Archive for May, 2009
Trying to start one company is difficult enough but starting two at the same time…that may be a little crazy. Currently, I am actually involved in 3 start-ups. Granted all three companies are at very different stages but I am actively involved in some way of all 3.
ScrubSquared LLC currently receives the majority of my time and attention. We are about a month away from the launch of scrubadoo.com and there is a ton to do between now and then. No matter what I get done one day there seems to be a full day of work still ready for me. On top of that there is our scrubraisers arm, for which I could be constantly be making sales calls.
The second business I am working on is The Ugly Dumpling. The Ugly Dumpling is a QSR concept that another Darden graduate and I have been working on. It is going to be a limited menu restaurant that specializes in dumplings. Our first location is planned for “Dinky Town” in Minneapolis, Minnesota which is right next to the University of Minnesota. We hope to have our first location opened by the end of the year. Fortunately there is not much to be done on this project until we get to Minneapolis. I am putting in a little time every week on The Ugly Dumpling and hopefully by the time I need to log serious hours ScrubSquared LLC will be off an running. A huge plus of The Ugly Dumpling is our tag-line “We’re beautiful on the inside.”
The third company I am putting time into is Conrohl.com. This is a concept a friend and I have been working on for about 18 months now. Essentially, we are building an online interactive game. The game is currently fully operational and we are alpha testing it. If you are a gamer check out the site and if you are interested in helping us test, shoot me an email. The graphics need some work but we are getting close. Conrohl has been a slow developing concept and the majority of the work done to this point has been programming which is not my responsibility nor my forte. As we get closer to launch and we start to enter more of the business realm I anticipate that my participation will increase. Once it is launched however it should not take much maintenance from my side.
If while reading this quick description you have thought “there is no way he can do all three of these at the same time,” you are not alone. I think about that all the time. Hopefully the timing works out so I can be successful with all three. That being said, I need to be very careful to make sure everything I do for each concept is done completely and well. There have already been situations were my time is extremely stretched and there will certainly be more. If one of the companies begins to suffer due to my multiple commitments I will need to adjust my commitments and re-evaluate my situation.
On the plus side there are some advantages to my model. First, having three concepts at the same time gives me a safety net that many entrepreneurs don’t have. Second, I am very rarely bored. If I get a little tired of working on ScrubSquared LLC accounts I can do a little creative work for Conrohl. Third, this situation will undoubtedly provide me with an endless stream of content for this blog. Finally, it is a lot of fun. I enjoy the challenge that my endeavors have created.
Obviously my ability to focus on one of the companies when it really needs my attention will be a huge key to our success but perhaps even more importantly is my honesty. I need to be honest and upfront with everyone I am working with in these endeavors. Nothing will make a quicker mess of my situation then creating unattainable expectations of myself with those that I work with.
Negotiating can be an extremely complex process, but there is at least one very simple theory: if you don’t ask for something you will never get it.
For our scrubraisers brand we have been buying our scrubs in bulk then shipping them to a screen printer and then shipping them to the end client. Needless to say it is not an ideal process and it really creates a situation with many unknowns and inconsistencies. On top of this we have had issues with consistency in product with the supplier we are using (which will be the topic of another blog).
Fortunately we are not stuck with using just one supplier. Just a few days ago I received some samples from another manufacturer and really like the product. The scrub pants come embroidered with university logos and would be a perfect replacement to our current process at scrubraisers. Unfortunately they were also about 50% more expensive.
So I called them yesterday and asked if we could get it for a price that would work (only about 5% more expensive) and you know what? They called me back today and agreed to my price without any further negotiations (I probably should have asked for a cheaper price!).
This 5% is well worth it as it eliminates a huge step in my process (screen printing), eliminates my worries about consistency and quality issues, and provides a better product (embroidered as opposed to screen printed).
It was a nice little victory today and the lesson is – it always pays to ask!
So, new media really isn’t that new anymore, which is good, because it’s much more user-friendly than it used to be! Here’s my take on a bunch of online initiatives Brett and I have pursued since starting Scrubadoo. I’m going to start by talking about our blog and Facebook, and in future posts I’ll tackle LinkedIn, Twitter, Google Analytics, etc.
I’m a big fan of WordPress, which if you don’t know, is the open source blogging software we are using for this blog. By using blogging software, neither Brett nor I need to know how to code this website in html. The software provides us an easy interface to write blogs and post them, and the software does all the conversion to html code. It helps to know a little code to make tweaks here and there (I know html because I was a computer science major), but for most things you would want to do in a blog, it isn’t necessary to know html if you use WordPress.
Also, for those who don’t know, open source means that WordPress makes their code available to the public so that other software developers can help write fixes to bugs in the software, or can write plugins that provide additional functionality to a site. For example, you’ll notice that we have a tab at the top of our blog titled Twitter. If you click on the Twitter tab, it brings you to a feed of Brett’s and my Twitter tweets. I was able to add that to the site, because a software developer wrote the code that makes it possible. Because WordPress is open source, it was very easy for me to search for this plugin and install it. You can start your own blog by going to the WordPress website.
We hope our blog will allow for an exchange of ideas for MBA entrepreneurs, so we can help others through our experiences, and we can hear back from you about yours and learn from them. We also hope it will give Darden some exposure from an entrepreneurship standpoint. It doesn’t have the geographic advantage of Stanford, or the technical advantage of MIT, but it has a ton of great resources and support. Finally, we hope that the more eyes who start following us on our blog, the more brand advocates we’ll have for Scrubraisers and for Scrubadoo.com when it launches! Everybody knows a nurse, so the more people who know about what we’re doing, the more nurses will hear about us from their friends and family. So pass the word!!!
We also have a Facebook page. Since Brett and I have both been on Facebook for a long time, this is an easy way to again get the word out, this time through our personal network. We already have 145 fans of our Facebook page, and it sends a lot of traffic both to our blog and to our Scrubraisers page. Here’s some information on how to create a Facebook page for your business.
Internships are a funny thing at business school. You are pushed and pressured both directly and indirectly to get a position with major firm that recruits on campus. Darden is getting better at offering alternative options with several programs they offer but it is still a corporate world. Oddly enough the down economy has forced Darden to focus on non-traditional internship opportunities to ensure that the majority of the rising second year students have a position for the summer.
We decided to try and take advantage of the down economy and bring on a few interns for the summer. At first we did not have any money to offer Darden students but we feel we offered the ability to really get your hands dirty and learn some cool stuff about starting and running a business. We received resumes from two interested parties for the initial unpaid internship opportunity. We thought one had signed on, unfortunately he received a paid offer he couldn’t turn down and left us two days ago. Yesterday we found out that we were going to receive backing from Darden in the form of a stipend for anyone that interns with us. Somewhat ironic, but there are still many Darden 1st years that are looking for a position and we hope to bring one on in the near future.
We have also interviewed students from the undergraduate school of business here at UVA and we hope to bring one on by Monday. It is easier to attract an undergrad than a grad student with “experience” as your primary offering. We hope we can teach them a few things while they help us launch scrubadoo.com and grow scrubraisers.com to new schools.
On top of these two positions we have also contacted the Law School of UVA with a part time offering for any 1L or 2L for the summer. We hope they can help double check the organization of the company to make sure we haven’t forgotten anything. We also think they can help us with contracts and research in the proper ways to do things as we move forward.
We hope to have three interns this summer, only the Darden student will be paid via the subsidy Darden offers us.
There have been two real challenges to this point. The first is attracting people without being able to offer a salary. This has made us a “back-up” option and we have already lost one intern that we thought we could count on. The second issue is making sure everyone takes us seriously. We are only 6 months old. I have been able to mitigate this by assuring people this is what I am doing for my livelihood.
The moral of this post is that there are a ton of talented people out there right now that are looking for experience. If you are starting a company and live in an area with a university it is well worth a few emails to try and bring on some very talented inexpensive help. I am looking forward to the challenge of managing people this summer and realize that this will certainly bring its challenges.
I anticipate that these will be some of the challenges:
Motivating unpaid employees.
Understanding the abilities and strengths of each employee.
Making sure they are getting enough out of the position.
Allowing them to work at their pace and realize that everyone will be at different ability levels.
I am sure there will be many many more and I will try and keep you updated on everything I learn as I go through it.
The current economic environment is certainly a challenge for everyone. Entrepreneurs are in no way an exception to this. On top of the normal challenges an entrepreneur faces it is difficult to raise money, tough to get anyone to spend money on anything, and really difficult to take the leap especially if you currently work or have other offers that will offer you stability on the table.
Despite all of this I think that young companies are currently in the position to take advantage of many things during this down-turn. At scrubadoo.com we have been fortunate enough to take advantage of several things.
First, our suppliers have been very willing to negotiate terms with us. The majority of our suppliers are giving us Net 30 days which will provide us a source of working capital in an environment where it is difficult to fund-raise.
Second, we have been able to attract inexpensive employees in the form of two summer interns (which I will write about in subsequent blogs). The lack of internships for both graduate and undergraduate students has created a real opportunity for companies to get high powered summer employees at a very reasonable rate.
The third advantage we have seen is depressed pricing on certain expenses we would incur in any economy. We have had real negotiating power with everyone from our outsourced web-developers to our delivery contract. Everyone is slow so they will compete for our business.
Finally commercial real-estate is very cheap. While we haven’t taken advantage of this yet, I know folks who have. Companies that are stable can get a great deal on space right now. There are a ton of places available and a renter can afford to be picky. Even if you are currently in a contract it may not be a bad idea to re-negotiate even if you have to sign a long term deal.
We are fortunate to be starting a company in an industry that is stable even in a recession. This stability combined with the concessions and opportunities that the poor economy have provided us has made it a little easier for us to get off the ground.
Money is such a multifaceted thing. There are those that say they don’t need money to make them happy and there are others for whom money is the end all and be all. Who knows if there is a correct answer, the right answer is probably different for everyone. The only thing I know for sure about money is that you need it to start a company.
Now it may not take a lot of money to start something but it always takes something. One of the things that attracted me to the concepts for both scubadoo.com and scrubraisers.com was the relatively low amount of start up capital they would take to get off the ground. That being said there are still a few lessons I have already learned about financial expectations and expenditures in a new venture.
There are your standard lessons of using your suppliers as a source of working capital and trying to carry as little inventory as possible but here are a few I hadn’t heard as much about.
My first point is to plan your initial investment very well. When you bring a partner on you are expected to stand by your commitment. There are very few partners out there that will give you the option of adjusting capital commitments mid stream. It is also important to make sure you have enough capital to get you where you want to be. I think we will be OK on this and get both of our scrub lines launched with our initial investment.
If you bring on a partner or an investor make sure you really think about BOTH the percentages and quantities going in. If your initial capital raise is $5,000 it would only take $500 to buy 10% of the company. Make sure the $500 is really worth 10% of what your building. Sometimes the value isn’t in the initial investment, it is in the risk and the sweat equity you are putting in. If you need a million bucks to start then maybe it really is more about the initial investment and 100k is worth 10%. You also have to remember to take into consideration what value aside from the cash an investor or partner will bring.
Always plan on spending more then you think on everything you take on. So far every initiative we have started has ended up costing more money then we initially though. Much of the extra cost is due to new things we want to add, but plan on it. It gets back to Meredith’s last post on the trade off of time, money, and quality.
Another thought is to push back your revenue time-line. We are already about 1 month behind where we thought we would be for the launch of scrubadoo.com. You shouldn’t count on revenue until you see it.
One final thought is to make sure you take into account your personal finances when starting a company. I am constantly juggling how much I need on the personal side vs. how much I can afford to put into the company.
Money is very much an object for us at this point. Hopefully it won’t always be like that.
I have briefly touched on scrubraisers which is the second arm of our business. Scrubraisers is the combination of scrubs and fundraisers.
In Business once you have a product you just need to sell it. We decided that we already had a cool product that people like to wear in scrub pants and started to think about any alternative markets we could sell to. We thought, why not put a school, sorority, or any other logo on them and sell them as lounge/pajama pants. One issue was that we didn’t have the time nor the breadth to do all of the direct sales it would take to grow this business.
The answer was scrubraisers. We sell a large quantity of the pants to an organization (at least 50 pairs) at a discount who then re-sells the product to anyone (incoming freshman, an entire class, or even neighbors) as a fundraiser for their organization. We handle all of the operational aspects of the fundraiser and all they have to do is sell. We can pretty much put any logo or words on the pants anywhere they want (you can see a mock up of the pants we sold at Darden below). We utilize our supplier network and operational capabilities and essentially outsource our sales.
UVA’s nursing school is one of our first clients. We are selling them 75 sets of pants with the UVA logo. Their plan is to re-sell the pants to the incoming freshmen on move-in day this fall. It is a great arrangement that is profitable for us but also will allow the school a unique way to raise a decent amount of money for their nurses council. I will definitely let everyone know how their sale goes in a few months.
Meredith has put together a nice clean website here scrubraisers.com. Hopefully we will start seeing some traffic and grow to new schools. After our initial success with UVA some of the girls I worked with their put me in touch with JMU’s nursing school who we are now in initial talks with. I hope that this will work just as well.
Check out the website and email me or send an email through the website to get more information about working with us. We would love to work with groups, sororities, fraternities, nursing schools, or any other group who needs to make a little money for their organization. If you make a referral to me and we close it I will even make sure you get a little finders fee!
As Brett and I have been working towards our website launch date, we’ve often been faced with the question of time vs. money vs. quality. In my advertising days, we always said you could get two out of three, but not all three. You could have it fast and cheap, but you’re quality would suffer, or you could have it fast and good, but pay through the nose, or you could have it cheap and good, but it would take a really long time.
Recently, however, it seems that we have faced decisions where we need to choose either quality alone or fast and cheap. While we’re very eager to launch, we know we can’t forfeit quality. The experience of our website will represent our brand, differentiate us from our competitors, and garner customer loyalty. We have to hold this above all else.
Which brings us to the big question: We know we want high quality, but how high does it need to be when we launch? Can we step up quality along the way, or do we wait for perfection before launch? My gut says perfection is too high a standard for launch, but there’s a lot of gray between a functioning website and a perfect website, and each shade of gray has time and cost implications. I guess the best we can do is stick to our guns about the experience we want to stand for in our customers’ minds, and make sure we always deliver on that, even if it means pushing back a timeline. At the same time, we need to make sure we’re not sacrificing better in the pursuit of perfect. It’s a tough process, but a great learning experience.
So today was Meredith’s last day in a location physically close enough for us to have face to face meetings. Although I have no doubt that we will be speaking on the phone pretty much daily it will be interesting to see if and how the dynamic of the company will change going forward. So far the partnership has been very good and I have no doubt it will remain so. Hopefully the move doesn’t shake things up too much
On the topic of partnerships I have a few other thoughts based on both what I learned at Darden and what I have experienced so far building scrubadoo.com. When I first started school I had always heard that it was helpful and even important to take on a partner when trying to start a venture. Every time I would here this I would scoff and think to myself that I didn’t really need anyone to work with. I have done a complete 180 on this idea. I am totally convinced of the benefits of a partnership. It has been a great experience for us and I doubt we would be as far as we are if I was working on my own.
That being said there are several factors needed in a partnership to make it work here are four that I can think of right now. First, I think you need to get along with the person. Meredith and I spend a ton of time together and if we couldn’t stand each other it would be miserable. Second, you need to respect the ability of the other person. If you don’t respect the work someone does you will always be questioning them and will likely end up re-doing everything, which will quickly disenchant both parties and likely end up in more work for you. Third, I think it is important to have complimentary skills. Meredith has an advertising/marketing background and I am a sales/finance guy. We both enjoy our roles in the company and are good at them. If what you want to do at the company and what you specialize in overlaps too much a ton of issues can arise; ignoring details in other areas, doing the same work twice, and arguments over who does what. Finally, one person needs to have final say and the other partner needs to respect and recognize that. At Darden we have heard a ton of stories about 50/50 partnerships that have gone bad over arguments that can’t be resolved.
For us everything has been smooth sailing so far. I am confident it will continue.
Throughout my time at Darden (which officially ended yesterday) one of the messages I have consistently heard in both entrepreneurship classes and in conversation was about the value friends and family can bring to you during your start up stages. Over the last few months I have been fortunate enough to validate this message many times over. We have not yet looked for nor taken any money from anyone so I am in no way talking about monetary contributions.
Without having to physically provide you with capital these people can, and in our case already have, provide you with insight, advice, or their time in whatever it is they specialize in. As I have mentioned before scrubadoo.com is very much a boot-strapping effort with zero excess money to spend. The free time and advice of friends of mine who are lawyers, accountants, and other entrepreneurs has saved ScrubSquared time and money.
For some reason I have a lot of friends that have pursued the law, unfortunately none decided to practice corporate law. However one of them put me in touch with one of his friends who does practice corporate law. We have spoken on the phone and he is very responsive to questions I email him. Just recently I had a few questions about setting up ScrubSquared as a D.B.A. (doing business as) for both scrubadoo.com and scrubraisers. I emailed him and shortly thereafter he got back with me and was pointed me in the right direction and provided me with a new resource I was not aware of, The Virginia Business Information Center.
The Virginia Business Information Center, (866).248.8814, http://www.dba.virginia.gov/. I called them and they were able to anwser both myD.B.A. questions and a few tax questions that I had.
The moral of this story is that my friends have consistently saved me time and money. Even though I knew my direct circle may not have known the anwser to my questions I asked anyway. If they didnt know they have put me in touch with people that do know. So far I have been both lucky and amazed by how much value they have provided to the company.