Advice for Entrepreneurs

“This is a really intense spreadsheet!” I told Jay, another parent at my seven-year-old's school. I was meeting with him for coffee to talk about a garden art product he had developed. It was beautiful, and he made the samples himself using the craftsmanship he'd developed while getting an MFA. I liked them so much, I was really hoping we could work out a barter arrangement: He could make me one and I'd help him market them.

But that spreadsheet! It was fantastic, with several pages and pie charts and obviously a lot of thought put into it. But it was all wrong. Not because the numbers didn't add up, or anything. It was just the wrong approach to this product and a new small business.

Not only could he not find a place to sell his product with the assumptions he'd come up with, he couldn't find customers and he couldn't afford to make it happen. What should he do? Find venture funding or a business loan?

“You need to start over,” I said. “You need to start with one.”

I told him that the best way to get this small business going was to get one customer. He really only had the money to make these products one at a time. He needed to find a way to sell them one at a time, for now.

Not only did he need to get one customer, but he had to get one product, setting aside for now the thoughtful and lovely line of different options. He needed to make one thing and he needed to make it beautiful and emotional and, most importantly, shareable. He needed to get that one customer who could get him more. It was like he had a novel with a half-dozen characters introduced on the first page; they were all interesting but it was hard to keep them straight. He needed a single protagonist.

“You need to get your customers in your neighborhood.”

His product had all the characteristics that make it ideal for selling near home. First, it was very heavy and hard to transport. The materials cost was pretty high and the labor was specialized. It was something customers can wait a few days or few weeks for; they don't need to be able to bring it home from a store when they first encounter the idea. But I think this approach makes sense for products that don't fit these characteristics, too; when my friend Sarah decided to start making sculptural, unusual chocolates, she didn't start by setting up a web site. She started by getting a booth in the farmer's market (where I met her!).

Not only did Sarah get local customers who were more likely to value chocolates made nearby, she got influential customers; the people who shopped at the farmer's markets were the same ones who wrote the food section of the local paper and who were connected to the best restaurants in the city. Tourists came to the farmer's market, especially food writer-type tourists, and soon Sarah's chocolates were being written about by people around the country. Then, with the profits from her loyal customer base and the good PR from influential chocolate lovers, she opened a shop. In her story, she had the setting just right; novelists say that sometimes the setting can write the story for you. That's what Sarah was doing by selling her chocolates in the farmer's market; setting her story somewhere rich and productive.

Of course, “neighborhood” doesn't have to be literal. These two examples include products and communities where locally-made is very important and the customers necessary to make the small business work could be found nearby. But it could also be a virtual community; say, something that might sell among a certain faithful blogger community on Etsy. I know lots of women who make stylish, organic cotton and wool cloth diapers that appeal to a specific sort of mother who tend to congregate around the same “group” of blogs. It's easy to sell to this “neighborhood” by starting small.

“You need to go direct to your customers.”

Jay's idea was to sell through high-end garden shops. This was the model he was most familiar with, but given the assumptions he'd built in to his beautiful overwrought spreadsheet, commissions and retail markup and such, the final cost was unrealistic. Most small business owners who are just starting out should take advantage of the one thing they have that bigger competitors don't: a personal relationship between customer and maker.

Not only can such a direct relationship be great for the seller (in far higher percentages of the selling price going into his pocket) but it can be desirable for the customer, as well. How different would you feel about your cereal bowls if you'd met the potter who'd cast them? You might go so far as to cry if they were broken. Certainly, you'd value them more than the ones on sale, four for $9.99, from the local department store.

Sure, these customers are fewer. But if you're starting small that's okay; especially if you're keeping your “day job,” or, in the example of many of my friends and my own self, taking loving advantage of a partner who's earning an income to support you.

“You should not invest in more inventory than you have cash for.”

I'm going out on a limb, myself, with a new project: a literary magazine for parents. I assembled a group of volunteer editors and we put our heads together. I chatted with other publishers to get an idea of process and cost. I convinced people to do work based on the possibility of pay.

And now, I'm going to go out and try and get the customers. I'm not going to even call my first printer until I've made the “sales”; until I've raised enough subscriptions to pay the bill for that first chunk of inventory ($5,000 or so). Luckily, this is made somewhat easier by the presence of fundraising machines like Kickstarter and networked connections through Facebook and Pinterest. Instead of the old-fashioned way; going to conferences and direct mailing and putting ads in similar-type magazines, I can reach people directly and get their money before I put out my first product, thanks mainly to social networks. Think about it as something like what J.D. wrote about in this classic post about starting your own business: “guerrilla marketing.”

We're in an unusual, rarefied time in the history of capitalism. It's almost like we've come full-circle from the old way of setting up a business in your village, selling your unique skills to people who know you and not having to set up a huge infrastructure first. We don't necessarily have to go through the business gatekeepers who developed over the years; the banks, the venture capital firms, even the family money that set entrepreneurs who made it apart from entrepreneurs who just puttered around thinking up ideas all their livelong years. Personal relationships are valuable again; they're just spread out geographically and not always “consummated” by face-to-face interaction. Some of my partners in this project are people I've never met IRL; they're across the country and I know them through Facebook, and Twitter, and Instagram…

“Your customers need to see a person there.”

The difference between this sort of business foundation and the boom years of high-growth capitalism is that the “brand” is not the thing so much as the “authenticity.” I know I just put quotes around “authenticity,” but let's make it truly authentic (I told my friends and I tell myself) by connecting the product to the person who makes it, and not just “here is the face of a person who makes things,” but a whole story. People will buy the product for its own merits but also for the story, the realness, the fact that paying $3 for a chocolate or $20 for a magazine subscription or $300 for a garden structure will tie them to this story, will write them into the narrative.

I love to think of a small business as a story and the entrepreneur as the storyteller. And the customers? I think they're characters in the story, if you do it right. Hopefully your story has a happy ending — no — hopefully your story is a serial that keeps on getting picked up for another season.

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AMW
AMW
8 years ago

Bravo! I think this is right on target! 13 years ago I did this very same thing. I accidently became a pastry chef/cake designer when my neighbors saw my children’s birthday cakes. A neighbor bought a cake from me…and I thought “I can do this”. I never invested my own money. They gave me money in advance, I bought supplies with this, and then went in search of more jobs, always using deposits to pay for the equipment I needed for that cake. I did this all while working a primary job. After four years I was able to go… Read more »

Hannah
Hannah
8 years ago
Reply to  AMW

I’m one of the many women out there making beautiful (I hope), organic, custom cloth diapers. This experience rings true for me. I had to sink in a small investment for my initial materials, and a LOT of time. The money I made from my first sales had to fund the next fabric purchase. It was months before I gave myself a (very paltry) paycheck. It can be very hard to stay motivated when the monetary payout is so unpredictable and small, but I know there is a small group of people who is able to do this full-time. I… Read more »

Greg Miliates @ Start Consulting
Greg Miliates @ Start Consulting
8 years ago
Reply to  AMW

Finding one customer and validating your business idea is key. If you’re not getting real-world validation, then you don’t have a business. And the more time & energy you put into planning & research, the more time you’re wasting. It’s much faster to learn by talking to your market and potential customers; running spreadsheet analyses doesn’t get you anywhere–except perhaps a false sense of accomplishment and security. Testing your assumptions in the real world is what moves you forward. When I started my consulting business in 2007, I’d done a lot of research and reading and planning, but none of… Read more »

Kelly@thehungryegghead
8 years ago

Want to add that timing is very important.

I started a travel planning business in 2009 when the economy tanked. Needless to say people were having trouble paying the mortgage, nevermind hiring someone to plan an expensive vacation in a foreign country. 🙂

Also starting a business is extremely difficult. You need to be prepared to fail several times before success comes along. The important thing is to keep trying.

Joe @ Maple Rowe
Joe @ Maple Rowe
8 years ago

Excellent article! My partner and I just unleashed our business on the world and we’ve been blown away by all the positive support we’ve received from friends and family. What’s been especially humbling is the support from long lost friends, people we’ve only been Facebook friends with after leaving them behind as far back as high school. When old high school friends come back and support you, it’s mind blowing. “You still remember me?” You definitely see the power of online social networks as well as the power of impressions you’ve made throughout your life. If anybody’s interested here, we… Read more »

Kelly@thehungryegghead
8 years ago

Checked out your website. It looks lovely. I would definitely give your soap a try once I move back to the US.

I am a firm believer in buying products that is “MADE IN THE USA” in addition to buying local and organic products.

If everyone did this perhaps we can send a huge message to the big business that jobs need to be bought back to the US.

I say this with a slight bitterness because my husband and I had to move abroad in order to further his career. I miss the US so much.

Joe @ Maple Rowe
Joe @ Maple Rowe
8 years ago

Kelly, thank you so much for the kind words. I’m with you — I place much more value on products made in the USA and buy those products, over imported products, whenever possible. I no longer believe that one can rely on mega international corporations for the best products or for the possibility of reliable employment. I think a new capitalism and a new economy is slowly being formed by American small business owners, crafters, service providers, etc, that will allow those people to offer great value to their customers and create a sustainable lifestyle for themselves. And I think… Read more »

Tyler Karaszewski
Tyler Karaszewski
8 years ago

This is all just a long-winded way of saying Buy American and keep our dollars as local as possible.

Funny how this “buy local” thing never seems to apply when international customers want to buy American products.

I wonder how many people Boeing (for example) would need to lay off if they started refusing to sell to European airlines and told them all to go buy Airbuses instead.

Joe @ Maple Rowe
Joe @ Maple Rowe
8 years ago

Tyler, I think you’re looking at it in a black & white kind of way when it’s really more of a grey area. Nobody’s refusing to sell anything to anybody. You’re also blowing it up to a mega corporation level where it is necessarily international due to what corporations are beholden to do for shareholders. It’s more about how you spend your dollars and what value you place on that. If you place value on price, regardless of where the product comes from or what impact it has, then you are free to buy the cheapest item without regard to… Read more »

Megan
Megan
8 years ago

Do you guys sell at farmers’ markets?

Joe @ Maple Rowe
Joe @ Maple Rowe
8 years ago
Reply to  Megan

Not yet, Megan. We really want to, and will probably pursue it in the fall or maybe next spring, but we’re in full scale production mode right now and focusing on retail and a couple wholesale accounts. We’ve also been asked to supply soap for a couple wedding gift bags and those are pretty big orders. We’ve even had friends straight up order a dozen bars from us so we’re just trying to keep up with demand right now as it is!

Josh @ Live Well Simply
Josh @ Live Well Simply
8 years ago

Sometimes older, tried and true business and marketing ideas are the best. There are more opportunities in our own neighborhood if we just look around. Great advice!

Paul
Paul
8 years ago

Really enjoy the articles on entrpreneurism…thank you! Can anyone recommend another good blog or two that focuses exclusively on this topic…specifically micro-business? Thanks

Lisa
Lisa
8 years ago
Reply to  Paul

Not sure if this is what you’re looking for, but Etsy’s blog has a ‘Quit Your Day Job’ series that highlights specific Etsy sellers that have been successful at getting their own business going.

Here is a link to the latest post in the series:
http://www.etsy.com/blog/en/2012/quit-your-day-job-solocosmo/?ref=fp_blog_title

Paul
Paul
8 years ago
Reply to  Lisa

Thanks Lisa. It’s certainly more of a niche blog, however, I love reading the success stories.

Ben David
Ben David
8 years ago

The idea of “selling a story” is central to a lot of small craft-related businesses.

A great resource for both the business and creative sides of craft business is the blog of Luann Udell. The archives are full of gold about all aspects of small, crafts-based business.

http://luannudell.wordpress.com/

Jennifer
Jennifer
8 years ago

Some good points, but a business model that relies on the volunteer efforts of others and “the possibility of pay” tells me that the writer doesn’t have a lot of experience with sustainable entrepreneurism.

Sheryl
Sheryl
8 years ago

Everyone’s on board with the crafty business bandwagon (which is totally a great bandwagon) but I love hearing this sort of advice for how to start them. Sensible.

Amanda
Amanda
8 years ago

Quality writing. Thanks!

Adam Spinosa
Adam Spinosa
8 years ago

Great Article! I loved the analogy that starting a business without a clear goal or mission, is like beginning a novel with two many likeable characters but no protagonist. It highlights how much creating a small business is like creating a story. That is, a story about your product, your customers, and your employees.

chacha1
chacha1
8 years ago

A literary magazine for parents sounds like a very niche project, but then most small businesses are.

I think this was Sarah’s best article so far for this community. Great advice.

amber
amber
8 years ago

I want to buy the THING!
(probably not really, but I really want to see a picture of it!) why not give the guy a leg up and post a link?

Jenna, Community Manager at Adaptu
Jenna, Community Manager at Adaptu
8 years ago

Curious, what exactly he is making.

Dana Leavy
Dana Leavy
8 years ago

I love this, because there’s so much noise out there telling business owners to “think big” and set goals that are totally above what makes sense starting out. Sure it’s great to have that kind of confidence and drive, but too many new entrepreneurs focus too much on “building the numbers” versus focusing in on a niche that you can really truly help, and delivering valuable content, quality products, that’s going to keep them coming back, but also prompt them to do the the “fame-building” work for you — by spreading the word about how great you are! Great insights… Read more »

krantcents
krantcents
8 years ago

I think this is particularly true for artistic endeavors. You need to see someone’s work to considering buying. One b one each customer will yield many more. I think it is true for small business in general, start small and build.

rosarugosa
rosarugosa
8 years ago

Yes, my burning question is also to know what “the thing” is!

Cruz Caudillo
Cruz Caudillo
8 years ago

This is a great article. I have been a pastry chef in fine dining restaurants for over 8 years. When my wife and I decided to start our own business we wanted to go all the way and open a full blown patisserie. After realizing it was next to impossible because of the initial expense I decided to focus on one thing. My company Praline Patisserie was born. Taking the old world recipes and canning techniques taught to me by my grandmother and using my modern approach to pastry I developed our Artisan Caramel Sauces. We rented space in a… Read more »

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