We recently had the opportunity to speak to the Aalto Fellows, a group of the top students from Aalto University in Finland. They were in Silicon Valley for the entrepreneurial tour and we caught up with them at Stanford University. What was most impressive about this group was that it was organized and financed by the students themselves! What better way to get a taste of true entrepreneurship?
We knew that by the time we spoke to them they had heard many entrepreneurial stories from some of the top companies in Silicon Valley. We knew that they had heard from many of the entrepreneurial academics about what it takes. And we also knew that they had heard from the VCs who “built” the Valley about what they look for in fundable projects. So, what were we going to tell them that was new and different, valuable and practical, memorable and applicable?
Most of the businesses they visited were wildly successful “unicorns” financed by VCs. They had plenty of assets and resources right from the start. Of course, they had to give up quite a bit of their equity to get their financing in the first place. And, of course, for every unicorn there were 19 failures that nobody ever talks about.
Is it possible to bootstrap your business when you’re under financed? Is that, in itself, a proving ground to learn how to solve business problems without tons of resources? We believe it is. It’s what happened to us and it can happen to anyone.
When you’re undercapitalized and running out of runway, you have no choice but to get creative, and you have no choice but to get resourceful. You must learn quickly how to communicate with your creditors in such a way that they will extend your credit and terms instead of putting you on a cash basis.
Sure, you can be resourceful, use a laundry room for an office and a door for a desk as we did. Sure, you can hire your family and make trades for goods and services as we did. But that only goes so far. Sooner or later you’re going to need some financial help. We found that help in our three key relationships.
- Vendors
We looked at our accounts payables, and it didn’t take long to realize that in our business, the glass company had the most at stake. The more wine we sold, the more glass bottles they would get to sell us. That’s right, they would get to sell …and make more money! So they were a natural strategic ally …if we could just convince them that we were trustworthy.
We decided to meet with them on a quarterly basis and share our plans and challenges. We showed empathy for their concern that we would pay our bills on time. When our cash flow projection indicated that we were going to be late, we called them way in advance and alerted them. We offered a payment plan based on our receivables to bring our account current, and we always did!
They felt comfortable extending our credit and terms. They enabled us to expand nationally without having to raise outside funds. This is a clear example of how soft skills can earn you hard cash!
- Employees
We looked to our employees to solve problems, develop innovations, and remain excited and loyal to our company. Rather than putting them on a need-to-know basis, we did just the opposite. We put them on a know-the-need basis. We figured they couldn’t help us if they didn’t know what our needs were.
Once we had a serious problem. The good news was that we had been authorized in a giant chain store in Florida. The bad news was that they put us, like all new products, on the bottom shelf (nobody looks down there). The scary news was that if we didn’t sell a hundred cases in 90 days, we would be out of the chain … FOREVER!
One of our people joked and said, “Well, we’re ’Barefoot,’ we’ll just go after the foot traffic!” “HaHa!” we laughed. But then somebody else said, “Wait a minute, that’s not such a crazy idea, why don’t we just put decal footprints down the wine aisle and turn them into our position on the bottom shelf?” We used those footprints all over the country. And that idea came from the receptionist!
- Buyers
In our business, our buyers where the distributors and the retailers. The distributors wouldn’t buy unless the retailers would buy. The retailers wouldn’t buy unless their customers would buy. Most VC financed companies would earmark a large chunk of money for advertising to get the word out to bring the customers into the retailer stores.
We had no money for advertising. At first, we were scared that our product wouldn’t move fast enough for the retailers because nobody had ever heard of a brand called “Barefoot.” But then we got a call from a neighborhood group looking for cash donations for kids’ after-school park. We had no money, so we gave them product. We told them we hoped they would use it at their fundraiser and perhaps it would loosen up some checkbooks or they can auction it off for some slides and swings. Sales took off in their neighborhood.
We tried it in another neighborhood. It worked. We tried it in another city. It worked. In fact it worked so well, we took Barefoot Wines across the country without commercial advertising. Because we showed empathy for our customer, we gave them a social reason to buy our products.
Conclusion:
These techniques might not work for everybody. Every business is different. But there is a golden thread that weaves its way through all these examples and you can use it in your business. It can reduce your need for cash. It can reduce turnover and engage and empower your people. And it can bring you the customers you need to achieve a positive cash flow and beyond. That golden thread is empathy. The more you use it, the less money you’ll need!
We’re excited to announce that our new business audio book on this subject is soon to be released.
- It will be unlike most business books that focus on companies that have a lot of resources. Instead, it will focus on the true story of the building of the Barefoot Wine brand which is a testimony to empathy and resourcefulness.
- It will be unlike most business books that give you list after list in prescriptive text: the three things to do, the five things to never do, and the seven things your customer wants from you. Instead it, will be a series of stories designed to entertain and educate.
- And it will be unlike most business audiobooks that have a narrator droning the story in your earbuds. Instead, the characters in the stories will be played by real actors, dramatically bringing the scenes to life as you jog or commute.
If this sounds like fun, you can find out more at www.barefootaudiobook.com
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.
To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.
