Distributors | The Barefoot Spirit

Breakthroughs Are Rarely as Spontaneous As They Seem

Michael Houlihan & Bonnie Harvey — Wed, 26 Jun 2019 13:28:45 +0000

Today it seems like we are hearing about a new breakthrough every day.

It’s easy to get the idea that these breakthroughs are instantaneous bolts of clarity from very gifted people. Once in a while there is a sudden stroke of genius that leaves us all in awe. But most of the time the real breakthroughs are years in coming and the result of much cooperation and analysis.

Sure, there are the “Why don’t we just…” moments, but most practical and lasting breakthroughs require a team. Here’s what we experienced with several breakthroughs that occurred in our business.

1. Other industry practices

We had a problem with keeping our advertising signs up on the supermarket shelves. The competition, or the cleaning people, would take them down regularly. Sometimes we couldn’t even get our marketing materials to the shelf. They were thrown in the dumpster by our distributors. We were spread so thin we couldn’t cover all the stores with our own limited staff.

One day we noticed that some soup cans had an award medal affixed right to the can to communicate value to the shoppers. It took us two years to work out the mechanical issues necessary to put our award stickers on our bottles, on the bottling line. That meant that finally we had at least one piece of merchandising material that made it to the shelf every time and couldn’t be removed.

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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Mind Your Business

Michael Houlihan & Bonnie Harvey — Thu, 16 Aug 2018 17:00:26 +0000

Last Sunday Michael was the guest of Yitzchok Saflas on his Mind Your Business radio show on 77 WABC in New York. Yitzchoks’ show is a great place to hear the business minds of our time. And Michael was honored to be chosen to be among such great company. The show is also currently number five in the top 10 Nielsen ratings. Michael’s interview is also available online at http://www.mybradio.com/michael-houlihan/.

The show covered the answers to the most common questions asked when building a startup: “How to go from ideation to monetization,” and Michael’s personal favorite, “How to decipher your true cost of sales.”

How to decipher your true cost of sales

Most startups understand their cost of goods, also known simply as COGS. This is what it costs to assemble, build, or manufacture the product you are selling. The budget will have a line item for COGS.

Other expenses such as advertising, taxes, shipping, and returns are simply lumped together into the general budget or even “overhead.” From our perspective, this is the biggest single mistake that startups make and it leads to a cascade of misconceptions that can put them out of business.

The cost of doing business is different in different territories. The selling costs, including taxes, shipping, promotions, representation, and distribution management, just to name a few, can vary widely from market to market. A fatal mistake we see startups making on a regular basis is underestimating the cost of sales in each market, not the cost of goods, but the cost of sales!

Our Barefoot Wine experience (or inexperience)

When we started Barefoot Wine, we knew there’d be some advertising, promotion, and merchandising costs. But we weren’t ready for the costs of airfare, car rentals, hotels, meals, samples, taxes, freight, not to mention salary and expenses for a representative in the territory. We found out about all these costs the hard way.

Fast sellers do not necessarily get reordered

Our product was a fast seller, so it sold out. That was the good news. The bad news was it didn’t get reordered after it sold out. It sold out and remained out of stock because we didn’t have a representative in each territory looking out for our products. We were shocked!

“Ya mean to say that even if retailers and distributors have a hot new product that is selling fast they won’t automatically reorder it?” we complained. The answer was demonstrated by their behavior. It could just run out and not be reordered. We had to pay to have a representative in every major territory. This was a big cost of sales. We wish we had known this going in. It wasn’t enough just to get into the big stores, now we had to pay big bucks just to stay in.

Don’t Forget Taxes and Shipping & Handling Costs

We had one big chain store in the Midwest that said they wanted to put our product on special for $5.99 in five different states. We were thrilled! We thought it would be a slam dunk. But as Bonnie says, “It was just a slam!” It turned out that in order to achieve the $5.99 sale price in two of the five states, we had to lose money on every sale. The taxes in those states were much higher, so was the shipping and handling. Instead of making a killing, we just got killed – by the cost of sales.

Michael’s Advice to Startups

One of the last questions that Yitzchok asked Michael was, “What advice would you give new startups today?” Michael’s answer was, “Start in a small place. Learn from your mistakes locally where you won’t fatally hurt your brand. Learn the cost of sales. Hire a cost accountant to analyze those costs ahead of time for each expansion scenario. Then, ‘All ahead slow’ with your eyes wide open and your notepad at the ready. You might find out it’s cheaper to do business in South Carolina than it is in New York!”

Who We Are

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

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Do You Need More Money – Or Improved Relationships?

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

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

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

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

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

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

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

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

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

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

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

Who We Are

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

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World’s Greatest Sales Pitch: I Can Help You Sell Your Product!

Michael Houlihan & Bonnie Harvey — Thu, 19 Mar 2015 17:00:26 +0000

Everything is dependent on sales. There is no better justification for salaries, offices, production facilities, or even products. With enough investment capital you can have all those things, but they are unsustainable without sales. Our modern business culture has gotten so carried away with funding as the source of all cash that we have forgotten that sales ultimately makes the wheels go ‘round. When businesses use up their investment dollars in research, administration and facilities, they have to go back for more – or close the door.

That’s why we put such emphasis on sales. In 2015 there are still very few secondary schools of entrepreneurship that actually teach sales. They teach sales management, how to add up the numbers and write reports, but not nitty-gritty sales. They teach the “sales funnel” and the elevator pitch, but not sales as we know it. For us, sales is the ability to get a prospect to buy your goods and services time and again, and remain loyal.

Entrepreneurial success is not about getting funded. You can easily burn through those funds without sales. It’s not about launching your business either. Every ship that sinks was first launched. It is not about offices, production, or even a disruptive world-changing idea. For us, true entrepreneurial success is still being in business three years later. And even better, having sold your enterprise at a huge profit. You can only get there through sales. So let’s focus on sales first.

We are frequently asked, “What is the world’s greatest sales pitch?” We think it’s, “I can help you sell your product!” Why? Because it compels the prospect to answer, “How?” This is a buying signal. He has given you the floor. You have said something he wants to hear. So now you have to answer the question. How can you help him sell his product?

Well, first of all, you had better know what his product is. This mean you have done a lot of research, questioning, listening and observing. It also means that you know to whom you are selling and what is important to them. Each person who touches your product must be sold, and what each of them wants is not the same as what your eventual downstream consuming customer wants. Not by a long shot!

If you are selling to your wholesale distributors, jobbers, or middlemen, their product is strategic importance to retailers or other distributors. Perhaps you presold a big retailer they supply and your product strengthens their strategic importance. Perhaps your product rounds out or distinguishes their portfolio.

If you are trying to sell your retailers, their product is retail goods on precious shelf space that must turn quickly. Perhaps your product has a reputation for fast turn and profitability. Your sales pitch might be that your marketing materials help them decorate their retail business to celebrate seasonal events to attract more shoppers.

We are also often asked, “Who is the world’s best sales person?” We always answer, “The assistant buyer.” Why? Because when your prospect sees you as having their best interests at heart, they will trust you and hand you the keys to their warehouse. They are relieved that they don’t have to worry about being out of product any more. They don’t have to worry about your motives any more. Now they rely on you and will ask you what they should buy.

We have seen many successful entrepreneurs over the years. What they all had in common was their ability to help sell their customers’ products and be their “assistant buyer.”

Who We Are

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

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