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How to Overcome the Challenge of Perceived Value

Michael Houlihan & Bonnie Harvey — Wed, 31 Jan 2018 01:49:52 +0000

It’s really hard to give folks a good deal. This is especially true when your price matches a point that is not known for high quality.

We ran into this perceived value challenge when we started Barefoot Wine. Our concept was to produce a product that delivered the value common at the $10 price point for $5.

Seems like a slam dunk, right? Wrong.

We were up against the perception that anything at $5 had to be mediocre because the vast majority of the choices at that price point were just that: mediocre. Their producers would say, “What do you expect for five bucks?” And we were thrown into that same boat.

Never mind that we won gold medals and Best of Class in open pricing competitions, and we were written up for quality in all the industry journals. “It can’t be any good at $5,” we’d hear.

To read the complete article, please visit The Business 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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Taking the Inc. 500 Survey is an Eye Opener

Michael Houlihan & Bonnie Harvey — Thu, 24 Aug 2017 17:00:00 +0000

Is there a set of characteristics all entrepreneurs share? What differentiates them from other folks? Below are the questions asked in the September issue of Inc. Magazine. In this issue, they list their annual Inc. 500 greatest and most inspiring entrepreneurs of the year.

The interviews with the entrepreneurs that made the list make it well worth the read. But the CEO surveys they ran on the new 500 are even more telling. As folks who have done it from ideation to monetization, we thought you would appreciate a brief summary and our answers to the key questions they asked.

Do you have any entrepreneurs in the family? 45% had entrepreneurial parents. 36% were the first. Bonnie’s mother had a blueberry farm. Michael was the first.

How old were you when you started your first business? 42% were under 25. 25% were 25 – 35. Bonnie and Michael were both under 25.

How much personal savings did you use to get started? 76% used personal savings. The next biggest source was credit cards. For Barefoot Wines we used personal savings, credit cards, and we also took over a client’s debt and converted it into supplies and services.

When did you start paying yourself a salary? 25% said immediately. 32% said within a year. 20% said within two years. For us it was 8 years because we put everything into growth.

What was your biggest challenge? 54% said managing fast growth. Attracting and retaining talent was the next biggest challenge. We agree. The launch is the easy part. Growth requires the right people, a cool head, and a well thought out cash flow management plan.

How much of your growth was funded internally? 40% said all internal. 34% said mostly internal. We grew Barefoot Wines without outside capital, all based on the advice of our cost accountant and judicious use of our cash flow.

Where did your company get ideas for new products and services? 35% said from their leadership team. 28% said from their customers. Only 14% said from their employees. This is where we differ. We got most of our ideas from our employees and the employees of our distribution and sales partners.

What is your primary goal? 82% said scaling. Only 14% said selling. We think the two are inseparable. You can’t monetize without a capital event, whether that’s a sale, merger, infusion, or public offering. And you can’t do any of those without demonstrating scalability.

What is the biggest danger of growing too fast? One said, “Keeping our company special as we grow.” Another said, “Making hiring mistakes that hurt your company irreparably.” And another said, “Unaddressed problems become much harder to solve later.” We agree with all these answers. Our biggest challenge was moving into new territories before we knew how to properly service the distributors, retailers, and our end-users.

Do you think tech companies are being overvalued by Venture Capitalists? 66% said yes. We agree. The inflated values are creating the self-fulfilling hype that caused the last bubble to burst.

Have you ever turned down VC capital? 51% said yes. We think this is wise. Most VC’s are looking for short term returns. They can force a premature sale just to get their money back. They can take so much equity, you wind up working for them. Focus on sales, work with your suppliers to extended your credit, and work with your bank on a line-of-credit based on receivables. Choose the “get rich slow scheme” and own it all when you cross the finish line!

Who We Are

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

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3 Big Throw Downs Challenge Today’s Grads

Michael Houlihan & Bonnie Harvey — Thu, 25 May 2017 17:00:56 +0000

We are excited to go to a friend’s graduation who just completed his Masters in Engineering from Stanford. When we asked him what he was going to do with it, his response came lightning fast, “I’m going to extend the range of electric vehicles another 200 miles!”

Now that’s the kind of goal we wish all the grads had – a goal that positively impacts the quality of life for generations to come. As much as we would like to think people will do the right thing to protect the future of the planet, many people are simply looking for a quick financial gain. Never mind that it’s clearly costlier in the long run to keep burning fossil fuel and poisoning the ocean, people want to see the immediate benefits.

A 400-500 mile range electric vehicle would provide immediate benefits, not because of politics, not because of concern for the environment, but because of market forces. The big challenge for today’s college grads is to discover ways that pay off immediately to compel consumers to make the right choices.

Better Batteries. Today’s younger generations are inheriting a power grid that fosters monopoly and extortive billing practices. For instance, we buy electricity from our local renewable power district to augment what our solar panels produce. But another company that owns the infrastructure charges us exorbitant monthly fees to be connected to their grid. Consequently, our electric bill has tripled!

Several states in the US are so dominated by the power companies that their pricing structures discourage home owners from installing solar collectors. And these are sunbelt states, perfect for generating solar power! So, what’s the challenge here for grads? Create products that store enough power to allow homeowners to cut the cord to the greedy power companies and be independent. Can today’s grads create local, affordable, and sufficient power storage?

Bio-Degradable Packaging. In the classic 1967 movie, The Graduate Mr. McGuire takes Ben, the graduate, (Dustin Hoffman) aside to advise him about his future. He says, “I just want to say one word to you, just one word … Plastics!” In 1967, the plastics industry was heating up and soon seemingly everything was made of plastic. …And it wound up in our oceans, in our fish, and in our bodies.

Maybe now the advice should be “bio-degradable packaging.” With the explosion of individually packaged home-delivered items, we are drowning in foam peanuts, plastic blister packs, and bubble wrap. Can our new grads create a cheaper and healthier alternative?

And what about the oceans? Can the grads develop a profitable way to harvest the plastic that’s floating around and keep it out of our food supply? Can they create a demand for this type of plastic that makes dollars and sense?

Sustainable Food. With 7.5 billion people on the planet, the food business is a good bet. But what kind of food business? We obviously can’t continue to destroy the world’s lungs to feed the world’s belly. The destruction of the oxygen producing rainforests for grazing lands is not sustainable, nor is it ultimately affordable.

We need to develop locally sourced food supplies that are sustainable. They need to compete economically with fossil-fuel-intensive global sourcing. This will mean food production close to, or in the cities, reducing the cost of transportation significantly. Can the grads find ways to make this more affordable? Can they create market forces that favor abundant, healthy, and delicious food locally produced?

Congratulations to all the grads out there. You have a lot of challenges. The whole world is watching to see what solutions you come up with. So get to work!

Who We Are

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

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Ask the Right Questions to Get the Right Answers

Michael Houlihan & Bonnie Harvey — Thu, 07 Jan 2016 18:00:41 +0000

Last week we had the honor of hosting 21 undergraduate students from the Minor in Entrepreneurship (MiE) program at Nanyang Technological University in Singapore. For most of them, this was their first time in the US. They went on to visit the great entrepreneurships in Silicon Valley, but our home was their first stop.

This would be their first impression of America and American entrepreneurship, so we had to set the tone for their visit and lay the foundation to interpret the keys to successful entrepreneurship.

We decided to start with the basics by asking key questions and giving them the three core competencies necessary for success. We examine these critical issues in depth with plenty of examples and stories in our new full length course (The Entrepreneur’s GPS) designed for aspiring, startup, and growth-phase entrepreneurs.

Here’s a brief summary of some of the questions we posed in the live, in person seminar we put on for the Nanyang students:

Why are you starting a business anyway? Are you looking for a lifestyle, a legacy, or are you building a brand that you will one day sell? If it’s the later, that goal will have a great bearing on how you organize, strategize, and grow your business. It will greatly influence your decision-making process.

How will you pay your bills? Cash flow management is absolutely crucial to the survival of any successful business. You simply must make more than it costs to stay in business. Not only that, but you must find ways to reduce your need for cash through resourcefulness, strategic alliances, and fostering critical relationships that build trust.

How do you engage your people? The hiring process is the most important part of this process. We shared what to look for in selecting new hires and how to orient them to understand exactly how their job makes a difference in sales, the overall security of the company, and ultimately the security of their own job. We discussed how to pay them, acknowledge them, and get their insight to solve problems.

How do you get your product to market – and keep it there? In reality, this is the biggest single challenge a new entrepreneur will face. A popular misconception is that price, quality, and value alone will do the trick. It’s just not so! What does each person who touches your product really want? It may not be what you think. And are you ready to do their job if necessary? Who are the real owners of your brand?

All these questions and more must be answered correctly by every successful entrepreneur. When you see a big, successful company, remember, they weren’t always this way.

We tasked the Nanyang students to look for how each of the successful companies they would visit actually answered these questions. We did not give them all the answers, but we did give them most of the important questions. We hope they enjoy and learn from their exposure to successful American Entrepreneurship.

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.

Who We Are

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

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Scarier Than Halloween! Creepier than a Crypt! It’s a Ghost! It’s a Goblin! No, It’s Entrepreneurship!

Michael Houlihan & Bonnie Harvey — Thu, 22 Oct 2015 17:00:01 +0000

For the past few years now we have been speaking at universities that teach entrepreneurship in one form or another. The reoccurring question regularly asked by millennials aspiring to become entrepreneurs is: How do you prepare for the unknown?

This is a great question because it is the most unnerving part of entrepreneurship and distinguishes it from a 9-5 job. Sure, a job may seem stable and dependable, but if the entrepreneur who hired you suddenly goes out of business, then you are suddenly unemployed. The millennials saw what happened in the recession when their parents were laid off, so they don’t put a lot of faith into their own security with the big corporations like their parents did. They’d just as soon take their chances on their own and at least have some say over the risks involved. We salute them for this! We love working with millennials, because they’ve got guts!

Still, we can hear the anxiety in their voices. We have asked ourselves the same questions. But what do you do about the unknown? How do you prepare for it?

Yes, you are entering a dark and creepy tunnel, but with the right tools you can be ready for just about anything. Just like a sea captain doesn’t know what to expect out there on the unpredictable ocean, but he is prepared with training, relies on standards, adheres to principles, and uses tools to get safely to port.

For entrepreneurship, we like to say you need a hard hat, a compass, and a flashlight to get through that unfamiliar tunnel.

The hard had is a set of attitudes that keeps you positive when the unexpected pops up or falls out of the sky. It’s really how you think of the challenge by taking the 10,000-foot view. The fastest way out of the box is straight up! Up there you can see the other folks that are effected by the same dilemma, discover your natural allies, and look for an elegant solution that solves more than one problem. If you take this big-picture approach, the pop up ghosts aren’t so scary.

The flashlight is to see your way down that dark tunnel and to light up the challenges and opportunities in front of you. Illumination can help you better understand what’s going on. It doesn’t solve anything in itself, but it does give you a better idea of what’s ahead. Illumination reveals the various parts of the challenge, making the solution more discoverable. What is that flashlight exactly? It’s research, asking questions, learning from your mistakes, and it’s the confidence that you get when you can see what you are faced with.

The compass is the set of guiding principles that act as the standards you rely on when making decisions. These are the business philosophies that you believe in, and the principles that build the foundation of your company. You carry these standards with you into the unknown, giving you the confidence to handle just about anything. The main guiding principle is put yourself in the other person’s shoes. From that position, you can discover what others want out of the situation, and once you know that, you are more prepared to get their attention, cooperation, and ultimately their support.

Fear of the unknown can paralyze you. The more you prepare yourself for it, the less scary it becomes. So for Halloween, we offer the millennials a real “Ghost Buster,” the Entrepreneur’s GPS. Check it out! And Happy Halloween!

Who We Are

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

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Success Requires Diligent Preparation and Commitment

Michael Houlihan & Bonnie Harvey — Thu, 09 Apr 2015 17:00:25 +0000

“Luck is what happens when preparation meets opportunity,” is a quote from the mid-1^st century Roman philosopher, Seneca. The idea that success is a result of chance, or luck, is not only disempowering, but simply false.

When people say we were lucky to have built such a successful brand, we have to stop them and say, “Luck had nothing to do with it!” But yes, we were fortunate to have had the opportunity to apply our skills and hard work to create a successful brand.

We prefer the word “fortunate” to “luck” because “fortunate” implies participation and “luck” implies a random gift that could be given to anyone. If luck is the reason for success, then why work so hard?

Opportunities present themselves to everyone every day. But we don’t take advantage of them because we are not interested, not prepared, or don’t see them as real opportunities. If you are not looking for an opportunity you won’t see it even when it’s right in front of you. If you aren’t prepared, or as we say, “dressed for success,” you won’t be able to take advantage of opportunities that you do see.

We love Zig Ziglar’s great story about the time he was driving through the country and stopped to watch a man fishing in a stream. Zig struck up a conversation and discovered he was fishing for his family’s dinner. All of a sudden the man pulls out a giant fish! Then, to Zig’s surprise, he unhooks it and throws it back into the water. Zig says, “Why did you throw that big fish back?” The man answered shaking his head, “I only have this itty bitty frying pan.”

Preparation is necessary to spot opportunities and take advantage of them. You are fortunate to have had the opportunity, not lucky. Your commitment to do whatever it takes however is wherein the real success lies.

We have seen many brands come and go in the marketplace. Some even came back and were eventually successful, such as Corona Beer. The first time it was on the market, the producers recognized an opportunity for a new style of label that was printed on a clear glass bottle. Still, sales were slow.

This first attempt soon lost distribution and it wasn’t until the brand was acquired that it achieved the top national brand status that we recognize today. How did they do it? Yes, they had a unique label, but Corona Beer was successful due to hard work and diligent merchandising. They did what they had to do.

We tell our clients, audiences, and marketing and entrepreneurship students that the real challenges to building a successful brand involve work in areas that you are not prepared for, will take longer than you planned, and will cost many times more than you thought. It did for us.

We thought our wine business had to do primarily with wine, but it didn’t. It had to do with visiting retail stores on a regular basis all over the country. It had to do with preventing out of stock situations at every level of the distribution chain. And it had a lot to do with building personal relationships. We could have been selling hammers. But whatever consumer product you are selling, success requires tenacity, humility and flexibility to do all the jobs necessary, even the “dirty” ones, to attain and keep distribution. Does this sound like “luck?”

We are all fortunate to have opportunities come our way. But when we recognize them, are prepared to take advantage of them, and are willing to do what it takes to bring them to fruition that is not luck – that is hard work.

Who We Are

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

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Blaming Others Prevents Corrective Action

Michael Houlihan & Bonnie Harvey — Sun, 31 Aug 2014 01:52:42 +0000

Behind many seemingly outside problems are inside solutions. But with your ire focused on the other guy, you can easily overlook what you can do to mitigate the situation. “It not our fault,” becomes the order of the day with its cousin, “There’s nothing we could have done.”

When we blame others for circumstances that negatively affect our business, we are disempowering ourselves and our people from finding solutions to the problem.

Sure, it was easy to throw our hands up in the air and point our finger at the other guy. But we encouraged our people to take that pointing finger, swing it around until it pointed right back at us, then ask, “What can we do to prevent this from reoccurring?” We found that somewhere in our own files were written documents that needed to be changed, updated, or newly created. Making the problem less likely to reoccur was what we were aiming for. We call this philosophy, “Aim, don’t blame.”

Instead of playing the victim, we took the situation as a challenge and somewhat of a game. How could we better clean up our own backyard? The winner finds the documents, makes the changes, and circulates the new procedure for handling the events leading up to the mishap. Then we are thrilled that we now have a better approach, and that this problem is far less likely to reoccur.

We found that most problems are caused by miscommunication. In other words, one party, either on our end or the company with which we were doing business, just didn’t quite get it. This really wasn’t all their fault, and we could reduce the chances that our communication to and from them would be misinterpreted in the future by refining our own procedures and documents.

Yes, when our company was new, we did our share of blaming. It was somehow comforting that we had nothing to do with it and that it was off our plate. But our customers still held us responsible. They didn’t care who was at fault; they just wanted value for their money.

Sometimes we lost sales because of the behavior of people outside of our company who handled our products. For example, truckers who worked for our buyers would occasionally forget to make appointments with our warehouse manager, resulting in them being unable to pick up our products. Then they would drive all the way back across the country to their destination, empty! We would be out of stock for weeks in that market.

At first we blamed them, but eventually we aimed at our own procedures and found that we needed to check in with our buyers’ ordering clerks to make sure they received the order from their purchasing agent. Then we needed to confirm that the trucking company’s dispatcher got the order from the buyer’s ordering clerk. We then checked in with both the dispatcher and driver to make sure they received the order, scheduled the pickup, and made an appointment with our warehouse manager to pick up the goods. Lastly, we made sure that our warehouse manager had the purchase order, and had the appointment scheduled.

Whew! Seems like a lot of babysitting, but it eliminated that particular reason for out-of-stocks. There were tons of other examples, but you get the idea. By focusing on how we could improve, we stayed empowered and in control. After all, we weren’t helpless, and there was no victory in being a victim.

You will be surprised how much control you really have when you “Aim, don’t blame!”

Who We Are

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

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