Alice Made This is a four-year-old menswear accessories brand that uses the materials and production methods of British factories. As the company expands beyond its core cufflinks range, founder Alice Walsh asks this month’s panel of business leaders how she can set ambitious but manageable growth forecasts
After a decade working as an industrial and product designer for renowned brands including Conran, De Beers and British Airways, Alice Walsh was itching to launch her own business. When she and partner Ed were unable to find him suitable cufflinks for their 2010 wedding, Walsh discovered her unique selling point: men’s accessories influenced by and employing the materials and production processes of British factories.
Her previous attempts at business plans had shown up Walsh’s need to gain management and logistics experience, but what she lacked in business wisdom she had in industry insight and contacts.
“As I explored the market further I realised no one had done anything particularly avant garde with cufflinks for a number of years,” says Walsh. “Coming from a product design background I wanted something with function as well as an aesthetic. Cufflinks provided that.”
Walsh was no stranger to factory processes, and she met with British manufacturers in industries as diverse as aeronautics, military hardware, Formula 1 and nanotechnology.
“I go into factories and look at their manufacturing processes,” she explains. “This influences not only the design process itself, but both the materials and aesthetic form of our products, too. For example, one of [the factories that produces for Alice Made This] is an aerospace factory and the materials it predominantly uses are stainless steel, copper and brass. The two processes it uses are a precision turning process and a precision milling one. So our cufflinks look very turned and symmetrical in their aesthetic as a result, because that’s the method of that process.”
With £5,000 from savings, Walsh launched Alice Made This in late 2011 from her garden shed, reducing her full-time role as a design consultant with Conran & Company to three days a week to help finance the fledgling business.
“I waited two years before going full time. It meant I could be reactive to wholesale enquiries and strategic about who I allowed the brand to be sold into without having to scramble for cash,” she explains.
“We have about 40 wholesalers,” says Walsh. “That was a new side of the business for me. The design and creative sides come naturally but the business acumen was alien. It’s been a massive learning curve in forecasting, growing margins and being cash savvy. In the fashion industry you have black holes of cashflow when you have new-season production going out while waiting on cash from the last season to come in.”
Alice Made This works with seven factories and the numbers of products manufactured in any run can range from just one to a batch of 400, she explains.
“My favourite part of the design process is working with a factory. I wanted to produce everything we do here in the UK. The term ‘manufacturing’ does not mean it’s not a labour-intensive, skills-based route to market. Everyone talks about handcrafted, but in British factories there’s a huge amount of history, provenance and skill that has been honed over the years, and it’s telling that as a story as much as the product aesthetic.”
Aware that much of her revenue comes from gifting – “90 per cent of our cufflinks sales in December 2014 were from women buying for a man,” she says – Walsh has expanded the range of Alice Made This into key rings, belts and men’s bracelets, but remains true to the industrial ethos.
The fast growth of Alice Made This has allowed her to take on a studio in Peckham, south London, and two members of full-time staff – an online manager and her husband, who joined the business in August – to complement her network of freelancers.
“My responsibilities are with design, development, production and brand strategy. Ed, who was a money broker, deals with the accounting. Him coming on board means we’ve put all our eggs in one basket, but it’s let us take Alice Made This from a lifestyle to a proper functioning business with the aim of growing this into a global brand eventually. “Growing wholesale is a major part of our plan, but I don’t want us to be available everywhere and lose part of our brand DNA by selling out. We have a wholesale strategy and we want to grow online because the margins are much higher.”
This brings Walsh on to the burning question for this month’s virtual board. “I want to set targets for Alice Made This that are ambitious but that don’t knock confidence if they are missed,” she says. Is that realistic? Over to this month’s panel…
Expert answers: How can Alice Made This ensure that our forecasting is ambitious, but not so enthusiastic that we damage confidence by failing to meet unrealistic targets?
Andrew Daniels, managing director of digital design agency Degree 53
Entrepreneurs should be ambitious when forecasting. We should start by deciding where we want to get to and what we want to achieve. The important part is to then focus on how we get there. Start with a Swot analysis of your business and sector to identify strengths, weaknesses, opportunity and threats. This will help you visualise what the future of your business might look like.
Once you have a clearer vision about where you want to get to and your aspirations, start looking at what you know is going to happen, such as what guaranteed revenue/orders you already have. This is your baseline. If your business is four years old, you’re lucky to have a lot of data that you can analyse. What have those years looked like? Identify what was behind that growth. How could this be replicated? Be honest about the problems you may have had. What effect would they have on your business?
You know what will drive growth, but you should now be able to see the difference between where you want to get to and where you think you are. With this level of detail you should be able to see if you’re being overly ambitious, or aspiring to realistic targets.
Andrew Daniels is a member of IoD North West
Anne Ovens, founder and managing director of accounting services consultancy Aspiration Europe
Ambition is an essential ingredient in growth and should be the starting point for developing growth targets and forecasts.
The first step in developing an ambitious but attainable forecast is to identify from your market research ‘what is possible if there were no constraints’? Scoping the market (and potential marketplaces) for your products, and clearly defining the potential of your target growth areas, gives you a solid foundation for your projections.
The next step is to consider the potential resource constraints. For example: people, supplies, time, working capital and longer-term investment requirements. How would (or could) each of these restraints affect your growth? Once these are identified, you must determine how, and in what timeframe, might they be mitigated? Could resource limitations result in the need to choose between the identified potential growth areas for your focus? Building these constraints and appropriate mitigations into your forecasts will ensure you have a sound growth plan.
Lastly, remember that ‘cash is critical’ – when forecasting business profit growth plans, modelling the cashflow timing is absolutely vital in ensuring that your targeted growth is achievable.
Anne Ovens is a member of IoD Cambridgeshire
Marios Poumpouris, managing director of commercial catering equipment supplier Chiller Box
Unless you have access to a crystal ball, reality will never accurately follow your predictions. Saying that, forecasts and targets are a necessary part of your planning to be used in conjunction with other facts, figures, and gut feel, to make strategic decisions.
To make realistic targets you should dissect your business according to such things as channels to market – in your case wholesale and online – and sectors and/or territories that you already sell into or are looking to branch into. Then make assumptions about how much these will grow. As margins may differ for each, your profit forecasts should reflect this.
You should consider the extra resources you may need as you reach your target sales, including staff, premises, marketing and distribution, and make sure your overhead costs mirror this so that your net profit forecasts are not overstated.
Lastly, assess the ‘what if’ scenarios to assess the effect of ambitious targets not being met. For example, ‘what if our wholesale business only grows by X per cent, the effect on profit will be Y, so we will need to do Z to avert disaster’. That way you are prepared for it if it does happen and can cut your cloth accordingly.
Marios Poumpouris is a member of IoD London
Thank you all for your words of wisdom. They’re really useful, particularly as I start pulling together our 2016 targets for Alice Made This.
Andrew’s comments about gathering data will definitely be acted on. We use software that manages our production, sales and logistics so we can analyse plenty of valuable real-time information by generating reports through this.
I like Anne’s advice of starting with the ambition of no constraints and then applying them to help realise the forecast. This will give us a super-ambitious option that will always be in our mind as the ‘nothing is impossible’ version.
Together with Marios’s advice, we can then do some ‘what if’ scalable scenarios to ensure we are both ambitious enough but savvy to any issues that may arise.
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