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 Running a tight ship on the high sea of retail

 

 For those not familiar with retail, and particularly the fashion trade, it may seem like a simple exercise to work out the budget for a single clothing shop, but Eugenie Solkow knows just how complicated it can be.

For the past 24 years, Solkow has been running the independent clothing store Yacht Squadron together with her own clothing brand Indigo in the V&A Waterfront in Cape Town. While budgeting for the operations of small clothing store with about seven employees may seem straight forward, the difficulty lies in planning the stock mix to keep on thriving in South Africa’s busiest tourist hub.

Like any successful business owner, Solkow spends time planning cash flow. What makes it complicated in a business like hers is that the cash flow forecast is intricately linked to her stock forecasts, which in turn will determine sales. “The whole thing is linked. If you want to sell so much, you’ve got to make sure that you’ve got so much stock. Obviously, those forecasts are based on what you’ve managed to sell in the past.”

Solkow uses a system of continuous planning which she has developed over the years – a set of spreadsheets, including daily sales patterns, which she checks for trends to help her plan and budget. Her strength lies in setting up and maintaining systems and this allows her to manage the shop and the Indigo brand as a “one-man show” and still have time to be involved in the lives of her school-going children.

It also helps that she has learned to keep things simple. Her Indigo brand aims to represent a timeless nautical style of clothing, and therefore remains fairly constant without having to follow the vagaries of high fashion.

She keeps the brand fresh through ideas and samples that she brings back from an annual overseas trip. The design and production of her lines, which are all made locally, are outsourced to a local production house.

Solkow has developed her recipe through years of “hits and misses”. Having worked as a secretary and air hostess in her youth, she was asked by a group of yachting-enthusiast businessmen in the early nineties to start a yacht-themed shop in the Waterfront, which was still largely undeveloped in those days.

The shop started off selling nautical décor but soon their lines of yachting clothes dominated the sales, and Indigo became a nautical fashion brand.

“They just gave me the keys and told me to get on with it,” says Solkow of her years as employee at the business, which she developed virtually on her own. In many ways it was an ideal training ground, she says, because the owners allowed her to experiment and learn with minimal risk to herself.

Solkow saw the business grow to a seven-store chain with a presence as far afield as Johannesburg, but the kind of staying power needed to break through as a national brand proved to be a step too far even for the deep-pocketed owners, and stores were closed once again to concentrate on the thriving Waterfront shop.

In 2009, the last of the original investors was retiring, and Solkow, by then a minority shareholder, was given the option of buying the business. It was shortly after the financial crash and the banks wouldn’t consider financing the deal, but risk-financier Business Partners Limited (BUSINESS/PARTNERS) agreed to extend the finance so that Solkow could buy the business that she had developed.

The biggest test for Yacht Squadron was yet to come. With the World Cup soccer tournament in 2010, the Waterfront shops were urged to prepare for a “second Christmas”, and Solkow stocked up for the once-off event.

By the second day of the World Cup, however, she realised that virtually the only thing that the international soccer fans were interested in was regalia in the colours of the competing teams. She urgently set about buying in what she could at that late stage.

The World Cup was followed by “the worst Christmas ever”, says Solkow. All her cash was tied up in unsold stock left over from the World Cup, and Yacht Squadron faced the biggest crisis in its existence. Fortunately, BUSINESS/PARTNERS agreed to provide much-needed working capital by renegotiating the loan, which Solkow will have paid off by next year.

Since the World Cup crunch, Yacht Squadron has once again seen double-digit annual growth. Solkow is starting to sell Indigo branded lines through some independent boutiques and she is testing the waters of online sales.

But for now, she is happy to run just one tight ship through her well-honed method of continuous planning and budgeting.

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