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Understanding the business you are in is central to achieving your objectives. My experience with many many apparel, accessory and shoe companies is that more often than not, the owners and management do not have a clear understanding of the business they are in.

By this I mean, they do not understand the target, the main objective, the ultimate goal that would deliver to them everything they want. They don?t understand what they have to do to build a meaningful business that will sustain itself over time and generate profits with consistency.

Let us first agree on the definition of a business. A business is an enterprise created to generate profits or income with predictability and continuity.

This isn?t always clear amongst the business owners we have worked with. Many lose site of MAKING MONEY or EARNING PROFITS and get caught up in the contest of fashion, the excitement of PR, fun of promotion and the pursuit of sales and the thrill of product development. And while all those things are necessary, a business needs profits to sustain itself like a plant needs water and air. So it is critical that owners keep an eye on the ultimate objective.

But how does one reach the objective? What is the real target that will lead to building a business and making money? What is the REAL BUSINESS an apparel company is in? What must it do to achieve great success?

The core responsibility of every apparel company is to make the retailers money. This is the first and foremost objective of every apparel company. MAKE YOUR CUSTOMERS A LOT OF MONEY. This is the target. If your products deliver profits to the retailer, if they do better with your products than everything else in their store, they will be at your door ordering more, fighting for more, insisting on more and will do it aggressively for as long as your products generate meaningful profits for their store or stores. You are in the business of making retailers money. That is where your focus must be.

How well do your products sell? If they invest $5,000.00 with your company, will it turn to $12,000.00 faster than anything else they can buy? Can they convert $5,000.00 of merchandise at wholesale into $7,000.00 of profit in 2 weeks after receipt? 3 weeks after receipt? 4 weeks after receipt? How long will it take for them to convert this inventory to cash? How much cash will they realize when the merchandise is gone? THIS IS THE BUSINESS.

Every apparel company is in the business of creating product that will move out of their customer?s store with speed, generating a significant profit and cash flow for the customer.

A smart manufacturer is paying attention to how well their products sell as compared to the competition. A smart manufacturer knows that his customer NEEDS TO SELL OUT OF THE PRODUCT IN 8 WEEKS to achieve 6 inventory turns a year, which is most likely their goal.

Do you know your customers goals?

Do you know what margin or mark-up they want to start with when they put the product on the floor?

Do you know what margin they achieve from their most profitable lines after markdowns and clearance?

Do you know what is the performance target?

Do you know how many times a year your customer turns their inventory?

Do you know how many weeks the average garment is on the floor before it is sold out?

Some retailers do not know the answer to these questions. Every major retailer looks at these performance numbers DAILY. Many retailers know this instinctively if not numerically, but you can be sure EVERY RETAILER IS IDENTIFYING WHO MAKES THEM MONEY AND WHO SHOULD GET THEIR DOLLARS FOR THEM TO MAXIMIZE THEIR PROFITS one way or another.

So you are in the business of making retailers money. The better you do this the more dollars they are going to bring to your company. The better you retail, the more they are going to like your company. This needs to be your focus. How well do you retail? How fast does your product leave the shelf?

You are in the business of making retailers money, more money than your competition can make them. Keep this in mind as you develop your product, establish your price points, determine your offering and direct your sales effort.
Keep this in mind when you talk to retailers. Become a student of their store and know what makes them money, who makes them money and do it better for them. When they know this is your focus, when they know this is why you are creating the products you are creating, they will think more of you and your business.

Would you buy more from the supplier who says they are in business to make you money? Would you buy more from the supplier who offers you the fastest delivery? Would you buy more from the supplier whose product you seem to sell out of the quickest? Would you buy more from the supplier who provided you with the most unique materials and you could charge an extra 5% or 10% because their product was fresh and your customers loved it?

So there it is. That is the business you are in????..making your customers money.

Next, a little bit about things you can do to be a more profitable resource for your customer.

“This is a Guest Post by Billy Kapler of Kapler & Associates”
1223 Wilshire Blvd. #810
Santa Monica, CA 90403
310.394.0504
william@kand.com

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