Step 12: Live And Learn
Make smart business decisions by learning from your hands-on experience.
From the moment you set out to launch your own business, you should expect to make a few mistakes as you proceed. Nobody's perfect, despite even the most meticulous research and planning. The key to getting past the occasional blunder is to fix things as best you can, learn from the experience, and remember what has happened so you won't make the same mistake again.
When we launched this column 12 months ago, we stressed the importance of learning from the successes and occasional failures of others who run their own businesses. At that time, we introduced the entrepreneurs who agreed to share their experiences and advice over the course of one year.
The months have passed quickly, and it's time to bid farewell to our entrepreneurs Judy, Marion, and Vic and Suzette. But before they go, they wanted to share some important words of advice, based on the significant lessons they have learned along the way.
A business writer for the past eight years, Kylo-Patrick Hart has run a successful homebased consulting business since 1989.
Vic and Suzette Brounsuzian
"The most important lesson I've learned is never to conduct big-money business without a contract," says Vic Brounsuzian, 45, who, with his wife, Suzette, runs a shop in Streamwood, Illinois, selling dry-roasted nuts and other edible treats.
A few months back, Vic found a client who was interested in purchasing a large bulk of his store's nuts each year. All went well for several weeks, then everything suddenly changed.
"The staff of a riverboat casino loved our product and wanted to purchase it from us every week for at least a year," Vic explains. "I gave them one hell of a deal, which would save them about $5,000 annually, compared to what they'd been paying their previous supplier. After selling them huge amounts of my product for several weeks, I checked with them to make sure they were planning to continue buying from me. Although we didn't have a contract, the casino's purchasing director was quite encouraging."
As a result of that conversation, Vic decided to make a bulk purchase of nuts from his supplier, which should have saved his business some money. Instead, the move resulted in long-term financial chaos. "I spent an outrageous amount of money to get a one-month's supply of nuts for that casino, and the next day I waited for their purchase order to arrive," Vic states. "It never showed up. When I called to find out what had happened, the purchasing director told me that the casino's old supplier had lowered his price to match mine, so the supplier ended up saving the account. As a result, the casino was not going to be purchasing any more nuts from me."
Vic told the purchasing director about the large purchase of nuts he'd just made, and explained how badly the man would be endangering his business's financial situation if he failed to keep his word. His remarks fell on deaf ears. "Naturally, that giant purchase hurt my business, because I couldn't sell all those nuts in one month otherwise, and I couldn't afford to pay my supplier everything I owed," Vic says. "Our debt just grew and grew."
Although it took several months for the Brounsuzians' business finances to rebound from the setback, Vic says he learned a valuable lesson. "Because of that eye-opening experience, our shop will never again enter a business arrangement without a formal contract," he explains. "I'd rather spend $300 to have our attorney draw up a special contract than risk losing $10,000 by not having one."
Proudfoot Wearable Art
"The greatest lesson I've learned while in business is never to second-guess customers," explains Judy Proudfoot, 45, who designs and sells handpainted clothing items in and around her town of Alexandria, Minnesota. "For me, this means asking customers what they like and will pay money for rather than going by what I like and getting stuck with tons of stock I can't sell."
Soon after she launched her business in 1995, Proudfoot prepared to sell her items at a weekend teachers' workshop, painting 100 sweatshirts sporting the event's theme: "Imagine . . ."
"I was just sold on the design I'd created for the event, so I really stocked up on it. It was a rainbow wash on a white sweatshirt, featuring a navy blue castle with lots of glitter. I just knew it would be a wonderful shirt for the teachers to buy and wear in their classrooms. I was so sure the design would be a bestseller that I made all 100 items with the exact same design, on the exact same color sweatshirt," Proudfoot reflects. So just how many sweatshirts did she sell that weekend? "Three. I've been trying to get rid of them ever since. After two years, I still have 20 of them left, which is startling because I've been selling them for only $10 each. The regular selling price for my sweatshirts is $35."
Since then, Proudfoot has been listening to what her customers--and sales figures--are telling her. "It makes no difference how much I like a design if nobody is going to buy it," she states. "Now, when somebody is buying a design from me, I ask them why they chose that particular design instead of others, or instead of the same design with different coloration. That gives me a clearer picture of what the customers' needs and preferences are.
"The other thing I've learned to do is analyze my stock sheet after I've participated in a major crafts show to see what the customers are buying," Proudfoot explains, "and I go by that when creating future designs."
Lets Go Party
"The biggest lesson I've learned while running my business is that you've got to trust your lucky stars," states Marian Fletcher, 55, who provides complete party-planning and catering services in the Baltimore area. "When you keep working hard toward making your dream come true, things have a special way of coming together when you least expect them to."
Fletcher speaks from experience. When she was first contacted to take part in this column, she figured it was all a joke--that nobody was really going to do a story about her business. All that changed the day one of our photographers showed up to complete a photo shoot, a day that Fletcher recalls as having been magical. "With help from my daughter, I prepared tons of food for the shoot," she says. "I wanted the photographer to get a true sense of the scope and level of preparation involved with an actual event. When it was over, we didn't know what to do with all the food, so that's the day I introduced my business to my community in a major way."
Following the photo shoot, Fletcher and her daughter spontaneously decided to hold an "open house" for influential members of their community. They contacted everyone they could think of who held prestigious positions in local businesses and community organizations and invited them to drop by between noon and 6 p.m. that day. The goal was to get them to sample Fletcher's food and learn all about her business, in the hope that they would become future clients.
"The event was a huge success. It was the first real opportunity for a range of people to find out what I was doing, and how well I was capable of doing it," Fletcher recalls. "I got a good deal of business as a result of that open house, which we'd organized primarily because we needed to do something with all that leftover food."
That day held more surprises in store for Fletcher. "It's also the day that I secured affordable rental space in a commercial cooking facility," she explains, "which I needed in order to operate my business on a more widespread basis." When the open house was over, Fletcher still had plenty of food remaining, so she called the local firehouse and offered to deliver it. Instead, two firefighters came to pick it up from her. "One of the firemen told me about a friend he knew who was looking to rent out some space, which was fully licensed by the Health Department and contained all of the equipment that I needed to operate my business on a grander scale," she says. "That very special day, my dream just started taking off faster than I ever thought it would."
Since then, Fletcher has planned and catered a myriad of important events in her community. Her favorite to date, however, was an awards ceremony recognizing the accomplishments of minorities. "Bill Cosby, Eddie Murphy, and a lot of other celebrities were there," Fletcher recalls, "and I had the chance to come into direct contact with each of them. I take pride in knowing that I was one of the key players who made that event such a success."
Let's Go Party LLC, 4531 Manorview Rd., Baltimore, MD 21229, (410) 624-0584.
Meg-A-Nut Inc., 1574 Buttitta Dr., Streamwood, IL 60107, (630) 837-2551.
Proudfoot Wearable Art, 1402 Bridgeport Ln., Alexandria, MN 56308, (320) 763-4904.