Welcome to Part 2 (of 3) of my post “Confessions of a Former cabi Stylist”. If you missed last week’s introduction to cabi and how my short-lived cabi career came to be, you can read about it here. Although I fully intended to wrap things up this week, I realized this post got much too long. So, in an effort not to bore you all to death, I will devote this post to the financial reasons behind my decision to walk away and then use next’s week post to reflect on what I have realized since resigning from the company.
When we left off I was reflecting on my first Scoop experience in San Diego – and how it was the high point of my cabi career. The trip was great fun! I got to know my new teammates – four of us joined our team leader for the very first time for the Spring 16 season (and sadly only one of us lasted beyond our freshman year) and I enjoyed getting to know these ladies, the other women on our team and my fellow cabi stylists, many of whom have become my friends. It was also nice to escape to warm and sunny San Diego in the middle of the winter and fabulous to attend a fashion show as part of my job.
But it was also uber-expensive. To fly from my home in Pennsylvania to San Diego cost over $500. My three night stay in a double occupancy hotel room attached to the Convention Center cost me (just my half) another $450 and then there were food and other incidental expenses. Not only was it expensive, but it’s a long trip for just a few days. And I had to cut the trip short in order to be back in time for daughter’s 10th birthday. See, cabi promises a career without compromise – and I’ll be darned if I was going to let my very first experience with the company cause me to miss my only daughter’s double-digit birthday. After that first Scoop I was already dreading the annual cross-country trek, both because of the recurring cost and regular scheduling conflict.
By the time I returned from Scoop I had already sunk $2570 into my seasonal inventory, $1227 into travel expenses for Scoop, $55 for business cards, $188 for show supplies and $150 for marketing materials. That’s a total of $4190. The expenses were adding up quickly, causing me to get a little bit sick to my stomach. But I told myself that all new businesses require an initial investment and that I’d make my money back over time.
After all, before I agreed to join cabi, I talked to my team leader about the return on investment. She told me that she borrowed $4000 to start her business and had earned her investment back within her first month. I take full responsibility for not pondering this further at the time, but knowing what I now know this seems highly unlikely, if not impossible. It would mean that in her first four weeks as a cabi stylist she sold $16,ooo worth of clothes (because unless you have an extensive team assembled underneath you the highest commission you can make is 25% of sales. There are opportunities for bonuses in the early stages of your career, but they tap in at around $200 per month). Per cabi’s own financial disclosures, $16,000 is a total that most first season freshman don’t reach all season, so it’s unlikely that my team leader reached that achievement in one month.
Furthermore, she also disclosed that her total sales for her first season were $22,000 – which would make her first month total of $16,000 highly suspect, for it would mean that 73% of all of her sales came in her first month. Perhaps, she meant that she sold $4000 worth of clothes in her first month – which is in itself noteworthy, but then she certainly didn’t earn enough to pay back her loan in that time. And even is she was a rockstar stylist, it was almost inconceivable that I would repeat that feat.
I blame no-one but myself for not recognizing this sooner, but I resent being misled when it comes to finances. You may recall that these conversations were going on just weeks after my sister-in-law passed away. I am not making excuses for my lack of due diligence, just highlighting that I wasn’t at my best and underscoring my point from last week that one should not make major life decisions while in the midst of grieving. (If it seems like I am harping on this I am – because I have made the same mistake twice now and I refuse to let it happen again).
Anyway, I made it home from San Diego exhausted but excited and in time to celebrate my daughter’s birthday. Then, the following day, I felt like it was my birthday and Christmas rolled into one when I received my delivery of seasonal inventory!! Two giant cabi boxes arrived filled with every piece on the line and five pieces of jewelry. I was so excited to start opening, tagging, hanging and trying on all these new clothes. I do feel fortunate that last Spring’s collection, La Dolce Vita, was stunning and easy to sell. Or at least it would have been had I lived in a bigger market. But as I was hanging clothes I quickly realized that there were very few pieces I could wear off my line, five pieces to be exact. I am consistently a cabi 2 in pants (very occasionally a 0), and an XS in tops. On rare occasions I can get away with a S. And I typically have to have my jackets tailored because my broad shoulders require a 4, but then the rest of the jacket is too big. The majority of the line comes in size Medium, for understandable reasons, but was therefore unwearable by me. So, immediately after investing in the inventory and paying for the trip, I had to plunk down another $650 (even with my discount) to buy enough clothing to outfit myself in current season cabi for daily wear.
As a cabi stylist I felt it was extremely important to wear the clothes I was selling. First, every time I dressed in my “cabi-cutest” I was giving myself free advertising. And, if I expected other people to purchase my line, I needed to show that I loved these clothes as well. I also feared being complimented on something that wasn’t cabi and felt it was a waste to wear clothes I couldn’t sell. This feeling that I had to wear all cabi all the time, and showcase current cabi most of the time, is actually one of the reasons that I stepped away from the company – but more on that later. I also felt it was important to wear the more expensive pieces at fashion experiences to try and maximize my sales and commission, which meant I had to buy and wear the expensive pieces even if they weren’t necessarily my style. And to complicate matters, most of my clients in the beginning were all from the same cabi circle – so I was seeing them repeatedly throughout the season and thus needed multiple show outfits. I found that just keeping myself clothed in cabi was a huge expense. Incidentally, the more you sell the steeper your discount on clothes; but, early on when sales are slow and you have no equity in the business the discount is much smaller.
And then there are the New Arrivals.
Twice throughout the season cabi releases additional pieces in order to keep our customers interested and engaged. These pieces are NOT included in our seasonal inventory. They are available for stylists to purchase early using our personal discounts, but each piece we purchase is at an additional cost. Every cabi stylist will tell you you can’t sell what you don’t have, meaning if I wanted to sell these New Arrivals I had to purchase (at least some of) them as well, so that was another $640 into the business. And I only selected a total of 12 pieces of the approximately 30 New Arrival available.
Finally, there were also a series of expenses associated with entertaining. Each season is launched with a preview party, hosted by the stylist to show off the new clothes, generate enthusiasm and book shows. My first preview cost $180. And then throughout the season I hosted a series of Open Houses or Stop and Shops. Cabi encourages stylists to have a minimum of 16 shows each season, and when you are just starting out in the business often the bulk of these shows have to be hosted by the stylist herself. I spent a total of $890 on these events. When you add up all these expenses, it brings my total investment for my first season to approximately $6570.
In order to break even I needed to sell over $26,000 worth of clothes. And I came close, but didn’t quite make it. Then, at the end of the season I had an opportunity to make back some of my initial investment by selling off my inventory at 50% of its retail price. I did pretty well with the “sample sale” (although I’ve still got some pieces sitting on my rack and cabi prohibits stylists from selling our inventory at consignment shops or on any online consignments sites, so I guess I’ll have these clothes that don’t fit forever) and I was able to recoup part of my seasonal inventory investment and almost close the gap between my expenses and my commission checks.
Although I finished my first season with a loss, it was a small loss. Not a huge deal in the scheme of things – most businesses are NOT profitable in the first 6 months and my loss was relatively small. But still it was a loss. And I did a LOT of work to wind up with less money than I started with. And then I had to turn around and do it all again for the Fall season.
But, I happily did. I believed that I had to give cabi at least one full year before I could honestly assess whether this was going to work for me or not. So, even before my first season wrapped up I renewed my contract for the Fall and hoped for the best. I, personally, am a huge fan of fall and winter clothes and I have always liked cabi’s fall line more than their spring collection, so I had high hopes for my second seasonal. With only slight trepidation I once again plunked down $2570 for my line and booked my trip to Scoop, which thankfully I could drive to and set to work trying to book a profitable fall. I’ll fill you in on the details of fall next week, but – spoiler alert – it wasn’t the season I had hoped for.
You may wonder why I’m spending so much time on my financial investment and the return (or lack) thereof. Well, one of the reasons that I decided to write this post is because I think it’s important, crucial even, for women to understand the initial investment in the business. As I said before, I recognize that in comparison to many businesses, $6500 is not a lot of money to launch a business; but, it is a much greater investment that I was led to believe by both my team leader and the company itself. Furthermore, it is highly unlikely that this investment will be returned during the first two seasons, and these numbers are also not made clear until you join the company. As I was doing my research on cabi before signing up, I read a number of other blog posts from a variety of different sites, which seem to seriously underestimate the amount of money necessary to launch a successful business as well as the ease of booking shows, selling clothes and turning a profit. I simply wanted to present a more accurate picture of the true costs involved so that other women could make more informed decisions.
I’ll recap my second season and what I’ve learned since in next Friday’s post. Have a great weekend!