One of the most prevalent thoughts on the minds of entrepreneurs is how to scale their business and increase profit. Profits are the lifeline of small businesses including fashion businesses and finding ways to maximise them is important.
As a small fashion business, the higher your profits, the greater your chances of surviving in the long run. Generally, profits increase as sales increase and costs decreased, but achieving this is not as easy as it seems. For startup fashion brands, the faster you start maximising your profits, the better for you.
Here are 7 steps to take to help you start maximising your profits from now on;
Ways to Maximise Profit in Your Fashion Brand
1. Lower Operating and Overhead Costs
Every fashion brand has operating and overhead costs tied to it. These costs are the costs associated with running a business. They are the costs you have to bear for your business to run smoothly and be more comfortable. They include rent, utilities, inventory, payroll, marketing and advertising costs and so on.
From your observations, you can find ways to reduce your operating and overhead costs without negatively impacting the business. Look out for costs that you can reduce significantly or that you can eliminate and do so.
For example, if you always barely afford to pay the rent at your current fashion store location, you should consider cheaper alternatives. Also, instead of running your generator all day long, you can install a solar panel or inverter at your store to keep things bright when there’s no urgent need for the machines. You can also look to buy your materials in bulk so you get discounts on them.
2. Keep Customers Coming Back
Customers are the lifeblood of any fashion business. Without them, there is no business and no profit to make. So, as a fashion entrepreneur, you should never underestimate the power of a happy customer. Happy customers always come back and bring others along with them.
Also, because they trust you and your brand, recurrent customers tend to spend more and buy things more frequently than new customers. This way, they help your increase your profitability faster. These customers play a big role in how long your fashion business will be around.
To keep your customers coming back to you and maximise profit, you have to convince them to stay. Some of the ways to achieve this are by creating referral and loyalty programs, offering recurrent customers discounts, surprising and enticing them with gifts, and communicating constantly with them.
3. Drop Poor Performing Products
In a ready-to-wear fashion business, there will always be products that don’t sell as much as you expected them to. To figure out which products didn’t do well, prepare an income statement for all of your income sources. This will help you see how much profit and expenses each of your fashion products brings into the business.
Once you recognise which products are not doing quite well, you can work out ways to hike their sales, reduce expenses associated with them or completely discontinue them. Deciding this should not be based on sentiments or emotions but on figures and how they affect the sales of other products.
For all of those products that didn’t sell well and are sitting in storage gathering dust, you need to find ways to sell them off. It could be that trendy hot crop top that went out of season too fast, those 6-inch strappy heels no one bought or that cute layered necklace they didn’t quite like, whatever it is, you need to get them out.
You could put them on sale, make them into special offer products, sell them to resellers, rework them or gift them to influencers. This way, you still get to make some money on them instead of leaving them in storage.
Once you have gotten these products out, figure out what went wrong. When you do that, you can puts structures in place to prevent it from happening again.
4. Expand Your Reach
To increase your profits, you might want to look into selling to a wider audience. Based on market research, you can figure out areas your fashion products will do well in and look into expanding there. You could also look into expanding your product offerings.
For example, if you sell in Lagos and you haven’t tried to sell them in Ogun state, you can look into expanding your reach there. Also, if you produce and sell just turbans, like Abaya Lagos, you can look into creating and selling kaftans as well.
Sometimes, focusing on just one aspect of the market and ignoring the rest can mean losing potential business opportunities. If you want to maximise profits in your fashion brand, this might e a good option for you.
5. Review Your Pricing Structure
Right from the get-go, if you have not been pricing your fashion products right, you will never be able to increase profit. Also, as your fashion brand grows or the economy changes, you might need to gradually adjust the prices of your product offerings. Depending on how you do it, you might scare customers away or keep them attracted to your brand.
As a fashion entrepreneur, you should regularly review the cost of your products to ensure you’re not making a loss on them. Sometimes, you might have to adjust the prices of just some products while you leave others. You can also decide to adjust the prices of all your products. Whichever way you do it, make sure to study your customers well and know what will suit them.
6. Delegate and Automate
You don’t have to do everything in your fashion brand by yourself. This is where delegation and automation come in. When you find yourself too involved in administrative duties, figure out if those duties help bring in and keep customers.
If they do, you can delegate some tasks to other members of your team. Let every member of your team focus on their strong points while you focus on yours as well so your combined effort can increase sales. Also, you can outsource certain tasks like stoning, embroidery, and beading to other fashion entrepreneurs while you focus on creating your items.
Also, to manage time more effectively and cut down cost, you can automate certain tasks. Things like sending emails out to clients or posting content to social media can be automated. This way, you get to save time and focus on other tasks that bring in money.
As you do these, don’t forget to eliminate certain tasks as well. Redundant tasks that don’t affect your bottom line can be taken out. They could include long real-time meetings or marketing channels that yield no results.
7. Up-Sell, Cross-Sell, and Resell
Many times, introducing your existing customers to other products can help increase sales. This can be done through up-selling, cross-selling, and reselling.
By up-selling, you can offer customers a higher version of a product they have come to buy. This should be done in an informational way and open the eyes of your customers to additional benefits they can get from the other product. For example, you could show them how a certain fabric feels more comfortable on the skin than another does so they pick the higher-quality fabric.
By cross-selling, you are offering additional products to your buyers along with their purchase. It is a way to increase their consumption of products. For example, you could suggest that a client purchases a neck scarf along with her dress because of how well they go together. Cross-selling could also be by offering another product on promotion along with the customer’s purchase.
With the talks of sustainability in the fashion industry, reselling can be an attractive option. You can offer a resell program where customers can donate their old stock that is still in good condition back to you for a small reward. With a little revamping, you can often resell this stock at a reduced cost and make some money.
Before deciding on the profit maximising technique to use, you must first study your fashion brand and clients to know which applies to you. Never make uninformed decisions about your brand all in a bid to increase your profit, but do not be afraid to try new things.