build relationships with customers rather than chase consumers.

6. Don’t underestimate the power of scarcity: If demand is greater than supply, and you are still making a profit, that is the good news. You’ll get there.

7. Become best friends with Quickbooks: Seriously. You need to know what is going on in your business because it will help you make good decisions and mitigate disasters.

8. Have a genuine story and/or “heritage”: Because there is so much stuff out there, designers need to connect and build relationships with customers rather than chase consumers. One way to do so is to develop a unique process and tell the story about the people who craft your product. Don’t make something up, however. Transparency is absolutely necessary if you’re to build trust.

9. Design timeless pieces that defy trends: This not only cuts down on development costs but also makes a brand more identifiable and reliable. People fall in love with a well-designed piece, wear it beyond a season, tell their friends, and come back looking for more.

10. Don’t overspend on PR: Although press can give the illusion of success, there isn’t necessarily a direct link between press and sales. There are many creative ways to generate a press following, but more important, you need a customer following. Focus on making great, unique products that sell and the press will find you.

11. Live within your means: It’s much more pleasant than living in debt. Don’t count the money until the check has cleared; you just never know what might happen along the way.

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