I Need Some Advice…And A Line Of Credit

Let’s face it. New business owners have a heck of a lot to learn when they’re first starting out and they often learn very costly lessons. Wouldn’t it be great to have a trusted funding resource with expertise in your industry, which could guide decision-making with sound advice and help you better manage your financial resources?

Back in my handbag design days, I spent a lot of time and money trying to boil the ocean. That’s a big-time business cliché, I know, but it really was applicable. I didn’t know what handbag styles would be a hit so I created a lot of different prototypes just in case, in an attempt to please as many potential customers as possible. Damn, that was a pricey error in judgement. I cast too wide a net and didn’t narrow in on my target demographic. Then, I spent an insane amount of money on PR to reach all those potential customers. Another waste. Bad mistakes turned into colossally huge ones because I became desperate….to make money, to get press, to find customers.

Presenting a new idea - crowdfunding or community funding concept

Presenting a new idea – crowdfunding or community funding concept

It would have been great NOT to max out a bunch of credit cards and work with a funding source that could have provided advice along with a line of credit. I could have owed much less and worked with financial experts in the fashion industry who could have provided valuable insight around the right areas of focus for my fledgling business.

A roadmap for expansion is critical but it’s hard to know, early on, what components should be included. Once you decide your focus, it’s much easier to correctly allocate funds. I think starting out, small business owners need that guidance from people who’ve made mistakes in expanding their own businesses or have seen mistakes others have made and can provide valuable insight about common pitfalls to avoid.

Figure out your target audience, determine where they “play”, then figure out how to reach them where they are most affected by your message. Learn from people who’ve been successful in the past and take advantage of their failures. There are always pearls of wisdom to be gained. Establish relationships and nurture them, as they are absolutely critical in growing a business. Determine the “what” and “why”, then ask questions and do research to establish the “how.”

Once your roadmap is set, find a lending partner who you can vet your plans with and who can guide your financial decisions. Leverage every source of knowledge available to you and choose the trusted lender that can provide advisement in addition to cash.

Why Do Startups Fail?

A multitude of potential pitfalls can negatively impact entrepreneurs as they eagerly try to build their fledgling companies…and basically crush their spirit if allowed. In my experiences, there are four reasons that stand out the most:

  • Lack of Research – Research is imperative. It provides insight about what your competitors are doing so can stay several steps ahead and create innovative ways to develop and market your offering. It also provides you with insight about the costs and components of running a successful business in your target industry. Spending time investigating a specific market will show whether there is a demand for your intended offering. Successful research will help shape your vision and strategy. Without it, you risk the future viability of your business.
  • Poor Planning – There are a lot of moving parts that need to come together before your finished product is ready for sale. You have to coordinate delivery timeframes with vendors and partners who are all part of your launch schedule. In addition, you need to plan for bill payment. Figure out what your accounts receivable schedule looks like so you can continue procuring supplies and services you need in a timely manner.
  • Boiling The Ocean – Sometimes it’s hard to know exactly what will be a hit in the market. Hindsight is always 20-20. Sometimes you decide to make six different handbag styles, each available in seven different colors because you don’t know which one will be “the” one until it suddenly appears in an issue of InStyle and you now need to satisfy excessive demand without nearly enough inventory because you spread your resources too thin….ahh, but I digress. Focus groups can help! Talk to your target market and gather feedback. It may push out your delivery timeframes but the insight can help perfect your offering.
  • Nothing Unique – If there is nothing new or different about your product, nobody is going to buy – no matter how much you love it. It’s hard to pull off those rose-colored glasses and embrace the reality staring back at you. Leather handbags? Not otherworldly. Romance novels? Been there, read that. The key is to make your work stand out. Dig deep and find what sets your product apart from the competition and play that up otherwise it’ll get swallowed up into the abyss. Perfect your offering. You care, so figure out a way to make everyone else care. Establish a connection, show how them why they should be invested, convince them why they need your product.
Courtesy of www.digitalbuzzblog.com

Courtesy of www.digitalbuzzblog.com

There’s Nothing Taboo About Failure

Hi, my name is Kristen and I am a handbag junkie.

In fact, I love them SO much that I spent a very large sum of money to design and sell my own. Unfortunately, though I cherished those handbags and saw them having a unique value proposition, my business never did become profitable. I really thought it was on the brink a couple of times but we all know close only counts with horseshoes and hand grenades.

InStyle

I lamented my losses for a long while (and continue to do so when I send my monthly loan payments to the bank). Was I really a failure? I mean, from a financial perspective, it definitely was an epic fail. But if I came away armed with useful knowledge and constructive feedback to apply to my next endeavor, maybe it could be chalked up to a lesson learned, albeit a very expensive one.

I have a close friend who is a co-owner of a man’s skincare line, a very difficult niche market to penetrate. But she believed in her product and drove hard to achieve success with her target. We spoke yesterday and she was completely deflated that her last-ditch efforts to generate revenue yielded no benefit at all. Hundreds of thousands of dollars in the hole and she’s come to the realization that it’s time to say goodbye.

Let me just stop here and tell you, it is HEART WRENCHING to slam the door on your hopes and dreams and downright depressing to see all of your hard work and effort crumble around you. It’s like a bad breakup story. Making the decision to pull the plug is a very humbling experience. Realizing that you couldn’t make it happen? Man, that’s a tough pill to swallow.

failure

Courtesy of www.venturebeat.com

I know this all sounds a little dramatic, but if you’ve ever been in the situation, you know all too well how devastating a loss it is. And for a while, you question and second-guess and lament some more, but it won’t change the overall experience. Sometimes, it’s cathartic to just get it all out there, to share your story with anyone who’ll listen. If you have truly lived and learned, you know where you made mistakes. When they are brought to light, maybe next time around you’ll know which pitfalls to avoid. It’s no longer taboo to hold it all in.  More and more entrepreneurs are coming forward with their own stories.  We’re in good company.

Here’s what I can tell you…don’t be too dejected. You can’t crush true entrepreneurial spirit. Don’t give up on it. If it truly resides within you, you’ll achieve your goals. And all the postmortems and lessons learned you’ve collected over time will make you that much more successful in your future endeavors.  I really believe that…

Embrace and nurture that spirit because once you channel it, you can’t turn it off. It’s what makes you a driver. I LOVE the feeling of coming up with new ideas and strategizing about how to make them come to fruition. The creativity charges me.

So even though things may look dismal now, tomorrow, they’ll look a bit better. And the following day, even better than that, until you finally come away with a lot of clarity and direction about how you can launch the next big thing.

This Love Affair Will Cost You

There is a really good reason why feedback is so critical in the product development process.

MONEY.

Hmm, interesting.  Tell me more.

If you go down a path without prospective customer feedback, you run the risk that you will never be able to gain traction in the marketplace. You WILL feel strongly about your product. This is pretty much a guarantee. It’s hard not to take criticism personally when you’ve poured your heart and soul into your idea but develop a thick skin because not everyone will love it like you do.

Before you spend tons of cash to develop something you love, something you HOPE others will love, test it out. See how you can make it even better, more marketable. Gathering feedback from your target audience is the best way to find out if you have something people will want to fall in love with. After all, they are the ones who need to pony up the money to buy it.

Courtesy of www.opendemocracy.net

Courtesy of www.opendemocracy.net

Always aim to enhance your product but don’t go to market with too many variations. When we launched Krina, we went out with seven handbag styles, each available in about eight different colors. We didn’t get feedback until AFTER our prototypes were designed. And we’d already paid handsomely for the samples. The thing is, we just didn’t know which styles would take off so we diversified…a little too much.  Bringing many variations to market means you have enough products to appeal to a lot of tastes but then you get stuck making one-offs. Extremely costly, folks.

Be aware that there is risk in trying to satisfy too many masters.  Gather insights from a prospective audience, identify synergies among the sound bytes and prioritize the recommendations. You can’t boil the ocean and some recommendations may cost much more than others. Keep things simple to start. If you have a solid first iteration, you can always improve upon it as time goes on. Just make sure you start out with the right product offering to begin with and everything else will fall into place.

 

How To Land The Sale

People want to buy but they don’t want to be sold.

Words to live by for a sales person. You want to establish a customer base but that takes time. You have to nurture customer relationships because that’s how you become successful long-term. You don’t want to sell one product to one customer. You want to sell lots of products to a return customer for many years to come.

But how do you do that? How many times are you supposed to keep banging your head against the wall, trying to make contact with influencers? Surely a few unreturned voicemails means they aren’t interested, right?

Wrong!

There is nothing personal about a few cold calls and voicemails. Make yourself stand out if you want to command attention. That takes a bit of creativity and a lot of perseverance.

So say I’ve got a handbag business. I want to sell buyers on the quality and marketability of my products so they want to feature the collection in their stores.

These people get sold all the time, so how do I set myself apart as a newbie designer with no brand recognition or footprint to speak of?

The first step is establishing contact. Pretty difficult to do as buyers are usually MIA. But I don’t get discouraged. I leave a message, introducing myself and my goal. I say I’ll follow-up with an email. Surprise, surprise, after a week, no return call.

Courtesy of www.highprobsell.com

Courtesy of www.highprobsell.com

Time to execute phase 2. I call again, only this time I don’t leave a voicemail. I stalk my prey over the course of a couple of weeks. But alas, the buyer is still MIA. So I finally leave a message letting the buyer know I’ll be following up with a package including some marketing and press materials and a sample handbag. I need to create a hook with this package to give the buyer a reason to call me back. But beware, this whole process can get rather expensive quickly so make sure you pick your targets wisely. Choose the ones where you might have a shot if you’re sending product as a sample. Make the packages personal – include handwritten notes, unique trinkets, anything to set you and your company apart from the competition.

About a week afterward, reach out again, via phone and email, and so on until you’ve exhausted your efforts or you get a return message.

This process won’t work all the time. Nothing is ever guaranteed But if you plan out your roadmap effectively, you have a real chance to make inroads with the people who can put your product in market and help you create demand that will hopefully translate into sales. And then maybe you can land in InStyle magazine too! =)

Are You Creating Something Disruptive? If Not, Get Back To The Drawing Board!

I’m a lot of things.  Patient is not one of them.  And it cost a boatload of cash for me to realize that rushing toward the finish line without a solid pair of running shoes is the surest way NOT to win the race.

You see, back when I decided that I was going to design the next “IT” handbag, I needed to jump in with both feet, break both ankles and crash down on my knees before realizing that a bit of education and feedback might get me a hell of a lot farther than throwing an awful lot of borrowed money toward my dream.

Why was I in such a rush?

Nobody had a bullet to my head.  I never stopped to research, didn’t bother to have any informational interviews with success stories.  I NEVER considered getting feedback about the designs.  Why WOULDN’T someone want to buy a Krina handbag?  Best Italian leathers, trendy looks, fabulous colors, celebrity endorsements?????

But while that should have made me stop and think about a longer-term strategy, it only made me want to drive harder.  Get more bags to market, edgier designs, better colors.  Capitalize on the momentum!

After all, InStyle and Katherine Heigl loved their Krina bags, why not the rest of the world?

InStyle

And don’t let Katherine’s super sexy outfit detract from your opinion of the bestselling Calista handbag perched on her luggage cart!

 

KatieHeigl

Unfortunately, I didn’t take advantage of the resources available to me.  I wasted a lot of money, learned a very harsh lesson and realized where I went so utterly WRONG.

Richard Branson recently uttered some great pearls of wisdom for a newbie fashion designer.  Unfortunately, it came a bit too late for Krina but here’s the gist of what I took away from the article in Entrepreneur magazine:

Figure out your passion.  Instead of rushing to make it a reality, take a step back to see if it’s disruptive in any way, shape for form.  Disruption is key to innovation!  A leather handbag is NOT disruptive to the fashion industry.  This is why so many other indie designers crashed and burned alongside Krina.

Testing is also key.  You know what you know but it is limited to YOU.  Getting feedback is essential, as you are building something for a wider audience than just yourself.  If someone gets excited, it may be a winner.

It doesn’t count if it is only you and your partner (my bestie, who is thankfully STILL my bestie after what I put her through!!) who are jumping up and down and popping corks on champagne bottles to celebrate the birth of your creations.

 

%d bloggers like this: