How to budget for your brand: where the money really goes

From fabrics to PR, the hidden costs that can make or break a label.

We need new roadmaps in fashion. Leaving design school with an uber-creative graduate collection, some Instagram clout, and an i-D feature is of little use if there isn’t good business nous underpinning it. With this in mind, we’ve partnered with AZ Academy, a Milan-based fashion course born out of the late Alber Elbaz’s AZ Factory – his brand turned fashion incubator – and overseen by Richemont, Creative Academy and Accademia Costume & Moda (ACM), to democratise access to its valuable lessons on how creative people can build commercially-successful brands. Read the sixth edition here.

By Amy Francombe

For many creative entrepreneurs, the word “finance” carries a faint sense of dread. It conjures scary visions of spreadsheets and stern accountants shutting down your favourite ideas, aka, the total opposite of the expressive nature of artistic work. But Laëtitia de Mathan believes this mindset needs to shift. “One of the most common misconceptions I encounter when working with creative founders is the belief that budgeting constrains creativity,” she says. “In reality, strong financial control is what makes sustained creativity possible.”

Laëtitia’s career offers a rare vantage point. She began in financial auditing for the automotive industry (an environment as far from fashion as it gets) before serving as Chief Financial Officer at luxury houses like Balmain and Chloé. As the instructor behind AZ Academy’s Budget & Accounting, Administrative and Finding Investments course, her mission is to translate the intimidating language of finance into an empowering toolkit for designers determined to build something that lasts.

But before jumping into the numbers, she starts with reframing. “Such a pity to feel financial language as intimidating,” she says. For Laëtitia, the key is connecting each financial concept to a creative goal. “Budgeting is not just about cutting costs, but about strategically allocating resources to the most impactful projects. Or pricing – it’s not just about making money, but about valuing your creative work appropriately and ensuring you can continue to create.”

So how do you become financially fluent without losing your creative soul?

Start with the basics

Financial fluency doesn’t happen overnight, especially for those whose education and training have centred on design and storytelling rather than profit margins and accounting equations. But Laëtitia encourages founders to approach it the same way they approach creative work: one layer at a time. “Financial statements tell a story about your business,” she says. “Understanding that story helps creatives make better decisions about their work.”

First up: understanding the difference between revenue and profit. Revenue is the total income your brand brings in – the big, exciting number. But profit is what’s left after you subtract all your costs, like materials, production, staff, marketing and shipping. You can be generating lots of revenue and still be losing money, which is why profit matters more than surface-level sales.

Next, she encourages founders to familiarise themselves with two key financial documents: the profit and loss statement (or P&L) and the balance sheet. The P&L gives you a snapshot of how your business is performing over a set period – it shows your income, your expenses and whether you're in the green or the red. The balance sheet, on the other hand, is more like a still-life portrait. It tells you what your business owns (assets), what it owes (liabilities), and what’s left over for you or your investors (equity) at a particular moment in time. One tells you the story of movement; the other provides a comprehensive health check.

Then there’s cash flow, which is the rhythm of money moving in and out of your business. Even profitable companies can encounter difficulties if they fail to manage their cash flow effectively. You need to know when money is coming in (like after wholesale invoices are paid) and when it’s going out (like when you need to pay factories or fulfil VAT). Timing is everything, especially in fashion where production and sales cycles can be months apart.

At the heart of all of this sits a deceptively simple formula: Assets = Liabilities + Equity. Known as the accounting equation, it’s the backbone of every financial conversation. “This equation is the foundation,” Laëtitia says. “It tells you how the pieces of your business relate to one another, what you own, what you owe and what’s actually yours.”

Once these fundamentals are in place, designers can begin to engage with the moving parts that define a brand’s financial health: gross margin, which reflects how efficiently a brand is producing its goods; operating expenses, the ongoing costs required to run the business; and perhaps most crucially, the break-even point, which the moment when total income equals total expenditure. This is the threshold at which a brand stops losing money and starts earning it. For any creative business, knowing when that moment arrives can inform everything from launch timelines to marketing strategy.

But understanding the numbers is only part of the process. The real challenge (and opportunity) lies in defining the assumptions that shape them. Laëtitia teaches creative founders to start by dissecting the P&L structure itself: How do decisions about price positioning, collection size and distribution methods ripple through the numbers? “It’s important to spend sufficient time on the structure,” she says. “Then you can define assumptions – price positioning, target customer, distribution network – by gathering data on the market and developing multiple scenarios.” Once those elements are in place, a full P&L model can be built, transforming loose projections into grounded possibilities. It’s an exercise in realism, but also in imagination – thinking through what a business could look like in six months, two years, or five.

This kind of scenario modelling, often thought of as the domain of analysts and consultants, is in fact a deeply creative act. “It is not about predicting the future perfectly,” she says. “It’s about asking ‘what if?’ and being ready for the answers.”

Tracking what matters

One of the most common pitfalls for new brands is confusing early revenue with long-term health. A designer lands a splashy feature, receives an influx of orders and believes they’ve made it – only to find themselves overwhelmed by production costs, late payments and mounting logistical chaos. “Although revenue generation is an important goal, putting aside financial controls can lead to overspending, weak cash flow management, and consequently unsustainable growth,” she says.

Instead, she encourages designers to think more holistically about what success looks like in the early stages of a business. That means looking beyond likes, press clippings and short-term wins to track what really drives resilience. Yes, brand awareness matters, but so does conversion. Visibility is great, but what about profitability? A spike in followers feels validating, but what’s your customer retention rate? “In the early stages, designers should focus on KPIs that provide insight into both brand visibility and business viability,” Laëtitia says.

The metrics that matter will vary slightly depending on your model, but can include things like website traffic, bounce rate, time spent on product pages, average order value, conversion rate, and customer acquisition cost. Social media engagement is useful – but track whether it actually leads to sales, newsletter signups, or meaningful interactions. Don’t get seduced by surface stats that don’t connect to your bigger picture.

Still, Laëtitia is the first to acknowledge that data overwhelm is real. “Clarity, consistency and curiosity are more important than complexity,” she says. Instead of trying to track everything, choose a handful of indicators that reflect your current goals – whether it’s increasing repeat purchases, improving your sell-through rate or expanding into a new region. Set clear benchmarks and revisit them monthly or quarterly. Tracking tools, even basic ones like Shopify analytics, Google Analytics, or Instagram Insights, can help automate the process and make it feel less abstract.

Most importantly, stay engaged. She’s not expecting you to become a full-time analyst, just to learn how to read the signals your business is sending. KPIs are less about ticking boxes and more about building self-awareness. The better you understand what’s working and what’s not, the more confidently you can make decisions, she says.

Building for the long haul

As your brand grows up and starts flirting with external funding – maybe a seed round, maybe a savvy investor who spotted you at a showroom – the financial story you tell becomes just as important as the aesthetic one. Investors may love your draped bias-cut mini dress or your dreamy brand world, but really, it’s your clarity of vision and whether you actually understand the playground you’re trying to win in that will seal the deal.

“When preparing a budget proposal for investors, strong and singular storytelling is essential,” Laëtitia says. “It has to be narrative, authentic and differentiating, but also supported by realistic financial projections.” In other words, you need to connect the dots between your ambition and your operations. Who exactly is your customer? What space are you claiming in the market? How will this investment be used, not in vague terms like “growth,” but in actual milestones with timelines and intentions?

What impresses investors is depth. That means showing you’ve done your research, thought through various scenarios and built a model that is considered. It means demonstrating that you understand your costs, your pricing your break-even point, and that you’ve charted a path forward that aligns with your creative values and your business realities. And increasingly, it also means being able to articulate your brand’s environmental and social impact.

That endurance, however, depends on structure. “Everything starts with setting up your business properly,” she warns. Think: registering your company, applying for identification numbers, setting up an accounting system, getting insurance and writing proper contracts.

One of the earliest and most consequential choices you’ll make is your legal framework. Should you be a sole proprietor or establish a limited liability company? Each choice comes with trade-offs in terms of tax, risk and administrative complexity. It’s why Laëtitia strongly recommends seeking professional advice here. An accountant or business lawyer can help you understand the long-term implications and steer you away from costly missteps. This is not the moment for trial and error.

And once the scaffolding is up, you have to maintain it. That means clear contracts with anyone you work with. It means making sure your name and your designs are protected. It means keeping your financial records in order so you can actually make decisions based on real information, not gut feeling or last-minute panic. "Protecting your designs and brand name helps prevent others from copying your work and helps you build a strong brand."

When assessing whether a brand is truly built on solid financial ground, Laëtitia looks for consistency. She’s drawn to businesses with realistic revenue growth, healthy margins and disciplined cost management. Cash flow matters more than hype. Red flags, on the other hand, include unrealistic projections, poor transparency, over-reliance on a single product or client and high debt. “These signs indicate that a brand might not be prepared to weather the inevitable challenges of growth,” she says.

But here’s the good news: all of this can be learned. You don’t have to know everything now. You just have to be willing to stay engaged, ask for help and make decisions with your eyes open. If the creative side of building a brand is about vision, the financial side is about giving that vision a life. And in the long run, that’s what gives a creative business staying power: the ability to dream boldly and, perhaps more importantly, build wisely.