Risks Specific to VAUTE
1. By analyzing our numbers and discovering that 80% of sales come from our fall and winter outerwear, yet we were carrying the same operating costs year round and spending a lot of time and energy launching additional categories, I have decided to shift our business to focusing on our outerwear, thus going from being an annual fashion label to becoming a seasonal outerwear and sweater fashion house. This decreases the operating expenses and energy spent per sale drastically and increases our growth potential by focusing on what is most profitable and sells the most. This also creates an off season of 6 months where we will be focusing on developing the next fall winter collection and marketing and customer service strategies. This was decided in March 2017. For this first off- season for 2017, since we weren’t prepared for this gap in sales, and also need to cover the loss created from operating expenses spent on unprofitable categories in 2016, we need to raise cash to cover this cash gap. If we don’t raise $500K we may not make it through this cash gap of switching from annual to seasonal, including having enough money for an increase in fabric to make enough coats to meet demand in fall winter 2017.
2. If we don’t raise an additional $300K for website redesign and marketing plan our growth will continue linearly and we won’t be able to meet our projected sales- though we can continue to grow slowly.
3. In September of 2016 and February and March of 2017 the CEO experienced stress related injuries and illnesses. While this has become an impetus for creating a sustainable growth plan, with support built in and the deletion of ineffective uses of her time and energy, there is still a chance that she will get injured and need to recover. If she gets sick or injured again from being overworked she may not be able to pull off this growth plan.
4. Our paid marketing until now has been minimal. Most of our new customers have come from editorial coverage, word of mouth, and facebook sponsored posts. We are creating our first paid marketing plan to reach a new clientele. If our marketing campaign doesn’t reach a new market, our growth will be slower than expected, but we can likely adjust so that we are spending less on campaigns that are not working.
5. If we aren’t able start making fabric in time, we will sell out of inventory in season and not be able to meet demand or show the results of our marketing campaigns or results from focusing on outerwear.
6. If our fabric mills go out of business, we would need to find, test, and create new similar textiles- since our mills are specialized with technical innovative textiles this might be difficult to do quickly.
7. It is possible our new COGS would be too high to keep a 55% margin because (a) Expenses are higher than we expect like the new expenses of distribution center and shipping (b) sales price is lower than we expect due to new customers not being interested in spending as much as we expect.
8. The demand and sales potential for ethical fashion may be lower than we expect.
9. As the market begins to recognize the demand and desire for cruelty-free ethical fashion, a well financed competitor could come in and dominate the market with expensive marketing and retail stores. Fortunately our authentic voice, innovation in textiles, holistic ethics, and nonprofit partnerships cannot be replicated.