In the world of fashion, creativity gets all the spotlight, but behind every successful brand is a solid financial plan keeping the runway clear. As an accountancy practice that works closely with fashion startups and scaling labels, we’ve seen firsthand that the brands who thrive are the ones who treat their finances as strategically as their design process.

So how do you actually build a financial plan that’s more than a spreadsheet exercise? Let’s walk through it, accountant style, but in plain language that every founder can use.

Start with the Vision – Then Quantify it

• Your financial plan should begin with your business goals:

• Are you launching a capsule collection?
• Planning to open a store?
• Scaling your DTC channel?
• Going wholesale or B2B?

Once the vision is clear, we work backwards to translate that into numbers. This includes estimating:

• Initial capital requirements
• Revenue targets (realistic vs. optimistic)
• Investment or funding needed (if any)
• Key costs (production, marketing, logistics, etc)

📌Tip from ledger: Be honest about your runway. Overestimating costs is one of the biggest killers of early-stage brands.

Break Down Your Cost Structure – Be Specific

Fashion brands typically underestimate their true cost base. Your accountant can help you build a detailed cost framework, including:

• Product Costs: Fabric, trims, production (CMT), freight, packaging
• Marketing Costs: Photoshoots, influencer campaigns, customer service
• Operational Costs: Website, e-commerce tools, shipping, customer service
• Overheads: Salaries, accounting, insurance, rent (if any)

🧠 We recommend using a unit economics model: What’s the cost of producing and selling one garment? Then scale from there.

Build a 12-24 Month Cash Flow Forecast

This is the heart of any financial plan – especially in Fashion, where cash flow is king. You’ll want to forecast:

• Expected income by month
• Payment timings (customer payments, refunds, wholesale terms)
• Outgoings (production, marketing, wages, etc)
• VAT and tax obligations
• Seasonal cycles (e.g. higher spend in Q3, slower sales in Q1?)

📌 Accountant’s Insight: Always plan for delays. Stock might arrive late, marketing might not hit as planned, and customers may return items. A good forecast builds in cushions.

Factor in Inventory & Supply Chain Commitments

Your financial plan should reflect your supply chain model, whether you’re:

• Made to Order (MTO) – Low upfront cost, longer lead times.
• Wholesale/ manufacturing – high upfront cost, potential for larger margins
• Dropshipping or hybrid

Inventory has cash flow and tax implications, and often ties up significant capital. We help out clients track this closely and update forecast in real time as production runs change.

Set Key Financial KPIs

Your financial plan should define what success looks like and how you’ll measure it. Some key metrics we help fashion brands track:

• Gross Margin %
• Customer Acquisition Cost (CAC)
• Return Rate %
• Break-even Point
• Operational Profit Margin
• Monthly Burn Rate/ Runway

These aren’t just numbers, they’re decision making tools.

Scenario Planning: What if Sales Double? Or Tank?

We always build in scenarios so you’re not caught off guard:

• What happens if you grow faster than expected? Can your cash flow handle it?
• What if sales dip or ad cost spike?
• What if your next production run is delayed?

A strong financial plan includes “what if” models so you stay flexible and prepared.

Review Monthly – Adjust Often

This isn’t a “set it and forget it” document. your plan should evolve with the business. We work with our clients to:

• Run monthly management reports
• Compare forecasts to actuals
• Adjust spend based on performance
• Keep investors or stakeholders in the loop

💼 Think of your financial plan like your collection calendar. It needs regular updates and adjustments to stay relevant.

Final Thoughts: Finance is Creative, Too

At its core, financial planning isn’t about limiting your creativity, it’s about funding it smartly. When you understand the numbers behind your brand, you can scale with confidence, speak to investors with clarity, and weather the unpredictable nature of fashion.

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Need Help?

• Contact Pennyhills® today to schedule a consultation with one of our experienced accountants.
  
  Our practice works with fashion founders and creative led businesses. Whether you’re pre-launch or preparing for growth, we can help you build a model that fits your vision and your balance sheet.
  
  Visit www.pennyhills.com/contact-us or Click here to chat now and discover how we can partner with you on your journey. You deserve the expertise and dedication that Pennyhills® brings to the table. Let’s embark on this journey together.
  

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