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The Stories.

You Aren’t a Real Company Until You Have This

4/11/2025

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When my partner and I started our toy company we had taken an old, tired product (a hula hoop) and reinvented it in multiple fluorescent colors.

It was beautiful to see when you walked by the display in a store.

The existing hula hoops at that time were boring light blue and pink. The gender association cliche of those colors was mildly annoying to me, too.

We called our product, the Maui Hoop and invested in a booth at the New York Toy Fair. We planned a lavish, Hawaiian-themed decor.

However, my partner and I knew that our sales would be limited to just one product, however cool it was.

So we invented an even cooler product which we called the New Wave Hoop (it was the 80s, so … New Wave).

Even with two products, our booth seemed a little empty so we came up with two more products that weren’t very good at all.

In fact, I only remember one of them — a plastic tennis racket with no strings. A kid could dip it in a bucket of soapy water and wave it in the air to make giant bubbles.

We didn’t get any orders on those.

We did receive many orders, including a few chain stores on our two different hoops, and the following year we added quite a few things to our line of products.

We were off and running.

What You Need to Start a CompanyYou can start a company with one great product, but if you want to grow and be a real company, you must add more.

Often, small companies are started by creatives who have an idea for a really cool product and then that’s all they do.

They can’t or won’t add more products to their line. I’ve observed several reasons for this:

  • Maybe they don’t have enough money and they don’t have the know-how to raise money.
  • Often, they feel like they want to see if the initial product is going to do well before investing more time and money.
  • They just don’t have the stomach for taking on additional risk.
  • They can’t think of additional products to add that are novel enough to do well in the market.

I call this the One Product Paradox.

You think starting and running a company will be easier and safer with just one product to manage, but it’s actually harder.

These companies always dwindle until they go out of business.

Typically, buyers don’t want to buy from a company with only one product.

A retail buyer takes a chance to order a product from a startup. It is always a bigger risk than buying from an established company.

Why?

It takes work to set up a new supplier in the system.
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If they only sell one thing, or if they don’t offer new products every season, why go to all that work? It’s easier to buy a similar product from a competitor that’s already set up in the system.

Most novel products only have a lifespan of one or two years unless it becomes a classic which is rare. Again, not worth setting them up.

Also, the statistics are working against startups in general. They have a higher chance of going out of business, and if they don’t have multiple products, that chance increases.

I’ve observed the one-product paradox with more than one friend.

In all cases, they invented a unique product, went to the effort and expense to manufacture and buy inventory, and then tried to sell it.

I told two of them to add new products to their line. And no, different colors or patterns don’t qualify as new products.

Product extensions are easy. Take the company in the photo above (which is completely hypothetical; I don’t know this company).

I’ll posit that they start with face wash, then add moisturizer, then facial cleanser, eye cream, etc. Voila. It’s an entire line of products.

The only novel part of this line could be the charcoal facial cleanser. Let’s say they were the first to introduce this concept. It’s completely novel.

The brand’s other, subsequent products might be completely ordinary in the sphere of facial care.
It doesn’t matter. If people love the cleanser, they have a good chance of buying the add-on products. Then the company can become a brand.

After establishing itself and earning money, maybe they can add makeup products. Or sunscreen products. Or haircare products — shampoo infused with charcoal?

That’s how you add new products.

That is what you must do: add new products.

After your first couple of seasons and decent performance at retail, buyers will continue to buy from you.
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Then you will have a real company.
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Critical Difference Between Prospecting for Customers and Prospecting for Money

3/11/2025

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And why money should never be overlooked.
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Of course you need customers. You need a few for proof of concept and to show you can sell. These things are important for investors.

But don’t overlook the importance of cash. Because cash is king. Customers are queen. Or bishops maybe.

A CEO who is a potential client needs money. He’s hired three people to go out and prospect for customers. This is important. However, there is a problem if and when those orders land on his desk.

How is he going to service those orders? He needs to add more equipment. He needs to pay for that equipment. This is for a SaaS company, but the same goes for companies that are making products and need to buy raw materials. And even service companies may need to hire more employees and pay them. In a way, they are the raw materials.

I’ve worked with many CEOs in the last couple months as we grow our consulting practice. I’ve seen this problem over and over. Companies are so obsessed with customers that they forget about making their customers happy. You need cash to do that.

The last thing you want is to land an important customer/client, and upset them to the point they won’t want to do business with you anymore.

As someone who writes about cash flow, has done webinars and seminars about cash flow and is writing a book about cash flow, I am firmly in the camp of bootstrapping a startup. I’ve written about that, too. If you can bootstrap, by all means. However, it’s hard. And it takes a lot longer.

We know that around three quarters of startups rely on a founder’s capital and cash from sales; that is the definition of bootstrapping (which comes from the expression, pull yourself up by the bootstraps).

However, we also know that two-thirds of startups fail before their first decade in business. I don’t know. Maybe there’s a connection there.

My partner and I started our first business in 1988, bootstrapped it, and had a very happy ending. It is possible. But we had some unique help including a family business providing our component parts giving us 120 days accounts payable terms. That’s difficult to find out in the wild.

Customers are vitally important. Cash is more important. Why? Let’s say you get a huge order out of the starting gate because, of course, your product is the best. How are you going to finance that?
What if you have enough money to process the order, but you don’t have enough to cover your overhead expenses (rent, salary, insurance, etc.) while you wait to actually collect the money owed to you? That’s a thing.

What you need is a couple of customers to show proof of concept. After that, put together a pitch deck, and go to an investor to raise money. Then you’re off and running.

If you can get purchase orders from a reputable company, you can also raise money from a bank. Many banks (or factors) will lend money against purchase orders.

When I say raise money, it doesn’t have to be from an investor who will take a percentage of your company. It can be debt from a bank as well. You just have to pay it back. With interest, of course.
There are a lot of creative options to raise money. I explain some of them in my Medium post, “Why Cash is King and How to Get More of It.”

If you need to know how to construct a good pitch deck, send me your email at: [email protected], and I’ll reply with my two-page outline. My partners and I have raised tens of millions of dollars using it as a template.

Originally published in Data Driven Investor.

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How We Launched a Company From a Kick-Ass Trade Show Booth

8/29/2024

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Photo by Sara Krulwich/The New York Times
I don’t remember the exact year, but I remember that it was the beginning of the end of my marriage.

My then husband and I landed tickets to Miss Saigon when it was the show to see on Broadway.

The story, while great (a reinterpretation of Madame Butterfly), was eclipsed in my opinion by the set design.

For those who might question that, there was an actual helicopter on the stage.

I felt like I was in Saigon at the end of the ill-fated Vietnam War, besieged and fighting to get on one of the last helicopters.

I sobbed. Was it the play or the marriage? Jury’s still out on that.

Regardless, I learned something important.

Set design is everything.

When said husband and I readied for our first trade show a few months later, I took that revelation to heart.

How We Made Our Booth a Must-See for BuyersWe had reserved a booth at the International Toy Fair in the Jacob Javits Center and needed to get attention and orders.

We only had four products and two of them were questionable. One was just okay. And one was a winner.

The idea was to create an amazing booth that would garner us attention.

We didn’t have a lot of money for an advertising budget.

So we planned a kick-ass booth.

The name of our company was, Maui Toys.

We decided to create a, “beach experience” in a ten feet by ten feet area.

The floor of the booth was covered in white sand with iridescent glitter mixed throughout.

We found pastel, cardboard cut-out palm trees (life-sized) and planted four of them in the sand.

I hand painted an ocean sunset mural that hung across the back of the booth.

A couple of beach chairs were planted in the sand.

The floor was littered with several sea shells and star fish. A beach ball and beach towels sat nearby.

In the middle of the booth was a pyrex stand that held a display of our four products.

And the coup d’etat was a ten foot long neon sign placed above the booth with our palm tree logo and the name of the company.

It was the talk of the show and everyone came to our booth just to see it. Then, of course, they looked at our products while there and put in orders.

Our company was off and running.

Trade ShowsYou can and should do the same thing. I still think trade shows are one of the best ways to launch a company.

It is relatively inexpensive and if you do your research you can usually find a trade show where buyers are known to write orders.

There are other advantages:
  1. You can see what your competition is offering and their pricing. Try to wrangle one of their sales brochures.
  2. Find independent sales reps to sell your products. It’s a great way to start your business. Many companies print their sales reps (with territories), on their catalogs.
  3. Establish brand identity. This is another reason why your booth design is so important.
  4. Ability to attend educational events by industry experts. Learn about your industry!
  5. Find employees that may be looking for companies to join.
  6. Find vendors that may be looking for customers.
  7. Find professionals that are offering services: software, designers, law firms, accounting firms, public relations firms, and marketing firms.
  8. Press opportunities.
  9. Networking in general.

Do some research and choose the trade show that is right for you.

Don’t spend the money for small shows that don’t offer much.

It still costs money to secure a booth as well as design, sales materials, creative giveaways, travel, and hotel and food while you’re there. You’ll need a helper or two to set up the booth and work the show. Budget all of that appropriately. Make the most of your investment.
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Read my article on reverse engineering your dates to make sure you are ready on time: The One Clear Difference Between a Good Businessperson and a Bad Businessperson

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One Wise (and Simple) Piece of Entrepreneurial Advice

8/29/2024

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Illustration by author on Adobe Express
Follow this advice no matter how much you might want to avoid it.

None of us likes to do tasks that we find draining.

You must do it, grasshopper.

Here it is:

Read the contracts that your attorney writes for you.

That’s it!

I know you might be thinking, “That’s all? I do that anyway.”

Good for you and then you can skip right down to the "likes".

For those of you who don’t, I will tell you why this is vital and the most painless way to do it.

Why is this vital?You cannot trust your attorney. You just can’t.

Attorneys are not business people. Not to offend anyone, but most attorneys don’t understand business that well, or your business, or just what you want for your business.

They know the law. Good! Because you probably don’t.

But you must go through your contracts to make sure they get all your business points down correctly.

Are you supposed to get 35% of the company or 40%? Are you to be paid 5% or 5.5% on that loan or for that licensing fee?

Those are examples of business points.

How is it done in the most painless way?I have found that it’s best to do this at the end of the day.

Finish all your other day’s work beforehand.

No distractions.
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Print out a copy of the contract or agreement or whatever it is that you’ve hired a lawyer to write for you.

Personally, I find that a nice glass of red wine helps, but if you don’t drink wine, try a cup of your favorite herbal tea.

Go through your printed copy with a red pen and a highlighter. Read it, highlight mistakes, fill in any blanks, and make notes.

Call your attorney the next day and communicate any mistakes.
Voila. You’re done.

Depending on the length of the contract, it should take a couple hours at the most.

It could make the difference between a worthless piece of paper, and something that might save your business.
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As President Ronald Reagan once said, “Trust but verify.”
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How I Use Sports Wisdom to Release a Successful Product

6/14/2024

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“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” ~Wayne Gretkzy

My partner played soccer (football) his whole life up until he was in his 40s.

He also coached his kids in soccer for many years.

He’s European.

My partner paraphrased the Wayne Gretzky quote for soccer and continually pressed it on the kids he coached, including his own kids:

“Don’t pass the ball to where your teammate is. Pass it to where they’re going to be.”

This concept is, of course, made more difficult because any sports game is fluid.

You don’t really know where someone is going to be located at a certain point in time.

It’s a game. Everyone is running around. And it depends on where the other team’s defenders are, too.

Here are the takeaways from this wise analogy:


  • Have a strategic plan with contingencies.
  • Make an emotional connection with your team. It improves the odds that you know where they are going to be on the field of play. Know their strengths and weaknesses. Leverage strengths and shore up weaknesses.
  • Educate yourself on your competition. Avoid those defenders.
  • Have faith in yourself and your vision.
  • And sometimes, you just must close your eyes and take a chance, take the pass.

Because the great Wayne Gretzky also said:

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“You miss 100% of the shots you don’t take.”
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​​Ah, sports is always such a great metaphor for business and life in general.

This is what you must do when planning to create and make a product or launch a service.

You don’t make a product based on where everyone is right now. You make a product for where they’re going to be. Same goes for a service if that’s what you are going to offer.

Don’t develop an idea or service or educational course for where the world is, where your potential client is. Develop it for where they should be.

Look at your competition and create something that is different and better than what is already out there. Observe where the empty spots are.

You also plan a release strategy based on where you think the market will be a year, or even a few years, from now.

There’s a certain predictive, even futuristic element to this theory.

How does one know what is going to happen in the future?

Well, we don’t.

But we can make educated guesses based on research and brainstorming with our team.

I write about this more in a past post: The Wisdom of Your Crowd.
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Thanks for reading! And feel free to reach out with any questions.
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8 Workarounds to Manage Your Cash Flow if Finance is Not Your Strong Suit

2/14/2024

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Photo by krakenimages on Unsplash

It could save your company.
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Whether you are a startup or a small to medium enterprise (SME), you will always need financial savvy to function and grow or you will fail.

Unfortunately many business owners are not adept at numbers at all. Usually they are designers, marketers, programmers or even sales people. If you count yourself in that category, read on because this is vitally important for your company’s survival.

First of all, you are not alone. My first job out of graduate school was in investment banking. One of my first tasks was to write a private placement memorandum to raise capital for a savings and loan customer.

I had no idea what I was doing. I was an econ major and while I was great at math and even taught statistics to undergraduates, I didn’t know how to even read an income statement let alone crunch numbers that would be a necessary part of my job.

Luckily, my office mate and later one of my closest friends had just graduated with an MBA from the Anderson School of Management at UCLA. She taught me how to read and analyze financial statements.

I still remember her teaching me about balance sheets, which are not intuitive at all when you think of it. 

“Remember, a balance sheet is just a snapshot in time,” she said. “It will change from day-to-day.” And for comparison she explained, “An income statement is an accumulation of a period of time.”

Thank you, Michelle.

Ensuring you have enough money to start, survive, manage and grow your company comes down to one main thing: financial acumen. 

And if that is not in your skill set, fear not, I’ll give you some workarounds. 

Analyze Your Financial Statements and Make Changes Accordingly

The purpose of analyzing your financial statements is to see where you are falling short or trending down. 

Where can you cut expenses? 

Should you raise your prices? 

Are your gross profit margins high enough? 

Can you decrease your cost of goods sold? 

What about payroll, taxes, interest rates, benefit costs, rent, legal fees, etc.? 

I know there are a lot of things to understand and scrutinize, but the good news is, there are a lot of areas where you can positively affect your cash flow and future. 

What if you don’t know how to read or do an analysis of a set of financial statements – like me when I started out in my career?  

I’ve had clients who didn’t even know if they had an accurate set of financial statements. (They didn’t.)

Well, if that’s the case, here are some actionable workarounds and a roadmap to follow.

  1. I always say that a good controller or bookkeeper should be your first hire. In our first company, my partner and I hired a controller as our first administrative employee. And we were both in finance! (Okay, I violated my next point, but we were newbies.) Even though we were both financially literate, we were doing other things in the company like operations, design and sales. Hence our first hire. 
  2. Consider a partner that is a finance or accounting person. Partners should have a skill set that complements yours. Don’t partner with someone because you like them or they share your vision. Choose a partner based on their skill set. If you’re in design or sales, choose someone strong in finance or accounting.
  3. Take a couple of accounting courses at your local college or online. Do the work. Even if you have a finance partner, you should still know the basics of accounting and finance. I cannot stress this enough. If you don’t or won’t put a priority on this, you probably won’t make it.  
  4. Hire a very capable outside accountant (get referrals from successful businesses you know) to help you set up your financial reporting and do your year end numbers. No. Quickbooks and the like is not enough. You need to know where everything goes within Quickbooks.
  5. If you just don’t have the time or bandwidth to take a class, have your outside accountant teach you. You’re giving them your business. It’s the least they can do.
  6. Your board of advisors or mentors can help as well. 
  7. Start banking with a smallish regional bank and make your banker your best friend. Take him or her to lunch. Keep them informed of your progress. Ask them for help in regards to what they need to see financially in your company. ​
  8. Have fun. Schedule a year end party where you go through all your results and give yourself credit for learning how to do that. 

If you can’t do an analysis or even read a financial statement, learn to. No excuses. 

And remember, the truth is always in the numbers.

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The Hidden Impact of Personal Issues on Your Business

12/28/2023

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Even if you want to pretend that you can compartmentalize them.
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I never had personal problems that impacted my business life.

Until I did.

I was going through a divorce with a two-year old and a five-year old. My then husband and I worked together. I sold my half of the company to him for peanuts so he would let me move out of state with our children. This needed to be arranged because I hated where we lived and what I was doing and I was so miserable that I couldn’t get out of bed in the morning. I was afraid that I might die. And there was more.

I had to arrange for half of our belongings to be moved across the country.

I had to find a new house to rent. I had to get a new job so I could afford said house. I had to enroll my daughter in day care and my son in kindergarten and find after-school care, because my new job didn’t end at noon.

I had to find a lawyer to help me with my custody case. And I had to lease a new car, because mine kept inconveniently breaking down.

New friends were in order. And not easy to find.

There was the need for a new pediatrician. A new doctor for me, too.

Believe it or not, there were more gory problems and wretched details. I won’t bore you with them here because they are too damn depressing. It made me cry just writing about this; I cried for my 31-year old self.

Everyday I showed up at my new job in a near catatonic state. In the space of less than a year, I had completely blown up my life all the while thinking I would be okay and that I could manage it all. I wasn’t and I couldn’t. At least not then.

Which brings me to the point of this post.

If you are going through an existential crisis or a profound life/health/financial challenge or even just a rough patch in your personal life, you owe it to yourself and your company to prepare for it and address it. Because shoving it to the back burner and trying to compartmentalize it probably won’t work.

While I’d never recommend bringing your problems to work everyday in all their messy existence, there are many personal problems that can bring you to your knees and in my consulting practice, I’ve seen them bankrupt a business.

Common Problems That Can Impact Your Business

Stress and Burnout: The stress of running a business can take a toll on an owner’s mental and physical health, leading to burnout and reduced productivity.

Financial Stress: Personal financial issues, such as personal debt or unexpected expenses, can spill over into the business and affect decision-making.

Time Management: Balancing the demands of running a business with personal life and family responsibilities can be a significant challenge.

Health Issues: Personal health problems, illness, or injuries can limit an owner’s ability to be actively involved in the business. Family health issues can also affect an owner.

Family and Relationship Issues: Conflict or stress in personal relationships, including family and marriage, can distract from business responsibilities. Lack of spousal support in a business endeavor can be a real challenge. This is especially true for startup founders.

Mental Health: Mental health issues, such as anxiety or depression, can impact a business owner’s decision-making and overall effectiveness. Adult ADD and ADHD can be a huge issue for some.

Substance Abuse: Alcohol or substance abuse problems can impair judgment and hinder the ability to manage a business effectively. This can affect a business owner or a member of his/her immediate or extended family.

Lack of Work-Life Balance: Difficulty in separating personal life from work life can lead to exhaustion and strained relationships.

Isolation: Business owners may experience feelings of isolation or loneliness, especially in cases where they have limited social interaction outside of work.

Legal Issues: Personal legal problems, such as divorce or lawsuits, can divert attention and resources away from the business.

Motivation and Passion: Personal struggles can affect an owner’s motivation and passion for the business, potentially leading to decreased engagement and commitment.

Lack of Self-Care: Neglecting self-care, including exercise, relaxation, and proper nutrition, can impact overall well-being and business performance.

Financial Dependency: Relying solely on the business for personal income can create financial vulnerability when the business faces challenges.

How to Handle Personal Problems at Work

According to Vistage, the global executive coaching organization, putting contingencies in place for unforeseen personal circumstances is something every CEO should have in place. They compare it to what you would do for an exit/succession plan or maternity leave.

A contingency plan may not be something executives would normally think to do, but one that may hold the difference between a healthy business and one that falters under duress.

Part of having a viable plan is having a competent number two executive in place. Micromanagers may find it difficult to find, train and develop a replacement for themselves, but it is probably the most important thing they can do.

Executives should also be fully transparent with their team or their boss. You might be surprised how people will step up to help you. And you should be willing to do the same if your colleagues are going through their own personal problems. They will remember that.

When I was going through my divorce and custody battle, I wasn’t the owner of the company I worked for, but I was the top financial person. Who did I have to help fill in for my responsibilities when needed (which was often in those early days)? What did my plan look like?

I heavily leaned on our outside accountant. I also had an honest sit down with the owner of the company to explain what was going on. He appreciated that. I had a fabulous co-worker who helped — sometimes just to listen to my litany of problems. We were implementing new accounting system software and the guy who was installing it and training us was an enormous help.
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It’s amazing how supportive people can be when you are experiencing difficulties and are willing to be honest and ask for help. If you have a plan in place, it can save loads of time and even save your company.
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The Dynamic Factors Shaping Sales: Trends, Styles, and Consumer Desires

9/29/2023

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Common business problem number 8: market changes

I spent most of my career in the consumer products industry, namely in clothing, toys and seed products.

One of the benefits of selling consumer products is that it can be a relatively low barrier to entry. That means it doesn’t require much capital to get started. You can print a hundred t-shirts and start selling them under your new, super cool apparel label without a huge investment.

However, there is a big con that people often don’t pay attention to which is the necessity to take into consideration trends, styles and consumer desires. And that has led to failure after failure of some of the most iconic brands.
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Trends: Cabbage Patch Kids
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The Cabbage Patch Kids was a line of cloth dolls with plastic heads with soft fabric bodies, first produced in 1982 by Coleco Industries. It was said that they “grew” in a cabbage patch and no two were the same. And you didn’t buy them, you adopted them. Cute.

At the peak of their popularity, between 1983 and 1986, the dolls were highly sought-after toys for Christmas. Cabbage Patch riots occurred as parents literally fought to obtain the dolls for children.

In 1984, Cabbage Patch dolls and accessories produced a staggering $2 billion in global revenues. The fad predictably ended and Coleco’s sales plummeted from over $800 million in 1986 to nothing in 1988 when the company went out of business.
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To their credit, Coleco tried to introduce new toys, but nothing caught on like the Cabbage Patch dolls and their overhead was far too high as they hired people and leased space to fill the demand for their dolls. When the fad died off, they couldn’t react quickly enough to cut overhead.
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If the toy industry is the king of trends and fads, then the fashion industry it the queen of shifting styles.
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Style: True Religion Jeans
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There’s no industry that reflects the style phenomenon more than the fashion industry.

For starters, fashion is seasonal. If you’re making four seasons a year (and most companies do at least that), you have a challenge if you make or buy too much inventory. It’s hard to sell sweaters in the summer.

Additionally, fashion styles change rapidly. Consider jeans. We have gone from pedal pushers to bell bottoms to hip huggers, skinny jeans, wide-legged, grandma jeans, boyfriend jeans, high waisted, low waisted, distressed, acid washed (you’ve got to love the 80s), and everything in between.

It brings to mind the premium denim brand, True Religion®. The large white stitching sewn over every seam with the happy Buddha playing the guitar label, was all the rage when it first came out, but after a couple years, people were ready to move on to the next thing.
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Ultimately, True Religion had two bankruptcy filings in 2017 and again in 2020.
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Consumer Desires: Eastman Kodak
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Many companies have been affected by changing consumer desires over time. Consumer preferences can shift due to various factors, including evolving tastes, societal trends, economic conditions, and technological advancements.

A good example of this dynamic is the Eastman Kodak company. From its inception, Kodak, a renowned photography company, dominated the American photography industry. As late as 1976, Kodak commanded 90% of film sales and 85% of camera sales in the U.S., according to a 2005 case study for Harvard Business School. By 1988, Kodak employed over 145,000 workers worldwide. 1996 was the peak year for Kodak.

Kodak faced challenges as consumer desires shifted from film-based photography to digital photography. Kodak’s failure to pivot effectively into the digital camera and imaging market had a significant impact on its business. By 2012, the company was bankrupt.

Suggestions to help you manage this common business problem.

1. Be adaptable. If you have a unique and trendy product, know that the desire for it will end. It will. I guarantee it. Always be thinking ahead and re-introducing a new trend, a new style. Be known as the company that is always willing to change.

2. Be a visionary. It takes more than just being willing to change; it’s being creative enough and forward thinking enough to look into the future and predict where you think customer preferences are heading. Shop a lot. Go to trade shows. Read. Study current events and trends. Think about what you love and are attracted to and reinterpret that. Interview or survey your customers.

3. Be very stingy with your inventory. Don’t assume you can sell through reorders or by landing new customers. Retailers buy their inventory many months in advance and they often buy too much as well. Don’t assume they will reorder or take on a new supplier at the last minute. Read more in my article: First Loss is Best Loss. I’ve seen inventory bankrupt a company, and it you don’t have too much, it’s easier to pivot to another style.

4. Market creatively. When you do come up with a new idea, interpretation or adaptation of your products, develop a worthy marketing strategy to get the word out. Do videos or articles or social media about it. Explore using influencers. Invest in marketing. Always.

5. Create a feeling of scarcity. At our clothing company, we printed six different t-shirts and sweatshirt designs. We only made about 2,000 or so. We called them limited editions. We never printed them again even if they sold out which most did. We designed clothing pieces to go with them and we never made those again either. We actually interviewed stores that wanted to buy and sell our brand. We had the stores send photos of their space. We wanted to make sure the store was cool enough to carry our products. We never sold to more than one store in a given shopping location.

6. Be careful hiring people and leasing space for one successful product line. It could be a fad and it’s expensive and difficult to shrink overhead quickly.

7. Don’t ignore a new trend when you see one. Kodak knew that digital photography was coming, indeed, they had developed their own digital camera, but they shelved it because they didn’t want to cannibalize their sales of cameras, and more importantly film. They tried to stave it off, but of course, it was inevitable.

8. Keep yourself up-to-date on technology changes. Think about all the products that were obliterated by technological inventions like the fax machine to name just one. When it arrived on the market, it was the best thing since sliced bread. (And, okay, sliced bread.) When functional email arrived, no one really needed a fax machine any more. There are oodles of examples through the ages of products that became obsolete due to technological changes.

Consider this: only 10.4% of the Fortune 500 companies in 1955 have remained on the list during the 64 years since in 2019, and more than 89% of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies. Moreover, 52% of Fortune 500 companies, from as recent as 2000, are no longer with us.

And perhaps even more astounding is this projection: by some projections, 40% of today’s Fortune 500 companies won’t exist in 2025.

Why is it that these large companies cannot or will not be more adaptable to changing consumer desires? Too bureaucratic? Myopic management? Ego-driven decision making?

As a side note, I love the word desires. Originally, I used preferences, but desire is such a better word. CEOs, management and board members should have this question tattooed on their foreheads: WHAT DO MY CUSTOMERS DESIRE?

Perhaps this conundrum exists because people are naturally averse to change. It’s easier to use the same thing you’ve always used and resist using a completely new thing because you have to learn how to use it. It takes work. So, for people to be driven to overcome this natural human tendency (laziness), they literally have to desire it. I’ll admit: I am not an early adopter. Okay, but plenty of people are. And the rest will catch up eventually, even soon.

The desire has to be strong enough in people for them to learn a new thing or try a new thing. And it will happen. Because a new thing is almost always better than an old thing.

And as far as changing trends and styles go, people get tired of the same old thing. They are constantly seeking out new trends, new fads, new styles. People are always looking for the next new thing.

Technology is advancing at such an exponential rate that businesses have to constantly be on their toes. Think of advancements such as email and smartphones. Goodbye to fax machines, phone booths and now, land lines. Goodbye to video/dvd rentals (Blockbuster) and hello to Netflix and other streaming companies. What next? Cable TV, Dish TV? Probably gone soon.
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Be the company that offers people the new things and makes them want to desire it. Be the visionary and build from there.
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Change Your Algorithms. Solve Your Problems.

5/14/2023

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Sometimes your challenges, be they losing money in a particular department or trying to improve your hiring processes can be easily solved by creating an new algorithm. I’ll give you some ideas on how to do that. And here’s the best news, it’s easy.

We already use algorithms in so many areas of our life that we don’t even think about. Any habitual task you do in your daily routine probably includes an algorithm. 

An algorithm is just a recipe for doing something. The Oxford Dictionary’s definition is: a process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.

Whether it is making your bed in the morning or making a cake after dinner, it is essentially, a set of detailed steps to do something. 

So, if it is taking you too long to do something or if something in your life or business is inefficient, perhaps you should come up with a new algorithm. 

If you want to evaluate and change some of your processes, the first thing you should do is write down the steps you are currently using. If appropriate, add the cost to each step. Costs can be either time or money. 

If you’re interested in creating an algorithm on a computer, here’s a great resource: Coding Freak. The author gives you twenty five algorithms with links to the instructions in different programming languages. But, an algorithm can also be simple step-by-step instructions. If you’re looking to change your algorithm, start with the things that take the most time. Or it can be problems that you’re having with a particular department.

I’ll use an example of a company having problems with its inventory. Let’s say their inventory shrink is too high –  inventory is less than it should be based on what your accounting system says. 

This can commonly come from problems in your receiving department – the people who receive your products from another manufacturer or an exporter. Maybe you’re losing boxes, or the contents in each box is inflated, or you might be missing on-time payments because your accounting department isn’t getting the proper paperwork. Or your accounts payable clerk is wasting time chasing down paperwork in receiving. Regardless, it’s good to go through all your procedures occasionally. Keeps everyone honest.

As an example, your company imports toys from China and sell them in the U.S. The toys are delivered from a freight forwarder after they clear customs. Your first task is to write down each step your department is currently using to receive your merchandise. This is your current algorithm.

1.    Start by receiving purchase order from sourcing department. A simple wire basket can work for this step. 
2.     Receive boxes from the delivery truck along with manifest.
3.     Count the boxes. Make sure it matches the manifest.
4.     Make sure each box has a packing slip that tallies products in each box.
5.   Go through your basket and pull the correct purchase order. Match the purchase order to the packing lists.
6.     If all is in order, sign off on the purchase order and staple it to the packing lists.
7.   Put it in the in-box for the controller (accounting department). She runs vendor checks every Tuesday and Friday.

Let’s say that your inventory shrink is too high as I explained earlier. Your system is telling you that you should have $5 million in inventory at the end of the quarter, but when you do a manual count, it’s only $4.9 million. That’s a $100,000 difference. That’s a lot. Two percent to be exact. If your net profit margin is four percent, you’ve just lost half of your profits.

There’s probably one of three reasons for the difference:

1.     Your manual count is wrong. That could be from products that are not in the right place or whoever counted them missed something. Since inventory is kept by product number, it should be easy to see which products are off. Then you can recount those.
2.     Your employees or warehouse employees are stealing merchandise. That happens and there are simple ways to protect against that.
3.     You’re not receiving the amount of inventory that is listed on the packing list. In that case, your vendor is stealing from you. Maybe once you can give them the benefit of the doubt; mistakes can be made. But make sure it’s reflected on the paperwork you give back to the accounting department so you’re not paying for the shortage.
 
The important thing is that now you need to change your algorithm.
 
In between steps 4 and 5, you add two more steps:
 
4.a  Open one out of five boxes and count the products to make sure they match the packing slip. Depending on how many boxes you receive, you can count them all or set up a testing ratio. If one out of five boxes is correct, you’re probably good. 
4.b  If any boxes don’t match the packing slip, count the products in every box. 

Note: Check your vendor contract or Letter of Credit. They often allow a plus or minus to the total order. However, that should be reflected on the packing slip.

If your products are small items like sets of dice or buttons, it is easier to weigh your boxes that you know are exactly correct. Then weigh the boxes as they come in. 

Most suppliers now use bar codes on their boxes. In that case, you can easily receive your shipments into your accounting system, but you will still need to test the count or weight of boxes and make sure they match your packing slips.

You now have a new, better receiving algorithm and your inventory shrink and loss of profits will be fixed. 

Success is so often about collecting information and improving your processes. Try it on one small area of your business or life to increase your efficiency and solve your problems.

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A Patent is Only as Good as Your Ability to Defend It

4/27/2023

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Photo by Mateusz Wacławek on Unsplash
One of our clients has an incredibly valuable series of patents. The highly effective product made by his patented manufacturing system has recently skyrocketed with the pandemic. His timing was excellent by any estimation.

The only problem is that several companies have blatantly knocked off his product without any repercussions at all. Why?

Because he doesn’t have the enormous resources necessary to sue those companies for patent infringement. But let’s back up a moment.

The Ridiculous Cost of a Patent
According to Bitlaw Guidance, a patent attorney will usually charge between $8,000 and $10,000 for a patent application, and the cost can be higher. In most cases, you should budget between $15,000 and $20,000 to complete the patenting process for your invention. They’ve constructed a great graphic to show the costs by tasks. (This does not include international patents which are also very expensive.)
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If you wonder if you can go ahead and use your patent (sometimes referred to as the poor man’s patent) to make and distribute your product before you patent it, in most cases it will not hold up in a court of law.

What About Litigation?
Let’s say you spent $20,000 and got your patents and someone violated it. You then have to be in a position to sue them to stop using it.

Patent litigation costs between $2.3 million and $4 million on average, and it takes one to three years for a patent case to reach trial. Patent infringement lawsuits are settled in 95 percent to 97 percent of cases.

In conclusion, I’m not saying, don’t get your patent. I’m just saying, make sure you have the money set aside to do so and also to fight any infringers. Otherwise, skip the patent, try to be first to market, and establish your customer base based on other tangible benefits like customer service.

Disclaimer: I am not a patent attorney, I am just a patent holder. So check with your lawyer to confirm anything I write about here.
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