We know how daunting it can be to start a new business, especially if you’re disrupting an industry or creating an entirely new one. When there is no path to follow, the biggest question is, where do I start? There is so much to do, but before you get ahead of yourself, let’s start at the beginning. To kick-start the process, and ease some of those first-time founder nerves, we’re asking successful entrepreneurs to share their stories in our series, From Scratch. But this isn’t your typical day in the life profile. We’re getting into the nitty-gritty details—from writing a business plan (or not) to sourcing manufacturers and how much they pay themselves—we’re not holding back. In this installment, we tapped Carolina Kleinman, the founder and creative director of Carolina K, to find out how she built her ethical fashion brand, what she changed about her business to find success in the midst of COVID-19, and why she recommends never overspending.
Did you write a business plan? If so, was it helpful? If not, what did you use to guide your business instead, and why did you take that approach?
Despite growing up in fashion and having a foundation and understanding of what it meant to have a fashion business, I chose to do things my way by guiding myself with what felt right and using my intuition. I learned how to run a business the hard way without specific guidance but my own, without investment partners nor a business plan. Thinking about it now, I would say it is good advice to have a business plan but be prepared to have to pivot unexpectedly. As John Lennon’s “Beautiful Boy” song wisely states, “Life is what happens to us while we are making other plans.” My approach has always been to be open, prepared, and aware of what reality may bring because it can disrupt the most detailed and thought-out plans, in business and life.
How did you come up with the name Carolina K? What was the process like, how did you know it was the right name, and what are some of the things you considered during that process?
Because my brand is such a personal reflection of who I am as a person—the way that I live my life, and my beliefs—I spent a lot of time trying to think of names that would represent just that. A meaningful word that would take this “project,” that was so close to my heart, to another level of growth and development. I went back and forth with a variety of different names but nothing was resonating. I then opted to use my namesake to just include my first name and the first letter of my last.
What were the immediate things you had to take care of to set up the business?
I founded my brand 15 years ago and the most immediate action item for me was the initial filing to make Carolina K an official business and company. Then, setting everything else up that came along with that. I am so fortunate that my brother Pablo was able to help me with this process because I had no idea where to even begin. He was able to set up the paperwork and guide me through legalities.
What research did you do for the brand beforehand? Why would you recommend it?
Luckily, I’ve always been immersed in fashion and grew up playing around with rolls of fabric at my mom’s clothing store in Argentina so everything came very naturally to me. Early on I had a very clear understanding that if I ever started my own label it would have to be done in an ethical and meaningful manner. This resulted in the research taking place as the development of collections happened. I traveled the world looking for artisans and factories, meeting and working with those along the way. Most, if not all, of whom I still work with today after 15 years. As I learned more about them I created a connection, and I knew I wanted to preserve the artisanal crafts, ancient techniques, and details of their culture.
I highly recommend seeking to establish a true partnership, meet who you work with in person, get to know your suppliers, test each of them out with small projects so that you can scale accordingly and grow together. Growth is great, but it’s beautiful when you can do it together.
How did you find and identify the manufacturers that you work with? What makes a successful partnership and what advice can you share for fellow business owners on finding the right partners?
I found many of my suppliers, manufacturers, and artisans throughout my travels prior to starting my company and throughout its growth. Still to this day when I travel, I often visit markets or attend festivals and celebrations in small towns or cities. At both places, I often run into a variety of artisans that sell items I end up falling in love with. I then strike up a conversation which usually leads me to placing a small order. This allows me to ensure their responsiveness and reliability. If things go well, I take them under my wing and continue to work with them long-term. To this day, we employ around 300 artisans worldwide that I’ve met and maintained relationships with for the last 15 years. I cannot express how important it is to really know who you are working with and cultivate those relationships to assure that the best materials are being sourced and used. Especially, in my case where we make sure to use eco-friendly materials that do not harm the environment.
Did you self-fund the company? If so, how did you bootstrap it? Did you do a friends-and-family round? Or did you raise seed money or initial investment money? If so, how much, and what was that process like for you? What path would you recommend?
Carolina K is a fully self-funded brand. In my early twenties, I was living in Los Angeles working towards being a musician and I would take small jobs here and there in styling or other projects in fashion. I later went back to Argentina where a woman that I knew offered me a 90-day term on fabric, leading me to design my first collection under the Carolina K brand. All I could afford was a one-way ticket to New York City. I took a leap of faith and flew there with the intention of selling it. The full collection sold out in just one weekend!
I paid off what I owed for the fabric and put the rest of the money back into the business. I repeated this cycle over and over; money always went back into the business. I must say, the journey has been hard. I didn’t study business, and it took me a long time to learn the business portion. Plenty of trial and error, especially when I was living outside of Tepoztlán, Mexico, and did not have internet access at home. Based on my struggles of scaling the business, I think I would advise others to connect and work with people that you trust and that are knowledgeable in areas that you may not be. For me, it would have been someone more understanding of the business side of things early on.
How much did you decide to pay yourself in the beginning?
To be fully transparent, I only had one employee for the first nine years. As a result, I didn’t see the need to pay myself a fixed salary up until the point my company really started to scale. All of the hats I wear as an entrepreneur and a creative is a lot of work, but I love every minute of it, and I know we will continue to grow and meet our financial goals.
Image: Courtesy of Carolina Kleinman
How big is your team now, and what has the hiring process been like?
At the moment, my team consists of seven employees and myself. Many of them came into my life at the right moment and time, hired on organically as well as the traditional hiring path of creating a listing on LinkedIn and interviewing. The organic path is always the best and most interesting; we either were introduced to each other by mutual friends or timing just led us to meet. The traditional path is always fun, as we meet a variety of new characters and hire based on who is the most fitting of the position and company culture.
Did you hire an accountant? Who helped you with the financial decisions and setup?
Yes, as we started to scale and needed more assistance in finances we hired an accountant. I do feel that having a great accountant in-house is key. Having a strong person dedicated to finance is something that makes the growth of the brand much smoother. I found that Quickbooks is great if the brand is based in the United States. Two other programs that I advise for clothing brands are AIMS 360, a production management and processing software, and Joor, a platform used to connect with buyers for wholesale. These have been great in assisting my team with production and sales, automating the process, and leaving less room for human error.
What has been the biggest learning curve during the process of establishing your business?
The biggest learning curve and challenge for me was learning how to seamlessly work with those outside of my brand while still maintaining important values such as caring and paying attention to customer needs while maintaining an eco-friendly brand. In our early years, I had to learn to block out the noise of buyers that would put us down or showrooms that wanted to mold our brand into something that it wasn’t. I realized that I had to trust myself, my good intentions, and work hard despite the external obstacles.
What is the most rewarding part of running Carolina K?
My favorite part of my brand is working with artisans. This means there is no fabric waste nor is there any contamination, and together we are working to maintain their ancient craftsmanship techniques. I quickly learned that even all of the positives can bring challenges. In the first eight years, every piece by Carolina K was made entirely by hand, but it got to the point where the artisans were unable to manage our growing purchasing demand. As a result, they sometimes were late to delivery deadlines that had to be met as they were dependent on sales. Trying to scale growth for the brand became challenging at that point. I then decided to develop prints that would complement and resonate with the hand-made pieces to assist in speeding up production. I traveled to India and partnered with very small print factories and later discovered skilled male embroiderers. We still work with both to this day and they too work with love and passion.
How did you promote your company? How did you get people to know who you are and create buzz?
The buzz happened organically. I started participating in trade shows in New York and in Paris and met other designers and buyers. As more purchases happened, I began expanding my reach at multi-brand stores and became more well-known and established.
In 2014, I opened my first store in Williamsburg, New York while I was still living in Tepoztlán, Mexico. In 2015, an opportunity presented itself to move to Miami and we moved forward in doing so along with closing our Williamsburg store and opening a store at the Faena Hotel in Miami Beach. That allowed for more visibility because of the hotel location. We began hosting branded events and fashion shows that attracted and led me to meet and dress interesting and like-minded people, resulting in more recognition and brand awareness on a global level.
Years of growth also led to the understanding that working with a good PR company can be beneficial if you’re able to align on goals and beliefs. Our journey has been a slow but organic and meaningful one.
Do you have a business coach or mentor? If so, how has this person helped, and would you recommend one to other founders?
I do not have a business coach at the moment, but I did in 2019. I met this coach through mutual friends and having a coach really helped me establish important skills like how to manage my team better and how to set and achieve milestone goals for the business. The most important lesson that I attained from having a business coach was learning that I must build my brand around my lifestyle so it serves me, my personal beliefs, and my necessities. I did not want to be in a position where working consumed all of me. I found it very helpful to work with someone on strategy and learn more about the areas that you are unsure of so that you can learn to master them. I completely recommend looking into business coaching when it is financially feasible.
How has COVID-19 impacted your business operations and financials? What tactics and strategies have you put in place to pivot and ensure your business is successful through this period?
COVID-19 was a very challenging time for my brand as well as almost every other fashion brand. We saw orders being canceled or delayed frequently at the start of the pandemic and we had no idea what to expect or what was to come. Due to the national shortage of masks, we began to work with our artisans to design and donate them to organizations that would get them into the hands of those in need. As things began to calm down and stores began to open again, we started to see retailers requesting their original orders, and we realized how lucky we were to have that support.
COVID-19 put many things into perspective; one being the need to pivot and put more backing into the direct-to-consumer model for our brand. We took this opportunity to strategically develop a more curated approach to our wholesale and work towards the positives this brought for the development of direct-to-consumer. It is important to take challenging times and try to find the positives in order to accomplish growth.
What short-term changes will be crucial to your business strategy long-term post-COVID-19 and what plans are you making for when we get back to “normal?”
One short-term change due to COVID-19 that will be crucial to our business strategy, is the number of collections that we drop moving forward. In 2019, I was growing tired of doing so many collections. It didn’t feel authentic to my brand but rather robotic and stressful. Post COVID-19 we have opted to make collections less frequently and focus on making them better, more meaningful, and mindful. A great example is that this year we are skipping fall/winter ’21 and, instead, replacing it with a Zero Waste collection. This collection is designed with only repurposed fabrics from past collections and many are one-of-a-kind styles. We have also focused on our home collection expansion. It has been around since 2014, but this year brought the opportunity to focus on its growth. I’m excited to share that we are currently working on our five-year strategy, and there are plenty of great things ahead for the brand.
What advice can you share for small business owners, founders, and entrepreneurs who are also reeling in response to COVID-19?
I would give small business owners, founders, and entrepreneurs the same advice I keep telling myself. Stay positive, keep moving forward, take time to do a bit less so that you are able to make decisions with a clear mind and a clear vision. Make sure that what you do and decide has your heart in it. It took me 15 years to build this brand; I won’t let it fall apart in one to two years of crisis.
Image: Courtesy of Carolina Kleinman
What is one thing you didn’t do during the setup process that ended up being crucial to the business and would advise others to do asap?
The one thing that I didn’t do during the setup of my company was take the time to dive deep into understanding the business side of my brand and the fashion industry as a whole. It is very crucial to understand or have the correct people around you to advise. If you are a creative person like me, having someone managing the business side allows you to dream big while they point you in the right direction to set up structure, goals, and strategies to help you achieve your big dream.
For those who haven’t started a business (or are about to), what advice do you have?
If you are creating something from the bottom of your heart that is authentic to you, you will be just fine. Be sure to always find your own voice, be ethical and conscious of the planet, don’t look to what others are doing unless there is something you can learn from them, and be consistent. There is so much going on in the world but remember that each of us is unique and has our own point of view and each and everyone one of us should find that value in ourselves, always.
What is your number one piece of financial advice for any new business owner and why?
Always stay within your budget, make sure to calculate numbers beforehand, and do not overspend. There is plenty of time to grow organically and enjoy the fruits of your labor. You cannot expect results overnight. I read an interview with Patti Smith where she mentions a quote by William Burroughs that I always go back to when tough decisions come up or when my patience runs out: “Build a good name. Keep your name clean. Don’t make compromises. Don’t worry about making a bunch of money or being successful. Be concerned with doing good work. And make the right choices and protect your work. And if you can build a good name, eventually that name will be its own currency.”
If you could go back to the beginning with the knowledge you have now, what advice would you give yourself and why?
I would tell myself to take some business classes and make the time to really understand. Remember to maintain consistency as that is the key to success. Lastly, continue to trust my intuition and always listen to my inner voice. She will never lead me astray.
Anything else to add?
Stay passionate and remember to always have fun, as it is the journey that matters and not the destination.
Featured image: Courtesy of Carolina Kleinman