Clients | The Barefoot Spirit

The 5 Requirements We Look For in a New Client

Michael Houlihan & Bonnie Harvey — Thu, 24 Jan 2019 18:00:01 +0000

We work as advisors to help businesses monetize their brand equity. In other words, we use our considerable experience having built and sold a business to help a select group of businesses do the same. But how do we select our clients? And what do we look for?

We look for the factors that we believe are necessary for them to achieve a successful acquisition. Many entrepreneurs want to get paid for their innovations. There’s a ton of legal services out there that are only too happy to sell them patents, trademarks, and copyrights. They’ll even put together licensing agreements and provide introductions. But from our experience, the way you make the most on your concept is to wrap it in a product, wrap the product in a business, wrap the business in a brand, and build your brand to the point that it attracts your acquirer.

It involves a lot of inglorious hard work and takes longer than you think. The sales cycle alone may be more than your budget can tolerate. But if you have what it takes, it’s doable! What does it take? Well, aside from persistence, excellent cash flow management, excellent personnel management, and excellent distribution management, it takes a certain kind of business.

We can’t help everybody. But everybody we help has to succeed. Our reputation is based on it. How do we mitigate our risk on the front end? How do we know when we are looking at a business that can benefit and will benefit from our advice? These are the requirements we look for in any new potential client.

Coachability

Simply, are they coachable? Will they take advice? Will they listen and apply? Are they willing to do what’s necessary even if it’s work they hadn’t planned on? Do they have respect for the experience being shared? Are they willing to work hard and long hours and make personal sacrifices? And lastly, the most important, do they take responsibility for their own actions and that of their business?

Scalability

Is their business scalable? Is there a product, service, or application that can be duplicated and achieve an increasing volume of sales? Is their product codifiable, mass-producible, and widely marketable? Does it satisfy a market-wide need or solve an unaddressed problem? Have they distinguished themselves with a product that has little or no competition?

Seasoning

Do they have some previous business experience? Do they have experience with their own product or market? Have they either achieved a breakeven or positive cash flow yet? Do they have at least some customers? Have they learned about what changes their product needs to be more acceptable to the market? Do they understand the value of sales overproduction?

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Can their business ever run without them? Are they willing to delegate? Do they know what they are good at and what they are not? Are they willing to admit it? Have they ever considered replacing themselves? Are they writing down everything including job descriptions, policies, procedures, checklists, and sign off sheets? When they make a mistake, do they learn from it and improve their documents to make a reoccurrence less likely?

Acquirability

Are they in business for the expressed purpose of eventually selling their business? Do they know who the top 5 potential acquirers are in their field? Do they know how big they have to be to pique the interest of an acquirer? Have they researched the metrics necessary to achieve before they would be considered as an acquisition target? Can they ultimately part with their business? Do they want to sell in 2-5 years (even if it takes 10)? Will they make the strategic moves to get the attention of an acquirer?

If they have something that improves their industry or makes the world a better place, if they can answer yes to most of these questions, and if we have good chemistry, then we can make a big difference, save them tons of money and time, and relieve a lot of the fear of the unknown. We want to use our experience to help others succeed faster!

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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10 Questions Our Clients Ask

Michael Houlihan & Bonnie Harvey — Thu, 17 May 2018 17:49:57 +0000

Our clients come to us because of our credentials as the founders of the largest wine brand in the world. They want to know how we began (in our laundry room), how we were financed (we assumed a debt which we traded for wine and bottling services), and how we overcame the challenges of personnel management (we paid for performance).

All that and more is covered in our New York Times’ Best Seller, The Barefoot Spirit, How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. It contains the lessons we learned told in a humorous business adventure story. It answers the top 10 questions start-ups and business owners need to know on their way to success.

And we are really excited to announce that we are currently recording it in an audio book! Like the paperback, it will be fun. Instead of having someone read it to you, we have engaged a live troupe of actors who will dramatically act it out for you. You will enjoy the unique format and learn from their interactions. We will be releasing it in the fall!

So, here’s the short list of a few of our favorite answers to the question – “How do I…”:

1. Start a business without financing?

Trade for goods and services
Use your buyers as banker by offering quantity discounts for cash
Use your supplies as bankers by earning extended credit and terms
Pay for performance rather than for attendance
Use the assets you already have, such as a spare room, family members, or contracted services

2. Start a business with no experience in the industry?

Ask a lot of questions
Work for someone who is already doing what you want to do
Talk to everyone who will be working with your product or service
Use your suppliers and vendors as teachers

3. Find, hire, train, and keep good people?

Look for hustle and integrity
Overkill on orientation
Give them appreciation and time off
Pay for performance

4. Get my product to the market?

Start in a small area to learn your lessons
Offer samples, tastings, etc.
Ask the buyers what they need
Get the reputation, even in a small area, of being a “Hot Mover!”

5. Give my brand a soul?

Identify what your brand offers its users that they love
Identify what your brand and your company stand for beside the mercantile product you are selling
Work with your community on your shared goals
Be inclusive and earth-friendly
Treat your people right

6. Build a brand without advertising?

Donate your products or services to community fundraisers
Build brand advocates who will sing your praises to all they know
Attend farmers’ markets or other social events where your customers can be found
Do many in-store demos

7. Think outside the box?

Put yourself in the other guy’s shoes in every position of responsibility
Meet regularly with everyone on your staff, with your suppliers and your buyers and ask them what their challenges and goals are
Be open to new ideas, especially those that seem to be contrary to your own
Practice “Know-the-Need” instead of “Need-to-Know”

8. Get the most out of my people?

Use performance-based compensation and share the wealth
Share information freely; share your goals, challenges, and opportunities
Give employees your respect by asking for their feedback and advice
Acknowledge their successes in writing and copy the entire staff

9. Use outsourced services?

Communicate your needs clearly and in writing
Pay only if your project has been completed to your specs
Oversee their work on your project to assure quality control
Look for long term relationships

10. Sell my business?

Talk with a business broker who recently was involved in a sale or purchase of a business like yours
Put your peanut in front of the elephant
Work towards the metrics required to become an acquisition target and ultimately monetize the brand equity you are building
Organize your filing system according to your future acquirer’s due diligence

As advisors, we help our clients identify and move toward their goals. We learn about their business, their challenges, and their opportunities. Then we meet with them regularly to help them stay on track. They get the many benefits of our 20 years growing the Barefoot Wine brand. We learned a lot of lessons – most of them the hard way!

You too can benefit from the knowledge we gained without having to go through the time, mental anguish, and money that it took us. Think of it as saving $300,000 or more on mistakes and 3 years or more in wasted efforts. Here is to your success!

Who We Are

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

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Are Conferences About to Change …Again?

Michael Houlihan & Bonnie Harvey — Thu, 05 Apr 2018 17:00:20 +0000

Would you pay $299 or more to attend a two-day conference to listen to 10 speakers selling products from the stage? We wouldn’t and there’s a growing audience rebellion brewing out there that agrees. In the future, it will become harder to fill your conference seats when your audience is just sitting there waiting for the hook, the “gotcha,” or the ask. Why pay to subject yourself to an advertising campaign? Shouldn’t they be paying you?

Four years ago, conference organizers would tell us as speakers not to sell from the stage! We didn’t and never have. Our goal has always been to educate and entertain our audiences with the hard lessons we learned building an international brand using resourcefulness, cash flow management, employee engagement, and strategic alliances. Our goal has always been to send the audience home with effective tools they can use in their business today. We want our audiences to thank the conference producers for providing those tools.

Over the past year we’ve noticed a big change. Now, most conference producers are operating on a model that basically “sells” their audience to their unpaid speakers. Now, these producers actively promote platform selling by their speakers to their audiences who have paid to attend their conferences. Imagine, free speakers plus income from attendees! When we point this out, they’re always quick to say that they are creating networking opportunities for their audiences and speakers. But how much longer will audiences pay to be treated like prospects?

We believe audiences attend conferences not just to network but to learn new strategies and techniques they can use in their businesses. We believe they can “smell” an upsell 20 minutes away. We believe upselling speakers creates a kind of anxiety as the audience is expecting to be teased and have key pieces of information withheld from them unless, of course, they pay more to get it. Now their conference ticket just buys them a pitch.

More new conferences are popping up every day trying to use this pay-to-be-upsold model. “Why should we pay speakers,” they say, “when we have a whole stable full of free speakers?” The fact is, there are no “free” speakers. They may not charge the producers for their talk, but they are hoping their audience will buy their services instead. When an audience is used like this, are they more likely or less likely to return next year?

Today many so-called speaking coaches are quick to jump on this bandwagon. They advise their speaking clients to sell their services from the stage. This advice is based on the idea that their clients are not professional speakers but are merely using the stage to sell something else to a sequestered audience.

Think about the last three conferences you’ve attended. Does any of this sound familiar? Do you need more people soliciting you? Do you need more emails from their sales campaigns in your inbox? Or do you want to get value for the money you paid to attend the conference?

We think you should get information that is of great value to you. It won’t happen unless you complain about platform sales or simply vote with your feet. Let’s go back to paying speakers on the condition that they don’t perform platform sales and that they deliver valuable and usable content in return for their fees. Let’s get more speakers who have actually done what they’re talking about instead of those who’ve created a new word, written a book about it, and were a bestseller on Amazon for 2 ½ seconds.

When speakers only speak for fees, they have a financial interest in delivering value. They don’t tease, scare, or hold back. They must perform, or they won’t get paid again. Speaking is their real job. It’s what the audience is paying for. Right? If you are a speaker, a conference attendee, or a conference producer, let us know your ideas on this subject.

Who We Are

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

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3 Ways to Prevent Growth from Killing Your Business!

Michael Houlihan & Bonnie Harvey — Thu, 25 Jan 2018 18:00:50 +0000

Expansion, growth, or build-out phase, whatever you call it, it is the most perilous time for your business. This is ironic because the perception from outsiders is that your business must be doing well because it is expanding! But it’s the expansion itself that can collapse your business.

Before you entered the build-out phase, your business had finally achieved its first level of precarious sustainability. You could finally pay your bills, not with investor’s money, but with revenue! Imagine that! You had finally achieved a few big clients who were making you cashflow positive for the first time since you launched your startup. You had built your business up to a point where you had proven your market proposition and some degree of stability did result, if only for a while.

It wasn’t long before you realized that the few big clients you were so proud of and dependent upon actually had you over a barrel. All your eggs were in one basket. Any one of those big clients could dictate terms or worse, stop buying and put you out of business right then and there. Lucky for you, you listened to your accountant and your salespeople who agreed that you were in a compromised position – until you got some new clients to mitigate the risk of coercion or financial disruption.

So, you decided to expand. You decided to get more customers so no one customer could hold you hostage. You decided to protect your revenue with more sources of income. And then what happened? You hit the wall! Like so many other build-out businesses, you were hit with costs and overhead you hadn’t seen coming. You found out the hard way about the cost of sales. Not the cost of goods. But the cost of sales!

We have found it to be the number one underestimated cost in business. Before the build-out expansion phase, these costs were spread out and absorbed under general “overhead.” But once you start moving into new markets, these costs make themselves known in no uncertain terms.

Suddenly you feel stuck. If you borrow money to expand, how long will it take to pay off the loan? If you sell equity to expand, how much control will you have to give up? And more importantly, what are the costs of expansion anyway? And are they the same in all markets? How can you know them ahead of time? And can you cashflow your way to achieve expansion?

The implications of growth are many. Here are 3 ways to survive this Build-out or Blowout challenge to your business:

Supply. You are going to need extended credit and terms from your main suppliers. They are more likely to extend them to you if you have developed a collaborative relationship with them during your Build-up phase. You have demonstrated empathy for their position by warning them ahead of time when you would be late or short on your payments. You have presented and executed payment plans to become current. You have shared your growth plans with them on a quarterly basis. You have entered into a long-term contract to give them the security that you will remain their loyal customer even after you get large. You have done these things all along, right?
Sales Cost Analysis. You have hired a cost accountant who has identified not only the cost of sales, but the cost of sales in various different markets. They have advised you about the profitability advantages of certain markets. You have heeded their counsel with an expansion plan based on a cashflow growth strategy. You have entered the most profitable markets first, the ones that cost you the least to compete in. You and your cost accountant have identified all the costs of sales, and how they differ from territory to territory. These include, but are not limited to, taxes, fees, transportation, advertising, promotions, customer service, representation, merchandising, presentations, discounting and so on. You don’t expand into the next territory until the first territory pays for itself. Right?
Compensation and Incentives. You have finally figured out that you can’t expect growth by paying your salespeople strictly on volume. In fact, you really can’t grow without a new compensation package based on new, higher goals every year. You have identified what growth means in terms of practicality and business health, and now you have developed the metrics that reward your people for growth and new markets and reorders. You have also set incentives in place for the other folks not on your payroll who can aid your growth. You’ve decided to take a smaller slice of a larger pie, haven’t you!

Of course, there’s a lot more to this tricky expansion business. The main thing is to not over extend yourself, make strategic alliances, grow slowly, and notice what it costs to actually make a sale, service a sale, and keep the sales coming. Work with a cost accountant and your suppliers, and follow a sensible strategy and you can build-out and not blowout! You can do this, right?

Who We Are

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

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7 Ways The Gig Economy Affects Your Business

Michael Houlihan & Bonnie Harvey — Wed, 27 Dec 2017 18:18:47 +0000

Most startups fail because they have too much overhead and not enough sales — period.

In fact, in our program, The Barefoot Startup, we advise our clients to outsource everything but sales, accounting and quality control. Overhead expenses are earned by sales, not the other way around.

We recently had the pleasure of attending the Conference on The Gig Economy hosted by the San Francisco Chapter of the Global Chamber of Commerce. The chamber is keen on keeping its members abreast of the latest developments in the international trade space.

What we enjoyed the most was the first panel discussion that included leaders from government and industry, large and small, who focused on their experience with contingency, or “gig,” workers. It was an eye-opener and has special significance for startups looking to reduce their need for capital to cover overhead by outsourcing certain kinds of work.

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.

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7 Aspects of the Gig Economy

Michael Houlihan & Bonnie Harvey — Thu, 23 Nov 2017 18:00:45 +0000

Most startups fail because they have too much overhead and not enough sales – period! In fact, in The Barefoot Startup, we advise our clients to outsource everything but sales, accounting, and quality control. Overhead expenses are earned by sales, not the other way around!

We recently had the pleasure of attending the Conference on The Gig Economy hosted by the San Francisco Chapter of the Global Chamber of Commerce. The Chamber is keen on keeping their members abreast of the latest developments in the international trade space.

When you think of gig work, names like Lyft and Uber naturally come to mind with all their legal issues that continue to unfold. The conference did a great job of exploring those issues and the ramifications to its members and attendees.

What we enjoyed the most was the first panel discussion that included leaders from government and industry, large and small, who focused on their experience with contingency, or “gig” workers. It was an eyeopener and has special significance for startups looking to reduce their need for capital to cover overhead by outsourcing certain kinds of work. The panel thoughtfully examined several aspects of gig work and the implications businesses should be aware of.

Batch Work. Because these folks are working on a temporary basis, it’s best to give them work that has a beginning, a middle, and an end. Be clear about the parameters, deadlines, and formats.
Free Agents. Since they work for many clients, they have to shuffle priorities. Make sure your work is on their priority list. Also, be aware that you can lose them after you have invested training time.
Timing. They may work in different time zones making real time communication difficult. They may choose to work when they want. You may have to accommodate their existing schedules to get your job done.
Legalities. There appears to be a fine line between independent contractors and full-time employees. It’s still being adjudicated all over the world. Different countries have different laws one must be aware of. Generally, the more restraints you put on gig workers, the more likely they are to be considered employees. For those who are employees, the governing bodies want insurance, and taxes and employer contributions – and the battle goes on in each jurisdiction.
Up-To-Date. Gig workers tend to be more current on their job skills and stay on top of the latest unfolding technology, even more so than your own employees who, over time, may become lax in updating their education.
Cultural Impact. Contingency workers tend to work harder and faster than many of your own people. This tends to influence your folks to work harder. But on the other hand, gig workers can lack an understanding and appreciation for your company culture, policies, and procedures. They can be out of step with your people. Especially if they are working directly with your employees, this can be a problem.
Proving Ground. Many companies use a gig worker for a trial period to see if they will fit into their company as a full-time employee. It’s also a way of securing trained folks and their knowledge of your company without having to first make them an employee. This way, you get a sample of their work without a commitment.

What we like about the gig economy is that, especially for cash strapped startups, it can be an excellent way of paying for work as needed and not having to support a “payroll” that is due every two weeks whether or not you have made sales!

We advise our clients to look for the types of work that “fit” the Global Gig Economy. Be aware of the shortcomings as well as the advantages. It just may be the outsource resource you’ve been looking for!

Who We Are

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

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Why Are You Going into Business?

Michael Houlihan & Bonnie Harvey — Thu, 10 Aug 2017 17:00:59 +0000

The first question we ask prospective clients is, “Why are you going into business?” This seems like an obvious first question, but most folks considering taking the big leap don’t really give it the attention it deserves. The answer can determine your strategy, goals, and even your recordkeeping.

When we ask, “Why,” we usually get answers like, “Well, to get rich, of course!” or “It’s always been my passion” or even, “I’ve always wanted to be my own boss”. Yet none of these popular answers really address the only three practical reasons why you can be in business: You can create a job for yourself; you can start a legacy; or you can build a brand and monetize its brand equity.

If you create a job for yourself, your “paycheck” is only as good as your time “on the clock.” If you don’t work, you don’t get paid. Sure, you can hire people to work for you to keep the business going in your absence, but this type of business is limited to trading time for dollars. You may build up some equity which someone may pay you for. But essentially, you have created a business that is operating on daily income and profits, with no long-term plan to monetize the brand equity through a sale or merger.

People who choose this kind of business usually tell us they are following their passion and well they should. But many also say they never want to sell and act like they can go on forever. If and when they do decide to sell, it’s usually because they have to due to age or health, or they finally tire of the work. Selling for them is an afterthought to achieving a business that expresses their passion.

The other group that “has no intention of ever selling” are the folks who think they are starting a legacy. Their plan involves their kids becoming vested in their business and wanting to continue their legacy. This is a wonderful way to include your family’s future in your business. But only a small percentage of planned legacy businesses succeed beyond the first generation.

The last group, in which we count ourselves, is interested in monetizing their brand equity. They want to use their ideas, concepts, and products to build a viable business that attracts an acquirer. They take acquisition of their business very seriously.

These are the people we can help the most. These are the kinds of businesses that are designed from the get-go to have all the hallmarks of an acquisition target. They grow into something saleable. They can run without the owner. And they are set up from day one to satisfy their acquirer’s due diligence.

One of the guiding principles of the Barefoot Spirit approach to doing business is to ask yourself why you are in business in the first place. If your answer is to build and monetize your brand equity, then you must assemble a short list of who would want to buy your company, why and when. You must organize your books, records, and reports to reflect your acquirer’s due diligence. You must reinvest your “profits” into expansion. And you must determine how, when, and where you expand to get your peanut in front of the elephant. We share what we learned about this fine art in our Guiding Principles for Success.

We’ve been through it, from ideation to monetization. These are just some of the business decisions that become heavily influenced by your early decision to eventually sell. if monetizing your brand equity is why you are going into business, we can help!

Who We Are

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

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10 timeless lessons about business from the founders of the biggest wine brand in America

Michael Houlihan & Bonnie Harvey — Thu, 05 Jan 2017 16:37:40 +0000

Last month I had the pleasure of interviewing Michael Houlihan and Bonnie Harvey, the founders of the world’s most popular wine brand, Barefoot Wine .

What’s most humbling is that they had absolutely no idea what they were doing at first.

From the start, with virtually no money and no wine industry experience, they had to employ innovative ideas to overcome obstacles, create new markets and strategic alliances.

Having learned the hard way, Michael and Bonnie fell forward into success.

The lessons they taught me were invaluable.

1. Stop thinking about following your passion, and start thinking about following opportunity passionately

Michael and Bonnie had absolutely no experience in the wine business. They were both business coaches who happened to have a lot of clients in the wine business. One of their clients was a grape grower, and this grape grower hadn’t been paid by a particular client for three years. Michael went straight to the delinquent company to collect funds for his client, only to find out that the company was bankrupt. Makes sense why they couldn’t pay!

To read the complete article, please visit The Business Journals

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9 Ways Consumer Products Are Discontinued Right After They Are Approved

Michael Houlihan & Bonnie Harvey — Thu, 23 Jun 2016 17:00:23 +0000

Our new clients were excited when their new consumer product was approved for one of the outlets in a big national chain. They were thrilled with their “success” and were entertaining visions of their product taking off in the multi-store chain. They would sell in quantity, collect from one entity, get national exposure, and show the other chains the validity of their product! What an opportunity!

So why weren’t we equally excited? Our experience building a national brand had sobered us to the stark, cold realities. We didn’t want to pop their balloon, but we also didn’t want them to fail. Our response was “Now you’ve got some serious work to do!” Then we spent some time explaining the actualities of the situation and all the implications, good and bad.

On the good side, they have achieved an opportunity to demonstrate massive sales and customer demand. They would be golden if the local manager who allowed them in her store would recommend them to others in the chain and possibly to the regional manager. If they went on to perform as well regionally, they have a good chance of going national, and possibly becoming part of the national chain’s “set” (the approved diagram for product positions on the shelves of all their stores). YAY!

The key is if they can quickly demonstrate massive sales. Remember, sales to a buyer means scans. The buyer only sees the screen in front of her, not the back room, not the programming, not the shelf, and not the condition of your package, signage or pricing. Just the number of scans. Mistakes can be made that can result in “reasons” why your product is not scanning. The buyer doesn’t care. She just sees scans.

Here’s our checklist of typical sales stoppers new startups are generally unaware of, but successful producers learn sooner or later:

Backdoor scan number. If it’s a test market, then the UPC and other tracking numbers may be entered manually. One digit off at the back door will result in product rejection and the buyer will see no “sales,” or scans.

Reorder scan number. If the reorder “ticket” that fits into the pricing slot under your product is wrong, missing, or upside down, your product will not be reordered, resulting in fewer sales.

Pricing Tag. If the invoice was wrong or misread, the price will be wrong on the shelf and your consumer won’t buy it because it’s too expensive.

Out-of-stock. If it’s not on the shelf (because it’s not delivered, or it’s still in the back room, or it sold out and was not quickly reordered), it is not available for purchase. Now your customer thinks you are unreliable, and the store buyer sees a slow mover.

Front Door Register Scan number. With any test market item, manual input is subject to error. Even though it’s scanning at the register, if there was an error in the entry, your sales are credited to another product.

Blockades. Someone put the potato chip stand in front of your products. They can’t be seen, or, consequently, purchased.

Label damage. Poor handling or outright competitor sabotage result in damaged labels, stopping sales because your product looks like damaged goods.

Adjacencies. Your product looks too expensive compared to the products surrounding yours.

Shelf Position. You are on the bottom and can’t be seen. You are new on the shelf and overlooked.

Notice that none of these has to do with your wholesale price, package, marketing, quality, or wholesale availability. Yet they can result in a reputation as a slow mover or non-starter, concluding in a discontinued item.

If you fail in the test market, you are permanently exiled from the chain! So when you get that big break, it’s “ALL HANDS ON DECK!” Focus as many people as you can on the “test” stores. You will be amazed at the number of sales stoppers you will find and fix –IF YOU ARE PHYSICALLY THERE!

Who We Are

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

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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.

The post Premature Infighting Over the Divvy Can Result in Nothing to Divvy appeared first on The Barefoot Spirit.

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