La evaluación en la educaci ón ética y moral

At some point, as your business expands, you will probably need outside financing to support increased production. Before you seek outside funds, plan ahead to know how much you will need, when you will need it, and how it will be used. Searching for funding at the last minute is expensive and risky, and you may not make the best decisions when under pressure.

Understand that most of the financial world sees fashion as very high risk. It‘s a creative industry subject to trends, consumer whims, and even unpredictable forces such as weather. It will take significant effort to convince anyone to hand money over to you—especially if you have little experience and limited personal finances. Anyone who gives money wants something (generally a lot more money) in return.

Don‘t hesitate to tell people if you are looking for money. If you don‘t tell people, they may assume that you are financially set. And you never know who can help you find funding. It‘s possible to meet potential investors at parties, meetings, in the factory, on an airplane, or even in the grocery store. While your business plan will include extensive information about your company and goals, you need to be ready to describe your company and its potential in person quickly and concisely—in 30 seconds—at any time. The financial world calls this the ―elevator pitch.‖ It‘s what you would say if you met a potential investor in the elevator at the top floor and only had until you arrived at the first floor to gain the individual‘s interest in your company. The purpose of this pitch is to attract a person‘s interest enough to want to see a full business plan or set up a meeting to learn more about

your label and its potential.

A sample elevator pitch may sound like this:

I design a line of high-end women‟s dresses that currently sell to Barneys New York as well as 14 high-profile boutiques on the East Coast. the line has been featured in publications including Elle and has been photographed on Cameron Diaz and Christina Ricci. The label is drawing great interest from buyers from other key national chains, and I‟m seeking finances to expand both my distribution and production to service these stores, as well as to develop the product range further to include separates and coats per the request of my current and prospective accounts.

What lenders and investors want. Whether it‘s a loan officer or a potential investor, no one will look

at your design portfolio, declare you a genius, and write a big fat check. People invest based on the belief that you can sell your product in increasing quantity over time while managing your cash flow well enough to make money. Marty Staff, president and CEO of the Joseph Abboud Group, stated, ―Lenders don‘t care if it‘s clothing or toothpaste. They don‘t care about your potential; they don‘t care about your book. A bank will not lend money against potential; the bank will only lend money against orders.‖.18_.

Most investors are looking for early-stage businesses, a few years past startup, that already have a solid, growing wholesale distribution with potential to expand to multiple global markets. They want to hear that you understand your market, that your product is in a growing category, and that you have a proven product concept featuring a unique quality that differentiates it from other products in the market. Store orders or proof of interest from stores are key.

New businesses don‘t have a long track record. Therefore, investors and bankers look at a multitude of factors to decide whether or not the business is a good investment or just a big risk. This is where the business plan becomes essential. Potential lenders and investors want to see a strong, realistic plan and the facts and data to back it up. They need to see projected cash flow, growth plans, and a realistic ability to repay them on time. They look closely at your personal track record with money—where you stand with other lenders, your credit history, payment history, and current debts and assets. A

designer must get used to opening the books and showing everyone the finances. While it may be uncomfortable, it comes with the territory. Josh Patner, cofounder of the line Tuleh, compares this part of the process to ―dropping your pants at a checkup.‖19

Before sharing your financial information with anyone, you may want them to sign a nondisclosure agreement (NDA) to stop them from sharing your information with anyone else. While some say this step is unnecessary, it will give you peace of mind and may help you to appear more professional. You can find a basic NDA form on the Internet or get one from a lawyer. If you are headed down the road to outside investment, you will need a good finance lawyer to make sure that you are protected and that any deal is in your best interest.

A potential investor ideally wants to see a strong management team, which preferably includes a savvy business manager who works well with the designer. The investor will also judge your character, professionalism, and maturity and will ask for references. Tell them about your industry training and experience and ability to manage people, budgets, and processes.

Include a strong list of references from high-level people in the fashion industry, your suppliers, factory, and anyone in the finance and business world who believes that you will be successful and will add to your credibility.

As you seek funding, be sure to ask questions, and if you are turned down, find out why and what would change it. Don‘t forget the Golden Rule: Everything is negotiable.

Read the fine print. With any financial arrangement, a designer should make sure he thoroughly

understands all the terms. Read the fine print: understand the interest rate, the length of the loan or partnership, back-out clauses, the repayment terms and deadlines, the payment amounts, and any additional fees or requirements.

Small amounts of money are easier to get, but with small amounts, it is even more important to evaluate whether the loan is worth the risk and cost. Before you accept any deal, plug the numbers into a cash flow statement to see when the money will come in, when you will pay it back, and if it will really be enough to help you grow and make a profit.

Generally in terms of expense, bank loans are the cheapest method of financ-ing, followed by factoring, invoice or purchase financing, and finally equity financing, which usually costs a percentage of ownership in the company.

Bank loans. Bank loans are the most common type of outside financing and, while loans can be the

least expensive option, they are often the hardest to get. When you take out a loan, you receive a certain amount of money and then pay it back, with interest, over a set period of time. Banks off er loans with both fixed and variable rates of interest. With a fixed rate, you pay the same percentage of interest throughout the life of the loan. A variable rate will fluctuate as federal interest rates change.

Shop around and compare loan rates and fees at several banks. Some designers have had success with small banks that deal with small customers and small loans, yet others find that the big banks can be the easiest places to get a loan of up to $50,000, because it is such a small amount of money to them.

Banks don‘t like risk, and some insist a business be at least two years old or more before they will work with it. Banks carefully check creditworthiness of the business owner before granting a loan, and many require security—something of value that will become theirs if the owner defaults on the loan payments. The bank could ask for business collateral, such as equipment, inventory, or accounts receivable, or it might require personal collateral, such as your condo. While you should try to avoid giving personal guarantees for a loan, often this is the only choice you have.

A bank may require a cosigner for the loan. A cosigner is held liable if the person with the loan fails to pay. The lender can go after the cosigner and her assets to recover the loan amount. Consider this seriously. You don‘t want Grandma to lose her house because you didn‘t manage your cash flow.

When you choose a bank, find someone there whom you like and who understands small business and even fashion. Your lender should be someone with whom you can readily communicate and who could become an important resource and advocate for your business.

Other loans. Some other types of loans for small business owners are worth exploring.

U.S. Small Business Administration (SBA). The SBA will not only direct business owners to

numerous loans but can often guarantee a loan for them, if they don‘t qualify on their own at a bank. The SBA can help prepare a business plan, fill out loan applications, and shop business owners around to different lenders. Some SBA-acquired loans are expensive, but they may off er a longer maturity, providing you more time to pay them back. Check out the SBA‘s web-site (www.sba.gov/financing/).

Minority and women business owner loans. Associations such as the National Federation of

Business and Professional Women‘s Clubs and the Association of Black Women Entrepreneurs direct small business owners to financial resources and loans. Accion is another good source of microloans for minority and female small business owners.

Local economic development organizations. These organizations often off er loans for

entrepreneurs in their area. Some provide tax incentives or grants to businesses that support the area by increasing jobs, restoring old buildings, or moving into challenged neighborhoods. Several of these groups off er additional support for small businesses. For example, the Brooklyn Economic Development Corporation has held fashion-specific entrepreneur seminars. Seedco Financial is a national nonprofit organization that provides loans for small business owners and neighborhood entrepreneurs in several different states. Designer Andy Salzer of Yoko Deveareux says that securing a Seedco loan was key to the growth of his business.20

It takes time and effort to track down and sort through these potential sources, but it is time well spent as you never know where you might find a little pot of gold.

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