When I had my handbag line I just wanted to be successful. I wasn’t always sure what that meant….. it did include making lots of money….but I wasn’t sure what the rest looked like for a while. And I certainly didn’t know there were 5 ways investors were going to ruin my business.
Once I got some PR and got my products to famous Celebrities, people started to take notice of me. Magazines wanted to interview me, and producers called asking me to be on E! and Extra. Don’t get me wrong, that was all fabulous and helped skyrocket my sales…..which made me more money…..which made me feel successful.
The circle was starting feel complete……
But what really made me feel like a rockstar was when investors started poking around. Now this was an important moment for me…..
I was flattered, but I wasn’t sure it was the right move for me. I didn’t really need their money, but I was enticed with the fact that they’d supply me with a COO who had a fancy MBA from UCLA and who (they swore) was clearly more capable than me since she had a business degree. Somehow I got caught up in it all and before I knew it, I had 28 small investors and a new COO.
But as you might know, it didn’t turn out to be all glamorous and fabulous….in fact, it was a mixture of my ignorance and circumstance that blew it up in my face. And cost me my business.
Unfortunately, I was not very “legally” savvy at this point and just went with the flow and in the end…..paid the price. I lost my namesake company, the rights to use my own name, and for a while my pride.
This hurt the most.
If you are considering teaming up with investors, be it friends, family, Angels, or VC’s… here are some things I learned the hard way.
Don’t make the same mistakes I did.
I am not an attorney…..just someone who experienced difficulty, and learned a lot over the years. Ask your attorney for advice on this…..just sayin’… ’cause I’m not one.
1. First and foremost, get your OWN attorney. Not the one for the company, but your very own who has your best interest at heart. A corporation’s attorney is obligated by law to make the best deal possible for the business.…not for you, even if you are the owner. I lost the rights to use my own name when I closed my handbag company as the company owned the rights to my Trademark, and my bitter investors would not give it back to me. I didn’t have my own attorney. Get one.
2. When taking money from anyone, be sure you have a very tight/strong shareholder agreement that clearly states they are taking a risk. Make them sign that page in addition to the main signature page. This saved my butt. If you don’t have this little piece of paper, they could turn around and haul our butt into court for not keeping your promise to make them rich (possibly in their dreams)…. but never the less.
3. If giving shares for sweat equity, be sure the equity equals the sweat. Meaning that you should have a clear statement of expectations and once the expectations are met each quarter (or how ever you measure it) then that amount of shares vest.
For example: You are giving someone 16% of your company for XYZ services. They have committed to 2 years of service in exchange for the shares. If you divide the shares in 8 parts then each quarter they vest 2% of their shares. If they abandon you – the vesting stops and you retain the shares. You can also speak to your attorney about the abandoning part as he/she might come up with a way to get the shares back for you if they quit too soon. It’s worth asking. One of my business partners took 20% equity in exchange for sweat equity, and quit a few months in and kept the shares as I didn’t have my own attorney and the corporate attorney did not advise me on this…… live and learn. It sucked.
4. Make sure your shareholder agreement has a dilution clause….meaning that you can dilute the shares and raise more money. Don’t get stuck NOT being able to raise more money. This was the one good thing the company attorney did that I could benefit from. Legal Zoom can help guide you on all this legal mumbo jumbo.
5. Lastly, only take money from investors when it is the LAST LAST LAST possible resort…… use credit cards, get a loan, borrow from a friend and pay them the low interest they are getting now……Investors stink…..they are (usually) only after the money they think you can make for them…. they are business people who choose to invest in you instead of Apple…..and they don’t want to lose their hard earned money.
It’s a lot of pressure.
The best investors are the ones who can give you advice, make connections, introduce you to the right people….. the ones who can actually change your life. Look for those….. you’ll be happier.
If you have any specific questions…..feel free to post them below.
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2 hours ago
Building an email list can be tough, I totally agree. But an email list is just as important as social media in my opinion. Social media is fleeting. Your customer might not see your post flash by, the FB or Instagram algorithm changes all the time so you never really know if anyone is seeing your posts (as much as you hope at least), and unless they purchase, it’s hard to tell if it is driving traffic or not.
When I started my handbag line, the internet was just getting started, and people were just beginning to get online for the first time and the biggest thing since sliced bread was www.match.com.
Note the www…… everyone used that back then so you’d KNOW it was a website. LOL.
And to get on the website, even just to learn more about it, you needed an email address to get past their “paywall”. The Paywall was a pop up of sorts that asked for your name and email in order to “grant” you access to see what was behind the curtain. They built a list of millions in a few short weeks and that was more valuable than anyone just “knowing” about their company because they could market to them incessentanly.
Daily. And I mean sometimes multiple times a day. I’d never seen anything like this.
They were the first company that I knew of who “collected” emails, then turned around and marketed to you to get you to sign up for their services. And they were relentless……
I’m not saying you need to send emails daily, or emails multiple times a day, but if you don’t email your list at least weekly, they will forget about you and end up buying something similar chez someone else who is sending them emails.
So Why are Pop ups so important? Pop ups are a way to collect emails via your own “Paywall” and continue to market to potentially interested customers. If they take the time to sign up (first baby step) then they are showing you that they are on the first step of the staircase and want to keep walking up. It’s your job to keep enticing them to the top! AKA buy something.
Step 1: Sign up with a content management system like Active Campaign, Mailchimp, Klayvio or whichever one you like best. I like Active Campaign and have been using it for over 10 years. Some people choose to use the forms that come with these programs and I have too in various situations, but I also recommend Privy if you use Shopify, and Ninja Pops if you use Wordpress. They can easily be installed and connected to these CMS systems.
Step 2: The first and easiest way to collect emails is to have a homepage pop up with an offer for a % off the first order. That is a way to ‘collect” emails and give something in return. It’s the first step in building rapport with your potential customers. It’s like saying, let’s be friends, I’ll give you something you want, and you give me something I want, your email.
Step 3: Make sure you have an automation set up in the CMS system. This is an automated email series that will be sent to anyone who gives you their email address on your pop up. I call it the Hello Series. The idea of this series is to again, build rapport, and tell the customer a bit about you and your company over a 2 week period. This series has nothing to do with your regular email marketing emails. This is a sole and separate email series to build rapport so just set it and forget it. Yes customers will probably get some of these on the same days as other marketing emails but just don’t worry about it.
This is how it works:
The first email to go out immediately is the one with the coupon code they just signed up for. Add something about your brand and photos of your products linking to your website.
The second one goes out the next day and asks them if they had a chance to use the coupon yet, and then tells them to whitelist your email so they don’t miss your promotions and special offers for people on your list. Always have images of products that link to your website.
The third email goes 4 days later and in this one I like to tell a story about how I got started with the business. Add images and links here too.
The fourth email shares something cool about your business. Could be some nice stores you are in, a press placement, a celebrity who has your stuff or perhaps posted about it on Instagram. It can also be a tutorial about how to use your products, or a blog post you wrote on a topic they’d be interested in. Share something that will make them feel happy for you, and encourage them to hang with you.
The fifth and final email in this sequence encourages them to follow you on social media. I like to entice them with “doing” something in exchange for a gift. Could be something like “post your photo using or wearing our product, and be entered in our monthly drawing for a free X”.
Step 4: Now that you have collected more emails with a pop up, your ongoing marketing efforts will start to pay off faster. As the list continues to build, you’ll have more people to market to, invite to events you do, and share your good news with. Hopefully they will become loyal customers, share your site with friends, and continue to be an active part of your social media channels. Keep sending emails weekly ( at least) to your list so keep them active and engaged. I’m sure you’ll see a big difference.
If you want ideas to help you fill in the blanks about the above, drop me a comment below and I’ll be happy to help out. ... See MoreSee Less
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2 weeks ago
Do you know how to set the right price for your product line? Lordy knows I sure didn’t when I first started my handbag line. But once I learned the correct way to do it, I never mispriced anything again! Now I want to share this method with you so you can be profitable and not wonder why you can’t pay yourself.
It took me years to figure out how to set the right price for my product line when I first started out, so I can imagine you might be in the same situation. If you are not sure if you are making any money, then there is a good chance you’re not pricing your products correctly.
Proper costing is the lifeline to your business and profitability. Taking into consideration and finding all the hidden costs, is the key. So many people forget little things that they add up and then BOOM, you are not making any money. Once you have the actual cost (cost of goods sold) then it is easy to figure out the wholesale and retail prices so you are always making money.
I’d love to share this formula with you. It totally saved my rear when I was in year 3….. Just thinking of all that lost money in the first 2 years…. I want to cry!
Drop me a comment with “PRICED FOR PROFIT” and I’ll reach out and connect with you. ... See MoreSee Less