Fashion Unraveled - Second Edition - How to Start and Manage Your Own Fashion (or Craft) Design Business

In actuality, these items are examples of fixed costs directly related to each collection you produce.

I cannot stress enough how important it is to keep to your budget. It’s easy to rationalize spending just a little extra, but it can quickly become a habit. Set limits to your expenses.

Let’s assume you are going to produce 100 pieces of one garment to fill orders that were placed, an additional 5% for damaged, plus another 10% for direct sales through your website. 100 pieces x 5% = 5 (Damaged allowance) 100 pieces x 10% = 10 (Allowance for direct sales and reorders) Your production quantity is 115 pieces.

Chapter 34: Variable Costs You will need your cost of goods calculated

The liabilities detail the loan balance, credit cards and accounts payable (money billed to you but not paid). Capital (also referred to as equity) is basically what you have invested as owners and the net profits that you leave in the business each

One way to acquire professional photos is to enter into a TFP (Time for Prints) or TFCD (Time for CDs) arrangement.

Online Marketing – Include the fees for selling online through sites such as Etsy.com and Ebay.com. This can also include your budget for blog advertising, Google Adwords and other online marketing efforts.

There are two reports that you should prepare on a monthly basis - a Profit or Loss Statement and a Balance Sheet. These two reports will later allow you to evaluate your overall annual expenditures and how you can improve your income.

How can you measure your profitability? Subtract “expenses” and “fees for your services” from your total “sales.”