Many bankers struggle to find themselves a good tailor. But James Hibbert found himself with the opposite problem when he needed a good banker to finance expansion of his business making bespoke suits.
Mr Hibbert founded Dress2Kill five-and-a-half years ago to provide made-to-measure suits and shirts for people who find the Saville Row experience too daunting or expensive.
Dress2Kill’s prices start at £350, items are finished within four weeks and the list of satisfied customers includes the actor Nigel Havers and Will Carling, the former England rugby captain.
The company’s tailors will arrange to come to clients’ offices and even airports, measuring Virgin Atlantic’s Upper Class travellers for suits at the airline’s Clubhouse lounge in Heathrow’s Terminal 3.
“The whole principle is to make bespoke tailoring more affordable,” explains Mr Hibbert, who remortgaged his home to help get the business of the ground.
The company began making profit in its third year and this year hopes to break through the £1m turnover mark, producing at least 125 bespoke suits a month, in spite of the current harsh retail climate.
The experience of being fitted out by a tailor at your desk is attractive to busy executives, according to Mr Hibbert.
However, Dress2Kill was also finding that many customers preferred to have their measurements taken and to collect their new threads at the company’s offices around the back of Waterloo Station.
“Our offices are fine, but are not the most salubrious of environments,” Mr Hibbert admits.
He decided the company needed a smarter presence in central London, called the Dress2Kill Studio. The new venue, which opens on October 24, aims to offer customers the atmosphere of a gentlemen’s club where they can enjoy a glass of wine, a shave or a haircut, while waiting to be measured up or collect their clothes.
“What we wanted to do was to create the Dress2Kill experience in a physical space,” Mr Hibbert explains.
Appropriately enough, given the nature of the company’s trade in cloth, the site he chose for the salon is on a road called The Cut, close to the Old Vic theatre and still near Waterloo.
Mr Hibbert budgeted for £80,000 to fit out the property with suitable decor, such as deep Chesterfield sofas and plasma screen televisions showing sports and business news programmes. Then came the difficult part of raising the money to pay for the expansion.
Several options were available. “We could have raised finance by giving away equity, but the thing that concerns me is you do not really know who you are getting into business with,” Mr Hibbert explains.
The company had been through a bad experience with one particular potential investor, who had offered £500,000 for a 33 per cent share in the business on the condition that they could prove how they would achieve their sales targets.
Unfortunately, just as the deal was about to be struck Dress2Kill lost a key sales’ person and the general retail climate turned frosty. The potential investor walked away.
Dress2Kill has about £50,000 of working capital, which might have covered part of the new shop’s costs. But in the end Mr Hibbert opted for a bank loan rather than eat into the cash the business had worked hard to acquire.
Instead he chose to borrow the money by seeking a loan that would not be backed by personal guarantee but would instead be secured against the fixed assets of the new shop.
He then applied to Lombard, the asset finance business.
Mr Hibbert had budgeted to pay £60,000 for the fixtures and fittings for the new shop as well as signing a £20,000-a-year lease on the premises.
Initially, the loan plan seemed to be moving forward smoothly so Mr Hibbert pressed ahead with refitting the shop.
Lombard asked Dress2Kill to provide accounts for the past five years, the names of the directors as well as a breakdown of the amounts to be borrowed.
The lender stipulated that Dress2Kill would have to get another party to stump up the £20,000 not backed by physical assets, but this was not considered a problem since Coutts, where Mr Hibbert has an account, had already agreed to provide such a loan.
What Mr Hibbert did not bank on was the outcome of the credit control check Lombard ran on the company’s application, which ruled that the lender should offer just £15,000.
When Mr Hibbert complained to a manager at Lombard, the offer was raised to £30,000, but on the condition that it came with personal guarantees.
“I told them this was unacceptable because the only reason we went to Lombard was to get an unsecured loan.”
In the end, Dress2Kill got its money by borrowing the cash from a relative of one of the company’s other directors.
“It has been quite a learning curve,” Mr Hibbert admits. The episode has not put him off debt financing and he is thankful for the support that Coutts provided throughout the process.
He would also be open to finding investors for the business but admits that decisions in this area must be made carefully.
“It is important to know your investors well, otherwise you are going to be stuck with a guy who might only be interested in the bottom line. We want someone who understands the business.”
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