Short Story
42-year-old Vaani owns a boutique in Mumbai. She manufactures and sells women’s garments at her store. She has been running this business for the past 20 years and runs two outlets in India and one in the USA. She has a dream to hand out franchises of her brand all around the country. Also, she aspires to penetrate the markets of the USA and the UK.
Business
- Vaani started her boutique when she was 22 with zero capital in hand. She used to receive a lot of garments as gifts, which she wouldn’t wear. After this, she started redesigning the existing garment according to her likings.
- She saw a business opportunity when a lot of other women liked her designs and asked her where they could purchase such garments. So gradually, through word of mouth her designs got popular.
A: How long has your business been running? Is this your family business?
H: I started this business about 20 years ago, with almost no capital. Also, there was no such support from the family. So, I have been the whole and soul of it.A: Is your business present in any other location?
H: Initially, I had started this business from home, a couple of years later moved to a 200 sq. foot garage and so many years later we have a 1500 sq. feet space that we function out of. Our entire production takes place in-house. From stitching to embroidery to embellishments happens here. Otherwise, there are two other units that function from outside, and all these places of work are rented out for these purposes.
A: What are the hours of the business?
H: There are no fixed hours as such. It really depends on the amount of work we have. There are days where we have to work until 12:00 a.m. and otherwise working hours are from 10:00 a.m. to 7:00 p.m. Clients start to come in post 12:00 p.m. and are on till 9:00 p.m. Also, I am present here throughout the day as I live pretty close by.A: Have you ever tried finding business online?
H: Not really. The thing is that my product will never sell online. There aren’t any readymade garments that we sell. They are all order-wise and customised for the individual purchasing it. Plus, I only make one garment of its kind. So, there are no different sizes to a product nor is there more than one piece available. Thus, selling these garments online would be a tough job.
Finance & Banking
- Vaani owns multiple bank accounts, debit, and credit cards. She also has an overdraft facility available with her bank.
- She believes that the major motivation to introduce UPI as a payment mode came only after demonetization took place. Now her customers have an alternative to make payments and she is happy to receive it through any mode that is convenient to them.
A: How do you make payments to your vendors? How do you accept payments from your customers?
H: About 90% of the payments we make to our vendors are through credit cards. The rest of the payments are made through cheques. When it comes to accepting the payments, we accept through cards, cheques, and UPI, which amounts to about 50% of the payments and the rest is in cash.A: Have you had to take a loan for these expenses?
H: As I said before, I had started the business with absolutely no capital. Over the years, all the revenue generated by the business has been reinvested back into it. So, there has never been a need to borrow for working capital requirements. Yes, we did borrow post demonetization but have already closed them all.
Loans
- In the 20 years of business, Vaani didn’t feel the need to take too many loans. The last time she took a loan was right after demonization. Currently, she has one active loan and an OD account.
- The interest rate is the primary factor for her when it comes to choosing a loan source. Loans are quite need-based for her. Currently, she is looking for an OD facility, which enables her to use the money when there is an immediate requirement and for payments.
A: Is there a specific time in the year that you require a loan?
H: As I mentioned earlier, the business is really erratic. It only depends on the marriage season and when the sale would be expected to pick up. Generally, we opt for a loan during the lean period of the business when we would need capital to design and manufacture a new line of garments.A: What is the amount that you are generally looking to borrow?
H: We prefer taking loans in the multiples of Rs. 5,00,000. This is because it becomes easy to allocate such a chunk into the business, plus it is always easier to pay back based on the time allotted.A: Here are three dummy loan products:
1. 100 Day Loan
2. Line of Credit
3. Term Loan
Please state the preference of these loan products from your business’ point of view in terms of need.
H: Out of all the products that you have shown me, I would actually not opt for any of them due to the high interest that every product accrues. When I have the option of taking a credit card loan or a loan with an unorganized lender, who would still charge me lesser, why would I opt for these products? Anyway, the loans that you offer have really high-interest rates and the only reason I did take a loan was that I was going through a divorce and my lawyers suggested I bring my CIBIL score down. Otherwise, I would just drown in interest payments and not be able to earn anything out of it. The only way you could have me come back to you would be by lowering your interest rates. Keeping all of this aside, I would be inclined towards the Line of Credit, just because of the nature of the product as it compliments the erraticity of my business.
Accounting & Taxation
- Vaani has a billing system installed in her boutique. For income and expenses, she maintains written records. She has hired an accountant who visits her boutique every Saturday to feed these books of record into Tally and maintain it electronically.
A: If payments come in from different sources, how do you keep track of that?
H: Every garment that is sold has a bill that is generated against it. On that bill, we mention the mode of payment for it, and thus, records are maintained.A: How do you keep track of inventory?
H: So, our inventory mainly includes fabrics, buttons, lining, etc. The orders we place are according to the demand, which is limited. Since inventory is limited and is used in some garment or the other, it is rather easy to keep track of it.A: What taxes do you file? What licenses have you applied for?
H: I just pay the GST and my income tax. The licenses we had to procure were the GST license and the Ghumasta.
Business Goals
- If Vaani had more working capital, she would use it in marketing her business more. For her, the need of the hour is to increase her customer base because that is directly correlated to growth. For this to happen, she would want to start a retail outlet for the same in a strategic location.
- She feels that demonetization and the introduction of GST have affected the market in both positive and negative ways — it has streamlined business but has also affected sales.
A: Where do you see your business in the coming years?
H: As I mentioned, the business needs more visibility. For that, opening a retail outlet is a must. This a demand raised by our clients actually. Our makes are really affordable and we tend to offer a variety of garments. So, at the moment we are underplaying ourselves. There is a lot more we have to offer than just creation!A: What are the top 3 things on your mind with regard to your business? H: Sales, sales and sales! Look, we are selling a fashion product and fashion is something that keeps changing within the short term. So, there is barely any room to make improvements slowly as we have to also keep ourselves relevant in the market. The bigger the sell-out we are, the better for us!
A: What are your long term goals? What are the challenges you face to achieve them?
H: I have a vision to hand out franchises of my brand all around the country. Also, I aspire to penetrate the markets of the USA and UK. We already cater to USA clients as we already have an outlet in Bakersfield, California. I know that I can achieve this feat if I have someone who is willing to invest in me and my business ethics. At the end of the day, money makes money.
Credits:
- Interviewed and transcribed: Ansh Chawla, Flexiloans
- Analyzed and published for Medium: Geetika Shukla
About the research
This documentation is a result of the in-person interview, along with the participants’ consent. The interviews might be conducted in their native languages and translated to English in the best possible way to reach a large audience.
Disclaimer: The identities of people and places in this documentation have been changed to honour the privacy of the participants.
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