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What is the True Cost of Overseas Outsourcing?

Michael Houlihan & Bonnie Harvey — Thu, 11 Feb 2016 18:00:16 +0000

From “shortcut-to-riches” internet marketers to Shark Tank, we hear a constant refrain, “If you want to be successful, outsource your manufacturing to a country with cheap labor costs.” If all you are concerned about is the bottom line in the short term, this may be good advice. It will certainly give you an initial advantage in the marketplace. But what about the long term and what about your responsibility to world health?

It’s not just the labor that is cheaper; it’s the overall health standards that are less stringent than here in the United States. Our pollution standards are pretty strict and expensive to comply with because we don’t want to have manufacturing negatively affect our health. Some Americans believe that it’s OK to buy products manufactured overseas, where they are subject to lower environmental standards, because we live so far away they can’t possibly affect our health here. This thinking leaves the door is wide open for questionable overseas manufacturing. But will that door always be open?

Consider what happens when the data begins to be front page news – that our oceans, air and climate are hurting our health as a result of where and how our cheap products are being manufactured. Los Angeles already reports several days a year when they exceed pollution standards, not because of violations in LA but because of pollution that came over the Pacific Ocean from Asia!

Consumer demand for cheap prices is driving this situation today, but sooner or later the true cost of “cheap” manufacturing will be too expensive to support or ignore. We already know it’s unsustainable, which is why we have such relatively high standards in our own country.

Soon “cheap” manufacturing will be unattractive to the consumer. In these days of increasing transparency, consumer groups, health advocates and environmental groups will be exposing the true costs of cheap manufacturing.

New entrepreneurs have to make a choice. Do you want to be part of the past, where you bet that no one would ever refuse to buy your product, no matter where or how it was made, as long as the price was cheap? Or do you want to be part of the future where you realize that world health will eventually trump price and give your environmentally- friendly manufactured products an edge in an increasingly educated and sensitive market?

Millennials who are inheriting this planet are beginning to realize how their decisions today will influence their future. Change is already happening. They know that the quality of their lives will be dependent on factors like pollution standards, water reclamation standards, and protection of the oxygen-producing rainforests. They know they are voting with their purchases every day – and that vote is more profound than anything they can get done at the polls.

Thanks to the proliferation of information, mass changes in attitude will occur at an ever-accelerating rate. Buyers are becoming very concerned about manufacturing processes and their implications to world health. This will be further accelerated by super storms, super droughts, famines, and pestilence. The choices buyers make will become more a matter of survival.

The world of business has cleaned up its act before. We saw the end of widespread use of lead, asbestos, and ozone-destroying additives once it became clear they were hurting our health.

Now is the time for all new entrepreneurs to reject the way things have been done in the past and market clean and healthy products. Beat the rush. Be a leader. Give the emerging consumers what they really want – a sustainable world to live in.

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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4 Tips to Avoid Drowning in Startup Expenses

Michael Houlihan & Bonnie Harvey — Thu, 19 Nov 2015 18:00:36 +0000

Worcester Polytechnic Institute near Boston may not be a familiar name. However, many major tech and engineering companies regularly recruit WPI grads. They appreciate the well-rounded education of many of their students who also take classes in business, management, and entrepreneurship.

We recently spoke as part of their executive speakers series about the three core competencies of entrepreneurship: Cash Flow Management, Personnel Management and Distribution Management. We shared with the WPI students and faculty lessons we learned from our experience building the Barefoot Wine brand that we believe all businesses must master in order to survive and thrive.

Many wanna-be entrepreneurs fear failure or loss of control of their companies due to lack of funds. They know many startups fail because they have made too many financial commitments before achieving positive cash flow.

Actually, what they really need is sales! Sales earn investments in real estate, equipment, and personnel, and not the other way around.

In our talk about Cash Flow Management, we offered these tips designed to avoid unnecessary expenses and lengthen the runway until sales take off:

Use Your Hidden Assets. Maybe you have a garage or an unused room you can use as an office to get started. We used our laundry room for the first two years. Maybe you have family members who can do some of the work. Bonnie’s mother and nephew came to live and work with us. What can you repurpose for your workspace? We used an old door on two sawhorses for our desk. This allowed us more funds for the surprising cost of sales required to get our business off the ground, as you too will soon discover

Outsource to Local Producers and Service Providers. Right in your own region are companies that can provide you with many of the goods and services you need. You can pay as you use them, eliminating the need to tie up capital in manufacturing, hardware, or office space. In fact, if you write your contracts properly, you don’t have to take delivery of any products not up to you strict quality control guidelines. We succeeded without ever owning an office, a vineyard, or a winery.

Hold Minimum Inventory. Strive for just-in-time production. Although it’s tempting to go for the quantity purchases to reduce your cost per unit, sitting on unsold inventory can be costly and get your business in trouble. Sales volume must justify quantity purchases. Instead, find suppliers who will warehouse goods for you until you need them. And offer buyers quantity discounts for cash to help your cash flow. We found when buyers buy big, they sell big – and reorder quickly!

Extend Your Credit and Terms. Treat your vendors as strategic allies. Grow together, each benefiting from the growth of the other. Gain you supplies trust by monthly or quarterly meetings where you share your goals, opportunities, and challenges. Show them empathy when you can’t pay your bill on time by giving your vendors advance notice and payment plans. Give them a long-term contract so they see your loyalty. Be patient. Your positive performance over time will win you the higher credit limits and terms you need to save your cash flow.

There’s more than one way to achieve a positive cash flow in the early days. These are some that worked very well for us. And, if you are lucky enough to have investors, they will be more comfortable working with you when you demonstrate resourcefulness by reducing your need for cash.

Who We Are

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

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7 Ways to Reduce Your Need for Capital

Michael Houlihan & Bonnie Harvey — Wed, 11 Nov 2015 17:28:09 +0000

Happy Veterans Day, everybody! Today, November 11, 2015, it is our honor and our pleasure to speak at the first annual Vets Rock event at Mohegan Sun in Connecticut. What would we share at this keynote event with more than 100 veteran-owned businesses that would be of the greatest value to them? What lessons have we learned, often the hard way, in our own business experience that they could use to improve their own businesses – tomorrow?

Of all the challenges aspiring, launch and growth-phase entrepreneurs face, the top has to be capital, or should we say the lack of it. The key to success of any business is simply making more money than it costs you to stay in business. So we decided to share how to reduce the need for capital in the first place.

Here are 7 tips that worked for us:

Discover Your Hidden Assets. What do you already bring to the table, and what can you find if you look with expectant eyes? Discover how you can repurpose something you have for something you need. Be resourceful. Solve problems creatively. We used a door for a desk and a laundry room for an office.

Identify and Work With Your Strategic Allies. Those who succeed if you succeed are your strategic allies. Learn how your products or service benefit your customers, suppliers, and the community. Find a small company you can work with that is poised to grow, and grow with them. We provided a small company called Trader Joe’s with a fun California product and together we spread across the country.

Use Your Suppliers and Buyers as Bankers. Treat your suppliers like business partners. Enter into long-term contracts so they can see a future with you. Keep them up to date on your progress, challenges and opportunities. Notify them in advance when you will be late on a payment, and show them how you will get current. Then ask for extended credit to expand your business and increase your purchases from them. We offered our buyers quantity discounts for cash.

Pay for Performance. Discover the metrics that demonstrate sales, growth, and profitability, then reward your people for achieving those goals. Keep the bonus period short term, such as every month or every quarter to keep the goals active and achievable in their minds. We matched our people’s 401K either 50%, 100%, or 150% based on quarterly achievement.

Outsource (Locally) Everything but Sales, Quality Control, and Accounting. Don’t invest in a ton of bricks and mortar or other overhead that require monthly payments whether you have sales or not. Try for just-in-time production and avoid holding large inventories. We outsourced production but held our producers to a set of quality specifications in a contract.

Reduce Turnover. The #1 hidden cost in any business is turnover. It can result in the loss of your company knowledge, supplier relationships, and even customers. The key is to hire, orient, train, and compensate properly. If you are paying your people right, the producers can’t afford to leave and the non-producers can’t afford to stay.

Reduce Your Cost of Advertising. Think about your customers as belonging to a community which is interested in more than your product. That community has needs and cause-based groups that work to satisfy those needs, such education, conservation, human rights, and support of the arts. By supporting community fundraisers and non-profits , we gave their members a social reason to buy our products.

These 7 tips can help anyone who runs a business, and we are happy to give back to our vets by sharing these lessons with them today, Veterans Day, 2015.

Who We Are

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

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Protect Your Most Valuable Small Business Investment By Saving Time

Michael Houlihan & Bonnie Harvey — Sat, 18 Jan 2014 19:59:28 +0000

An OfficeMax survey of small businesses showed that 4 billion hours are spent each year on routine operations that could be done more efficiently. Almost half of the business owners stated these efforts drained them of their motivation for growing the business. Look for those tasks in your office and automate them, outsource them, or get them done more efficiently. Don’t let them rob you of your desire to build a successful business.

Your Investment of Time. The time you’ve put into starting and growing your business is an investment. As your business becomes more successful, you’ll get the satisfaction of having accomplished something. Hopefully, you’ll get a decent income, too. One way to protect that investment is to make sure your time is not wasted. Garda World says that any time you spend on things that don’t focus on customers should be given to someone else to do or eliminated entirely.

Hire or Outsource? If you don’t already have employees, then hiring someone is a big decision that comes with more responsibilities. Outsourcing work to contractors can make sense once you’ve identified those discreet tasks that can be turned over to someone else. Bookkeeping, documentation, marketing and PR are some areas where hiring a contractor makes sense. To be clear, it makes sense if the contractor is experienced in that area. Friends and family that want to pitch in and help may not be the best option, unless they are experts in the field.

There are also a number of things you can contract out to a virtual assistant and they don’t need to be on site. Entrepreneur says these could include:

bookkeeping
online research
presentation creation
email management
travel and scheduling

Tech Time. How much time do you spend with your technology? How much of that time has a direct ROI? Many technology tasks can be outsourced, but some can also be made more efficient. If you’re using cloud-computing for applications and backups, how reliable are they? Do you have to spend time checking on backups? Are they difficult to schedule and run? Research dependable cloud storage rankings to see if there are better service provider options for your business.

Manage Your Time and Create Routines. You work hard as a small business owner, but that doesn’t mean you have to work all of the time. Even if you’re working out of an office in the basement, establish your business hours. You may work a 10 to 12 hour day, but keep it to that. When the work day is over, quit and do something that revitalizes you. Small Business Trends says to keep focused on work during the business hours, but focus on the other parts of your life when the work day is over.

Get Rid of the Time Wasters. There are numerous things that can distract you throughout the day, especially if you work out of your home. People call or stop by to chat. You have personal appointments and errands and emails that don’t need to be read right now. There are dozens of things can happen every day to take your focus away from work, says Score. For the next week, jot down every time you are interrupted by something that’s not very important. Then decide how to move or eliminate those distractions. You’ll gain back time to spend on those important customer-focused activities.

Time is your most important business asset. Invest it wisely on customer service and maximize your sales in return!

Who We Are

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

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