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?

Auto-Pilot

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.

The post The 5 Requirements We Look For in a New Client appeared first on The Barefoot Spirit.

Of course, your VC has a right to quarterly reports. They want to keep track of their investment. If you’re not performing as agreed, they want to know right away. They want to cut their losses, which means you could lose your financing if you don’t make the numbers. Are you getting a little more nervous?

You know if you push your salespeople too hard it will take away from next quarter’s numbers. You know that if you load up your buyers you may lose them due to lack of service. And you know your reputation will be hurt if you don’t service what you sell. In fact, you may not have even fully realize the true cost of sales until you got several months away from that extravagant launch party. The reality of your business is just beginning to settle in. Now you know at least part of what you don’t know. But it’s too late and the report is due!

Just since you started, you have learned a ton. It’s stuff they didn’t teach you in college. It’s stuff that you wish you had known about. It’s stuff that requires actually experience.

You thought your VC knew more about your business than you. You thought they’d warn you. You thought they would be an enabling “partner”. You thought your business plan was validated because your VC funded it.

But no! You are on your own! And now it’s clear that your VC doesn’t really care. He’s spread out his risk like a gambler playing the odds. He’s bet on 10 to 20 start ups like yours, hoping for that one unicorn. Your business is just one roll of the dice. Will you make your numbers and stay in the game or will you crap out?

You are quickly approaching a no-win situation where if you make the numbers, you could lose your business. If you don’t make the numbers, you will lose your investor, and then your business.

The Department of Commerce says that 9 out of 10 businesses fail. That’s why most VC’s play the odds. But the same Department of Commerce also reports that businesses that make it to 2 years are more likely to make it to 5, and those that make it 5, to are more likely to make it to 10.

Having been through it from ideation to monetization, we understand why. In the first 2 years, we found out our cash flow plan was more important than our business plan. As time went on, we began to respect the cost of sales, which generally increased directly with growth. That’s why we created The Barefoot Startup, a more sensitive approach to starting and growing a business. It’s more grounded than bootstrap. It’s being in touch with the environment.   

Just like being barefoot, the Barefoot Startup directs you to learn to walk before you run. It directs you to be more sensitive to the terrain so you don’t fall down. It shows you how to be more flexible so you can make quick adjustments, thoughtful pivots, and remain light on your feet.

Don’t let quarterly reports hurt your chances. Starting a business is challenging enough. Discover and use your hidden resources. Outsource everything but accounting, sales, and quality control. Create revenue earlier with the relatively small, low-hanging fruit. In other words, reduce you need for capital right from the start, and you may not have to play the VC game at all. Ironically most VC’s are shying away from pre-revenue startups anyway. Demonstrating revenue proves your concept, but more importantly, provides a priceless business education. VC’s will line up to expand a proven concept and you will be in a much better bargaining position!

The credo of The Barefoot Startup is simple: Start small. Make your mistakes in a small place. Get your act together before you take your show on the road. And don’t scale to fail …or make your quarterly numbers! By keeping your (bare) feet on the ground and building a solid foundation, your chances of success will increase, and your need for outside capital will decrease!

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.

The post Is your Startup Doomed by Your VC’s Quarterly Reports? appeared first on The Barefoot Spirit.

We faced this exact challenge. Our employees, business associates and clients all kept saying that we should break our journey down into its essential parts and expand upon those parts. So, for a year we kept tossing around ideas, thinking about how we could get these concepts across to startups.

Focusing on why so many startups failed seemed to be a good place to start. Did they all have something in common? What were the areas that most of the “failures” failed to master? Surprisingly, they all lacked competency in one or more of 4 key areas. So, we decided to focus on those areas and prioritize them in The Barefoot Startup’s GPS (Guiding Principles for Success). Here’s a brief summary:

1. Monetization Strategy. Crazy as it sounds, many startups never ask the fundamental question, “Why am I doing this anyway?” Is it a lifestyle? Is it a legacy? Or is it to monetize on brand equity? If you’re setting your course on an eventual acquisition, merger, or public offering, the steps you take at the beginning of your journey will be critical to your survival. They will determine your expansion plans and the steps you take to maximize your brand equity. This choice means that your goods or services must be scalable, and your business can run without you. It means that your files reflect your acquirer’s due diligence. And it also means that you know and establish the metrics and milestones you need to become an acquisition target or, as we say, “Get your peanut in front of the elephant!”
2. Cash Flow Management. The goal here is to reduce your need for capital. Do you know how identify and utilize your “hidden” assets. Ideally, your buyer’s will pay you before you need to pay for your supplies and overhead, and this is possible. But for most of us, we need to juggle! And we need to spend every dime on the bills before we pay ourselves. This is why outsourcing, reducing overhead, and pay-as-you go are so critical. This is why income and cost projections are so essential. You need to establish revenue, even if its small, before you ask for investors’ money. Do you know how to establish strategic alliances with your suppliers and your buyers, to reduce your need for capital?
3. Personnel Management. The goal is to reduce turnover, the #1 hidden cost of doing business, and to engage and empower your people. How you find good people and build great people are covered in our video. We believe it is essential to overkill on orientation from day one to demonstrate where the money really comes from, including all the hands, hoops and twists it has to go through to get to them. Paying for performance encourages better performance. Paying by the hour encourages longer hours, not necessarily resulting in productivity. Nurturing a culture of permission, encouraging innovation, and giving public acknowledgement for a job well done are absolutely vital to building a productive and supportive team. Sharing challenges with the entire staff on a know-the-need, rather than a need-to-know basis will unlock your personnel assets to solve problems on the fly.
4. Distribution management. Do you know how to get your product or service to the market, and more importantly, keep it there? Distribution is everything from supply chain management to sales. Sales is not just to your end user, but to your own people, your B2B customer, their B2C customer and eventually to their (and your) end-user. Understanding and delivering what each person in the chain requires can make the difference between access to market and being shut out. Not understanding the true cost of sales is the biggest single reason for startup failure. Start small, make your mistakes in a small place, learn from them, and get your act together before you take your show on the road. Don’t scale fast to fail fast!

Are you interested? We know that these 4 core competencies, so often overlooked, are so important that we spend an entire hour on each one in our online video course, The Barefoot Startup’s GPS (Guiding Principles for Success). Check it out.     

#BarefootStartup

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.

The post The 4 Core Competencies of the Barefoot Startup appeared first on The Barefoot Spirit.

We are often accused of being Monday morning quarterbacks with 20-20 vision. Well, guilty as charged! And lucky for you!  Having been through it from ideation to monetization, we are in a unique position to offer help. After years of wrong assumptions, and actions based on those wrong assumptions, it ultimately became clear to us what we were doing right and what we were doing wrong. Our experience and success in the real world can save you a ton of time, money, and anxiety.

Like the man says, “If you had it to do all over again, what would you do differently?” Well, some things we would do just the same, but others, we would have started doing a whole lot sooner. Starting with no money and no knowledge of our industry, you can bet we had a lot to learn. You can bet we made plenty of mistakes.

These are the same challenges startups face today, like being undercapitalized, finding and keeping the right people, providing effective leadership, and getting the word out, just to name a few. But the biggest mistakes startups make may be in their own heads! They tend to accept popular assumptions about business that are just, well, wrong! We want to change all that.

There’s a new movement afoot. We call it “The Barefoot Startup.” Why “Barefoot”? Because it’s a great analogy for a feet-on-the-ground, step-by-step approach to starting and growing your business.  It’s beyond “bootstrap” because it’s sensitive to the terrain, its well-grounded in principle, and clears the path for success.

The Barefoot Startup incorporates the proven strategies we used successfully and the lessons we learned over 20 years building the Barefoot Wine brand. These key tenets made the biggest difference in our success. They can work well for any business. The tenets of The Barefoot Startup  (#BarefootStartup) will give you a big head start, mitigate your risk, and reduce your need for capital.

It’s not another set of tactics. It’s not another cut-and-paste process for 6 figures in 6 months. But it is a fundamental understand, and application, of the basic principles of long-term business success.  Think of it as an insurance policy for your start-up.

The 7 tenets of The Barefoot Startup spell S-U-C-C-E-S-S:

1. Strategic Alliances. Who wins if you win? How can you help them win? How can you work with your community to get the word out?
2. Understandings. How does your distribution system work? What are the challenges you face gaining acceptance in your market?
3. Customer. Who are your customers? What does each of them really want? How should your company be structured to gain their loyalty? How do you turn your customers into advocates?
4. Compassion. What does everyone who touches your product want? How can you show empathy for their needs? How do you gain their respect and cooperation?
5. Empowerment. How can you get the most out of your people, your suppliers, and your buyers? What do they need from you to do their job better for you?
6. Sales. What is the fastest way to create a positive cash flow? Where is your low-hanging fruit? What is the quickest way to gain a “Hot Mover” reputation?
7. Slow Down! How can you reduce your need for capital by being more resourceful? How can starting small show you the true cost of sales? How can you get your act together before you take your show on the road?

The Barefoot Startup offers detailed answers with real world examples. How do you spell success?  Join the movement at www.thebarefootstartup.com!

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.

The post The 7 Tenets of The Barefoot Startup appeared first on The Barefoot Spirit.

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

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

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

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

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

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

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

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

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

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

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

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

Who We Are

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.

The post Taking the Inc. 500 Survey is an Eye Opener appeared first on The Barefoot Spirit.

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

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.

The post Why Are You Going into Business? appeared first on The Barefoot Spirit.