As promised Fashion Rider is back with another fantastic set of tips from Tahir Basheer, an Industry member who specialises in fashion and media law for leading London-based law firm, Sheridans. This week we will be exploring the world of Fashion-Tech, with Tahir giving advice on those starting up their new business.
But firstly what does “Fashion-Tech” mean? Fashion-tech or Fashion Technology connects and streamlines fashion, apparel and/or different aspects of the fashion industry to consumers and/or other fashion industry professionals by utilising and implementing technology in order to make the user’s experience more efficient and enjoyable. And boy, was 2013 the year of the fashion-tech start up!
With many major designer brands such as Nastygal, Farfetch and Rent the Runway investing millions of dollars into their very own start-ups, commentators have predicted this little start-up bubble will burst in 2014. Only time will tell! But one thing is for sure, expect to see many exciting, new fashion businesses this year whether it’s via technology or otherwise. Eek!
Now if you’re one of these brave, aspiring entrepreneurs that have or wish to set up your own fashion-tech start-up then listen up. You don’t need us to preach about how hard it is to get started, but how beneficial it can be too. You can be your own boss, you can make your own decisions and you can feel proud every day. But if you lack a significant amount of organisation then this can lead lead to problems in terms of executing the vision and ultimately the creation of a sustainable business. You must consider both the internal aspects and external aspects, as both are important.
So here is Tahir’s checklist!
1. Secure the brand via registered trademarks, domain names and social media tags.
2. A fashion business’s success is closely connected to its Intellectual Property, so the business should be able to control and preferably own all trademarks, copyrights, design rights and, if applicable, patents. It is important that the business has contractual arrangements in place ensuring it controls the Intellectual Property Rights created by its employees, contractors and partners (remember also that Intellectual Property will be an asset that adds value to the business when seeking investment and then later selling the business on).
3. Set up a limited liability vehicle through which the business will contract and thereafter register with the relevant tax revenue organisations.
4. Get the limited liability vehicle investment ready. The start-up should have documentation that not only clarifies the founder shareholders equity position but also forms the basis of making the business as investor friendly as possible though a clear shareholders agreement that has been optimised for any tax benefits passed onto the investors. Think about SEIS and EIS compliant structures.
5. You should consider tax efficient employee incentive schemes that are designed to incentivise employees of your business while at the same time reducing the costs of salaries and bonuses.
7. If you are contracting with third parties (buying stock, hiring freelancers etc.) then you should have in-house agreements you can use. If you use third party agreements it is important to remember that these won’t be drafted favourably towards you. Bear that in mind before signing anything too!
8. Think about contracts for any endorsement deals, PR and marketing that you may do. Make sure the price, territory, term and any approvals are all covered together with any specific provisions.
9. Start keeping records of all designs, brands and products created and any further iterations of those. Also, keep clear records of transactions and deals that you make. Good filing can help not only when it comes to later due diligence that an investor or buyer of the business might want to undertake but it is also useful if a dispute should arise at some point in the future.
This may seem like quite a long list, however it is important to at least have these things on your radar. It is sensible (if possible) to budget for legal fees at the outset and remember that firms such as ours are start-up friendly and should offer “start-up friendly” rates and terms to help be part of the founding team as the business grows.
For more information on Industry member, Tahir visit his personal partner page on the Sheridans website. To contact him directly, visit The Industry Directory, email firstname.lastname@example.org or telephone 020 7079 0103.