Particularly with artisan, ethical brands, there’s an inclination to believe that bootstrapping is the most honest, noble approach to growing your brand.
Small artisan and sustainable brand founders often believe that if you work hard enough, and are passionate about your product, then you’ll find success, even with no or little funding. With ethical brands, there’s an additional concern that being too profit-directed might betray the values of the business.
But here’s the thing: In order to be in business, you have be financially viable. In fact, it’s even more true if you’ve decided to venture down the socially conscious path in which you’re helping artisans make money from their craft. You want customers, retail partners and editors to trust that your brand is a serious player.
(Find out why you should be careful about which PR firm to hire if you’re a sustainable brand.)
All of this requires planning, plus an understanding what you stand for, what type of brand you want to build, and what “success” looks like to you.
So there’s your threshold question (it’s one I ask every single branding client I’ve ever worked with): What does success look like for you – now and several years from now?
How you answer that question is largely going to dictate whether or not a bootstrapping approach will work for your business model and expectations.
Where Bootstrapping Works
True bootstrapping – spending only your own time and money to develop a product, hustling to sell your collection/product yourself, and building based on reinvested profit from sales – is one path to develop a business. It’s also an essential piece to product development in which you test the market with your first line or collection. Getting your product in front of real customers is essential R&D. The first product or collection you develop is often going to be a prototype, full of things that need to be refined or reworked or even repriced. You’ll also see pretty quickly whether or not this is a thing that will make enough money to sustain itself. Those first steps are where bootstrapping works well.
When to Stop Bootstrapping
After this initial stage, however, many eco, ethical and sustainable brands find themselves trying to figure out how to break even, let alone make a profit. And beyond that, once they develop a certain amount of sales or purchase orders that require volume manufacturing and tighter delivery schedules – as well as a paid team to help build their brand – self-funded businesses can run into even more dangerous financial quarters. This is often where founders either burn out or, on a more positive note, stop bootstrapping and start getting serious.
Behind the hype or the romanticized stories of every brand lies the real story of what it really cost to develop their business and how some serious decisions and planning were essential to achieve real brand growth.
How Brother Vellies Bootstrapped… To a Point
As noted above, some sustainable brands get into business with a very small collection to test the market, and can meet their initial cost of production with minimal investment. Brother Vellies was founded by an exceptionally talented woman who was well-connected in the fashion industry as a modeling agent, curator and teenage model, Aurora James. James developed her first collection of 20 pairs of traditional African vellie shoes in her own signature style after traveling to Africa in 2013. She then sold those shoes at the Hester Street Flea Market and continued to put more money into developing her collection – the brand was born. She also garnered significant attention during her first New York Fashion Week presentation, and by 2015 was awarded a Vogue Fashion Fund prize of $300,000. Brother Vellies has since grown significantly and is thriving with one of its own shops in New York City, while continuing to embrace a fashion-forward, socially-conscious following that helps to inspire other ethical businesses.
When you look at this timeline – from the seed money James most likely self-invested to travel to Africa and work out the logistics of paying the producers in 2013, to the mentorship and funding from Vogue in 2015, you see a common example of reasonable growth. By about two years in, with the increased costs of labor (even for a cooperative model), marketing, packaging and development, any brand is going to need about $250,000.00 to make a dent in development for a collection. Depending on the nature of your business, the costs may be higher or lower for production, sourcing and all of the other core aspects of development. And often, the $250,000 is not going to come solely from a bootsrapped brand’s own sales.
Brother Vellies is also a great example of a very focused collection of shoes – and having that type of focus is a smart way to build not only an exceptional collection, but also a brand that can clearly communicate what they do. That, along with Aurora’s experience and knowledge of the fashion industry going in, all contributed to Brother Vellies’ winning a notable Vogue award that helped the brand to grow to what it is today.
How TM 1985 Uses Private Label to Fund Its Business
On a more humble but no less exceptional note, one New York brand that serves as an example of sustained, reasonable growth during the past several years is TM 1985, which was founded in 2010 as an American-made brand of quality leather bags by Teilor McBride. Teilor’s collection is gorgeously structured, and is also a realistic example of what is more common and reachable with regard to building a sustainable brand without a huge amount of investment.
How did he have the money to create his first few collections (after leaving a position at Polo)? Teilor started with a small amount of seed money from friends and family and was then able to use that money to build out a collection that was not only his own line, but also a private label business that he developed for other brands to sell under their own line. Like Brother Vellies, TM 1985 was well received by consumers and sales were healthy.
But what really helps TM 1985 to sustain itself even today is the fact that the product line is favorable to private label clients who Teilor develops collections for. In fact, the purchase orders TM 1985 generated from both wholesale and private label sales helped TM 1985 demonstrate to factor companies so that it could take out a loan based on its purchase orders. The manufacturing costs for this collection were not bootstrapped, but rather the result of private label and factor access.
How Everlane Found Success (Hint: Not Bootstrapping)
Other brands go bigger. It would be impossible to write this article without mentioning Everlane, as one of the most notable ethically manufactured success stories in the past seven years. Everlane’s model, a vertically integrated ‘digitally native’ brand, is one of the poster children for ethical commerce, for both its manufacturing and pricing transparency. It’s also a great case study of how a brand can thrive by being strategic about fundraising.
Everlane, which was founded in 2011, raised two rounds of funding by 2015 of about $18 million dollars from a mix of private and high-profile Bay Area institutional investors. This is notable because it helps to tell the story of expectations: a brand expecting to disrupt the market with a direct-to-consumer model needed to invest in making that happen, and bootstrapping was not how they went about it. Rather, they developed an incredible, carefully-edited collection, kept manufacturing light, and were incredibly clear with their brand vision.
Ditch the Bootstrapping Myth
To tie this back to expectations for any current or aspiring founders, the ultimate message is that if you really want to build your brand so that it can become a sustainable (in both the environmental sense and the business sense) operation, bootstrapping should not be your plan beyond the product testing period, if at all. But this does depend on your expectations of growth.
Secondly, just because you’re in business as an ethical, eco, or socially conscious brand, that doesn’t mean you can’t have a serious plan for profit. In fact, you need to. What it will look like for you depends on your vision for success, and that can be a slow growth model or it can be an incredibly focused, kick-ass product that does attract investment interest early on (and there are plenty of pitch competitions to test this). Becoming clear on that will help vet out what type of investment you’ll need and force you to look at the harder questions about building your brand and product.
But you’ll be glad you did, and you’ll feel pretty awesome watching it thrive – especially knowing that you’re able to create something that offers a greater value to the world… and everyone involved in its journey.