Collette Dinnigan to close fashion business: Lessons in succession planning
Tuesday, October 29, 2013/
Fashion designer Collette Dinnigan has announced plans to close the bulk of her eponymous business, 24 years after it launched.
Dinnigan will close her retail stores, international catwalk collections, and bridal wear line, The Australian Financial Review has reported.
It is understood that she will keep designing a diffusion line for David Jones, called collette by Collette Dinnigan, and a childrenswear line, Collette Dinnigan Enfant. The manufacturing for these lines is not done by Dinnigan’s business.
The AFR also reported that she currently has around 50 staff, of which around approximately 10 will remain.
Dinnigan runs stores in Sydney, Melbourne and London, which will close before the end of the year.
The Sydney-based designer said that she is not closing due to financial problems, but rather that a long-time search for a compatible business partner to help grow the business has not proven fruitful.
“What I need is somebody to run the business side of it, and I haven’t been able to find somebody who I thought was right for it. And we’ve had extensive searches,” she said.
“If they’ve been international they haven’t understood the domestic market, and we’ve even brought people out from Paris or London and they’ve kind of written off David Jones and what we do here, and I think, ‘hang on a minute, you have to understand this is a huge part of our business and is very important to me.’ Or they’re Australian and haven’t understood the international side of the business, which is why it’s so important to show in Paris. ”
The designer is known for her hands-on involvement in all aspects of the business, from design through to staging Parisian catwalk shows, and being the spokesperson for the company.
KPMG succession planning expert and lead partner for family business services Bill Noye told SmartCompany this morning that in situations where a company has an individual or family name at the core, planning for exit or sale must happen years in advance.
He says if the person or family running a business is as renowned as the company itself, the right partner or buyer can be hard to find.
“You have significant personal goodwill, and personal goodwill is really hard to sell,” he says.
Noye explains that business owners must decide on their objective – whether it is to sell, exit, or bring on another person or company and transition out over time.
“You have to plan to maximise the profitability and value of the business. You also have to transfer the personal goodwill into business goodwill.”
He explains that this transfer can be done by having a clear strategic plan for the business, with clear objectives and goals that can be fulfilled without you as part of it.
Key to this is finding ways to broaden the company’s revenue stream so that it does not rely on the individual’s input or name. For example, expanding a product range to offer goods with a different label, or building a team of staff around the owner that can carry on the owner’s style or approach.
“It is fine if you can duplicate the flair of the individual…you can build a quality framework (of staff) to duplicate that look.”
Most importantly he says it is vital to see succession planning as a process, not an event.
“The longer the time frame you have, the better,” he says.