Recently, a once wildly popular and successful fashion retailer filed for bankruptcy. How could this happen to such an established brand? Is it marketing? A few dismal seasons’ worth of merchandise? While I don’t know the ins and outs of this particular company, there are certainly mistakes I see brands making that can lead to failure. New companies are especially vulnerable; in fact, roughly 20 percent of new businesses fail within their first year, according to the US Bureau of Labor Statistics. Avoiding the following pitfalls will help your business succeed—and have staying power.
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• Launching at the wrong time
There are good times to launch a brand, and bad times to launch a brand – and, launching at the wrong time can cause even the best brands to fail. Read up on the current financial market and research consumer spending habits. If your due diligence indicates that your product doesn’t seem like something people are willing to spend money on right now, it’s worth waiting a beat until things shift. Similarly do a competitive analysis to understand how you are priced in the marketplace and if you are fulfilling a need.
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• Not having the right people
When a company is young, there is no room for people sitting around idly. Everyone needs to roll up their sleeves and contribute. People need to be nimble and pitch in wherever needed. If you notice your staff doesn’t have this kind of work ethic or collaborative spirit, you may need to make some personnel changes.
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• Overspending upfront
It’s a common trap: You’re desperate to kickstart your new company, so you throw a lot of money into it. This is risky. Yes, a really fancy website may be appealing, but can you afford it? Can you afford the elaborate packaging you want? Focus your resources in a few key areas that really drive revenue, and then you can upgrade as you start bringing in more cash. You also need to keep a cash reserve. Too many startups run out of money and are not able to raise capital. You have to try to be lean in the beginning and look to minimize cost where you can.
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• Skimping on marketing
While overspending isn’t wise (see above), I do suggest you devote as much money as you can to marketing your product. You may have a great brand, but if no one knows about it, it won’t be successful. Also, you need to be nimble with your marketing strategy. You might have to try a few different things to find out what is actually working for your brand. Doing research is key.
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• Holding too much inventory
This happens a lot. Filled with enthusiasm, founders stock up on inventory, only to be left with lots of extra product. This is especially tricky for beauty brand founders like me, as beauty products have expiration dates. But on the flip side, you also don’t want to be left without inventory, since it can take weeks (and sometimes even months!) to get products back in stock from suppliers. When launching a new brand, be conservative. As your brand grows, carefully track your sales and don’t order more than 15 to 30 percent more than you know you can sell.
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• Neglecting to negotiate
If you are struggling financially, don’t be afraid to negotiate with your vendors and suppliers—and even your own team. If you are a good customer and ordering in large quantities, there is a good chance they will be willing to work with you. You’ll never know if you don’t ask!
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• Giving up too soon
I have seen founders launch a company, and then throw up their hands and close the business within six months. Starting a business is expensive, but if you can afford it, give a brand at least three years. That’s how long it takes to really get into a rhythm and find your footing. You may find that you have a good product but the strategy and messaging needs to change. Only time will tell.
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In today’s market with so many brands, differentiation, authenticity and quality aesthetics are also a few additional factors that will help a brand rise or fail. Some say a little luck and a bit of risk doesn’t hurt either. Some of these factors are an enigma until you actually launch and get into the process. The substance, the stability and the fuel to drive a brand to success is constant. If you don’t have the drive, focus or energy, my recommendation is not to do it. But if you have the passion, the dream and the need to accomplish something beyond yourself then you have the start of something potentially life changing.

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