investor | The Barefoot Spirit

Why is The Barefoot Spirit So Relevant Today?

Michael Houlihan & Bonnie Harvey — Thu, 07 Sep 2017 17:00:36 +0000

We talk a lot about the Barefoot Spirit. But exactly what is the Barefoot Spirit in essence? It is sales! Period! Presales before you open your doors; growth supported by sales; overhead justified by sales; new team members oriented with sales process maps; company-wide bonuses based on sales; and expansion based on the cost of sales. The Barefoot Spirit is a sales-driven culture.

Why this obsession with sales? It’s how everyone gets paid – everyone! Without sales, there would be no need for production, marketing, R&D, HR, legal, admin, and CEOs – nobody!

Why is the Barefoot Spirit so important today? Because many of us have actually lost our focus on sales in favor of engineering, programming, technology, legal, HR, and production. We have gotten to a place where we think that a killer app, a disrupting technology, or a new financial model is somehow more important than sales. They’re not.

In fact, in what we call the Barefoot Startup, the product itself is determined by sales. The design is not complete until after a thorough understanding of what the market wants and how the market will be accessed.

Today many believe that business success is based on securing financing. It’s not! You can secure financing and never make a sale. You can have a burn rate that quickly smokes investor dollars without sales.

We have allowed ourselves to believe that getting into a major box store is in itself a recipe for success. It’s not. It’s only the beginning, not the end. Real success is staying in the market with sustained and increasing sales.

In fact, we have seen companies that have discounted the importance of sales and elevated marketing – who will gladly take a bow when sales are up and blame “those salespeople out in the field” when sales are down.

Today, you can even get financing with a cool idea, no real sales plan, and no sales experience. Startups are not alone in this thinking. Investors abound who take sales for granted. They shouldn’t. The startup failure rate is on the increase. According to Small Business Trends, over 50% of small business startups fail in the first four years.

No one’s idea, no matter how brilliant, is going to sell itself. All ideas must be sold and more importantly resold on an ongoing basis.

Today, much of the focus is on the cost of goods, when it should be on the cost of sales. If you can’t service what you sell, you are soon off the market. If you can’t achieve a positive cash flow quickly, you are back trading more of your precious equity to the investor just to keep the lights on.

The current thinking seems to be that if you have a good enough idea, and a catchy marketing plan, you just hire some people to sell it. If they don’t, just fire them and hire some more. Right? Wrong. With that attitude, you never find out why your idea didn’t sell – until it’s too late!

How has this happened? Sales itself has gotten a bad name. Nobody wants to be “salesy!” Nobody wants to face personal rejection. Sales is generally not taught in school. And salespeople are seen as shifty characters, out to trick you, only after your money, and with very little to offer in return. Good salespeople offer excellent customer service, and should be the highest priority for a startup, not the last.

From startups to enterprise companies, the time is right for the Barefoot Spirit. Now is the time to focus on the top priority for success, sales!

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 Does Your Dashboard Look Like? … and Why?

Michael Houlihan & Bonnie Harvey — Thu, 20 Jul 2017 17:00:40 +0000

It’s not about the data. It’s about what questions you have that can be answered by the data. Startups especially must ask the right questions, and ask them often, just to survive. We have seen many businesses fail because they didn’t know what questions to ask, or didn’t ask often enough, or they were paralyzed by the overwhelming volume of it all.

Why does this happen? Often, it’s a preoccupation with the business plan and securing financing. Many founders believe their business plans will get them the financing they need. If it does garner them that capital, both the founder and the financier could be in big trouble.

The founder may get the wrong idea about the importance of the business plan if it does attract an investor. They may think it has been validated and deserving of even greater status. The investor who buys into the plan by itself has oversimplified views of the revenue process and is surprised when he winds up having to throw good money after bad.

When we started our business, most of our data came from the accountant. We would constantly ask him for what he called “special reports.” Usually, by the time he got around to doing them, it was too late. We were in crisis mode …again!

He constantly chastised us for not being able to read a set of books. He would say, “Everything you want to see is already there! Just learn how to read the reports.” And “Accounting is a language.” He was right, it was a language, a foreign language designed to categorize and file past events. The only problem was that we wanted to see the future! After a long, dangerous period of flying blind and being surprised by crisis after crisis, we finally demanded that the “special reports” become part of our regular reviews. And that saved us! We had the beginnings of an early cash flow warning system.

It wasn’t until much later that we were fortunate enough to hire a cost accountant who understood what information we needed of the data. He helped us build a proper dash board. Every month we would get a new indicator that would help us not only stay in business, but minimize our need for cash, control our inventory, and keep us from growing faster than we could afford.

Think of trying to drive your car using the rear-view mirror. That was the old “special reports.” Our cost accountant gave us a windshield, and a dashboard. Now we were driving the business with projections based on historical data as well as what we just learned.

The first report we would review was aptly named “the cliff report” because it showed us how much time we had before we went over the cliff and couldn’t pay our bills. For years, it was never more than three months away! This simple rolling cash flow projection ran our business and identified our priorities. So much for our well thought-out business plan…

Finally, with a cost accountant, we became more sophisticated and confident. We began to develop a dashboard that was relevant, critical, and timely. We had the right data, in the right format, and got it in time to take appropriate action.

When we sold our business, we had 10 key factors we looked at every month. We never did learn how to read a set of books, but we did build a heck of a business, thanks to the cliff report!

Who We Are

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

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Lines of Credit Can Help Startups Retain Their Ownership

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

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

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

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

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

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

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

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

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

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

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

Who We Are

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

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How to Find Your Ideal Investor

Michael Houlihan & Bonnie Harvey — Thu, 04 Aug 2016 17:00:47 +0000

One of the wisest questions any startup could ask is, “What should I be looking for in an investor?” Wise startups assume they have some say over whom they will accept money from, rather than being in the desperate position of being lucky to get any investor.

When you choose your investor carefully consider their motives and what they can add to your business besides funding. Sometimes the “perfect” investor is not bringing hard money to the table! Sometimes what they bring can be of greater value to you in the short term and protect your equity position in the long term.

For years we could not get an investor in Barefoot Wine, now the world’s largest brand. The banks wanted nothing to do with us because we didn’t have a “secondary means of collateralizing the debt.” Those are big words for owning real estate. They wanted us to own property they could take if things went south. Ironically, when we tried to buy a house they said we were self-employed and ipso facto “unstable.” When we complained that they had floated mortgages to four of our employees, they said, “Well, that’s different. They have a good solid job!”

So were forced to go it alone, undercapitalized and on the verge of bankruptcy for years! But that was a good thing! That forced us to be resourceful, frugal, and practical. We never had a bunch of money to “burn” through, so we had to come up with alternatives to get the word out about our product. We had to come up with other ways of financing our growth. We were forced to grow slowly.

Yes, it was a good thing because we learned how to get our vendors, suppliers and retail buyers to “finance” our business and we never lost control. They had an interest in seeing us succeed and we learned quick enough what we had to do to gain their trust. They were, in retrospect, our ideal investors.

Had we gotten the Shark Tank variety of investors, we would have been forced to sell as soon as we achieved the equity return majority owners wanted to see on their investment. Not necessarily the most opportune time for a sale, but the shortest turn around for investors!

With access to capital we would have approached marketing in a much more conventional, expensive, and less efficient way that we did – which was to use Worthy Cause Marketing. Because we were broke, we chose to support local fundraisers in the neighborhoods around the stores where our brand was for sale. We hoped the non-profit’s members would choose our product over our competitor’s. This turned out to be a targeted, highly efficient, and effective way to build a loyal base of advocates.

Our “investors” who were suppliers and vendors stood to gain by our success, so they granted us extended terms, higher credit limits, and free warehousing. In the case of “investors” who were our retail buyers, they gave us cash for volume discounts, store-wide ads resulting in higher volume, and they gave us their loyalty. In other words, they helped us build our brand.

These “investors” wanted long-term contracts, quick resolution to customer service issues, and empathy for their position. They never pressured us to sell our brand. On the contrary, they wanted us to continue to enrich them with ongoing growth and success!

So what is the bottom line? Your ideal investor is someone who is in your industry and stands to gain by your success in more ways than just a return on their hard capital investment. They will be more supportive, more forgiving, and more respectful of your long-range goals. Cash is not necessarily king. It takes more than money!

Who We Are

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

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Save Time and Money Monetizing Your Idea

Michael Houlihan & Bonnie Harvey — Thu, 20 Aug 2015 18:01:47 +0000

Many people have a simplistic view of how to make money on their idea. They think that if it’s good enough, someone will buy it. We have come to realize, finally, that it’s not about the idea, it’s about the business that sells the idea.

The idea might be for a great product that makes life easier. But to actually have a monetization event where you get paid for your idea, you must create a business that sells it. Now you have to demonstrate that there is a substantial and increasing market for your idea. You do this with sales.

If you intend to eventually attract an investor, acquirer, or cash infusion partner, your business must show the level of earnings they are looking for. Most businesses are valued on a multiple of annual earnings, so, in most cases, it is the earnings they are investing in, not the “idea.”

For us, it took 19 years to finally achieve the earnings and the sales necessary to attract an acquirer. For every category of consumer product and price point, there is a corresponding number of earnings and sales that your business must achieve before any acquirer will even look at you. And those numbers can change with the times and the economy. But once you know what those numbers for your particular type of business, you must grow to at least that size.

Now you are involved with growing a business and all the critical make-it-or-break-it decisions that are required daily. How will you make more right decisions? What principles and standards will you employ to hold up as a guide in every aspect of your business?

If we had known then what we know now, it might have taken us half the time to monetize our business. We learned most lessons the hard way, but now we have 20-20 hindsight. Like a Monday morning quarterback, we look at our history and realize what we did right and what we could have done better.

Many folks with great ideas who want to get paid for them are starting out just like we did: not realizing all that is involved to reach that monetization event, not realizing the long term effects of daily decisions, and not really employing a set of time-proven standards. We can help!

Our New York Times bestselling book, The Barefoot Spirit, is our story of hardship, hustle, and heart. We wrote it as a business adventure story to entertain and enlighten. It’s about the real world, not academic form and function. But now we have distilled out of it The Guiding Principles for Success that ultimately guided us, resulting in our success. We put them into a 30- day, four-part video-webinar series. Each week for 4 weeks we present a one-hour content video and 4 days later, a one-hour live Q&A. We wish someone would have sat us down and had this chat with us!

Part 1 is “Starters for Startups.” It breaks business down to the things you should know before you get started and the mindset required to overcome the challenges ahead.

Part 2 is “Being Resourceful – Cash Flow Management.” It examines the ways you can reduce your need for capital, increase your credit, and extend your terms.

Part 3 is “Engaging and Empowering Your People – Personnel Management.” It explores ways to reduce turnover (the #1 hidden cost of business) and how to motivate your people.

Part 4 is “Sales Is King – Distribution Management.” It focuses on the most important part of your business – sales. It tells how to get your product to market and how to keep it there.

We employ 20 Guiding Principles for Success to these core competencies. Stop wasting your time and money in your quest to monetize your great idea! Go to www.BarefootSpiritGPS.com for a free sample.

Who We Are

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

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