November 16, 2011

Entrepreneurship, Money & Career

From Idea to Reality: A One-Year Case Study on Launching a Successful Business

September 15, 2010

From: Matt
To: Colin, Charlie

Here’s a thought… we all have a reasonable amount of disposable income to invest. I say we push this talk into a seriously productive conversation and put our money where our mouth is. Let’s START A BUSINESS.

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This was taken from an actual email that I sent out to my friends, and now business partners, just over a year ago. At the time, all of us were at work, and in the process of catching up on life via email. We started out with the pretty typical topics of conversation: weekends, women (or lack thereof), and sports.  However, as shown above, the dialogue quickly turned.  This topic was born out of a frustration of sitting on the sidelines while success stories kept popping up around us.

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I’d love to see where WE could go in 1 – 2 months if we actually started brainstorming and developing an idea, investing, and letting it roll… I mean, how nice would it be for all of us to earn some extra bucks on the side for the very same amount of time we spend staying in touch. We need to get off our asses and put something together.

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It was a simple challenge: stop talking and start doing.  Within two hours our group had thrown out more than a handful of good ideas.  By the end of the day, the foundation for an investment in ourselves had been established.  After all, daydreaming is the fun part: it costs nothing, demands little, and the possibilities are endless.

Yet, starting a business is never easy.  With that being said, technology has afforded our generation the ability to create businesses much more efficiently and cheaply than ever before. By capitalizing on outsourcing and the power of the internet, creating a business in which you simply have to manage the moving parts is within reach for most of us.

Besides, becoming a small business entrepreneur has never been so enticing.  Let’s face it–in this economy it can be hard to find a traditional job, much less any job.  For those who have lost their jobs in corporate America, entrepreneurship can create an opportunity for financial independence by allowing you to become your own boss.  Even for those who have steady jobs or a main career objective, starting a business on the side can create another stream of income to help build wealth and give you options for your future.

In one of my earlier posts, I detailed my own model for self-publishing my book, Have Her Over for Dinner.  The positive feedback received from readers such as you made it clear that being open about the wins, losses, mistakes, failures, and triumphs of my own endeavors can help motivate you to push forward on your own goals and dreams.

So, here’s a look behind the scenes of my latest venture, Moonshine; a gentleman’s cologne.

(MONTHS 1 – 3)

IDEA/CONCEPT

Why cologne?  Good question.  I prefer being the underdog in a world full of corporate players that are “too big to be good.”  Similar to Brett–I’m sure many people balked at his idea of creating another men’s blog–especially considering the competition in the marketplace.  Two books later, and with hundreds of thousands of loyal readers and fans, his success is proof positive that being the biggest isn’t always necessarily the best.

Besides, I think wearing cologne is manly.  And despite what great marketing execs may say, I didn’t feel like I needed a big-time celebrity to tell me what I should smell like. Instead, we thought the market could support an independent cologne that smelled great, without all of the hype.

PARTNERS

There’s an old saying: “If you want to lose a friend, go into business with them.”  Before becoming involved with business partners (especially friends), you should be clear on each other’s personality types, business sense, and overall goals for the business.  Without exception, a legal contract should be executed by each party which clearly outlines responsibilities and rewards for each individual.   In my experience, most partnerships fail due to a lack of communication.  Similar to personal relationships, if you do not communicate with your business partners, issues are bound to arise.  One person feels as though he is putting in more work than the other.  The other person questions spending habits or business practices.  These issues can be solved with open and effective communication.  In the end, focus on the positives, and let business be business.   

With the idea in hand, my friends and I got to talking specifics.  It soon became apparent that we would need to be able to switch between friendship and business mode when analyzing what each person could viably bring to the table.

For this venture, I partnered with two friends from college, Colin and Charlie.  Colin is an attorney in Dallas, TX, so he was able to handle all of the business set-up and contract work that was required for such a start-up–saving us thousands of dollars.  Charlie sells insurance in NC and is also a part-time model.  He was able to acquire product liability insurance on the cheap, in addition to connecting us with other wholesalers in the fashion industry.  Me?  Well, I finally got to use my degree in International Business and French when it came time to sourcing cologne in France or products abroad.  In essence, we created our business, product, and partnership around each other’s strengths.

Yet there was one thing we were all lacking–knowledge of the fragrance industry.  Instead of worrying about what we didn’t know–giving us an excuse to NOT move forward–we worked through it.  In fact, it became a strength of our product to not constrain ourselves by what we deemed as the “status quo” in the industry.  If you want a celebrity endorsement or a half-naked man peddling cologne to you, we are not your guys, and Moonshine is not your cologne.

(MONTH 3 – 6)

RESEARCH/TESTING

It’s one thing to have a great idea, but it’s another thing to see if that idea is actually viable in the market. Technology allows us to quickly access potential competitors, markets, and opportunities.  A simple internet search will give you the opportunity to research all aspects of your business including potential suppliers, wholesalers, retailers, etc.–depending on your business model.  During this phase, you can also begin to estimate risk vs. return.  You should be able to accurately portray how much you stand to lose or win on an investment before moving forward.

Now was the time to start doing some research.  During our testing phase, we found out pretty quickly that most of our demographic (stores, press, critics, buyers, etc.) wouldn’t give our product a second look unless it was made in France.  Although quotes for producing the product domestically turned out to be much cheaper, in the end we decided to partner with a parfumeur in Grasse, France.  This provided credibility in the marketplace.

This is also the phase where you can afford to make mistakes.  We ordered samples from suppliers to test out potential bottles, caps, labels, etc.  After countless sample orders, we at last settled on a final product . . .

But something went wrong.  Our bottle supplier ended up running out of our choice of bottle before we could order.  It was a major mishap, as all of our packaging, labels, caps, and “look” of the brand had been built around the bottle.  After scouring the internet–and contacting suppliers around the world–we actually ended up finding a new bottle that we liked even more.  What boils down to two short sentences now, was actually two long months of additional cold calls, uncertainty, and frustration.  In other words, be ready for surprises.  Take on challenges one at a time and don’t let one issue steer the entire ship off course.

After getting final estimates on the cost of cologne, bottles, boxes, caps, and all of our other supplies, we put together a simple Excel spreadsheet to analyze our risk vs. return.

In the end, the numbers made sense (down to the dollar, actually).  It was time to move forward.

COMMITMENT

After careful deliberation, finding the right business relationships, and testing the viability and potential return of the idea–it’s time to put your money where your mouth is–seriously.  Until that money is laid out on the line, you will continue to let time, work, family, friends, weekends, and relationships push back a potential gold mine of an idea.  I actually learned this very important lesson in business from running marathons.  Until my money for the race was paid, I never actually trained that hard.  Same thing in business–once you lay out the cash, your instincts are to find a way to get it back.

We set up a bank account, giving everyone in the partnership access to the online banking profile (transparency).  In addition, our email account and websites were all set up so that we could all access each other’s profiles to view all of the “goings on” from each partner.  Of course, this is a personal choice–most of us travel so regularly that we wanted to be able to quickly access each other’s accounts if something was needed on the fly.  However, every relationship and business is different, and privacy and trust should be addressed and respected.

(MONTHS 6 – 9)

FULFILLMENT

It’s time to go to work.

We decided to base our operations out of Greensboro, NC (Charlie’s home).  We had access to free storage (Charlie’s parents’ basement), and Charlie’s flexible work schedule allowed him to take charge of fulfillment and shipping.  We determined that it was much cheaper to do the physical labor of filling, bottling, and packaging ourselves, so Colin and I flew to Greensboro to assist Charlie.   On top of that, this idea, this side business, this grandiose figment of a plan, had somehow transformed into more than just an investment of our money–it was an experience.  We all wanted to be together to bring that first bottle into existence.

Then there was the work–and lots of it!  After a long weekend of bottling product, shooting photos, building a website, and drinking a few beers–we were now in business.

LAUNCH/SALES/PUBLICITY

Now that you have a product and business, it’s time to go let the world know about it.  This is the time where you will hear the word “no” more than you’ve ever heard it before in your entire life.  I mentioned in my previous article that I set a goal of getting at least 10 “no’s” each day–that way I knew I was working hard enough.  Depending on your business, people are going to shoot down your ideas all of the time.  Use that negative energy as motivation to make something positive.

Armed with product in hand, we went to work reaching out to stores and press outlets.  Let’s face it–cold calling is tough, but it’s par for the course.  Remain persistent by following up with phone calls, emails, etc. until you get your yes–or no.

Fortunately, we knew this idea was going to be successful pretty early on.  Having set our sights on the top independent men’s stores throughout the country, we were only a week’s worth of sales calls in, and we’d landed our product in over 80% of our target stores.  Trust me, this was not due to slick sales tactics, rather it was the result of our tedious research and testing.  In the end, the hardest part of the sales process was simply finding the right buyer–not pushing the product.

Regarding publicity–I would argue that having a solid online campaign is more successful these days than the traditional route of magazines, newspapers, and television.  Of course, getting a spot on the TODAY show never hurts!

It’s important to also know your limitations.  Macy’s isn’t, and shouldn’t be, knocking on our door.  We knew from day one that where we placed our product was just as important as the product itself.  By defining success in attainable limits centered on branding, and not buyers, we’ve set ourselves up for those higher aspirations down the road.

(MONTHS 9 – Onward)

Once the engines are on and the boat is moving, somebody has to keep steering the ship.  A successful sales and publicity campaign can allow you to quickly recoup your investment and turn a profit.  However, things can turn south in a hurry.  Successful CEO’s, managers, and entrepreneurs are those that can manage the day-to-day tasks while also having an eye on the big-picture.  Building relationships, maintaining satisfied customers, and remaining innovative are all crucial elements for continued success.

Now that our venture is successful, we are hard at work on expanding our brand.  Realizing that a large order from a major supplier or partnership might take weeks to complete, we’ve created a contingency plan to handle the fulfillment through a third-party supplier.  In addition to working on Moonshine, we are in the process of developing our women’s fragrance, SpeakeasyAn Intoxicating Aroma, set to debut next year.

The bottom line, though, is this.  I’m constantly reminding myself that success is what we make of it.  Sometime into the process, we agreed that if we could create something together that we were proud of, whether or not external influences agreed with us, it would be a success.  If we came away with nothing more than a great story of our semi-successful business venture, we were already a success.  Well, fortunately our little idea has proven to be more successful than we could have ever imagined–but our eyes still remain focused on the “big win.”  Sephora?  Nordstroms?  Time will tell.

In the end, we earned our success, story, experience, and so much more.  Chances are you’ve had an even better idea.  Today is the day to make something happen.  Take it from me, you’re worth the investment.

Read the follow-up article, Reality in Motion, which was published one year after this article.

Have you started a venture or small business? Share your tips with us in the comments. Also, this is your chance to tell us about the great businesses you guys are trying to get going. Share your links and your story–tell us all about what you’ve been working on or hope to start working on!


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