Distribution | The Barefoot Spirit

Americans are Getting a Crash Course in Distribution Management

Michael Houlihan & Bonnie Harvey — Sat, 03 Apr 2021 15:07:27 +0000

As consumer-packaged-goods (CPG) brand building advisors with real-world experience on how to build a successful brand, we are taking a special interest in the formidable challenges governments and private companies face in trying to manage the distribution of the Covid-19 vaccine. There are important lessons to be learned here.

Popularly held misconception

We tell our clients that “It doesn’t matter how great your product is, what a great value it is, or even if there is a huge demand for it, you cannot succeed if you don’t focus on distribution.” Alternatively, “You can’t get it if it isn’t there.” It’s that simple.

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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What Business Should I Go Into?

Michael Houlihan & Bonnie Harvey — Thu, 20 Sep 2018 17:00:31 +0000

Discovering Business Opportunities in Problems

We are often approached by young folks who ask us, “What business should I go into?” – as if there was the realm of all possibilities. We assume by this question that these folks have not decided to “follow their passion.” So we talk with them about how most business opportunities present themselves as solutions to problems they are personally experiencing.

“Why hasn’t anyone done this yet?” might be their first reaction. And this is where many wantrepreneurs stop. They don’t do the research to find out why. Perhaps someone else did think about it but was unable to make a profit or get it into circulation. Many great ideas are collecting dust in warehouses somewhere because they may have solved the problem, but they were unable to solve the distribution challenges.

Many young folks spend too much time perfecting their product while grossly underestimating what it will take to get it in the marketplace. They tend to take distribution management for granted. Their idea is so good, it will distribute itself! Not!

The Challenges of Selling Online

Many think that they can “just sell it online, avoid the middleman and go directly to the customer.” They might, but then they face several challenges that are generally overlooked:

First, they are making their idea and the market for it highly public before they have amassed even a small war chest to protect their idea. This opens the door to copycats who already enjoy a war chest and already have secured access to the bricks and mortar stores. They can achieve instant market penetration and outlast you in court.

Second, online sales are a race to the bottom price-wise. The first thing your customer will do is check for a lower price. Never mind that yours is the original, and never mind that yours is of high quality. They can’t physically feel it and compare it to others in a tactile way. They must buy on picture only and so price becomes the major differentiator.

Third, because you are selling onesies and twosies, direct to consumer, you will never get a big check for a massive volume from a major retailer. So you won’t be able to compete with competitors who will benefit from quantity discounts for substantial purchases.

The good news is that anybody can sell online. The bad news is that your risk of failure is much greater.

So, our answer to “What business should I go into?”

“Choose one that you can achieve distribution with.” We strongly advise a careful study of the distribution system for your great idea, even before you finish it. Why waste your time if you can’t get it to market?

We suggest you engage someone who has already successfully navigated the distribution system for your kind of product. You may be surprised to hear what they might have done differently, now that they know what was required.

A distribution advisor can save you tons of money, time, and anguish. They don’t cost, they pay!

As advisors ourselves in this critical area of business success, we caution against growing faster than you can support the cost of sales. We advise our clients to test out distribution for their great idea in a small area to discover what they really will be required to do in a larger area. That education will determine their strategy for success. And isn’t that the whole idea? Not just coming up with a great solution, but actually getting it out there and keeping it out there?

So, go into a business for which you understand the distribution. Then you can solve a problem, and we can all thank you by buying it!

Who We Are

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

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3 Reasons to Start a New Branded Product Now

Michael Houlihan & Bonnie Harvey — Wed, 20 Dec 2017 20:31:42 +0000

Are new brands getting squeezed out of the packaged goods markets?

It seems like every day there’s some new merger to further consolidate the production, distribution and retail channels. The markets are getting monopolized by a few big players with hundreds of brands.

Access to market is getting tougher and tougher. There’s less shelf space and more retailer-owned control brands.

So why do we think the time has never been better to start a new CPG brand?

1) Corporate compliance

Due to increasing litigation in the marketplace, the big boys who have a lot to lose have given tremendous power to their legal departments. “Everything has to go through compliance” is the refrain that echoes through their halls.

For all its good intentions, this trend dampens risk taking and creativity at the corporate level.

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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The 3 Core Competencies Entrepreneurs Must Master to Succeed

Michael Houlihan & Bonnie Harvey — Thu, 30 Mar 2017 17:00:04 +0000

We see too many entrepreneurs falling in love with their products and kidding themselves into believing that their idea itself is all they need to make them a screaming success. Warehouses are filled with great commercial products that never got to store shelves. Founders of promising start-ups wind up working for their investors, or worse, close their doors. All hopes are dashed and they are back living with mom. Why? Because they failed to master the three core competencies of any successful business.

Cash Flow Management. You’ve got to pay your bills! And when you can’t? You have obvious two choices. Go out of business, or raise more capital. But that comes with a price; diluted stock or loss of control. So many companies try to get financing to pay for staff without sales. They may be financed and even refinanced before they make enough sales to support their overhead. In other words, they are top heavy and reliant on multiple rounds of new investment to stay afloat. One different solution is to make sales a priority, sell in a small territory, service the heck out of it, and use the proceeds to finance growth. Another solution is to identify and forge strategic alliances with your vendors and your buyers. Vendors who trust you will extend your credit and terms to help you make ends meet, especially when they believe their business will grow if you succeed. Buyers will pay in cash for volume discounts which also help you pay the bills.
Personnel Management. You’ve got to get some help! And it ain’t easy! Probably the most important skill successful entrepreneurs have learned in their years of experience is how to hire the right people. But even if you hire well, you still have to train, incentivize, and encourage your people to do their best. It’s a tall order, but absolutely necessary. Just discovering and implementing a productive compensation system can take years of trial and error. We suggest you start with bonuses for sales, growth, and profitability. Get everybody to agree on exactly what the metrics are and how their jobs can contribute. Then offer a quarterly bonus to everyone, regardless of their job, to put them all on the same team. This builds a positive company culture.
Distribution Management. You’ve got to get your product to market! This requires satisfying several levels of distribution before it gets to your ultimate customer. This is perhaps the most important skill set new product producers overlook. They tend to focus on production and think, if their product is good enough and priced right, it will sell. But you will run into distributers who want to know what the strategic advantage is of carrying your product. Their sales managers want to know how you will help them make their numbers. Their salespeople want to know what the incentive is. The retailer wants to know how fast it turns, and his clerk wants to know why he should stock it on the shelf. Nobody but your end-user customer cares about quality or price. Everyone has their own requirements and you’d better satisfy them or you simply won’t make it to market. Distribution is more important that your product because nobody can buy it if it isn’t there!

These 3 core competencies may vary from business to business, but they generally fall in to these basic proficiencies. Master them and your great idea will be much more likely to succeed.

Who We Are

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

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5 Principles For Solving Problems

Michael Houlihan & Bonnie Harvey — Tue, 22 Nov 2016 16:22:09 +0000

When we took on the building of the Barefoot Wine brand, we really didn’t understand the problems we would have to overcome to be successful.

We had no idea how long it would take, the opposition we would face, or the enormous hurdles we had to clear in compliance, distribution, and personnel management.

Every day there were new fires that had to be put out. Every day there were unexpected bills hungry for bucks. And every roadblock challenged our very approach to problem solving.

After a while, we began to develop actual problem-solving principles that gave us structure and a set of standards we would apply to future problems. As we solved problem after problem, we slowly improved our approach to problem solving itself.

To read the complete article, please visit Business Journals

Who We Are

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

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5 Barefoot Problem Solving Principles

Michael Houlihan & Bonnie Harvey — Thu, 27 Oct 2016 17:00:37 +0000

When we took on the building of the Barefoot Wine brand, we really didn’t understand the problems we would have to overcome to be successful. We had no idea how long it would take, the opposition we would face, or the enormous hurdles we had to clear in compliance, distribution, and personnel management. Every day there were new fires that had to be put out. Everyday there were unexpected bills hungry for bucks. And every road block challenged our very approach to problem solving.

After a while we began to develop actual problem solving principles that gave us structure and a set of standards we would apply to future problems. As we solved problem after problem we slowly improved our approach to problem solving itself. In fact, we began, in a crazy way, to lose our anxiety over the inevitable problems! It became kind of a game! We were challenged with something new and unheard of, but we took comfort in the knowledge that we had a set of principles to handle it, no matter what it was.

Here are our 5 Barefoot problem solving principles:

Take Inventory. That’s right, just like a shipwreck on an abandoned island, take account of everything you have on board. Get ready to be resourceful. Think about how your assets can be used to overcome the challenges you face. Your assets are more than property, money, and products; they are also your people, your customers, and your suppliers. You may have a strategic advantage in a seemingly unrelated area. Don’t overlook any hidden assets, including your own knowledge and experience.
Get Out of the Box. And the quickest way out of the box is straight up! Take the 10,000-foot view. Look beyond your walls, beyond your business, even beyond your industry. Check out the entire landscape. Who has overcome a problem like this in another space? How did they do it? What similarities apply? Are you even defining the problem properly? We believe one way to the solution is the best definition of the problem, so look at it from every angle.
Who Else Benefits? If you solve the problem, who else will the solution assist? And conversely, who is hurt if you don’t solve the problem? By asking these questions you can discover your strategic allies who share an interest in seeing the problem solved. For instance, you may have a supplier who benefits by your growth, and may be amenable to providing additional credit or extended terms to help you overcome a hurdle or grow your business faster so they can sell you more products.
Look at Your Other Problems. If you believe, as we do, that the elegant solution solves more than one problem, then reverse the premise and put all your problems out on the table with the one you are trying to solve. By looking at them all together you’ll begin to see relationships between them. And it is in those relationships that the solution often lies. We’ve been amazed how this tactic can turn on the lights with breakthroughs we wouldn’t have considered otherwise!
Know the Need. Instead of putting your staff, your suppliers, and your associates on a “need-to-know” basis by hiding your problems under the veil of security, practice “know-the-need.“ Involve your stakeholders in the problem solving process. They have an interest in the solution and will appreciate the respect you demonstrate for their intelligence and creativity. Crazy ideas that come out of fun brainstorming sessions often result in problem solving at its finest.

So bring on the next problem and give these principles a try. They worked for us and they can work for you!

Who We Are

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

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True Entrepreneurs Do What It Takes – No Matter What!

Michael Houlihan & Bonnie Harvey — Thu, 07 Jul 2016 17:00:11 +0000

Once the afterglow of the launch wears off, and once the business plan takes a back seat to the cash flow projection, you discover what the real work is in your new business. We call it the “real” work because it generally takes more time and focus that anything you have done before or even anything you could have imagined. It comes as a complete surprise and not a pretty one. It can shatter your preconceived, popular notions about how things get done in product distribution and what is required of you to be a success.

We learned our tough lessons because we were selling to the general public through distributers who then sold to retailers, and we had to do their jobs handling our product. “What? Shouldn’t they have an interest in making money on a product they bought to sell?” you may ask. Even though we were new and unproven, we expected them to sell our products and get the reorders. We also thought they would put up our sales materials to help them move our products. We found both distributors and retailers to be disinterested and unreliable. Still, we faced discontinuance if our products didn’t sell a certain amount in a certain period of time. We had to do the work required, and we had to do it right!

So here we thought we were in the “wine business.” You know – swirl, sniff, sip, maybe say a few French words, hold your pinkie out, and talk about mid-notes. Forget about it! We were in the same business that anyone selling any consumer packaged goods is in: the distribution management business!

Our success depended on stocking and pricing our own items (where legal), dusting bottles, checking item codes, confirming pricing, staying on top of the retailers’ and distributers’ inventory and reordering our products for them as well. It took years to get them to realize that our product was making them so much money that they had an interest in merchandising it themselves. And a good 10-20% never did pick up the slack.

The big companies know this. You know when you go to a store and ask the “clerk” where something is and he says, “Sorry, I don’t work here!” That person works for a product producer who understands what the real work is. It is merchandising! And their own rep is in that store to merchandise their products for the retailer.

Now let’s say you think the stores will do this work and that the distributers are going to get the reorders when the stores are out of stock. You think someone else is going to be responsible for the distribution process. Or you think your product is so good, priced so right, and recommended by so many that somehow you will avoid this inglorious work all together. Guess what? Your product fails. Period.

Unless you make it a priority with your new and unproven product to demonstrate, for an extended period of time, that it will “sell” (and that means constantly move smoothly through the distribution system), you will get the reputation of being a non-starter or a slow mover.

In the early days we spent most of our time in the stores vigilantly watching the shelves, the back rooms and the warehouses – doing whatever needed to be done to make sales happen. It was not uncommon to see us to working on our hands and knees on dusty linoleum floors! That was the real work! So, stop dreaming and get out there and do what has to be done to be successful! You can (and must) do it!

Who We Are

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

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Entrepreneurs Must Decide Between Volume or Margin

Michael Houlihan & Bonnie Harvey — Thu, 05 Nov 2015 18:16:17 +0000

Our friends Larry and Laura Martin of Food and Wine Trails are a creative and energetic entrepreneurial couple who have inspired us for years. When the airlines decided to sell seats direct on the internet, they were faced with reinventing their travel agency business. Reliance on the old model of brokering tickets was no longer sustainable.

So they looked at the travel industry from a different angle. What they discovered was the increasing popularity of food and wine especially with the cruising boomers. They really identified and pioneered this market with their unique, high quality European wine and food “Epicurean Tours,” resulting in Larry being chosen by Conde Nast as World’s Top Wine Travel Specialist for three years in a row.

During our Halloween dinner with this well-traveled and cultured entrepreneurial couple, the conversation got around to our favorite subject – entrepreneurship, its challenges and its principles. They often give us great sound bites that sum up complex business relationships in just a few well-chosen words. This evening Larry said, “It’s volume or it’s margin.” Then he added,” Distribution makes the difference.”

It sounds so simple; decide if your product or service is going to be at a velocity price point (volume sales) or if you are willing to forego distribution for margin (higher profit on fewer sales). But it gets complicated. Most small businesses are looking for higher margin because they know they can’t afford the investment in time, energy and capital to achieve a positive cash flow at lower price points.

Other businesses have a model that doesn’t require distribution, then charge enough to see a profit at a low volume of sales. Still others evolve at medium prices but soon reach their capacity and are unable to expand.

The only way to enter the market when we started our business was at the velocity price point. That is the price at which the greatest volume is sold. Little did we know that we would have to sell over 200,000 cases per year just to break even! Back then folks would say, “Why doesn’t America have a good $5 bottle of wine?” The answer was that it simply didn’t pencil out, especially for an undercapitalized startup.

Now that we have had that painful experience, we counsel our clients, “Make up your mind; is it going to be high margins or large distribution?” Most want to produce and sell a competitively priced product, but they generally underestimate the cost of sales, including the costs of distribution. Unless they are starting with a big investment, or unless they are willing to spend years cash flowing the cost of expansion like we did, they are naturally limited to a smaller market at a higher price.

The obvious problem with the higher margin model is that unless you sell it to a bigger player who wants a high margin business and has the capacity to expand it, you run the risk of being underpriced by a bigger player.

The problem with the higher volume distribution model is the years you have to work at it before you see any real margin. The good news here is that by establishing a market for your product you may be able to attract an acquirer who can scale your business up quickly because they have a distribution infrastructure already in place that can “bolt on” your low margin, velocity price point business.

This is the beauty of the “road side fruit stand” approach. Folks drive up, buy your products and drive home with them. And that’s the end of the distribution program. But it may be hard to sell the fruit stand! So what’s it going to be? Are ya goin’ for margin, or are ya goin’ for volume?

Who We Are

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

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Beverage Trade Network – How Barefoot Wines Became the World’s Largest Selling Wine Brand

Michael Houlihan & Bonnie Harvey — Fri, 19 Dec 2014 16:24:49 +0000

We were interviewed by the Beverage Trade Network.

To read part 1 of the interview, please visit BTN

To read part 2 of the interview, please visit The Barefoot Spirit

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You Can’t Teach Entrepreneurship Without Sales Training

Michael Houlihan & Bonnie Harvey — Sat, 12 Jul 2014 18:30:12 +0000

At the recent International Conference on Small Business (ICSB) World Conference on Entrepreneurship in Dublin Ireland, the Asian delegates gave Michael the nickname “King of Sales.” Now we have to laugh whenever we receive an email with the salutation, “Dear King of Sales.” It’s not a title he feels he earned, but recognizes that it was given in fun and refers to his insistence that successful entrepreneurship must begin with sales.

We certainly emphasized this truism at each of our four talks during the ICSB Conference. Speaking at more than twenty five schools of entrepreneurship in the past year has given us a unique snapshot of the state of the art of entrepreneurship education. We were surprised to see how few schools teach a course in sales as an essential class or requirement.

In business, it’s not enough to sell your ultimate customer. You must also sell your own people, your vendors, your lenders, your wholesalers, and your retailers. Each sale is essential to keep your goods and services moving, reduce your need for capital, reduce turnover, and gain access to the market.

We often say the best salesperson is the assistant buyer. You can’t be an assistant buyer unless you understand the buyers’ needs. You have to demonstrate your dependability and that of your products and services for some time to achieve “assistant buyer” status.

So why should this be such a novel idea to so many in the academic community? We think it is because of how entrepreneurship education evolved. It’s a relatively new major and degree, so it’s still in a state of flux with each school trying a little something different. Generally, entrepreneurship is seen as an add-on to the business school.

The business school does a fine job of creating entry-level managers for large corporations. In fact many of those large corporations help fund these schools. But what is the attitude of those corporations with regard to salespeople and does it rub off on the schools with the support they receive?

In most large corporations, sales is just one of many departments and has a relatively low status. The salespeople are outside and the C-Suite is inside. Sales is below marketing in most company structures. Add to this our historical and cultural prejudice against salespeople. Movies such as “The Music Man” or “Used Cars” reinforce our conditioning as a society to be skeptical of salespeople.

When entrepreneurship is seen as the stepchild of the business school, the importance of sales can easily be overlooked in favor of form and function. Interestingly, most schools have degrees in marketing, and some teach that marketing is the sole revenue-producing system. As we understand it, marketing supports sales by producing materials and programs that can be used by the sales force to increase sales and profits. And, when marketing takes advice from sales, the knowledge gained from talking directly to wholesalers, retailers, and customers is translated into effective marketing plans.

The subject and teaching of sales in entrepreneurial courses must be a requirement for anyone who plans on starting his or her own business. Putting salespeople on the bottom has no place in a start-up. We laud the increasing number of schools of entrepreneurship who are taking sales seriously, teaching real-world techniques and strategies, thus giving their grads a better chance of being in business three years later. Every grad should be the “King of Sales!”

Who We Are

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

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