March 2003
Ontario Business Report
HELP WANTED
Want to be your own boss in an ultra-competitive industry known for long hours and high stress? Would-be fashion designers do, and they get the help they need at the Toronto Fashion Incubator (TFI).
House in a renovated coat factory in the less-trendy but lower-rent reaches of Queen Street West in Toronto, the Toronto Fashion Incubator helps creative young designers develop the business acumen they need to survive and even thrive in the tough business of high fashion. TFI has produced many of Canada's most successful designers, created thousands of related jobs and reinforced Toronto's image as a world fashion centre.
Like a successful college or university, TFI owes part of its impressive track record to very high admission standards. Applicants must meet several stringent criteria before they are admitted into the incubator's resident program. In addition to demonstrating innovative design talent, they must have a three-year business plan, with a detailed cash-flow analysis and a minimum of $25,000 of initial financing in place.
"They also must be able to communicated well and present themselves properly," says TFI's executive director, Susan Langdon, whose previous experience ranges from head designer in a large fashion house to designing and producing her own line. "And they must have the personality to work in a co-op environment, because we don’t' have room for any prima donnas. A designer must have all these qualities to get accepted here. I'd rather leave a space empty than have someone who doesn't have what it takes," says Langdon.
Designers who win one of the 10 spots in the incubator's resident program are rewarded for their efforts. In return for a flat monthly fee, they receive a range of services that includes a semi-private studio, the use of production equipment, a professional showroom, office facilities and a receptionist, a resource centre and, most importantly, business advice. Outreach members, who work off-site, can also access TFI's resources.
Usually, recent graduates of fashion programs at Ryerson University, Seneca, George Brown and Sheridan College or the International Academy of Design, many TFI neophytes have never sold a single garment. Once accepted into the resident program, they are expected to post sales of $12,000 - $15,000 in their first year, $25,000 in year two and $50,000 in year three.
"They should be doing at least $100,000 by the fourth year," says Langdon. "Several of our grads are in the range of $500,000 to $1.5 million at the high end. By then, they have created several new jobs."
Langdon recently analyzed TFI's job-creating efficiency using a benchmark established by the National Business Incubation Association. Businesses served by TFI have created 2,508 jobs since 1988, at a gross cost per job of $826. The average cost per job created for incubators in the U.S. was well over $1,500.
The Toronto Economic Development Corporation (TEDCO) is the incubator's prime sponsor, investing more than $2 million since 1990. Corporate sponsors include Smirnoff, Bain de Soleil, Tridel and many other companies that see the value of a brand association that appeals to a younger, trend-conscious audience.
TV's "Fashion Television" and "Fashion File" regularly profile the work of TFI designers, and the concept has been imitated by such fashion centres as New York, Los Angeles, Sydney, Cape Town and Dublin.
AN INSTINCT FOR MARKETING
Arthur Mendonca is the latest addition to the Toronto Fashion Incubator (TFI), but he'd already seen how the incubation process works while employed by Toronto designer David Dixon. After graduating from Ryerson University's fashion-design program, Mendonca worked with Dixon at TFI and saw him move on to create a successful independent fashion house.
"Working with David taught me a lot about getting established in the business, and I saw the development process first-hand," says Mendonca, who moved into the TFI in April 2002. "When I decided to go out on my own, I knew that the TFI was the place for me."
Mendonca credits the development of his comprehensive business plan to TFI's rigorous admission standards.
"We write business plans as assignments in school, but this is the real thing and it's hard to think years ahead," he says. "I'm not following it to the letter, but it's really good to know what to expect, especially in areas like cash flow. It also forces you to have your financing in place."
Mendonca premiered his 2003 spring collection for women and men during Toronto Fashion Week in October 2002. Reviews were very positive, and he is receiving a lot of attention. His design skills are well supported by an innate sense of effective marketing.
"I went on my first sales trip to Montreal, Ottawa and Vancouver after the show," he says. "I made some press kits, put the samples in the car and went cold-calling. Actually, I looked at it as a promotional tour, and any sales were a bonus." He made a lot of contacts, and all are interested in seeing future designs. "It's so much better to meet people in person than trying to sell to them over the phone."
Next year, he'll try to sell in New York and Los Angeles.
TFI has been highly successful in developing the drive and talent that eventually produces successful small businesses.
MERCY LOOKS BEYOND CANADA
Mercy is a successful label developed in the Toronto Fashion Incubator, where Ryerson fashion grad Jennifer Halchuk started work in 1994. Two years later, she was producing innovative designs from her own studio in Toronto and selling them to personal customers and select retailers across Canada.
In 1997, her fellow Ryerson alumnus Richard Lyle joined her as a partner after a two-year stint in London, adding his design and promotional skills to the Mercy label. Mercy's designs often feature hand-painted or hand-dyed fabrics, fur and leather, and are described as "handwritten clothing with a story behind it."
"One day, out of the blue, a Japanese company placed an order," says Lyle. "We decided that if the Japanese were interested, why not the U.S. and the U.K.? And, of course, once you start exporting, your sales in Canada go up."
Mercy is following a strategy of steady, controlled growth. The two partners do virtually everything themselves, from design to production, although some work is sent out to carefully selected contractors. To keep costs low, Halchuck and Lyle share workspace with an interior designer in Toronto.
"We do everything ourselves," says Lyle, "which isn't always good, because it limits the time we can spend designing. We will eventually employ people but we would rather have slow, stable growth over the long term."
Mercy sells to Holt Renfrew in Canada but currently exports about 75 per cent of its production, mainly to Japan and the U.S. The label has hired a Japanese company to handle its sales for Japan and North America.
"Our ultimate market is a global market," says Lyle. "We may not sell a lot in each area, but in total the sales all add up to a good number."
PROGRESSING BY DESIGN
Joeffer Caoc has a wide range of experience for someone who was been in the fashion business for less than a decade. Well known for his Misura by Joeffer Caoc label, Caoc first attracted attention as a student at Ryerson University in 1993, when his "wearable teepee" turned heads at the Smirnoff Fashion Awards. Fresh out of Ryerson, he worked as a studio assistant to Lida Baday, another Ryerson grad already well established in the world of fashion.
"I learned an incredible amount from Lida," says Caoc. Besides the business side of the work, "I learned a lot about how important technical things like tailoring can be to your success."
The Toronto Fashion Incubator (TFI) was the next stop for Caoc. He established his own label, Misura by Joeffer Caoc, and soon attracted financial partners who provided the capital needed from promotion in Canada and a high-profile launch in New York. Misura quickly outgrew the TFI.
"We got a lot of press in the beginning, and that has really helped in the long run," says Caoc, whose creations are known for edginess and meticulous attention to detail. Although designing in an art, "as soon as you get things to market, it's a business, it's not an art," he says.
When Caoc's partners decided to move on, he had to decide whether to take the plunge and go out on his won or move back to working for another designer.
"I bought back the company a year and a half ago," he says. "It was a good decision." It's tougher, he says; it takes money to properly market the line, and travel expenses are high. "But we're doing it in a targeted, controlled way. We don't have the money for a shotgun approach." The company does two fashion shows a year as promotion.
Caoc has seven employees working at a 2,500-squrae-foot facility on Spadina Avenue in Toronto. Misura's sales are mainly in Canada, but the company is planning another push into the U.S. market for autumn 2003.
"It's all been a great learning experience," says Caoc, "and it will help me in my goal to have a company that is more export-focused." He also wants to eventually add a mass-market line of clothes.
TAKING THE LEAP
Elena Conte is ready to make the leap from the warm environment in the Toronto Fashion Incubator (TFI) to her won studio space in the competitive world of fashion.
After three years at the TFI and extensive business experience, she is a confident young designer. A graduate of Sheridan College's fashion-design program, Conte has done a variety of jobs within the fashion industry.
"I took on extra work as a graphic designer at a public-relations firm," she says. "Getting that extra experience in a different business has benefited me. It might seem like a waste of time when you're doing the extra work, but it's positive in the long run."
The energetic Conte later set up a custom-design business with a partner. It was successful, but when her partner moved on, Conte gave up her studio space in Toronto's fashion district.
"It's difficult to work on your own," she says. "I jumped at the chance to get a spot in the TFI, because the creative environment here is very positive."
She sees a lot of other advantages in working in the incubator, including the business advice that is available and the design and production equipment.
Growth has been steady for the Elena Conte label. With two collections per year, and a month and a half of selling time for each, Conte's design, production and management time is under pressure.
"Selling take a lot of time, so I'm looking to hire a sales rep soon," she says. "I want to start exporting to the U.S., to reach a larger market and to get better exposure at home. Eventually, I'd like to open my own retail outlet."
