- Posted by admin
- On October 20, 2016
- Lessons, Mistakes, Spending money like drunken sailors
This video was initially created to be part of the Australian event “3 Day Discovery Program” organized by StartupAcademy.org in November 2016.
I’m Serena De Maio, and I help small companies’ owners to get customers love their business so much, that they will never ask for discounts again.
In this video I will share with you the 5 reasons I lost 100,000 USD, the lessons I’ve learned and why I would do it again in a heart beat
This is going to be a presentation to the point with a bit more about me, my mistakes and why I’m happy I lost that money. I mean it!
These are some of the brands I worked on. First while I was studying. Then at Procter & Gamble as a brand manager and then commercial leader, mainly in the Perfumes category, and finally the business I have found or co-found. Grace & Wilde was my very first business, which I run for 2 years in parallel to my P&G career. Wolf Leaders Academy, an educational organization teaching how to succeed in their first job to young professionals. Incredible Cuisine, my unforgettable cakes business and my consulting and courses business.
Today we’ll focus on my first business, Grace & Wilde.
In Grace & Wilde we were designing and marketing luxury shapeware. For those who don’t know what it is, it’s a sort of underwear you can use to smooth curves. We were based in Geneva, Switzerland where I live. I’m going to show you a couple of images.
These were some of our catalog and PR images
We were actually loved by the press, with The independent , one of the largest newspaper in UK, our key market, featuring us among the best shapewear that year. You can also see Vogue, The Times, The Telegraph, Marie Claire.
We were also supported by local celebrities.
So in summary, we were kicking asses at many things
Product development: the shaping function was excellent, the quality of our suppliers superior, the packaging high quality
Branding: we bring to life a brand world people loved(name, images, colors, typography)
Our digital strategy and campaigns was successful, and actually run by Anna Lundberg and company Crocus Communications.
Our Journalists and Bloggers reach out was successful
Trademarks, patents, contracts were done
And the set up our Logistic infrastructure, with an automated ordering and shipping system
So despite everything we did well, then why is it that I lost, 100,000 USD of my own money?
The 5 Reasons I Lost $100,000
Number 1 – Our business model had some serious flaws
The good news: there was a real need from consumers to have a shapewear to feel proud of instead of hiding in their bathroom so their partners wouldn’t see them wearing it. The other good news was that we did have a product that looked fantastic, some even calling it the first shapewear you could wear with nothing on and feel good about it. Finally we were doing good marketing: people understood the benefit and loved our brand world.
High cost of material
Need to sell in retail
Therefore our Price to consumer was too high
+ being in retail increased the complexity of the business
Get the business model right
- Solve a real issue
- Offer a superior solution
- Define a clear customer profile
- Do good marketing
- Make financials work
- Ensure the right distribution channel
#2 We launched before qualifying an MVP (1)
The feedback from retailers?
Looks like a scuba diving suit
The feedback from consumers?
It’s too small, can you send a larger one?
Now it’s too large, send me back the previous one!
No clearly I can’t fit in it, can you please refund?
Unexpected costs spike: $100 shipping costs + 2 unsellable garment + taxes + warehouse costs
Retail distribution needed
Develop a Minimum Viable Product
And TEST TEST TEST
TEST a bit more
#3 We didn’t know the category
And please notice that this was because at the time we were still working in Procter & Gamble therefore it was impossible for us to start a business in a category we knew and which would have competed against our employer.
On top of this the experts we hired didn’t help make the right decisions for a startup
We produced way too high volumes “to be ready for xmas” and avoid a hypothetical out of stock
But, the experts told us “don’t worry, if you don’t sell, I can get your stock sold to brokers. Easily. No way you will lose money”. The rest is history, I would say…
- Start in a category you know
- If you don’t know, take your time, don’t rush in to it, financially plan your personal expenses to not be in a situation where you need to rush into decisions. Take the time to learn. If possible bring an expert of the category in the board
- If you hire, stay vigilant. Remember that at the end of the day, most consultants #1 priority is to be paid at the end of the month. While your #1 priority is to succeed with your business. Those 2 objectives can at times contradict each other.
#4 We couldn’t grow slowly and adjust
- High production volumes
- Which generated a high level of stock
- And as a consequence it was difficult to pivot and adapt to market’s feedback
- Plan for slow growth
- And If impossible…
… find a way
#5 We thought everything would be alright
Oh god, we really thought that
If you work hard enough,
If you pay enough money,
Things will ultimately get better
If you have a business model issue, like we did, you can work hard, pay a lot of money and you will fail.
Despite entrepreneurs being dreamers and generally optimistic, it’s important to Develop a healthy pessimism
- When you take a decision, Plan best AND worst case scenarios
- Plan steps on the way to success, don’t assume success from the start
- I would add : Decide your stop-loss point. When and what are the conditions based on which you’ll decide enough is enough, let’s stop this. It takes courage to stop a business, but at times it is also the smartest thing to do.
We have seen my 5 mistakes and here is a Summary of the lessons I’ve learned and that I advise you to follow
Get the business model right
Develop a Minimum Viable Product And TEST
Know your category
Plan for slow growth (the business should adapt to you and your timing, not the other way around)
And last, Develop a healthy pessimism
We have seen the mistakes, the lessons, and we have arrived to the last part: WHY I WOULD HAPPILY
LOSE THE MONEY AGAIN ?
And this is NOT Because I’m crazy, although some friends of mine might disagree
I’m happy because I believe the following.
- Generally you succeed in your third+ company: so for me it’s one less to go!
- More seriously, I learned tons – grace & Wilde was definitively more tailored and effective than an MBA
- This experience showed me I could be an entrepreneur on top of succeeding in corporate
- It helps me tremendously in my current businesses . Take Incredible cuisine. We offer mums who have a demanding career, and don’t see their kids as much as they would like to, a cake their kids will never forget.For that, we charge double the price of the market. Not bad at all I think;)
- I can now help other entrepreneurs avoid the mistakes I made
How I can help business owners by leveraging my corporate knowledge and my startup experience?
- Consulting: I do it for you model. I assess your company, I propose a plan to improve results and I implement it
- I do 1o1 Coaching – this is different from consulting. In this case we do it together. I teach you the principles, I explain you how to do it, I give you some additional ideas and you decide and execute the plan
- The third thing I will start doing, by popular demand is a business model and marketing course called Customers Seduction, the kick off is on the 2th of November. This course helps entrepreneurs move away from a business model where clients continuously ask for discounts, to work for free, and in general where selling is hard – to a model where clients will desire your products and services and where the sales talk is going to be a fruitful discussion for both parties, vs a confrontational stressful moment. The cool thing about the course, is that you can take it first and only after pay what you think it’s worth to you. It’s a bit madness, but forces me to deliver superior material and coaching to my students.
Whether you take my course or not, do get external help: leverage this event, course, coaches, mentors.
“90% of small businesses fail because their owner y lack skills and knowledge”
In particular, “70 percent of small businesses that receive mentoring survive more than five years – double the survival rate of non-mentored businesses.”
I’m almost done.
I will leave you with 2 things:
A quote from Eleanor Roosevelt
[BLOKQUOTE]Learn from the mistakes of others. You can’t live long enough to make them all yourself.[/BLOKQUOTE]
And my contact details. Sent me your questions or comments, give me feedback on the presentation and I will be glad to have you in my Customers Seduction course at serenademaio.com
If you speak Italian, here is a previous version of the talk, for the Week of the Italian Language in Geneva. Warning: the sound quality is pretty low – If you are still motivated, here it is: