capital | The Barefoot Spirit

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

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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Soft Skills Can Result in Hard Cash!

Michael Houlihan & Bonnie Harvey — Thu, 02 Nov 2017 17:00:23 +0000

A big part of our “Barefoot Startup” movement is being, well, friendly! You may have the world’s greatest app, most awesome hardware, or must-have consumer product, but the colder your attitude, the higher your price of doing business! Instead of crying about how much money you need to get started, the Barefoot Startup asks, “How can you reduce your need for capital?” The Barefoot Startup knows how!

For us, it’s hard to watch so many startups fail because they say they “couldn’t raise enough cash,” when, realistically, they have not yet addressed the core issue. We ask, “Did you really need all that money to start with?” At the Barefoot Startup, we believe that there are many ways to get your idea off the ground and grow your business effectively that do not require cash. One way is by being more resourceful, and yes, friendly. But you need to be genuinely sincere about your friendliness; Just acting friendly can be seen through and easily backfire!

So, what is “friendly” and how does it translate into profitable business relationships?

Here’s a clue – think about how you treat your friends. You have their best interests at heart. You demonstrate this with your actions. You would never mislead or manipulate a true friend. Think of your family members. You take a sincere interest in their lives. You know their aspirations and their challenges, and you are there to help and encourage them.

Now think about how you felt when they showed up on moving day to help you pack up your stuff, when they introduced you to that key person who helped you with your problem, or when they just listened to you when you needed a sounding board. Their interest in you and your needs made you want to treat them special, give them the benefit of the doubt, and make allowances for them.

Isn’t this what you want from your business associates? Special treatment, the benefit of the doubt, and allowances made for you are all valuable. In business, this can translate into cash. Let’s look at the 4 groups of folks most businesses have relationships with and how you can be friendly with them:

Employees are often seen as an expense, and therefore are an untapped resource. And yet, turn-over is the #1 hidden cost of any business. Employees are more likely to stay with you if they believe you have their best interests at heart. Demonstrate this with fair pay, time off, and an interest in them as individuals. They will be more engaged if you show them appreciation for the good work they do. They will go the extra mile if you compensate them, at least partially, on performance.
Vendors have the ability to extend your terms and increase your credit, but will only do so if they trust you. You will build trust by keeping them up to date on your payment status, sharing your plans for growth, and making good on your promises. When you show them your loyalty by purchasing certain items exclusively from them, they may show their appreciation by giving you breaks on warehousing, shipping, and quantity purchases. Vendors are also a wealth of information. So, treat their sales people like gold …it pays!
Investors are more willing to extend financing if you have demonstrated even a small positive cash flow. They want to see that you appreciate their predicament and are willing to take steps to mitigate their risk. When you demonstrate that you are being frugal and resourceful with their money, investors will be more receptive to the idea of investing more and offering you better terms.
Buyers require reassurance before they will carry your products and participate in your promotions. You can gain their confidence by being dependable, providing industry information, and helping them achieve their goals whether strategic, metric, or mercantile. They appreciate your kindness when you give them personalized attention and provide the help they need without being asked. They will often return your favors by opening doors previously closed to you.

When we speak at universities and technical schools, students of entrepreneurship often ask us, “What else should I be taking beside business to help my startup be a success?” We always answer, “The Liberal Arts, also known as the Humanities.” History, sociology, psychology, philosophy, literature, communications and critical thinking are great “soft skills” tools that enable you to better appreciate and communicate with the people who can make allowances for their “friend,” YOU!

Who We Are

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

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Think You Need a VC to Start Your Business? Try the Barefoot Spirit Instead!

Michael Houlihan & Bonnie Harvey — Thu, 27 Jul 2017 17:00:59 +0000

These days it seems like most people believe that you can’t start a business without some sort of venture capital financing. Shark Tank, Silicon Valley, and most of the business publications underscore this popular premise. In fact, the business plan is now viewed as an application for venture financing. The idea seems to be, come up with an idea and get it financed, and you are golden.

But you’re not. Far from it! Now you have given up equity to raise capital that you can spend in ways that may not be necessary or effective. Now you have given yourself the false sense of security that because your plan got financing, it must be right. Now that you have secured a “runway” and “burn rate,” you attract service suppliers interested in grabbing some of that capital. They want to sell you goods and services you don’t necessarily need, including staff, facilities, and other overhead with monthly bills hungry for your money. Have you made adequate sales to justify those expenditures?

So, now you have funded your company without thoroughly understanding the sales or growth process, especially the most often overlook and underestimated expense: the cost of sales. Do you even know what it costs to make sales? And what it costs to service what you sell? Now you can get into trouble because the only funds you have are from financing …and you are burning through that at an alarming rate. Pretty soon, you go back for a second and third round of financing and you give up more of your equity.

We have heard many startup founders say, “We had to close down because we couldn’t raise additional capital.” But that’s not the real reason! They simply didn’t have sufficient revenue to achieve a positive cash flow given their hasty commitment to overhead. In other words, they focused on production and administration instead of sales.

There’s a good reason why VC’s look for returns that are ten to twenty-five times their investment. They are losing on nine to twenty-four of their investments.

On the other hand, the startup using the Barefoot Spirit focuses on achieving a positive cash flow much sooner. It’s not as sensational as the promise of “six digits in six months,” but it is solidly based on sustainability. It’s not the glamorous rocket to the top, but it is a practical way to discover the true cost of sales before you get over-extended or commit yourself to regular monthly bills you just can’t sustain. It’s not an instant success that’s crushing it on a national scale, but it is a slow, step-by-step process that is deliberately small in scale to allow you to get the real market education you need to make sensible growth decisions and preserve your equity.

The Barefoot Spirit is an attitude and a philosophy that puts you in the other guy’s shoes at every turn. From your own people to your vendors, from your supplies to your bankers, from your distributers to your retailers – learn what they want. This is how you discover your strategic allies, be more resourceful, and save time and money. This is how you can grow your business on a positive cash flow!

The Barefoot Spirit has proof that you can do it without VC money. And you may even do it better.

In the coming months, we will be describing and advocating the Barefoot Spirit approach to starting a business. Isn’t it about time we got back to basics?

Who We Are

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

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Lines of Credit Can Help Startups Retain Their Ownership

Michael Houlihan & Bonnie Harvey — Thu, 22 Sep 2016 17:00:27 +0000

We are always surprised by the number of startups that don’t use, or even know about, lines of credit. The first thing we hear is usually, “I need more money!” Sure you do. But the real question is how to get it. Today, with Shark Tank, Venture Capitalists, and term sheets, you’d think the only way to get your business going is by giving up a big chunk of ownership. You may believe there is no other way!

There are several other ways to raise capital for your business, but they all require that dirty word that everyone seems to shun, “Sales!” Yes, sales. We found it down right shocking that out of 40 schools of entrepreneurship where we have spoken over the past three years, only one taught sales. Real sales! Not sales management, not sales projections, not marketing, but real sales, from “Get out of my office!” to “I’ll take two truckloads!” And that only happened because one of the entrepreneurial benefactors of that school said, “Hey, why don’t you guys teach sales?”

When you think of sales as a pitch to an investor, you are starting off on the wrong foot. You might start using terms like “burn rate,” as in how fast you burn through cash without income (from sales) to offset it. You might even get the idea that you have “succeeded” because you got an investor when in fact you may be a long way from a positive cash flow.

Before the investment, you couldn’t lose. Now you can lose the investor’s money. Now you can go back and ask for more because, you may think, if the investor’s in for a dime, he’s in for a dollar. But even if you do get more funding, it comes with a price. You lose more and more of your company until you are working for the VC – who now wants to sell the company the first time he thinks he can get his money back. So much for growth!

We all see so many crowd-funded ideas that never see the light of the retail marketplace. How can this keep happening? Lack of sales before their crowd-funded investment is depleted by extensive R&D and operating costs – that’s how!

So that’s why we advise our clients to get a good sales education first, before trying anything entrepreneurial. The liberal arts are a good place to start. You know, communication, history, culture, psychology, and philosophy to name a few. The human, or soft, skills along with actual sales training can make a positive difference in your business, especially in the early stages.

We also advise our clients to start small and focus on a small area. Limit your number of offerings until you have achieved positive cash flow. Find out what quirks and service requirements lie in a small market so you can take your well-rehearsed show on the road. Make sales your top priority.

If you do, you may qualify for a line of credit from your local banker. Without taking any percentage of ownership, your bank can set up a “revolving charge” so to speak, where your accounts receivable, purchase orders, and inventory are held as temporary collateral to advance funds you can use to pay your bills and grow your business. But it all starts with sales.

Sure, they’ll probably want a “warehouseman’s lien” on your inventory that gives them first dibs if you go south. They’ll want to set up a separate account to collect your receivables. But that can be done on a zero-balance, sweep basis where you only pay for what you need. And isn’t that better than giving up the ownership of your company?

Make sales. Get a “Line.” Save your ownership. Pay your bills. And grow your business!

Who We Are

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

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Social Skills Can Reduce Your Need for Cash

Michael Houlihan & Bonnie Harvey — Thu, 28 Jul 2016 17:00:07 +0000

Business owners want to know, “How do I raise more money?” We ask, “Why do you need more money?” The answer is usually, “To pay my bills” or, “To grow my business.” But we have found that more money may not be the answer. What if you could get more investors, increase your credit limits, extend your terms of payment, and close more prospects – all by using better social skills?

By developing and using good social skills you can reduce your need for capital. Conversely, poor social skills will increase your need for cash. Why? Because people simply don’t know you, like you, our trust you enough to take a chance on you. And people are ultimately making the decisions… not algorithms!

Here are a few examples of how poor social skills will increase your need for capital:

Increased turnover because of poor relationships, resulting in loss of knowledge, skills, and critical supplier and buyer relationships.
Increased need for prospects, because you will be closing (or converting) less.
Reduced opportunities to extend lines of credit because of poor communication.
Everything you want to do takes longer because of lack of cooperation.
Reduced knowledge of your industry because folks simply don’t want to talk to you!

Have we become so dependent on email, social media, and texting that we have forgotten how to communicate in real time? Are we so afraid of personal rejection that we need that constant security “screen” that gives us the lag time to ignore, delay, or delete any uncomfortable or negative communication? Are we afraid to face a person in real time because we may not have all the answers they want? If any of this sounds familiar, get out your wallet! You’re going to need a lot more money!

Perhaps, instead of asking for more money, you should be asking “How can I improve my real time, face-to-face communication skills with vendors, suppliers, employees, and buyers? How can I improve the first impression I make with total strangers in real time?”

Not too long ago before email, social media, and texting, the Baby Boomers had to do their communication in real time. Just imagine! Phones were used only for verbal, real-time communication; meetings were in person; sales calls were in person; and suppliers gave credit if they felt you were trustworthy based on your face-to-face meetings! Personal relationships built trust, and business relationships are built on trust.

So how did these Boomers build the greatest economy, the greatest infrastructure, and the highest standard of living the world has ever seen? They did it by building trust through real time relationships. What are the social skills that made them so powerful and effective in real time? Basically they practiced what we call today the Humanities (AKA the Liberal Arts or Human Studies). They learned how humans tick! They learned through formal education, their upbringing, or just plain hard knocks!

We speak internationally at universities that teach entrepreneurship. Each school of entrepreneurship comes from a different place. They come from the school of business, the school of technology, and from the school of engineering or agriculture. But all have one purpose, to teach their students how to succeed in their own businesses.

Students ask us, “What else should I be taking beside business courses to be successful?” We always answer, “Communication, Psychology, Philosophy, Social Studies, History, Culture, Religion, Literature, and Political Science.” Why? Because it is through the mastery of these Human Studies that you will be better prepared to conduct more fruitful, real-time conversations that will save you money, time and effort. It is through these Human Studies that you will be able to turn real time into real money!

Who We Are

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

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Do You Need More Money – Or Improved Relationships?

Michael Houlihan & Bonnie Harvey — Thu, 16 Jun 2016 17:00:55 +0000

A common lament we hear from startups is, “If I only had more money!” or, “I would have succeeded but I was undercapitalized,” or even, “I ran out of money!” But what is money but trust in the form of investment? Someone is taking a risk on you. Money without trust can be very expensive.

The banks love it when you have to come to them to borrow money at high rates to pay for your services and supplies. When you can’t collect the money owed you before your bills are due, they are right there with short-term loans and lines of credit.

So do you really need more money? Or do you need to develop better relationships with your vendors and suppliers?

First, you build a relationship based on trust with your key suppliers. With that foundation, they will be more likely to raise your limits and extend your terms. Over time, they will realize that your success is a key to their own growth and success.

But how do you get to that level of trust? It takes empathy, communication, dependability, and good behavior – over time. They have to believe that you have their best interests at heart. That means that you must be clear about what their best interests are. Where are they going with their business? Who is their competition? Where do they want to be in five years and how can you help them get there. We chose our suppliers and vendors based on how we could grow our businesses together. We also took this approach when choosing our distributors. We offered them big discounts on volume for cash and then helped them sell it. They became loyal and we enjoyed dependable receivables.

The whole idea here is to reduce your need for cash in the first place – so you don’t have to borrow so much or so often. Ideally, your buyers pay you before your bills are due! And conversely, your bills ideally aren’t due until your incoming checks have cleared. The reality is somewhere between that ideal situation and borrowing money to pay for all your supplies and services. This is where building a strong relationship based on trust really pays off. The stronger the relationship, the less money you need! Period!

When you write a business plan, you itemize the costs you expect to pay. Then you start your business and find out costs are higher than you planned. When you itemize your receivables, they are almost always less – and received later – than you planned! In other words, your business plan is generally impractical. The day after you open your doors, it’s the cash flow projection that is guiding your business, not your business plan. Your business relationships directly affect your cash flow projection and the very survival of your business.

The sooner you get started, the better. Identify right now the suppliers and vendors you can grow with. When you grow, they grow.

But don’t leave out the magic ingredient, the foundation of trust. Let your major vendors know your plans, your directions, and the obstacles you face. Offer them long-term contracts that make them feel comfortable about helping you grow. Call in advance when you can’t make a payment and offer a plan to get your account current. Meet with them on a regular basis to review your progress and ask for the help you need – that will result in more sales for them.

Remember your vendors and suppliers will judge you more by how you behave when you’re in a pinch than when it’s smooth sailing. That’s when you show your true intentions. That’s when you show your stuff and build your trust, and that’s when you can reduce your need for capital.

Who We Are

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

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Preoccupation with the Launch Can Sink Your Entrepreneur Ship

Michael Houlihan & Bonnie Harvey — Thu, 05 May 2016 17:00:25 +0000

Just because you launched your business don’t think that’s the key to success. The Spanish launched 1,000 ships … and they all sunk in a storm! So what exactly does success look like? If you’re a ship, it’s getting safely in to port. But where’s port? And how do you get there? How do you avoid the icebergs, storms, rough seas, and pirates? And how do you keep from running aground? The answers are navigational skills. Sure, you need a sturdy ship, but success on the high seas of commerce has more to do with captaincy than shipbuilding, and it has very little to do with launching.

Today we are constantly bombarded with stories of the new business that launched this week. There’s the press release, the launch, launch party, and even the launch lunch! Seems like everyone in the startup world is always celebrating. We don’t know why. Their concept has yet to be proven. The market has yet to accept them. They are a long way from positive cash flow. And their crew (staff) has yet to prove themselves seaworthy. The business plan is about ready to be scrapped for the cash flow plan. And no acquirer is in sight. What lie ahead are uncharted waters with many perils waiting to make themselves known. What’s all the celebrating about?

Are they celebrating the fact that they raised the capital to open the doors and stay open for a quarter or a year? This is a temporary fix. Sooner or later businesses must make more than it costs them to stay in business. Are they celebrating the creation of a business that promises to change the world? Promises are not bankable.

So what is the sober approach to a launch? We think apprehension, humility, and down right fear are some good starters. We think understanding the basic navigational skills are essential. We think starting small with a careful shake down cruise to knock out the bugs is crucial. Here’s our short list of business navigational questions that beg to be answered.

The Port. Why are you launching this business? Do you want to create a certain lifestyle? Do you want to build a legacy? Or do you want to monetize on your brand equity? If it’s monetization, who are the 3-5 potential acquirers and why do they want your business? How big does it have to be before you become an acquisition target? And how long will it take you to get there? This is the port your Entrepreneur Ship is headed for. You won’t do a good job of navigation until you know your destination. Where are you now and where are you going?

The Currents. What’s going on with the market? What are the trends in your space? Can you overcome the pushback from the gatekeepers? Are you agile enough to take advantage of opportunities as they present themselves? Can you change course quickly to avoid disaster and can you recognize favorable alternatives and have them buoy you along? Can you stay the course when you own staff begins to doubt you? Do you have a map and do you know how to get though the obstacles?

The Captaincy. Can you choose the right crew? Can you orient them, train them and inspire them? Can you engage and empower them to be their best? Can you create a team that can pull together to get through the rough seas ahead? Can you “sell” your decisions to your own people? What about your vendors? Are they strategic allies? Will they watch your back? Are you willing to learn, improve, and not make the same mistake twice? Are you a leader? Can you make the tough decisions? When you have a bold new idea, will you be able to captain your shipmates, or will they move towards mutiny?

The answer to these questions and much more are waiting for you, not in the classroom, but in the board room. They are not coming to you from a professor, but from seasoned, and successful business navigators who have actually done it. We have experienced firsthand what you are about to. You can learn by our mistakes, see them coming on your own horizon, and successfully navigate around them. It cost us plenty, but it can save you time and money. Before you launch your entrepreneur ship, get the admiralty skill and experience to bring you safely to port from folks who have successfully navigated the rough waters. Don’t wind up like one of the ships in the Spanish Armada!

Who We Are

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

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New Entrepreneurs are Easy Prey for Dubious Merchants

Michael Houlihan & Bonnie Harvey — Thu, 07 Apr 2016 17:00:52 +0000

In California, we have an old saying, “The only people who made money during the Gold Rush were selling shovels!” But a gold miner needs a lot more than a shovel. More importantly, he needs a map. And the folks selling shovels can’t help with that, because if they really knew where the gold was, they wouldn’t be selling shovels, they’d be mining the gold themselves.

There are way too many folks out there today selling “shovels” to the entrepreneurial “gold miners.” They’ll help you with your website, your social networking, your on-line business, and even your pitch, as long as you make all the sales.

The idea behind the “shovel” merchants is to find folks who are excited about the possibilities, hyped up by the media, and possibly over simplifying the sales process. If you are a new entrepreneur, you may be like the miner without the map. You’ll buy the shovel because you think if you’re going to mine gold, you’ll need it… assuming you’ll find gold, that is. The merchants will load you up with goods, services and applications you think you need …everything except the map. Bonnie has an expression we think is apropos, “If we had ham, we’d have ham and eggs, if we had eggs!”

Many of the products they’ll sell you are premature for your business development, based on faulty assumptions, or down right unnecessary. Many require costly subscription fees and even require “experts” to run those services. Many of these services are trying to be all things to all people, so you wind up paying for services you will never need. Still, they require a myriad of plug-ins that work around their short comings. But what do the sellers care? They got your money and they’re down the road.

The map to the gold can only come from one source: another successful gold miner! In the case of entrepreneurship, this is an entrepreneur who has actually successfully started and run a business, and is now willing to share the secrets that lead him or her to the “gold.” These are the folks you should be seeking out – especially when you’re starting out. For one thing, they can save you a ton on premature overhead and monthly fees because they too have made those same mistakes. They will help you focus on building the true client base that justifies buying any supportive services, as well as identifying exactly what kinds of services you need, and more importantly, when.

New business owners who have recently been funded are sitting ducks for the shovel sellers who prey on those looking for the “next” gold rush. Today entrepreneurship is the next gold rush. Don’t be swept up in the hype. It’s really all about getting and keeping your customers. Take a closer look at that reality first! The tools and services won’t guarantee those customers but acquiring those customers is absolutely necessary to be able to afford taking on additional overhead. And how do you acquire those customers? Talk to successful entrepreneurs who have already done so, built their business, and even monetized their brand equity. These are the folks with the gold maps!

We can’t tell you how many failed businesses we have seen that loaded up on needless overhead before they ever made a sale and just flat out, ran out of money. Today’s access to capital through crowd funding seems to exacerbate this problem. Often, neither the crowd doing the funding nor the recipient of the funding fully understand the process of achieving a positive cash flow. They are both clouded with the hype surrounding the product or service itself, and they believe taking on major overhead is a requirement for success. So they tend not to scrutinize the investments in overhead until it’s too late!

Bottom line: Buy a map before you buy a shovel!

Who We Are

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

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7 Ways to Reduce Your Need for Capital

Michael Houlihan & Bonnie Harvey — Wed, 11 Nov 2015 17:28:09 +0000

Happy Veterans Day, everybody! Today, November 11, 2015, it is our honor and our pleasure to speak at the first annual Vets Rock event at Mohegan Sun in Connecticut. What would we share at this keynote event with more than 100 veteran-owned businesses that would be of the greatest value to them? What lessons have we learned, often the hard way, in our own business experience that they could use to improve their own businesses – tomorrow?

Of all the challenges aspiring, launch and growth-phase entrepreneurs face, the top has to be capital, or should we say the lack of it. The key to success of any business is simply making more money than it costs you to stay in business. So we decided to share how to reduce the need for capital in the first place.

Here are 7 tips that worked for us:

Discover Your Hidden Assets. What do you already bring to the table, and what can you find if you look with expectant eyes? Discover how you can repurpose something you have for something you need. Be resourceful. Solve problems creatively. We used a door for a desk and a laundry room for an office.

Identify and Work With Your Strategic Allies. Those who succeed if you succeed are your strategic allies. Learn how your products or service benefit your customers, suppliers, and the community. Find a small company you can work with that is poised to grow, and grow with them. We provided a small company called Trader Joe’s with a fun California product and together we spread across the country.

Use Your Suppliers and Buyers as Bankers. Treat your suppliers like business partners. Enter into long-term contracts so they can see a future with you. Keep them up to date on your progress, challenges and opportunities. Notify them in advance when you will be late on a payment, and show them how you will get current. Then ask for extended credit to expand your business and increase your purchases from them. We offered our buyers quantity discounts for cash.

Pay for Performance. Discover the metrics that demonstrate sales, growth, and profitability, then reward your people for achieving those goals. Keep the bonus period short term, such as every month or every quarter to keep the goals active and achievable in their minds. We matched our people’s 401K either 50%, 100%, or 150% based on quarterly achievement.

Outsource (Locally) Everything but Sales, Quality Control, and Accounting. Don’t invest in a ton of bricks and mortar or other overhead that require monthly payments whether you have sales or not. Try for just-in-time production and avoid holding large inventories. We outsourced production but held our producers to a set of quality specifications in a contract.

Reduce Turnover. The #1 hidden cost in any business is turnover. It can result in the loss of your company knowledge, supplier relationships, and even customers. The key is to hire, orient, train, and compensate properly. If you are paying your people right, the producers can’t afford to leave and the non-producers can’t afford to stay.

Reduce Your Cost of Advertising. Think about your customers as belonging to a community which is interested in more than your product. That community has needs and cause-based groups that work to satisfy those needs, such education, conservation, human rights, and support of the arts. By supporting community fundraisers and non-profits , we gave their members a social reason to buy our products.

These 7 tips can help anyone who runs a business, and we are happy to give back to our vets by sharing these lessons with them today, Veterans Day, 2015.

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