This week, New York City hosts one of the largest mass marketing events of the year: Mercedes Benz Fall Fashion week. Now, I’m not a fashion expert, but I’ve dedicated the past 15 years of my life working with entrepreneurs and small businesses and can say I found one designer who is starting small, but aiming to end big.
Raul Penaranda, founder and president of Raul Penaranda, LLC, launched his NYC fashion startup in September 2010. Just two years after his launch, Raul is seeing impressive sales numbers, despite the fact that the fashion industry has been one of the hardest hit in the economic downturn. Behind the glitz and glamour of the runway, I sat down with Raul to discuss his journey to Fashion Week and how he plans to become the next small-business success story.
Growthink co-founder and OPEN Cardmember Dave Lavinsky sat down with designer Raul Penaranda to talk about the business of fashion before his debut at New York Fashion Week to a crowd of over 900.
Dave Lavinsky: When did you know it was the right time to start your own fashion business and how did you raise funding initially?
Raul Penaranda: I knew it was the right time to start my business when all the pieces of the puzzle came together (such as: fit, production, social media, networks, an experienced team, and consumer needs). I couldn't control the economic downturn, so I knew I had to develop a very strong strategic plan from the very start.
In terms of funding, the answer isn’t very glamorous but there were no shortcuts—I bootstrapped. I knew that one day my goal was to become a power fashion house for the next generation, I began with the end in mind. I saved money for over a decade and consulted to raise extra money to fund my business. I really feel that I’ve grown and evolved with all of my products that have succeeded so far.
DL: What are some common pitfalls new designers fall into? What advice would you give them based on your own experience?
RP: A common pitfall for new designers is that they sometimes spend way too much money where they don't need to at the startup phase. I mean, it’s important to put every penny where it counts and will help you build the most value. Fashion is a very competitive world and before spending money on a luxurious studio for example, you should allocate it to building meaningful resources if you want to generate long-term revenue. You can build these resources through social media, logistics planning and marketing but only based on competitive advantage research. The more you know the better you are prepared to serve your buyers.
DL: How did you acquire the support necessary to pull off the introduction into New York Fashion Week?
RP: The consumer needs and wants to feel special and the best formula for success at NYFW, or any major event, is a quality product, customers that speak on your behalf, and unique brand messaging.
I also built a strong network of fashion heavy hitters that believed in my vision. They, too, understood what it took to become successful and helped me overcome many challenges. I have been able to maintain this momentum by understanding budgets, strategies, retail landscapes and by getting to know who the “Raul Penaranda” customer is, while figuring out what made me unique and different from the competition.
DL: What challenges did you face early on?
RP: Every small business comes with its own set of challenges but no matter what industry I find we have more in common than we think. In my case, one of the challenges was to position myself/brand within my direct competition. I had to understand my competitor’s operations in order for me to find a more productive and efficient way to operate my company. Also, being self-funded means a designer needs to be extremely cautious with spending. In fashion, your first sale cycle will not come until one year after the launch of your first collection. Every penny counts and you need a strong financial model if you want to survive. The fact is, you most likely won't have any revenues in your first sale cycle.
DL: Do you use social media to promote your business? Has it worked for you?
RP: Yes I do, and it has become our digital marketing and PR highway tools. We use Facebook, Twitter and Instagram to reach out directly to our customers. We also use it as a digital platform to build the design identity and brand awareness. It’s our daily news outlet to keep customers up-to-date on our new products as well as have them be a major part of our growth process. I think in today’s social networking world, photos speak louder than words and through our images, our followers feel connected to the fashion industry and always be in the know.
DL: Who are your business mentors? Any advice for finding these, given the competitive nature of the fashion industry?
RP: There is one person that has been my main source of knowledge and inspiration. Ramdat Harihar is the president and owner of R&C Apparel, an amazing manufacturing apparel company that has existed more than 35 years. Under Ramdat’s guidance and mentorship, he has helped some of the most successful designers, such as Zac Posen, Anna Sui, Marc Jacobs and Michael Kors. His company has produced garments through very unique techniques for fashion houses such as Oscar de la Renta, Carolina Herrera, Valentino, Vera Wang, Calvin Klein, Ralph Lauren and more. Ramdat is a great fashion industry mentor and friend who has shared his incredible knowledge with everyone he believes in. You must be yourself in order to have Ramdat give you the best lessons in this industry.
DL: What does the future hold for Raul Penaranda? What are you doing to grow your business from here?
RP: Well, I would love to move the Raul Penaranda brand into the global market. We are so ready for this type of expansion and are looking forward to the next chapter and planning process to make this a reality. Stay tuned.
DL: What advice can you give to fashion and beauty entrepreneurs just starting out?
RP: Three words that my mother, gave me have helped me become who I am today: dream, vision, reality. First dream, make sure to transform that into a vision and finally if you want to make it happen and be successful in the industry of your choice, make a plan to make it your reality.
DL: What do you like best about your life as a fashion designer and small business owner?
RP: The best thing is that I love what I do every day. The life of a small business owner is a journey where your creativity and common sense must be living as equal partners, while one creates; the other analyzes and acts accordingly. It’s the formula that works for me until I find the right capital investment partnership. Until then, I have to stay motivated and play-up my strengths, both as a designer and as an entrepreneur.
OPEN Cardmember Dave Lavinsky is the president and co-founder of Growthink, which provides products, consulting and banking services to help business owners develop business plans, raise funding and prepare their businesses for sale.