5 in 5: Lessons in Being a Startup Social Entrepreneur August 17, 2019 14:21
Written by MADI Apparel designer and founder - Hayley Besheer Santell
Five years as business owner... woah.
It doesn't quite seem real that just eight years ago I moved to a small beach town called New Smyrna Beach with my best friend and then roommate. Just a year later, we decided to build a business that focused on positively impacting humans and the environment. That very year, my co-creator decided to step down as a co-founder and remain just my best friend.
Then in 2014, as a fearless yet equally terrified female entrepreneur (is that even a thing?), I dove in and launched MADI Apparel as a solo business owner. I pretty much didn't know anything with the exception of one thing: I wanted to make a difference through the arms of my business — for people and the planet.
Over these last five years, I've stumbled through a rigorous learning curve. I've found myself laughing through mistakes, asking a lot of "stupid" questions, humbly asking my team for grace, losing a lot of sleep, attempting to hold my head above water when the to-dos never end, and smiling really big when something really amazing happens — like landing our products in a department store. Fake it till you make it, right?
I can't tell you exactly HOW to start a business, because every journey and circumstance is different. But, here are five tips for entrepreneurs that I've learned over the last five years as a social entrepreneur myself — both good and bad — that may come in handy when starting a business or when the going gets tough.
1. Only use an interest-free or minimal-interest business credit card
And more importantly, stick to only one. You want to keep debt as low as possible in your first few years. Don't get in the habit of using money your business doesn't have. (See my next two points for advice below on how to do that.) If you have great credit, you'll probably qualify for a credit card with a huge limit. Just because you qualify for a big limit doesn't mean you should fill it up with money you aren't making. It will be like quicksand when trying to later pay it off with money you need to use on growing the business.
I recommend signing up for a credit card with a low credit limit and low interest rate. Treat it like a debit card, charge only small amounts at a time, and pay it off immediately. This will not only help you grow organically at the pace your business is moving, but it will keep your sanity and your credit score in check. When you hit the big bucks, THEN switch to a credit card with an annual fee, great rewards and high interest.
Pro tip for clothing or electronic brands:
Don't exhibit at a big trade show in year one, two or three! I promise, this will be tempting. The trade shows will find you online and contact you a lot. You are going to be hungry for business and wanting to just soar right away with beaucoup de wholesale orders.
But, here's the catch that the expos won't tell you before signing up: Wholesale buyers have already pre-booked appointments with more established brands before the apparel and tech expo even starts. They go straight to those booths for their appointments, make the orders they're interested in, and then 90% of them leave after. Almost always only new and small store owners are actually walking the floor looking for new, unknown brands.
Also, it's expensive! For (the smallest sized) booth fee plus travel and lodging for you and a few team members — this can cost upwards of $7,000. You won't have that money just sitting around (because as a startup, you will need it for other things.) So, you'll most likely want to put it on your business credit card. Don't fall in this trap!
2. Make a budget every year — and stick to it.
This is a pain, but it's absolutely necessary. Make sure hiring a CPA is included in that budget (unless you are a finance expert) — that's one of the most important things. This budget will be a guess in the beginning, but account for more expenses than you think. Meet with experienced entrepreneurs in businesses similar to yours, and ask them to look over your budget to see if you're missing anything important. If you are opening a brick and mortar store, make sure to account for multiple months of rent and a savings pot in case certain months are slow and money gets tight.
Don't launch until you've raised or saved money for your starting expenses, or you'll never get ahead.
Before you launch your business, sign up for Quickbooks and hire a CPA to walk you through setting it up. I'd highly recommend our CPA, Frank Reardon of Magis Business Services. Then, literally block out an hour of your schedule twice a month to update it. Personally, I'm a procrastinator. If you get in a habit of doing this, you'll know about every check that a vendor hasn't deposited, a real-time update of how much money is in your account, etc. It will also make tax time easy breezy. If you update as you go, you wont have to spend days getting it together and you won't have to pay your CPA extra to bail you out of a screwed-up report.
Pro tip when you hit year four:At this point, you will have 12 quarters of records/sales under your belt. You'll be able to forecast trends within your small business operations.
- The last quarter (October to December) is our biggest sales quarter.
- The first quarter of the following year (Jan to March), and the quarter before holiday (July to September) we spend the most on Cost of Goods Sold aka contracting our cut and sew teams to produce more of our products and re-fill the shelves.
Whatever the trends end up to be for your business, use them as tools for forecasting the months when you need to hoard money and the months when you know you can spend a little more on advertising, etc.
Not a financial wiz? That's okay, I'm not either! Seek an advisor to keep in your court and guide you as you stumble. My friend and business advisor, Cary Silverman, has helped me from the beginning in areas I'm weak in like budgeting and forecasting sales/expense trends. It's important to let key people into your world of entrepreneurship and lift you up in your areas of weakness.
3. Raise initial funds through crowdfunding or a local fundraiser
These first three pieces of advice all tie together and are in order of importance. Crowdfunding campaign platforms like Indiegogo and Kickstarter have started to become pretty saturated. Although, your friends, family and close community will most likely always support something you're starting. So, use your network to your advantage and lead them to a website or event to donate. If everyone helps a little — your startup funds will add up!
This is the smartest debt-free small business capital you can seek.
Why? Well, it's interest-free. No one has an actual stake in your business - you (and any co-founder) will still own 100%. The donors will simply have a stake in the heart of your business, which is the best part. You'll have the opportunity to lay out your plan, and donors will be the first to try whatever you're launching! It may be just as exciting for them as it is for you. So be vulnerable, lay it all out there, and let your network join you.
Pro Tip: Set your fundraising goal lower than you hope for so that it's achievable.
Pro Tip regarding seeking capital investors:Grow organically first, then seek investments (unless they're interest-free like a loan from a family member or crowdfunding).
4. Listen to your gut
Don't let all of the opinions coming from all directions stress you out.
As an entrepreneur, you will be surrounded by a lot of advisors and a lot of advice from friends, family, customers, you name it. It's great to always be open to advice and let in your staff and network into decisions — especially ones you're unsure of. Your new business will be forming and molding — and ultimately, you're the one with the vision for the brand.Take opinions with a grain of salt and not so literally all the time.
Use them as tools. Keep some, toss some, consider some, etc. At the end of the day, you know what's best for the brand and don't be afraid to stay true to your initial instinct and your gut when it comes to big and small decisions.
Use MADI Apparel as an example. We can't be everything to everyone. We already have multiple focuses that define our brand and make an impact. Like donating underwear, U.S. production, training and employing women to sew, sustainable fabrics, ethical motives, etc. We stay true to these key elements that define our brand. But, we can't stretch to the end of the world to please each potential customer.
We literally focus on making a positive impact in every area, but we are not perfect. There are occasional bullies criticizing us for our limited size run (XS - XL), saying we don't cater to all body types. Well, it's not as simple as people think to have expanded size runs in our collection - this is expensive for a startup brand, especially when larger sizes sit on our shelves and don't sell as quickly. As we grow, we plan to expand to more sizes. 75% of our color collections are hand dyed in small batches (lower water waste) with organic dye by a local artist. This is rarely ever done by any of our competitors because it's easier and cheaper to dye in big batches. But, we still get bullies criticizing any products that are not dyed with organic dyes. We are a startup. And we are growing and learning, always.
Remember this as an entrepreneur when your business gets bullied by people trolling internet, because this will happen. No matter how much you give or try and "do good", some people still find a way to criticize you. Don't take it personally. Don't let your team take it personally. If you're truly giving your all and doing the best you can, find comfort in that and keep moving.
5. Take vacations and breaks
Can someone say mental breakdown?
I've experienced plenty of those over the years. Although, this is contradictory to my personality. My parents have always talked about how I was such an easy, go-with-the-flow baby. That baby turned into a laid-back teenager and then adult. Even this business was formulated on a whim after a spontaneous move across the country to the beach. Even the most easy-going business owners need grace, breaks and "me time".
I recommend literally scheduling "me time" into your calendar. Block out a portion of your daily schedule to go to the gym as if it's a meeting or a regular to-do.
Set a time for work to end and the laptop to close each night, and stick to it. This was really important for me when I got married. Before my husband was around, I would stay up and work until midnight sometimes. It's easy to slide into this as an entrepreneur wearing many hats, because the to-do list never ends. YOU have to be the one to stay dedicated to your recharge time. If you don't, you'll burn out quickly.
Best of luck to all my entrepreneurs out there! I am rooting for you.