business plan | The Barefoot Spirit

These Business Tasks Should be Outsourced

Michael Houlihan & Bonnie Harvey — Wed, 05 Feb 2020 18:00:36 +0000

As successful brand builders, we are often asked, “What is the biggest single mistake that new consumer product brand builders make?”

Our answer is always the same: “They focus on production and not on sales!”

Unfortunately, the first thing that goes through most startups’ heads is something like, “Oh, if I’m going to produce and sell a new branded product, I need a factory, an office, a big staff, trucks, warehouses, and several in-house professionals.” Then they write up a business plan and try to get financing to pay for the whole thing.

Plus, they cover a runway for six months to a year to achieve a positive cash flow.

To read the complete article, please visit The Busines Journals

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.

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Is your Startup Doomed by Your VC’s Quarterly Reports?

Michael Houlihan & Bonnie Harvey — Thu, 16 Nov 2017 18:00:37 +0000

You must be getting a little nervous! It’s June 25^th and the pressure is on. Your chances to effect the data for the Q2 Report is wrapping up in just a few days! How will you make the numbers you promise your VC? Will you load up your new buyer with more than she needs and more than you can service? Will you have to fudge the numbers …again?

Of course, your VC has a right to quarterly reports. They want to keep track of their investment. If you’re not performing as agreed, they want to know right away. They want to cut their losses, which means you could lose your financing if you don’t make the numbers. Are you getting a little more nervous?

You know if you push your salespeople too hard it will take away from next quarter’s numbers. You know that if you load up your buyers you may lose them due to lack of service. And you know your reputation will be hurt if you don’t service what you sell. In fact, you may not have even fully realize the true cost of sales until you got several months away from that extravagant launch party. The reality of your business is just beginning to settle in. Now you know at least part of what you don’t know. But it’s too late and the report is due!

Just since you started, you have learned a ton. It’s stuff they didn’t teach you in college. It’s stuff that you wish you had known about. It’s stuff that requires actually experience.

You thought your VC knew more about your business than you. You thought they’d warn you. You thought they would be an enabling “partner”. You thought your business plan was validated because your VC funded it.

But no! You are on your own! And now it’s clear that your VC doesn’t really care. He’s spread out his risk like a gambler playing the odds. He’s bet on 10 to 20 start ups like yours, hoping for that one unicorn. Your business is just one roll of the dice. Will you make your numbers and stay in the game or will you crap out?

You are quickly approaching a no-win situation where if you make the numbers, you could lose your business. If you don’t make the numbers, you will lose your investor, and then your business.

The Department of Commerce says that 9 out of 10 businesses fail. That’s why most VC’s play the odds. But the same Department of Commerce also reports that businesses that make it to 2 years are more likely to make it to 5, and those that make it 5, to are more likely to make it to 10.

Having been through it from ideation to monetization, we understand why. In the first 2 years, we found out our cash flow plan was more important than our business plan. As time went on, we began to respect the cost of sales, which generally increased directly with growth. That’s why we created The Barefoot Startup, a more sensitive approach to starting and growing a business. It’s more grounded than bootstrap. It’s being in touch with the environment.

Just like being barefoot, the Barefoot Startup directs you to learn to walk before you run. It directs you to be more sensitive to the terrain so you don’t fall down. It shows you how to be more flexible so you can make quick adjustments, thoughtful pivots, and remain light on your feet.

Don’t let quarterly reports hurt your chances. Starting a business is challenging enough. Discover and use your hidden resources. Outsource everything but accounting, sales, and quality control. Create revenue earlier with the relatively small, low-hanging fruit. In other words, reduce you need for capital right from the start, and you may not have to play the VC game at all. Ironically most VC’s are shying away from pre-revenue startups anyway. Demonstrating revenue proves your concept, but more importantly, provides a priceless business education. VC’s will line up to expand a proven concept and you will be in a much better bargaining position!

The credo of The Barefoot Startup is simple: Start small. Make your mistakes in a small place. Get your act together before you take your show on the road. And don’t scale to fail …or make your quarterly numbers! By keeping your (bare) feet on the ground and building a solid foundation, your chances of success will increase, and your need for outside capital will decrease!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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How to Get Ready to Sell Your Business — Even if You Don’t Plan To

Michael Houlihan & Bonnie Harvey — Thu, 18 May 2017 17:50:15 +0000

There’s much talk these days about the business plan, yet the sale-of-the-business plan seems to get little attention.

Right now is the time to discuss the eventual transition and the due diligence checklist. Planning ahead for your potential acquirer’s required list of documents is an effective blueprint for the organization of your files and records.

You may say, “I’m never going to sell my business,” or even, “I’m giving the business to my kids so I won’t have to worry about the buyer’s due diligence.” But knowing what an acquirer wants to see and why will give you a big head start on what records are important to anyone who will own, manage, or invest in your company.

It is essential to have these documents in order from day one, because you can’t afford to wait until Mr. Big comes knocking. What are you going say then? “Oh wait just a minute… please stay interested! I know I’ve got that information around here somewhere!”

To read the complete article, please visit The Business Journals

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post How to Get Ready to Sell Your Business — Even if You Don’t Plan To appeared first on The Barefoot Spirit.

Premature Infighting Over the Divvy Can Result in Nothing to Divvy

Michael Houlihan & Bonnie Harvey — Thu, 12 May 2016 17:00:00 +0000

Even before the launch, and even before the funding, many start-ups suffer from infighting over who gets what and under what circumstances – as if the launch, proof of concept, and the achievement of positive cash flow are all a given. They’re not! In fact, many times the divvy is a function of the road ahead, which is an unknown, for the most part, for months!

We advise our clients not to argue over pie in the sky until there are peas on the plate! Just achieving positive cash flow is such a challenge, all the proponents should be focusing on that first.

We have seen too many businesses fail to achieve positive cash flow, but boy did they have infrastructure. No positive cash flow but big overhead – staff, offices, an HR department, lots of people with lots of titles. Why? Because, they say, “That’s just how it’s done.” It isn’t, really! The way it’s “done” is to achieve positive cash flow first and then earn all the other corporate luxuries. You really can’t afford to load yourself up with tons of bricks, mortar, structure, administration, employees and employee benefits until your company is solvent.

The big advantage of focusing on cash flow as your first and only goal is that you will have a better chance of being around long enough to have the luxury of arguing about pie in the sky. By focusing on achieving positive cash flow in the beginning, everyone’s mindshare will be free of office politics, communication issues, and turf wars. Also, and probably most importantly, you won’t be using up precious startup capital on premature overhead.

We like to say, “The day after launch, it’s the cash flow report and not the business plan that runs the business.” Stick to the inglorious task of making sales happen – all of you. Everyone in the company must focus on sales, either making them or supporting them.

We actually blame this “pie in the sky” phenomenon on the funders as much as the proponents. The proponents may have gotten the idea that other things were more important than achieving cash flow from the movies, the entrepreneurial success stories, and the press.

That’s dangerous enough, but now add to that misconception VCs who should know better. Many seem to be overly impressed with the business plan, the structure, and administrative staff. Maybe that is why so many VCs try to hedge their bet by investing in 14 or more businesses hoping one will ROI.

We think the ROI would be much better if everyone focused on sales. Then the VCs wouldn’t have to bet on so many startups hoping just one would succeed. More would!

Oh, and as far as the prelaunch, pie-in-the-sky infighting is concerned, a focus on sales would provide the sobering realization that the divvy may have to be based on commissions, and other costs of sales like programming, representation, and allowances just to get off the ground.

The idea that, “Oh well, if we don’t achieve positive cash flow, we’ll just ask for more money” is not only counterproductive, it encourages a negative and unproductive mindset. This kind of thinking diminishes the value of quick, sustained, and growing sales. It also gives a false sense of security in the short term, and winds up costing more of the proponents equity in the long run.

So let’s get some peas on the plate before we talk about divvying up the pie in the sky. Bon appetite!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Teaching Entrepreneurship is as Challenging as Being an Entrepreneur

Michael Houlihan & Bonnie Harvey — Sat, 10 Jan 2015 19:30:02 +0000

Ten years ago there were very few schools of entrepreneurship. Many asked, and some still do, “Can you really teach entrepreneurship?” They felt you just had to do it, take your lumps and learn from them. Many heroes of entrepreneurship actually dropped out of school altogether to pursue and master their own businesses. We think this sends a wrong message to aspiring entrepreneurs.

With all the hard knocks we got on the street, we would have certainly benefitted by some formal education in business and entrepreneurship. Today there are many schools of entrepreneurship popping up all over the country. We have spoken at more than 30 of them in the past 18 months. This experience has given us a unique perspective on the state of the art of American (and international) entrepreneurship education.

For one thing, the entire world looks to the United States as the cradle of entrepreneurship. So what we decide to do in terms of entrepreneurship education has international ramifications. For another, like the entrepreneurs they are trying to develop, schools of higher education are casting about for best practices, effective content, and real-world experience. They want to discover what works in the classroom, the start-up hub and the marketplace.

Each school we visited had a different idea about how to teach entrepreneurship and how to measure its effectiveness. Most schools view entrepreneurship as an offshoot of their business schools. For them the business curriculum is ready made with courses you need to run your own business. We agree, but there’s more to it than that.

Some schools take a different view. For them, entrepreneurship education is an offshoot of whatever they specialize in, whether it’s engineering, agriculture or hospitality. They realize they must have at least some courses in entrepreneurship so their sciences and technology grads who want their own businesses leave with the knowledge to do so.

Still others see entrepreneurship as an offshoot of the liberal arts school, pointing out the need for entrepreneurs to obtain such core competencies as psychology, philosophy, communication, history, sociology and the other humanities. They recognize that in order to run a business, one must find, hire and train good people and build great people. One must communicate and bond with a wide range of customers, vendors, and other business people who have varying psychologies, philosophies, cultures and communication styles. We tend to agree with this approach although business form and function is also a must.

Some schools merely offer classes in entrepreneurship, others offer majors, a few offer masters degrees, and still others have start-up incubators with academic credit.

So the approach is still in its emerging stages even here in the “cradle of entrepreneurship.”

The jury is still out on what the metrics of success are. Unlike a business school where you can tout how many of your grads received high paying jobs, entrepreneurship educational success is not as clear. Is it how much money was raised for business plans? Or how many new businesses were launched? Or even how many entrepreneurial super stars graduated from your school? These are easily measured as the data is readily available. But we think schools of entrepreneurship should start keeping track of how many of their grads’ newly launched business are still in business three years later!

We salute the schools of entrepreneurship for their multi-faceted approach to the teaching of this multi-faceted subject! It is from this melting pot that the consensus will be built on the foundation of their students’ success. We are honored to be a part of this process.

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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