Fashion/textile small- to medium-sized enterprises (SMEs) are currently adding value to previously discarded textile waste by applying practical skills, knowledge and expertise to rework and reuse this material. As a result, sustainable design strategies such as zero-waste pattern-cutting, design for disassembly and upcycling are beginning to emerge. However, the scope for redesign will always be limited and the complete lifecycle of the material used needs to be considered at the front-end of the innovation process, to optimise material lifespans and reduce consumer waste. Further work is also required to inspire and educate the next generation of designers to the creative potential of reuse, and help the industry to understand its viability, scalability and role in the future. This chapter explores how the principals of the circular economy might support business model innovation within fashion and textiles. To this end, an exploratory canvas tool for SMEs, ‘Circular by Design’, was devised to aid SMEs to embrace closed-loop systems and to identify the most appropriate sustainable design strategies for their business.