Cash flow issues can cripple any company but fashion businesses are particularly vulnerable. They’re subject to a volatile and brutally protracted cash cycle, with large sums flowing out to fund next season’s stock long before there’s any return. On top of this, there’s forex volatility to manage. Business owners have to shoulder a lot of risk, which makes it tricky to plan and fund for growth.
Penny and Aaron could see the opportunities. All they needed were the tools to take their business to the next level.
Before Mr & Mrs Styles came to us they were using a part-time bookkeeper, and essentially flying blind. Without real-time reporting of their cash position, they
were unable to see whether they had the capacity to invest for growth. Frank set them up with Xero and gave them the reporting tools to understand, plan and manage their cash position. This, in turn, gave them the confidence to take on staff and go for growth.
Penny and Aaron felt that one particular customer – who represented 50% of their turnover at the time – was holding them back. We helped them understand and analyse the financial implications of letting this client go. The business took a short-term dip but rebounded strongly once resources were re-allocated to more productive, long-term opportunities. On top of that, their concentration exposure was reduced significantly.
Frank worked with Penny and Aaron to recruit the right finance people to take some of the day-to-day admin burden off their shoulders. For instance, we helped them hire financial administration staff so they could focus on customer relationships and the creative side of their business. As Penny says,
“when we have good people, work tends to be good.”
There’s an opportunity cost to everything you do in business, so you have to allocate resources to activities that bring the greatest rewards. In our conversations with Penny and Aaron, we continually asked questions – what’s the next most important hire? Where do you get the biggest bang for your buck? These discussions meant the recruitment of new staff could be staged in line with opportunities and resources.
Penny and Aaron are good at design and good at client relationships. Now they have even more time to invest in these critical areas because they aren’t being distracted and overwhelmed by the financial admin side of their business. More importantly, they now have the confidence to grow their team and commit to new contracts without the nagging fear that they’re taking on too much risk.
As a business, Mr & Mrs Styles has grown to the point where it now manages production for some of New Zealand’s best-known fashion brands. The owners have been liberated to continue developing their own creative labels, Remain and Just Another Fisherman. They also have more time to spend with family, doing the things they love.
In their own words:
What problems does Frank help us solve? Cash flow, without a doubt. They give us guidance around resourcing, what we can do, what's important and what we should be spending our money on.
Without Frank’s help, a whole lot of things would be different. We probably wouldn't push ourselves as much or have the confidence to do some of the things we do. They give us lots of confidence and that feeling of security.