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When Annmarie Scotto-Dinan quit her Manhattan public relations job to launch a women’s fashion label, she knew she’d need to invest a significant amount of time in learning the trade, but she didn’t know she’d also be investing a massive chunk of her savings. Dinan figured a small business loan would be key to financing her endeavor, but by the time she applied for loans in 2008, the economy was beginning its slide into recession. Despite being unable to secure a small business loan, she went ahead with founding her label, Chloe & Reese , digging into her significant savings to do so. Her bootstrapping worked: Chloe & Reese has grown steadily through the recession, and Scotto-Dinan is coming out of the economic downturn with her dresses sold in global department stores like Saks Fifth Avenue and Neiman Marcus, as well as small boutiques all over the world. How’d she do it? “It’s not just making a design that’s great – it’s figuring out wholesale margins, adding in the cost of packaging, shipping, taxes, tariffs, and making sure your profit margin will keep your business running,” Scotto-Dinan said. “Like many designers, I’m so much more creative than analytical. But you have to focus on the numbers to make your business actually work.” In other words, breaking into fashion requires a lot more than just a degree in design and a talent dreaming up runway styles. We’ve interviewed emerging designers who have built their businesses from scratch, as well as legal experts who filled in the finer points of financial and legal sustainability to guide you through the fashion start-up process. Breaking into Fashion: Pin Down Your Dreams Whether you create handcrafted vegan footwear or custom ball-gowns, before you take your product to market, experts suggest you ask yourself why, precisely, you want to do so. What’s your goal? George Nemphos, the chair of the corporate practice group at Duane Morris, a law firm in New York City that works with a lot of emerging and established fashion designers, says he asks all of his clients what their goals are for the business they’re setting up. “People in the apparel industry are very creative, and some of the legal aspects can escape them,” Nemphos said. “It’s part of the business that goes unseen. It’s not what they’re thinking about when designing, or are out there with the buyers.” Nemphos suggests before even enlisting an accountant or attorney to help set up the business, that an emerging designer solidifies plans for what kind of company they want to have, and what kind of life they’d like in coming years. How big they want to be, and where they’d like to sell their designs, will determine a lot of how a company should be set up – and help guide legal issues going forward. Scotto-Dinan agrees that entrepreneurs in fashion and design should ask themselves: “Do you want something nice and easy, something that brings you joy and a bit of income without much stress? Or do you want to be a fashion empire? I really do think that goal speaks to how you’re going to work.” For designer Jiminie Hayward , starting her business small – and keeping it small – is right in line with her goals. She graduated from Boston’s School of Fashion Design in 2007 and began scoping out a target audience for her custom-made formal dresses. Her dream: to sew and sell custom-fitted hand-made dresses at an affordable price. Mass-producing was not an option. So, Hayward designed 10 dresses and launched her brand softly, selling it online through an Etsy shop, MyBlackDress . She says she started with about $500 in fabric and supplies, and now orders from individuals account for $2,000 to $4,000 of income monthly. “I get lots of requests for wholesale from boutiques and online stores. I will look into that in the future, but I can’t handle it right now. I really like doing custom work for now,” she said. The number of orders coming in online keeps her at the sewing machine from 8:30 a.m. until evening. For Sonali Singh, who met her business partner and husband, Jeet, while they were students at New York’s Fashion Institute of Technology, the greatest bulk of preparation in starting their label, San & Soni , went into market research. “We had to do a lot of market research, as far as price points, what brands we wanted to sit in with,” she said. The pair’s label doesn’t offer basics, such as a simple white blouse. Instead, it’s centered on inventive construction. “We spent a lot of time on theme and inspiration, and that’s how we came into the contemporary market – and we’re in the higher end of contemporary.” Dig Deeper: Fashion Entrepreneurs Capitalize on High-End Rentals Breaking into Fashion: Get the Financials Straight Considering that manufacturing, importing, distribution, and sales are in your future, unless you’re particularly numbers-savvy, you’ll mostly likely want to enlist an accountant and a legal counsel to help advise on business incorporation and how to set up your financial accountability. Nemphos suggests that too many independent clothing and accessory designers don’t work with advisors, and instead end up simply setting themselves up as a sole proprietor of their company without exploring other incorporation options. “As a sole proprietor, you are on the hook for everything – so we advise them to not do that necessarily. Setting oneself up as an S-Corporation could also affect them if they are possibly going to seek financing in the future,” he said. Creating an LLC might seem more complex from the start and for tax purposes, but doing so can gives business owner organizational flexibility – and doing so ensures there is a corporate entity comfortably wedged between your business and your personal liabilities. It also allows some flexibility in terms of changing your form of business incorporation later without harsh tax penalties. Scotto-Dinan said her top advice to a bootstrapping fashion entrepreneur would be to invest in a good accountant and a good attorney. “Definitely speaking to a good accountant about your goals so that you can set your business up, and to be careful about how you set it up, because while at the moment it might not feel like a crucial decision, it absolutely is a wise investment.” If you decide to keep accounting in your own hands and file for incorporation yourself, which Hayward successfully did, you might want to consider educating yourself first. And, no, Googling isn’t sufficient. “It’s really important to take some tax classes,” she said. “That’s the least fun part about running your business, doing your taxes. But the city often offers bookkeeping classes, and they can teach you how to create monthly income statements. Absolutely do those, then it makes it a lot easier at the end of the year.” From the start, you’ll also want to protect your label from trademark infringement. “If you have a service mark or trade name, you’re going to want to file with the patent and trademark logo. Once you have done that, you can use that on a label, for events, and on your website,” Nemphos said. He also warns that brands should be proactive about promoting their brand online, because simply getting your name out, and attaching it to products, protects your use of it. He suggests registering URLs with your brand name right away, and using the brand name prominently on products and labels. Doing so doesn’t hurt marketing, either. “Brand development comes from just being out there and known, and that you take the steps to show off your product and your concept.” Once you have a legal counsel and accountant in place, remember that they likely have a great deal of expertise in the industry – and can serve as valuable advisors to your business. Don’t be afraid to ask questions – doing so can open your eyes to everything from money-saving options to marketing trends. Dig Deeper: How to Incorporate Breaking into Fashion: Build Your Production Model Today, in the era of super-simplified online sales via eBay, Etsy, and a host of other online storefront options, it’s easy to start small. You can learn how to set up an Etsy store . Inc.com also has guides on setting up shop on eBay and how to use your local market as a business incubator . Hayward could be considered model of how to make a sustainable, and truly profitable, business that exists solely through an online storefront. But she’s planning big: she’d like her own boutique, complete with sewing lab – as well as to use the space to offer educational courses in designing and sewing. She’s anticipating hiring her first employee soon: another seamstress. “You can start small – you can do custom wedding dresses or bridesmaid dresses. Start small with a very focused audience,” she said. “But I’m getting to the point where I’m working late evenings, and I’d like to create every dress myself, but I’m going to have to expand production.” Scotto-Dinan, on the other hand, knew from the beginning she’d need a production facility. She read Womens Wear Daily to learn about the industry, and found advertisements for a variety of New York factories in its pages. Once she found a handful that seemed aligned with her goals, she interviewed them, and found one “that was a good match for what I was planning. I aligned myself with one local facility – and to this day I’m with them.” Scotto-Dinan, who is based in New York, knew that she wanted to work with a local producer. However, sourcing a product abroad is a popular – and often money-saving – choice, though doing so creates myriad shipping, customs, and quality control issues. When you’re ready to sign on with a production house, mind the contract, attorneys caution. “The cutting houses and factories will throw a contract at you. There’s a standard contract that they give you, but some of them come back and say, once you’re working with them, that they own the patterns. You can’t let that happen,” Nemphos said. One way to preempt disputes is to have a legal confidentiality agreement and a development agreement ready. Also, if you’re using unique patterns or fabric designs, you might want to consider trademarking them. Yes, that’s right: patterns are considered intellectual property and fit into the trademark purview rather than being considered patentable. Then again, if you’re developing a new fabric, or chemical compound that creates a fabric, you should consider patenting that process, Nemphos says. “There’s a great deal of change in the materials that are used in apparel. A lot of it is specially designed and created – and that material has to find its way into contracts, because you have a trade secret on your hands,” he said. “That can, and should, be patented.” Nanette Heide, a corporate partner in the New York office of Duane Morris, added: “You really have to be careful who you give access to information on how your product is made. That’s handled through confidentiality agreements. You have to make sure your stuff is kept secret.” Before establishing your brand, search out others who might be using the same, or similar, names. Don’t enter the same retail space as a direct competitor with the same, or a similar, mark. That said, Heide advised that throughout your brand’s lifetime: “You want to keep a watchful eye on whether someone out there is using a similar mark or name. If someone is, at that point, you’d need to send a cease and desist letter.” In other words: call your lawyer. Dig Deeper: Creating a New Online Fashion-Buying Experience Breaking into Fashion: Ramp up Sales, Think Big, and Address Market Desires The legal issues involved in establishing a brand only expand as your business grows. So do sales and marketing demands. At this level, both innovation and sales are your keys to success, Scotto-Dinan advises. “If you know your market, and it’s department stores, call the fashion director at Bloomingdales. You can find these people. You have to sell your product, and if you know it’s good, just do it,” she said. “Send them your look book and don’t look back.” Another part of succeeding as a designer in this economy is being innovative. But also being mindful of your audience helps. If your brand is selling well in a few boutiques, listen to their buyers, Singh said. If they’re not talking, actively solicit their advice on your last line, including what they liked, what didn’t sell well, and what they’d like to see in the future. “One thing I would share with any emerging designer is you have to be open to things your buyers are saying,” she said. “It’s true that designers can be like babies, and be very attached to what they design. But being open to what buyers have to say can really help you make a collection they want to buy.” And that can tune you into what consumers want. For instance, when Scotto-Dinan began receiving a bulk of calls requesting dresses for bridal parties, she knew the bridesmaid dress market was ripe for the picking. “We launched this January a second collection, the Ardour Collection, in bridal stores last year, to fit that demand,” she said. Now the Ardour Collection is in 25 bridal stores. Scotto-Dinan has also built on the shapewear trend, which has been firmly established with the popularity of Spanxs, by creating a line of shapewear-lined dresses called SLEEK NYC, which will be launching this year at department stores. She has a fourth label, a private label for Anthropologie stores, called Annabelle, this year. “What I love is the big question mark, how you don’t know what will happen, but that you can strive to build it. Even if it doesn’t grow to that huge point, you know you’re building it,” she said. Dig Deeper: Revamp Your Fashion Marketing Plan Business – Design – New York City – Fashion – Fashion design

Do entrepreneurs need a college education? Flickr and Hunch co-founder Caterina Fake may have argued that the best way to become an entrepreneur is to drop out of college, but Read Write Web profiles one college entrepreneur who disagrees. Jay Rodrigues is a 21-year-old University of Pennsylvania junior who secured Series A funding for his college-calendaring system start-up, DormNoise. “Don’t drop out of school, because for every Bill Gates and Mark Zuckerberg, there are hundreds of entrepreneurs who drop out and go nowhere,” he advises. “At least if you stay in school, you’ll have an education.” But it isn’t easy juggling his roles as CEO and college student–Rodrigues says he works about 16 hours a day. “Be 150 million percent sure this is what you want,” he says. For more on successful college entrepreneurs, check out our 2010 list of America’s Coolest College Start-ups . How to stop being a control freak? Name a number two. For business owners who built their company from scratch, letting go can be hard. But the Wall Street Journal cautions that there are worse consequences than the fear of losing control, such as burnout or unexpected emergencies if for some reason you can’t be around to make sure things run smoothly. “Invariably an owner will hit a wall where they feel overworked and like a prisoner to their business,” says Daniel M. Murphy, co-founder of The Growth Coach. Ceding day-to-day operations to a number two can free you up to work on the big picture. Ideally, their skills and work style will be complementary to your own. What better time than now, adds Murphy, “There’s such great talent out there that’s affordable.” The man who fired Steve Jobs. We told you last week about the dangers of saying no when the founder of Apple offers you a job . Now, the Daily Beast tracks down John Sculley, 25 years after he engineered a coup at Apple computer to oust Steve Jobs. Sculley, unsurprisingly, feels bad about the whole thing, telling the Beast that he should never have been the CEO in the first place. Meanwhile, the website digs up testimony given to an oral history project by Arthur Rock, a VC who was on the board when Jobs got fired, that hints at a culture clash. “I believe [Jobs] had a goatee and a mustache and long hair – and he had just come back from six months in India with a guru, learning about life,” Rock said. “I’m not sure, but it may have been a while since he had a bath.” For a glimpse at what Apple’s board was thinking back when they fired jobs, fire up the Inc.com time machine, and check out to this 1987 Q&A with Sculley. How to build foot traffic. For one small business owner, the answer was bananas. Yep. Bananas . (Via the Los Angeles Times.) Oh, AT&T. The sole U.S. provider of wireless service for Apple acknowledged yesterday that the e-mail addresses of more than 114,000 iPad owners had been uncovered by a group of computer experts through a security hole in AT&T’s website. Gawker Media first reported the security breach, calling it an “embarrassment” that exposed “dozens of CEOs, military officials, and top politicians.” Could the slip up further complicate AT&T’s rocky relationship with Apple? Well, Apple is staying mum on the issue, leaving it to AT&T to apologize and clean up the PR mess. Which type of entrepreneur are you? Tech entrepreneur and UC-Berkeley professor Steve Blank has winnowed the spectrum of entrepreneurship down to four major types: small businesses, scalable start-ups, large companies, and social entrepreneurs. Although seemingly very different, Blank demonstrates that the four types of entrepreneurs are all searching for a sustainable business model and all have common characteristics such as resiliency, agility, tenacity, and passion. The differences are most notably seen in each group’s risk tolerance, size and scale of vision, and personal financial goals. Hiring and firing deli-style. A CNNMoney contributor and small business owner herself, Vickie Elmer attended a crash course on SMB hiring and firing given by Zimngerman’s the Ann Arbor, Michigan-based deli with a cult-like following . There she picked up a few tricks she might apply to her own Italian ices business, Mity Nice. One of the hiring tests the deli employs is having most potential hires work a trial shift on a busy Saturday or what they call “Tilt-A-Whirl” in which they simultaneously interview multiple candidates. Other ideas came from the attendees such as asking job seekers to sell you a pen to gauge their sales ability. For more information, read our guide on improving your hiring practices . More from Inc. Magazine: Get this delivered to your inbox. Or get it on the Kindle Follow us on Twitter or Tumblr . Friend us on Facebook. Apply now for the 2010 Inc. 500|5000 . Apple – Steve Job – Facebook – Mark Zuckerberg – Caterina Fake

Most growth-oriented entrepreneurs are wired for starting, not running, a business. I call these folks “on-base hitters” because, unlike baseball’s “sluggers,” they focus on earning lots of little wins in the form of starting many small businesses instead of seeking out rare but fantastic successes. (Read more about “on-base hitters” and “sluggers” in Part 1 of this series.) Yesterday, in Part 2 , I described the Kolbe personality test, which allows you to measure yourself on four personality attributes that are predictive of your success and happiness in running a business. People with a high Quick Start score on the Kolbe test thrive in the chaos of a start-up. One of the reasons Quick Starts rarely grow large businesses is because all of that creativity makes them bad managers. If you’ve ever watched a 230-pound slugger try to lumber his way to first base, you know it’s not a pretty sight. Neither is watching a Quick Start entrepreneur try to manage a large team of employees. When the boss is a Quick Start, employees get frustrated trying to keep up with all of the new ideas. Employees have trouble determining which brainchild was just a passing thought and which needs their most urgent attention. People with high Fact Finder scores often see their Quick Start boss as an impetuous, superficial risk taker. That’s why most growth-oriented entrepreneurs are happiest—and most successful—in the start-up phase. In a start-up, new ideas are valued at a premium, and there are only a few employees to manage. To follow our baseball analogy, these types are happiest with the quick, regular success of getting on base a lot rather than hitting a rare home run. Here’s an informal quiz to identify whether you’re best suited to be an on-base hitter or a home run slugger. Answer each question with a simple “agree” or “disagree.” I get bored easily.I feel overwhelmed by complexity.I have higher employee turnover than is normal for my industry.I like proposing new ideas that some people think are “off the wall.”I started lots of little businesses before getting into the one I’m running today.I’m a big-picture person.I started a little business when I was in high school or university.I burn out when my business gets too complex. If you answered “agree” to more than four of the questions above, you’re probably a person who thrives on the variety of the start-up and would flounder running a larger business. Focus on just getting on base by launching the business and creating revenue and a positive cash flow; then either sell it or install a manager. Clearly, you won’t earn as much from the sale of one small business than you would if you hung on and built it up further, but by getting out quickly, you’ll retain the energy and creativity to devote to a new business. Collectively, a portfolio of successful start-up businesses in a career could easily surpass the financial success of one home run, and you’ll be infinitely happier along the way. John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board. In 2008 he was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers. Business – Small business – Quick Start – United States – High school

As I pointed out in the first part of this series , baseball players typically know by their physical attributes whether they’re a leadoff hitter who can get on base frequently or a slugger who swings for the fences and drives in runs. But as an entrepreneur, how do you know if you are best suited to start lots of small companies or to try to grow one large one? The trick is to understand your personality. For the past nine years, I have attended a quarterly workshop offered by the Strategic Coach. “The Coach,” as it is known to the initiated, specializes in working with entrepreneurs to help them achieve both business and personal success. Prior to my first Strategic Coach workshop, each attendee was asked to complete a personality test known as the Kolbe test. The Kolbe test measures people on four personality attributes: “ Fact Finders ” are people who seek details before making decisions. Just as picking at a single yarn in an old sweater unravels it, each answer to a fact finder’s question triggers a new set of questions. The fact finder seeks out the answers to those questions before making decisions. “ Follow Through ” people love systems. They think in a linear fashion, where step 1 leads to step 2 and so on. They love process and create systems when they are confronted with chaos. “ Quick Starts ” enjoy initiating new things. They are creative problem solvers and think laterally. Easily bored, Quick Starts tend to begin lots of projects but need help finishing any of them. “ Implementers ” live in the physical world and enjoy building and fixing things. They thrive in environments that allow them to work with their hands. When you take the Kolbe test, you award yourself a score of 1–10 on each attribute. A score below four on an attribute means you actively avoid the behavior; middle scores of four to six mean you go along with the crowd on that attribute; and a score of seven-plus on a single trait means that you will actively initiate the behavior. My first Strategic Coach class was made up of 60 growth-oriented entrepreneurs, most of whom had started a number of businesses in their careers (on-base hitters). The facilitator started the day with a poll of our Kolbe scores. When she asked how many people scored seven or higher on the Fact Finder scale, about one-third of the hands went up. Just three or four hands rose when she inquired about people with high Follow Through scores. When she asked if anyone got a score of seven or higher on Quick Start, virtually every hand in the room went up. My Kolbe scores were as follows: Fact Finder: 7 Follow Through: 4 Quick Start: 7 Implementation: 2 I like asking lots of questions before making a decision (Fact Finder: 7); I can follow a set of rules if you insist (Follow Through: 4); I like the start-up phase of running a business (Quick Start: 7); and you don’t want me anywhere near your IKEA furniture (Implementer: 2). If you score seven-plus on Quick Start, chances are you’re going to be happiest starting lots of smaller businesses in your career (on-base hitter) rather than one larger one (slugger). As a business grows in complexity, the need for higher Follow Through scores increase and your high Quick Start score goes from an asset in the start-up days to a liability as your business will need more structure to support its size. (Read Part 3 .) John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board. In 2008 he was recognized by BtoB Magazine’s “Who’s Who” list as one of America’s most influential business-to-business marketers. Business – Quick Start – United States – Entrepreneur – Kolbe