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Greetings Everyone,
Are you an entrepreneur who wants to learn from national experts how to successfully take your idea from concept to reality? Mark your calendar for the E2detroit Symposium, where I will be a panelist and Keynote Speaker on this national conference on entrepreneurship.
On October 1st and 2nd, Wayne State University in Detroit will host this don’t miss event for entrepreneurs and small business owners. I, along with other national and local presenters, will share the challenges and rewards of launching a new business and proven strategies to help ensure success.
Register today at www.e2detroit.com.
Until then, check out this interview I did for E2 Detroit.
Kim Lavine Interview for E2detroit 2007 Newsletter
1. E2detroit: Your nickname is the “The Wuvit Lady”. What is a Wuvit and when/how did you conceive the idea? (Correction: Wuvit Wady. J)
Lavine: The Wuvit® is a designer personal spa therapy pillow you heat in the microwave for up to hours of soothing moist heat, which people use for comfort, relaxation and pain relief. I made it as Christmas presents for my kids teachers in 2001, and before I knew it, I had strangers calling me up from all over town asking if they could buy one. My husband took a dozen to a local retailer without telling me, and asked if she would try selling them on consignment; she agreed and ended up selling out of them in a week. Shortly after that, my husband came home to tell me he was without a job: he had been laid off from an industry that was experiencing a major downsizing. I was a stay-at-home-mom, with two little kids aged 2 and 4, out of the workforce for 5 years, with a $200,000 mortgage. I had to find a way to support my family. I took a big risk and decided to risk our savings to start a business selling a product most people were laughing at, telling me I was crazy, including my family. In 2002 I opened 4 mall kiosks for the holidays and ended up selling $225,000 worth of Wuvits in 8 weeks at those 4 locations. That’s pretty much when people stopped laughing. After a failed kiosk program in 2003, I ended up taking my product to the top retailers in 2004, including Saks Inc, Macy’s, Bed Bath & Beyond, Gottschalks, Whole Foods and Von Maur, recording record sell-throughs at Saks Inc. After raising angel capital in 2006 we rolled out a successful line of pajamas at Saks and Gottschalks on the west coast, recording record sell-throughs and debuting the line on the cover of Parisian’s sales circular going to 7 million homes. We converted from a vertical model to a licensing model third quarter of 2006 and are now preparing to role out a home décor line for the bedroom, bathroom, kitchen and tabletop at the nation’s most popular retailers including Target, Penney’s, Sear, and Kohl’s in time for Holiday 2007. Licensing is a $180 billion market; the cancer drug market on the other hand is worth $24 billion. The message is, you don’t need to be the next Bill Gates, or invent the cure for cancer to be successful. It can start with something as simple as a Wuvit.
2. E2detroit: Successful people fail more often than unsuccessful people. Why is Green Daisy successful despite the multiple financial, production and cash flow challenges you faced?
Lavine: Green Daisy’s financial, production and cash flow problems aren’t unique; they’re the story of most businesses. The only difference is, I’ve been totally honest about my challenges. I’ve heard the analogy that starting a business is a lot like making sausage: once you see it being done, you never want to do it again. My book Mommy Millionaire let everyone in on all the sausage-making details, so there’s a tendency to think I’m unique, but I’m not. I’ve had many entrepreneurs from all over the US call and write me to tell me this was their story too. It’s true that in my journey you see that I have failed probably more than any body you know, but an unwillingness to give up in the face of failure is what sets any successful person apart. I’ve met so many entrepreneurs along the way with million dollar ideas or businesses, who gave up on their first encounter with crisis. This breaks my heart. I’m here to tell people that learning to live with crisis in business is what’s essential to success, because crisis is constant—you even get used to dealing with it eventually. In fact, I think it’s the addiction to adrenaline that crisis and challenge produces that every successful entrepreneur I’ve ever met shares. People have said to me, “I can’t do what you do because I don’t have your drive.” I tell them, you spend the first year pushing the boulder up the mountain, and you spend the next years running to get out of its way as it chases you down the other side—that’s the secret to drive. You need a business plan to get you through that first year. It’s a road map; a good one will tell you what to do every morning you get out of bed that first year.
3. E2detroit: Based upon your experience, what are the key traits that successful entrepreneurs need to possess?
Lavine: An unremitting belief in oneself; that is the key trait every successful entrepreneur I’ve met possesses. You can find a standard list of personality traits out there, meant to help you determine whether you’re a candidate for a successful entrepreneur, and they include items like confidence, competitive nature, risk taker, but when I started out, I was none of those things. Entrepreneurs and millionaires aren’t born, they’re made. When I started out, I was a mom with two little kids, out of the workforce for five years, selling a product everybody laughed at. I certainly wasn’t confident, and I’m not a competitive person by nature; I just had a gut-feeling I was going to be successful that drove me to act. In the end, most people don’t start businesses for the money, they start businesses because they have hopes, dreams or aspirations. This is infinitely more powerful a motivator than any personality traits you can cultivate.
4. E2detroit: What are the key product characteristic or marketing approach that distinguishes your product from the nearest competitor?
Lavine: I love this question because it illustrates just how easy it is to become a successful entrepreneur. My message is, you don’t need to reinvent the wheel to come up with a winning concept, you just have to build a better mousetrap. When I started out, many people told me I was going to fail because there were already successful products like mine in the marketplace. But that’s the point exactly: there was a significant market to exploit. At that time I didn’t understand this analytically. Now I can say: there are 300 million consumers in America. Even if I just sell to 1% that’s 3 million people. At a retail value of $25 for my product, that’s a $75 million market. That’s a significant market for a simple little consumer product. For me, I created a new niche by merging home decorator accent with spa therapy: I used designer fabrics, a removable washable pillowcase, unique packaging with an unforgettable and intriguing name—Wuvit. This successfully exploited an underserved niche, effectively moving the spa therapy pillow from a medical device to a gift item, and everyone knows that at the holidays you have at least 5 people each year you need to buy a unique gift item at $25 and under. The best thing is, the marketplace is always demanding new, innovative ideas; there are a million underserved niches to be exploited and a million new ideas yet to be brought to the marketplace. Just put your mind to the task, and you’ll find them.
5. E2detroit: We often learn more from our mistakes than our successes. What are the key pitfalls to avoid n setting up a new business?
Lavine: I think the most important lesson I can tell people starting out is to avoid overcapitalization, or the temptation to spend too much money. Just because you’ve been approved for a $150,000 loan, doesn’t mean you should spend it. Resist every temptation possible to spend money whenever you can. Work out of your house for as long as you can. Bill Gates started out in his garage, and the guys who founded Google are still working on the sawhorse desks that they started out on; if it’s good enough for them, it’s good enough for you. My grandfather and his brothers—all self-made millionaire immigrants from Russia—had a great saying: “Nobody ever got rich by spending money.” It takes money to make money, true, but you’d be amazed at how little money it takes. We launched our whole pajama line on a paper roll-out kit we made, when we came to the conclusion we couldn’t afford a showroom in NY. It was so good, we not only made the sale into Saks and Gottschalks, but we got invited to meet with Macy’s in San Francisco, who told us they wanted to be the first division to carry our line. This kit cost us $50 to make; a showroom would have cost thousands each month. Ideas are what’s really important. Ideas are the currency of the world.
6. E2detroit: In the early days, you researched and used a number of “free resources”. What were the top resources and what value did they provide?
Lavine: This is the great thing about being in business now; the technology of the 21st century including the Internet, email, cell phones and wireless modems have transformed work and family life in meaningful and revolutionary ways. Never before has it been so distinctly possible for us as women to have it all—a career and a family life. There is so much information available for free on the internet, that just a few years ago you would have to pay an attorney hundreds if not thousands for. My book Mommy Millionaire is essentially a catalog of all these free resources, which could help you save hundreds of thousands of dollars on everything from writing your patent, filing your trademark, finding critical and free legal forms, registering your business, inexpensive marketing tools that get you national attention—on and on. I think my top resource though for the serious entrepreneur is the Small Business Development Center or SBDC (sometimes called the SBDTC when it has a technology component added in.) This is a component of the Small Business Administration, located in all 50 states, usually at major universities. You can find your local SBDC by going to www.sba.gov/sbdc . These offices are staffed by talented individuals with real-world business experience, who have access to incredibly valuable resources; unlike SCORE, these people are paid full-time professionals who’s only job is to help you succeed. I resisted the advice from my millionaire mentor to go to the SBDC when I first started out, thinking I didn’t need them. That was a mistake. I could have saved my self thousands of dollars and countless headaches if I started there first.
7. E2detroit: Initially, Green Daisy used bootstrap resources to fund the start-up, however, you soon realized that angel investors were the way to go. Yet you found that not all angels are good. Can you share some pros/cons of working with angels for raising capital?
Lavine: The most important thing you have to remember is that Angels aren’t called angels because they’re benevolent philanthropists interested in helping you succeed; they are instead extraordinarily shrewd and experienced investors, licensed by the Securities and Exchange Commission, who are primarily interested in one thing: the bottom line. Angels fill a critical funding gap between conventional bank financing and venture capitalists, providing working capital where these other entities do not. I think too many people underestimate the quantity and quality of work that is required to raise angel capital. It typically takes 12 to 18 months to close an angel round from beginning to end. I go through this process step-by-step in my book Mommy Millionaire. The good news is that there is $20 billion available annually for start-up and mid-stage businesses from angel investors, and that number is growing by 20% each year. Out of the $20 billion, last year—though 40% of all businesses in the US are owned by women—only 4% of that money went to woman-owned businesses. Other pluses of working with angels, is that most of the time they give you this money in exchange for an equity position in your company, which means you don’t have to pay it back. Also, these investors possess significant and successful experience, which they many times put to work for the companies they invest in. I was able to recruit as my CEO the former President of Precious Moments, where he helped take the company from start-up to over $700,000,000 annually in sales for no salary, rather an equity piece. These kinds of skills can be the difference between a company doing okay, and exponential growth.
8. E2detroit: What is Green Daisy’s next “big thing”?
Lavine: Green Daisy has embarked on an ambitious growth strategy. Not only will you be seeing our brand in major retailers across the US for holiday 2007 in the categories of home décor, but you could also soon see a line of inspirational paper products and business planning tools at those same retailers. In addition, the paperback version of my book Mommy Millionaire will launch in January, with an added section on how to start your own Mommy Millionaire Club—a networking component designed to help other entrepreneurs form their own support groups, providing business resource and encouragement. Our goal is to bring extraordinary design within the reach of the ordinary consumer. Look for our brand to bring a youthful, modern perspective to everything from home décor to paper products. Just as soon as you think you have us figured out, we’ll be on to something new. The only defining characteristic of our brand is innovation. Don’t expect to see even the same fabric design twice.
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