today’s biz ladies post comes from amy rutherford of red barn mercantile, with contributions by fellow shop owner angela phelps of le village marche. amy, a third generation antique dealer, has learned a thing or two about the many mistakes that occur along the path to success. today she shares with us the top 10 biz mistakes she made along the way in the hopes of helping us all recognize some possible issues that may arise (and hopefully avoid them!). thanks amy for sharing your personal experiences with us!-stephanie
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Top 10 Biz Lady Mistakes
1. Under capitalizing the business. We started in September, 2007 when there was still credit to be had, but quickly realized our expense projections were too low and our sales projections too high. Then the recession hit and no one could get credit. If I had it to do over again, I would have included another 20 – 30% in working capital.
2. Over estimating my success and over purchasing. Looking back I should have been more conservative with my marketing collateral expenses. For instance, I bought 500 pages of letterhead and am certain that 2.5 years later I still have 450 pages left. That’s also true of the 1,000 gift cards I had manufactured of which I still have 800 and the 2500 XL bags of which I still have 1500. Was mighty sure of myself!
3. Over indulging my sense of style and not my customers’. In my store, I buy what I like. There is precious little in there that I would not put in my own house. Sadly, just because I like it, doesn’t mean everyone else will. For instance, at High Point I fell in love with these patchwork Turkish rugs made from tents of nomad travelers. They were amazing, but no one responded to them. The pricepoint was too high and the style was too esoteric for my regular customer. We sold them at a big loss and moved on. Still might get one for my house one day.
4. Spreading myself too thin. Thankfully I have a tremendous staff! They take good care of the store while I’m away tending to my two young children and my other leadership roles. Had I to start over again, I may have waited until both my children were in elementary school. But I can’t tell my mother that or she will kill me!
5. Not establishing proper financial processes from the beginning. Boy, was I naïve! I thought I could manage my financials by simply looking at my checkbook balance. Had no idea how important something Quickbooks would be. After 2.5 years we are finally properly establishing financial processes so that we can stay ahead of the curve – and the creditor!
6. Not communicating with the end customer. We do a lot of custom orders – Cisco Brothers furniture, Dash & Albert rugs, Elizabeth Allen and Matteo bedding, and so on – which require a detailed order form. Imbedded in customization is a huge risk of being wrong and having to eat the mistake, as was the case recently, when a woman ordered a custom 36” round ottoman with Hable Construction’s Green Bean fabric. She kept telling my manager, Preston, that she trusted her and was sure whatever Preston recommended would be fabulous. Preston presented her with what we thought was the best design option for her. The woman said there was no need to send pictures that she trusted Preston. Sadly, we believed her. When she got the ottoman (which, by the way, was amazing and exactly what we intended and communicated to her) she was livid! It was not at all what she was expecting. But, because we never showed her pictures, never communicated to her via email the final version of what we were ordering, and never had her sign a special order form, then we were at fault. We could not prove that this is what we discussed and had to reimburse her for the slipcover. (We both knew that she ordered a 36” round ottoman, so thankfully we didn’t have to eat that.) We did not communicate properly to her our vision so we now have a wonderful green bean slipcover and the new ottoman is on order. I’m sure someone else will love it as much as we do.
7. Not collecting customer information. My friend, Angela, owns Le Village Marche in Arlington, Va. I asked her if she had any mistakes and she admitted to a doozey! She said her greatest mistake was not collecting customer information from the beginning. Only three years old, Le Village Marche is a wonderful and very successful gift store. In her first year, Angela made almost $500,000 in sales. She has had thousands of people walk through her door. Imagine how she could have increased her sales if she had been talking to these folks from the get-go.
8. Investing in too many gimmicks. Again, don’t tell my mother this, but some of the gimmicks (aka: events) we have had were a complete waste of money, time and effort. The big screen television playing Oscar winning movies and a popcorn machine in the store during Oscars weekend fell flat. That was $600 I could have spent on product or a better placed ad. However, these events are as much to get free publicity as they are to bring in shoppers. If one of these ploys gets me a mention in one or two media outlets then it was money well spent. The Oscars didn’t work, but the Tarot card reader at Halloween was a huge success.
9. Undervaluing our services and products. I used to apologize for my prices. I used to worry that people would think we are overpriced, that they would wonder “who do they think they are,” storm out and tell all their friends about this cute, but ridiculously overpriced store. I lived in that fear and therefore did not price my goods and services accordingly. By doing that, profit margins suffered. Businesses have a lot of overhead — rent, utilities, new product, supplies and payroll, and if you’re lucky a salary for the owner too. We cannot underestimate our worth. At Red Barn Mercantile, we sell a mix of old and new. Buying and refinishing antiques is a lot harder than ordering from a catalog and it takes a keen eye to sift through tons of junk to find a potential prize. What we do – and you do – is not easy for everyone. If it were, everyone would be doing it and they wouldn’t need us. Once I realized that and started valuing our skills as a company, we priced our goods and services accordingly and are making our margins (and paying rent, payroll, etc). I don’t apologize anymore and neither should you.
10. Not taking a salary as the owner. Wow, was this a mistake! Talk about undervaluing yourself! Since opening our doors in 2007, I have not taken a salary. I have put every dime and then some back into the business. Sounds crazy, right? Well it is. When writing your business plan and getting your financing in order DO NOT forget that you are the one investing everything and you are the one taking all the risk. That deserves to be rewarded. Take the money, however big or small. You deserve it.
_____Top Ten Successes____
Top 10 Biz Ladies Successes
1. Creating an identity. As a marketer by training and trade, I know the power of a strong identity. It was important to me to visually communicate what Red Barn Mercantile is all about. I spent oodles of money and time on perfecting the logo, bags, website, tags, business cards, tape measures, note cards, signage and any other thing that might make it into the hands of potential customers. We deal in antiques and vintage-inspired accessories as well as 21st century products from the likes of Cisco Brothers, Matteo, John Robshaw and Frances Palmer. So our identity needed to communicate that mix of old and new as well. I went with a name that evokes old and rustic and a logo design that communicates a very crisp and contemporary look. Every element sends a message of what we are all about. Even the paper we use for our business cards and tags speaks to the quality of the product.
2. Building a brand. The four P’s of marketing are Product, Price, Placement and Promotion. Each is essential in building a brand. Anthropologie uses them. J Crew uses them. Ralph Lauren uses them. All in genius ways, I might add.
Everything we do supports our brand. I picked wood floors that were hand scrapped by prisoners in South Carolina not only for the look but for the social message. We used no VOC paint because that is part of our mission. We listen to only three channels on our Muzak feed because they fit our brand. The new products we pick are vintage-inspired so they blend effortlessly with the antiques we sell. We carry brands that have a traditional yet contemporary style because it fits our brand. Our prices reflect the quality and timelessness of the product. We give away tape measures with our logo on them as our calling card. When they go to measure another piece of furniture they are going to think of us. Our business cards are printed on Mohawk paper, which is produced using wind power because it fits our brand.
Every detail – be it office supplies or the sign hanging out front – is important. Every detail should tell a story of who you are and what you do. One of the most oft asked questions in my store is, “Are you a chain?” At first I wasn’t sure what that meant, but now I take it as a compliment. To me they are saying that they get the brand. They see it, feel it, smell it and hear it. To me they are saying that I got it right. Whew!
3. Collecting contact information from day one. My marketing and fundraising background is primarily in direct mail. This medium is still one of the most direct and measurable marketing tools available, and in conjunction with e-mail, is my primary tool for reaching people.
The investment it takes to get someone to become a customer is four times greater than that of keeping a customer. Once I get them in and buying – which is the hard part – I want to keep talking to them. They have already expressed interest by allowing us to add them to our mailing list, so I would be a fool not to keep the dialog flowing.
Since opening in September, 2007 we have almost 3,000 names on our mailing and e-mail lists. It continues to grow daily and we continue to build relationships.
4. Surrounding myself with people smarter than me. I’m not good at asking people for help on things I know how to do or are capable of doing, but I’m really good at asking for help on those things that I’m clueless about. What kind of fool would I be if I blindly made my way through the world of small business without help?
Every good staff person I’ve ever had was/is smarter than me. My accountant is better at taxes than me. My husband is better at building a website and a social media presence than me. My mom is better at refinishing furniture than me. My dad is better at managing people than me. Even my kids are sometimes smarter than me. I’m just the fool who was willing to risk falling on her face.
Finally, I’m going to say this to God and the internet, the best thing I did was hire my manager, Preston Brown. She is by far smarter and more organized than I am. She never makes mistakes and has a memory like a steel trap. (It’s a huge asset, but sometimes it can be really annoying.) She is my right hand. She completes me.
I could not have gotten this far without having people around me who knew how to do so many things that I can not.