What are profit margins and how can you forecast them for your business? How did the 2020 lockdown inspire the start of a profitable business? Why is it important to stick to your beliefs when starting up a new company?
In today’s episode, I’m joined by Felice Langkamp founder and director of MyCashmere. Felice founded MyCashmere in February 2022 after spending five years with Tiffany and Co. in e-commerce client development and high jewelry.
Lockdown conditions inspired her business idea and her entrepreneurial spirit shifted into overdrive as she then set out to become a cashmere expert and create a supply chain to bring her brand to life. Her focus is on creating a sustainable start for her business to have a sustainable future.
Felice is a graduate of GIA, she knows a thing or two about exquisite quality, the highest level of craftsmanship, and how to communicate all of the values of luxury to a potential target client base.
The featured finance term in this episode is Profit Margins, a measure of a company’s profitability expressed as a percentage of revenue that the company keeps as profit. It represents what percentage of sales has turned into profits.
Moving around and seeing so many places in the world played a huge role in influencing Felice’s entrepreneurial spirit. She always had the big dream to be an entrepreneur, but it was ultimately inspired by the lockdown of 2020 and the shift of being home 24/7.
Felice wanted to feel comfortable but elegant with her wardrobe and that perfect balance came in the form of cashmere Felice wanted to focus on producing her pieces in Italy because she has an appreciation for fine craftsmanship. She also really wanted to focus on sustainability.
When talking about startup businesses, you can be a little more aggressive when it comes to price points. Being able to control your costs, you can sacrifice your profit margins up front and come in at a medium to high price point.
Felice says she went through a mathematical approach when finding all of her manufacturing partners and vendors. It was important to her that those she worked with had the same passion, and a great relationship, and also supported her business from a human perspective. Because of this, she has had cohesive partnerships through and through.
There are many variables that come into play that can impact the profit margins of a company. In the fashion industry specifically, there are many things to consider like material costs, manufacturing costs, tagging, packaging, and labeling as well as variable costs when it comes to shipping and duties.
The reality is that small business owners struggle in the beginning in terms of profitability, but you can learn to navigate towards increased profitability over time. Part of this is learning about minimum order quantities which is a balancing act.
In the beginning, when you don’t have data it is hard to forecast sales, especially when you are overly ambitious. Realistically you need to ask around and find out what the sales goals of other businesses are. There are things to consider like the time of year, marketing budget, showroom costs, and where you are getting your sales from. It is important to diversify and push every avenue to get your sales moving.
Felice says she works with two types of yarn. The first is one that is 100% cashmere which is the highest quality and the other is recycled cashmere. She initially wasn’t going to use recycled cashmere but ultimately fell in love with it because it is a sustainable process.
Showrooms and small popup stores are where she does her best learning because it gives her the opportunity to see consumers interact with her product. People have the opportunity to touch and feel the product which is different from viewing it on a website. It also provides networking opportunities, which is actually how she and Catherine originally met.
Felice says she feels like she has always had an entrepreneurial drive to have something that was her own.
Overall Felice was surprised to find how supportive the entrepreneurial network is. She says there are people she met who are willing to support her right from the start and it’s incredible the lengths that can take you. It is humbling.
The key to becoming an entrepreneur is to absorb everything you can, network like crazy, and invest your time and energy into others.
In business, it is very easy to fall into the trap of wanting it all yesterday, however it is important to never drift from the vision you have for your business.
Felice says she could easily produce somewhere else and cut corners to lower her price, but she realized business is a marathon, not a sprint. She chooses not to compromise what she truly believes in. The path of a business owner is full of ups and downs.
When you are confident in your product, have invested in it, and have strong values and visions it will pay off in the long run. People will see the intention behind your brand.
While shopping at a luxury price point is not accessible to everyone, being intentional and mindful when it comes to shopping sustainably is important.
Once you understand fast fashion you will realize that someone somewhere is paying for it. We need to be ethical and humane with what we buy and how we shop. This is one reason Felice loves cashmere and knowing she has meticulously had a hand in every detail of the production process.
Felice has a few goals for the brand going forward including entering into the wholesale market and partnering for cashflow needs to expand. All of this should not be rushed and will come in time.
Build your network and community. Find the right people who will help you along the way. These relationships may turn into connections that are game-changers in your long-term strategy.
Simple Finance Resources for Small Business Owners:
For more podcasts about all your burning business questions, click here!