How this fashion business reached £8m turnover in four years

How this fashion business reached £8m turnover in four years

Posted: Thu 30th May 2019

Fashion entrepreneur Scott Shashua confesses that he wasn't that interested in clothes when he started out in business. But that hasn't stopped him building an £8m fashion brand.

The key to his success was taking advantage of marketing opportunities, building the right partnerships and his palpable restlessness.

Shashua is a lawyer by trade. His journey into fashion started when he set up a football agency to represent players and someone brought a selfie stick to an event. They weren't in the shops at the time and he decided to import some.

"We bought 10 to 15, rebranded and sold them. We set up a littler venture doing selfie sticks imports and exports," he told Enterprise Nation.

His friend and co-founder Ross Worswick, who he knew from the Manchester night club scene, was due to appear on MTV reality show Ex on the Beach. The pair knew he would get significant exposure and Worswick was very passionate about clothing. The idea was to leverage their early experience importing and the PR to build a clothing label.

"That was the birth of The Couture Club," said Shashua. "We had an amazing first year, with half a million in turnover. That was just me and Ross. We were picking and packing, customer service, design and marketing."

The power of personal networks and partnerships

The business grew through their personal network. Shashua said they were lucky that Instagram was just taking off and they didn't have to pay influencers in the beginning.

Sales grew to a point where they were they didn't have enough stock to fulfill orders by Christmas in their first year. They talked to clothing distribution company 2Squared Agency, which could warehouse goods and do customer service, allowing them to concentrate on marketing and design. They gave their new partner a 40% stake in the company as part of the deal.

"There were a lot of brands starting that were competition and we could have got lost. A lot of people get carried away with wanting to own a certain percent of the business. We knew giving that share away would make the business a lot more valuable.

"There's times when I've been massively frustrated and asked what they're doing for 40% but we could never have done it otherwise. Managing the warehousing and using their trade terms at that moment in time was what grew the business. Truth be told the deal was a fare," Shashua added.

The founders realised they could take advantage of the delay before suppliers' payments were due to rapidly scale the business. Turnover reached £3.2m in year two and £8m in year three when they opened three stores. That said, the growth wasn't without its difficulties.

"It grew massively but profits weren't as strong [in year three] as we'd done so much growing and we spent a lot of advertising. It was a tough but rewarding year," Shashua said.

They have started introducing measures to meet the demands of the business' size, including hiring heads of department and bringing the accounting function in-house. This means they have more control and access to management accounts on a monthly basis. They have also reduced spend in some areas to improve profitability.

Shashua added founders often underestimate how much you need to spend on marketing in the beginning. He estimates online businesses should have a 50:50 split between product and marketing when they launch.

Learning to source clothes internationally

Shashua is a big advocate of meeting your suppliers and using agents, adding Chinese suppliers often think on a short-term basis in the beginning, which creates risk.

"There's people that will go and spend £5,000 to £10,000 and do it all through Alibaba but there's an amount of people that get stung. If you can jump on a flight go over there. It's better to spend £1,000 on flights and £9,000 on stock than £10,000 on stock," he said.

The caveat is that you have to use an agent, Shashua added. They may charge 10-15% but you benefit from their experience and connections and it's a lot safer.

The team behind The Couture Club plans to continue its expansion and hopes to reach £12m turnover this year. They're building their US business and opening a story in London. Shashua said they just got the news that ASOS is taking on their womenswear too.

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