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LETS GET DOWN TO BUSINESS.

Question :
Hi there,Chicken or Egg situation , NZ made Swimwear since 2013 Yay Splash! Ltd Development of my product is superb, however funds to get it to market are lacking.2 reasons 1/ I cannot fund a large production line to promote. (Even 5 of each garment size, colour, style would total 100k NZD to manufacture2/ There is no purpose spending on a marketing campaign to take consumers to a website with such limited stock availability. (one offs in random sizes)Dificulties are: I have funded to date personally (large tax credit and no debts) however have no funding to take this further.I also need an income, so can dedicate limited personal time at this stage.I don’t enjoy doing social media myself to be honest, and am not looking to be ‘high’ fashion, more “modern, reliable, basics” like Bonds underwear. I can certainly back this product though with over 20 years experience in fashion and film as a tailor and stylist.I had a physical store in Browns Bay with repeat happy customers, however again limited stock, limited advertising, limited foot traffic meant a year only in the premise. 2 worst weather summers too. 2105/2016Too many hats on myself, and am looking for a business partner and or a marketing partner to take a cut of any sales generated.Any advise appreciated, or input or interest, please get in touch. sales@yaysplash.com Thx Lara

Question submitted 28/05/20 @ 12:03pm
Industry: Start-ups
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  • Hi Lara,

    From what you have said above I can see 2 ways in which you can continue to grow the business/expand.

    1 – Trade & Stock finance, This is a specialist product which allows a business to raise funds against the stock they are purchasing and the debt is repaid from the sales when they occur. It normally has a 60-90 day payment term to allow a business owner to purchase stock and sell so it means you can market efficiently. It is a bit more complex than traditional debt funding as the key is to understand your cash conversion cycle and also managing any potential currency risks depending on how you pay your suppliers but again there is FX products to mitigate this.

    2 – Investor funds, bringing in an investor to expand the business is another way to grow if you don’t/can’t take on debt funding but means giving up equity and you need to show there will be a return for a potential investor through an exit strategy.

    Either option I would advise you build a basic cash-flow model to understand the stock movements and cash-flow requirements vs the predicted return to see if it’s worth your time in taking on either option listed above. I like the idea of a sales agent taking a cut or perhaps approaching existing fashion retailers and offering terms such as that as opposed to traditional wholesale although it means a smaller margin for you it mitigates the cash-flow risk for both parties.

    Happy to discuss in more detail if you like so flick me an email on Dave@vegalend.co.nz.

    Cheers

    Thanks Dave,

    Really appreciated, I will flick you an email shortly

    Lara

    To Dave’s point #2, most investors will also ask about market fit / demand validation tests, and whether the demand is *really* what you say in your projections. Might be worth a think about some truly experimental trials. You said it wouldn’t be worth a full campaign to direct people to a website with limited availability. True, you don’t want to negatively impact your new brand.

    That said, you could get a great deal of information from a basic landing page, combined with well-tuned Google Analytics and a good call to action. Even a brief, inexpensive Google Ads (formerly AdWords) and/or Mailchimp campaign could give you a pretty good independent indication of market demand. There are some great articles out there with “Product Validation” and “Test Marketing” as keywords.

    Best of luck with your growth and success.

    Thank you!! Much appreciated 😉

    Hi Lara,
    Yay Splash! looks like a good site and had positive feedback when I tested it with friends. So to add to the discussion above…

    When scaling up it can be really tricky balancing the organic growth you want, with the growth capital you may need. Taking on debt or investors will fundamentally change your business model and your relationship with your business, so it’s really important to shop around and make sure the right solution will work for both you and your business. Get to know all the pros & cons with each option, and talk to other founders who have been through similar challenges to hear what worked for them, and what didn’t.
      
    Financing the next production line will just be one part of your growth strategy, so before spending cash on it there’s work you can do for free/cheap to properly fitness-test Yay Splash! first and make sure you’re still on target (so every dollar spent goes much much further). Although you’re not be a fan of social media, it will be a huge factor in connecting with customers, validating your product lines and scaling up. You may already be doing these but…

    – Increase your direct customer engagement (hear what they value most about your bikinis and swimwear, what do they want next)   
    – Coordinate social media campaigns (collect feedback on products and test potential demand before spending any cash)
    – Review your branding and marketing (update website, fresh images, new campaigns, experiments, etc.)
    – Consolidate product lines to strengthen your value proposition (use your sales and website data to grow fewer ‘great’ products)
    – Network with local entrepreneurs & promote local founder stories about you and Yay Splash! (raise awareness, meet prospective co-founders + partners)
    – Re-evaluate your manufacturing costs (materials vs. value proposition, consolidations scenarios, partnerships)
    – Plus lots more…

    Your local Regional Business Partner  and AucklandNZ networks (or even your local business association) have people dedicated to working with founders like yourself to grow your business. They’re a good place to start to take you through each step, so if you haven’t already register and bring them onboard!

    Kia kaha and look forward to seeing the next updates!

    Justin.

    Hi Justin, thank you so much for your time & thoughtful reply!! This is awesome to hear & I really appreciate it. I will devour this response again and soak it in!!

    Lara

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