California Apparel News

Rob Greenspan spent 30 years with accounting firm Moss Adams, working with some of the best-known brands in California’s apparel business.

Earlier this year, he struck out on his own with his own consulting firm, Greenspan Consulting. These days, he spends less time behind a desk and more time in the offices of his clients—apparel and accessories labels, including companies working in the juniors, contemporary and misses markets in Southern California. His clients range from small start-ups to $25 million mid-tier companies to established $100 million brands. He also sits on the executive board of Fashion Business Inc. and is the treasurer for the Los Angeles nonprofit education resource.

California Apparel News Executive Editor Alison A. Nieder recently caught up with Greenspan to discuss challenges and opportunities facing fashion companies of all sizes. How does your new job differ from your work at Moss Adams? First and foremost, I am not practicing accounting, as I am not issuing CPA-prepared financial statements. I am no longer responsible for the completion and delivery of the audit or reviewed financial statements. But almost everything I do is related to my accounting background and knowledge of the apparel industry. I am working directly with my clients with their internal reporting of their balance sheets and income statements. What I am now doing is ensuring my clients’ internal monthly financial statements are credible, accurate and timely. By doing this, the owners and management of these companies can look at their monthly numbers with a high degree of confidence in their accuracy. They now don’t have to wait until their mid-year or year-end financial statements are prepared; we do this monthly. I meet with the owners or other management and go through the numbers in detail. So far, this seems to be working very well for all, including their lenders, who like seeing accurate monthly financial data.

Additionally, I am now spending more time working on strategic options for my clients, including plans for growth of new divisions, licensing opportunities, sale of all or part of the enterprise, or any other types of strategic decisions that can be made. We then build a business plan to achieve the desired results.

I now spend more time dealing with their factor, bank or creditors to help structure new lending arrangements when that becomes necessary.

[And] I assist clients by helping them develop a due-diligence plan if they want to acquire a new business. In addition to designing the plan, I will also do some or all of the necessary due diligence.What are some of the changes you have seen in the industry over the years?

Some of the biggest changes I have seen in my 30 years in the industry continue to be the consolidation at the retail level, manufacturing level and, quite frankly, at the financing level. There used to be many, many more major department stores. Manufacturing and importing companies continue to consolidate. In fact, in my early years it was very rare to see an apparel company being sold. Now, mergers and acquisitions in the apparel industry have become a huge business and can be a great exit strategy for the fortunate ones. When I first started in the industry in the later 1970s, there were about 20 different factoring companies. Today there are only a handful or so. The [decrease in] competition has created its own issues.

The changes from domestic production to importing have been significant, as well. In fact, in the beginning of my career, importing was a rarity; now it is almost the norm, in some form or fashion, for most apparel companies.

The other major area of dramatic change is that a brand can become global. To me, that is great news for our industry, as the marketplace for the products now can be much, much larger. Your brand may become your most valuable asset, so protect it.

The area that hasn’t changed—and I think this is great—is the desire of people to start their own apparel companies. It is still an entrepreneurial business. I like the fact that one with a dream and some talent—whether it be in design, merchandising, sales or production—can start a company and be successful. The only change in this area is the cost of entry has gone up. What are some of the biggest challenges facing apparel makers today?

The biggest challenges are still the same. First, getting enough sales at the right margins to cover your overhead and profit. You have to make money in order to survive and grow. Gross-profit margins have been decreasing over the years in most areas, which makes it harder and harder to make profits. Inventory management will always be an issue in our industry. This includes controlling production and monitoring the cost of goods. Flexibility in your production and not having a concentration with too few suppliers are important. Those who do this best are not the ones necessarily making the most money in a short period of time but those who stay in the business the longest. And the ones who stay in business the longest are the ones who, over time, usually, will make the most money. A lot of companies are heading to Las Vegas for the apparel trade shows. What advice do you have for them to bear in mind as they look to land orders and develop new sales leads?

They should stay in areas of business they know and can be successful. Don’t try to be all things to all retailers. Keep your line concise, and don’t let it get out of control. The old expression “narrow and deep” still stands true. If your core product is strong, think about licensing other areas to those who have expertise. Let them help you build your brand.

Sell only to qualified, credit-worthy retailers. Don’t be blindsided by large orders where you cannot get credit approval from your factor or credit insurance coverage. If the companies that provide credit services, and get paid for this service, can’t find a way to approve the orders, you should not take the risk.Rob Greenspan is the president and chief executive officer of Encino, Calif.–based Greenspan Consult Inc. (www.greenspanconsult.com). He can be reached by e-mail at rob@greenspanconsult.com or by phone at (213) 910-2094.