Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in business and e-commerce. Today’s guest is Ciara Stockeland, the founder of TheBoutiqueWorkshop.com. We’re going to talk about personal stories and lessons learned running a product-based business. She built a seven figure business in 13 locations around the US by creating a franchise model. 11 of the 13 locations moved franchises with a women’s apparel system, a company that was called MODE Iowa and sold it to one of the franchisees. So, I think this will be an interesting experience to discuss so that you don’t need to learn by failing. You can learn from somebody else’s experience here. I believe we have lots of wealth of knowledge to share.
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Alright Ciara, I’m happy to have you with me here today.
Ciara: I’m so excited to be here. Thank you.
Guillaume: Can you give us a brief overview of your background, so that people can know a bit more about you?
Ciara: Yes. I was born and raised in North Dakota, about two hours south of the Canadian border, so we spent a bit of time in Winnipeg for summer vacations. I am a third generation entrepreneur, my grandfather and father also owned small businesses and so I was no stranger to the small business world. I started my first small business when I was 13. I was a homeschool student when I started an acting company which I built and grew for about a decade. When that wore out it was welcome and I was ready to move on to the next venture. I decided to go into retail. So I opened my first retail store in 2006, my second concept just six months later. I ended up merging those two concepts and built the brand MODE as you mentioned, then franchised. I ran that for about a decade and I ended up selling the brand to one of the franchisees and then I moved on to some other ventures that were all product-based related. I’m now just coaching and consulting, working with inventory based businesses. Just helping them build profitable businesses based on the knowledge of the numbers that they have in their business. I love what I’m doing and I have a lot of experience, and like you mentioned there are a lot of wins but a lot of losses too. I really enjoy where I am now decades later after the first venture.
Guillaume: Awesome. I’m interested in going through the whole story. So let’s start at the beginning when you actually created this women’s apparel business, how did you do your product sourcing or design. Did you create your own design? Did you sort of white label and resell something else? How was the startup?
Ciara: Yes, very interesting. I think often in business, we have one idea in mind when we start and we end up going in a different direction, that was no different for me. So when I decided to open my first store I knew I needed to be different in order to build a brand. In a small town, Fargo, North Dakota, there weren’t a lot of boutiques or retail opportunities. So how could I create a niche or be a little different? So my first concept was a maternity baby store, very high end. We started when maternity clothes were just starting to come about in the fashion space. We did the majority of our buying in LA. So I had this high end maternity baby store which was a beautiful boutique.
Then my husband was working for a trucking company and they would haul a lot of products for high end department stores and when the product or the packaging would become damaged or it was mis-shipped, the trucking company had to pay for the salvaged freight. The business didn’t want it back and the vendor didn’t want it back. So the trucking company would accumulate all these salvaged inventory. And because I had a store, my husband’s boss came to me and said, ‘’Hey, Ciara, you already own a store, would you be willing to sell a couple truckloads of all of this salvaged product for us?’’ I love opportunities, so I said, ‘’Yes, I’m not going to put it in my maternity store. But there’s another empty spot right next door to mine, what if we just rented that out, we backed up the semis and I sold it for you?’’. So we just did a handshake deal, we had no paper contract which I think was amazing.
Guillaume: Amazing and a disaster. I’ll never do that.
Ciara: Give me the product and I’ll pay the rent if you pay the employees and you manage it, and we’ll split everything fifty-fifty. So he backed up his two truckloads. We unloaded amazing inventory, some of it quite strange but a lot of it beautiful and wonderful inventory.
I opened my second concept which we called MODE. So I had Mamma Mia, which was my first maternity baby store and right next to it, we had MODE which was a designer outlet. That took off and it was really one of my first lessons in retail, that you have to pay attention to what your customer wants and what your customer demands, versus what you have in your mind that your brand is going to look like, because I loved Mamma Mia, it was my beautiful child. But MODE made money and appealed to the masses. So we ended up combining those two concepts, bringing the MODE concept over into the boutique and then creating MODE, which we then franchised.
Guillaume: Okay, so your product sourcing was sort of spoon-fed to you like, ‘’Here’s two semi truckloads and let’s see what sells in this’’. Then they could keep providing you with those products using the same way?
Ciara: Actually, yes. So we had our first truckloads and this was my second conundrum. We had these truckloads of products, they sold wonderfully and then they ran out. They had no more because it had taken them years to accumulate this freight. So now I had a concept that was in demand, everybody wanted to come shop and I had no inventory, I was running really low. So I had to figure out where I was going to get this off price overstock inventory to keep filling the supply for the customers. So I began cold calling. First of all, I went to the vendors that I had in maternity. Do you have any overstocks? Do you have an outdated product? Do you have anything in your warehouse? Who do you know in the retail manufacturing space who I could connect with that might have overstock? So I just began cold calling trucking companies, cold calling vendors, designers, manufacturers, and that’s how I ended up building my ongoing supply. It was through my own resources and my own relationships that I built.
Guillaume: Yeah, because that is always the problem for anything that’s a business based on either refurbished or reconditioned, and so on. They will always sell very well because they’re at a lower price and people can spot a good deal but how do you keep the supply up? Sourcing is always the problem with any kind of refurbished type of business. So there was the obvious first bottleneck, can they still provide you enough products? Especially because you said you scaled up that particular franchise, I highly doubt that this model would scale at any rate. So you were able to source products then sort of put it together. What about all those other franchises who scale up operation with the same providers, or you had to source even more so you could supply those two?
Ciara: Yeah, we combined our concept in 2008, and then we franchised in 2010. Majority of our franchisees came after that, so we had time to build up relationships. Majority of our products always came from the West Coast. We would work with warehouses, manufacturers and we had really great relationships. People started referring us like, ‘’Oh, my goodness! I’m gonna send my friend to you. She just started a brand and she has a bunch of overstock, I’ll tell her to sell her stuff to you’’. So that kind of relationship. The product supply grew as we grew and we fixed that problem before we started franchising, the problem of where we were going to get the inventory from.
Guillaume: In rough numbers, how many suppliers would you have to line up to be able to do this because that can change big time? It’s a logistical problem, if you have just one supplier then you are at the mercy of that supplier which is a huge business risk, but if you have too many suppliers it’s a logistical nightmare as well.
Ciara: We had our own warehouse in Fargo. So we brought in all the inventory and we’d repackage it and ship it out to our franchisees. By that time I wasn’t doing any of the buying anymore so it’s hard for me to remember, but I mean, at least a dozen really good solid ongoing relationships with designers where we always took their overstock or we worked with them. Then we were always looking for new opportunities, new brands that were up and coming, new opportunities for just one-off purchases because we were a designer outlet, and our customers loved the treasure hunt. So they were fine with coming into the store and knowing, ‘I love this brand, I like this deal and I might not see it again, and that’s okay’. So that was also part of our business model. We bought out companies that were closing. We could buy out their inventory as they liquidated it. So we had a lot of ways to get inventory to source.
Guillaume: Okay, it sounds a bit like the winter store.
Ciara: Yes. Like TJ Maxx which is actually one of our biggest competitors when it came to purchasing overstocks even though we were much smaller, that’s who we were competing with. So that same type of idea.
Guillaume: So you go on a treasure hunt and people like that, they would say, ‘’Hey, maybe I found something cooler, we’re going to that store’’. So you know it will run out. It’s not the same concept as Zara with their quick fashion but has all kinds of major ethical and ecological concerns, but the idea is that this is going to be on the shelves for a few weeks and it’s not going to be introduced again after. So there’s a feeling of, ‘I want you to buy this right now’. So people are able to consume them. That’s interesting now. So you were getting all that stuff to your main office and then you would redistribute and repackage all that to the US? Did you ever explore on creating your own brand, or you were really on the retailer model?
Ciara: Yeah, we talked about private labeling, but that was a whole other business model. Just wanting to really be careful in the stages of growth. I think a lot of times small businesses have a lot of opportunities but just because we can do something doesn’t mean we should do something. So it was something we explored and talked about a lot, but we were able to just fill our supply chain with the vendors that we had. So we really didn’t see the need even though it was an interesting idea for us.
Guillaume: Okay. And in that startup phase of your business, is there any lesson you learned or anything you would do differently?
Ciara: Yeah. I would say, on the franchise side of things, there are a lot of lessons learned. When people think about franchising and if there’s anyone in the audience who is thinking about that, I would never discourage someone from the franchise model. But I think it’s really important to be aware that franchising is very capital intensive. It’s very expensive to franchise because you’re suddenly supporting multiple locations and franchisees, with support teams and marketing support teams. It’s just very expensive and I wasn’t aware of that. ‘I’m an entrepreneur, everything’s an opportunity. We’ll figure it out.’ Which is a blessing and a curse. So that was one thing that I learned, it’s capital intensive.
Then I think the other big lesson for me was, what do I excel at as an entrepreneur and a founder and where do I really want to spend my life and live my life and spend my time? When you become a franchisor, you no longer do the roles most often that made you really successful as a founder. So when I was a founder, I was in the details of my business and I could buy and pivot quickly, and do all of those pieces that I was really good at. When I changed roles and became a franchisor, suddenly it was very regulatory, it was very operational about the pieces of business that I didn’t necessarily love or excel at. So understanding that in the franchise model is really important, or I think anytime you scale. When you scale your business you might have an amazing business concept that could do really well in two, three, four or 10 locations, but what role is that going to place you in? And are you okay with that as a founder? Suddenly, you’re overseeing a team of multiple people or a lot of operational heavy pieces of the business where before you thrived because you were hands on and you were with customers. I didn’t understand that I needed to be aware of that. So that would be something that was a big lesson learned as well.
Guillaume: It is something that I’ve lived with too but in a different context, of course, because we’re a service business. But as you say when you start a business, you deliver, you manage your customer relationships and you manage a project yourself. Then as you grow, you start hiring one, two, three, four, five project managers and so on. Then you’re managing through people who are then managing the product and the service and the delivery. And there is a structure that puts different roles. I could just jump in and fix that, I’ll make that work. But then no, I have to build a leader who can take care of that without me being involved.
Guillaume: With a very different role and style, coaching companies. You talked about the financing so I’m kind of curious, how did you structure that since you say it’s capital intensive? Did you ask them to put all the capital and majority of it was due to investors?
Ciara: Yes, we never had investors. It was 100% owned by my husband and myself. He was an absentee owner. He has his own job, his own career. We owned it without investors. In franchising they pay a franchise fee and an ongoing royalty and that can support a lot. I mean, when I talk to franchisees around the country they’re like, ‘’Oh, my goodness! I have to pay this 6% or this 8% and I don’t really know why’’. Well, part of that is going to the support team because you have a marketing team on the back end, you have discounted rates at buying, there’s different reasons for that. That royalty or the franchise fee gets eaten up very quickly. So there was a bit of capital that was injected, but the majority of the capital we had to support and find it on our own, so that we could have the team, we could have the warehouse, we could be sending out buyers and support team for marketing, going out to our franchise stores and helping train their teams, or providing training materials and things like that. So yeah, so when you franchise the franchisor is responsible for the bulk of that revenue that you need.
Guillaume: So you did not have it as a requirement that when you become a franchisee, you need to buy in 400k or something like that?
Ciara: That would be like the franchise fee. So our franchise fee was 30,000 which is pretty typical and then an ongoing royalty of 6%.
Guillaume: It makes sense as long as it allows you to actually scale and so on. And it does, you ended up with 13 locations, what made you stop at 13 locations? How do you monitor the profitability of each of those locations, let’s say, somebody paid 30k and maybe his locations are not profitable. How do you handle that?
Ciara: Yeah, I mean, that’s the interesting thing about the franchise model. They are independent business owners. So as a franchisee you’re basically buying the right to use the brand and to have ongoing support. If you’re inventory based business, a lot of franchisors will supply that inventory in some way. I know that there’s some retail franchisors that are stricter with the products that you can put in your store. Some are a little bit looser, everyone has a little bit different model. But as a franchisee you’re responsible just like you would be for any business for the profitability of your store, for running your store, for hiring and firing your team, for negotiating your own rent, and all of those things as a franchisee. So we as a franchisor, provided support as we’re not a franchisor anymore, and then the franchisees are responsible for making sure that their business is running in a way that they want their business to run.
Franchising is federally regulated here in the United States. So there’s a Franchise Disclosure Document and the franchisor has to be audited every year. So it’s very tightly monitored to make sure that as a franchisor you’re fulfilling all your obligations, and then the franchisees business is their own LLC or incorporation, however, they would set that up.
Guillaume: So it doesn’t tax you too much because they are all autonomously run businesses and there’s a degree of flexibility in what you’re allowed to sell or not. So there’s more flexibility and that’s anecdotal or something like that, but everybody’s exactly the same. And were there any kind of human conflicts to manage with the other owner?
Ciara: Yeah, I mean, anytime you’re working with people you’re managing personalities and expectations. So we as franchisors never do anything with employees of the franchisees. Those are their own employers who they hire, fire and train. We would approve a franchisee and then the team members that they have in their location are their own team members, but on the corporate side we had our own team to manage and structure and train. So yeah, there’s a lot of moving pieces in franchising. Whenever I visit with someone about franchising again, I would never discourage it. I think it’s really important to understand the business model, it’s fairly complex. It is federally regulated in the United States but I don’t know about other countries, but just to be aware of those things, I think is really important.
As best you can go in with your eyes wide open.
Guillaume: Yeah. Because you say you will not discourage anybody, but I hear a little bit like, would you do it again? You know, going with the franchise approach if you were starting over?
Ciara: No, I would not. I don’t regret what I did because it made sense at that moment. In that moment of time I learned a lot. I was very involved in the International Franchise Association. It was really interesting meeting our franchisees, I loved building the business, I loved my business model. I wouldn’t do it again but there’s a lot of things we wouldn’t do again. Would we run that race that we signed up for again? Would we buy that outfit? Would we eat at that restaurant? It doesn’t mean that we didn’t enjoy the process, but there’s other options that might fit us better at this time. And for me, I love what I’m doing now. I love the independence, I love being in a service based business now and just helping counsel others. I feel like in this season of life, I am where I’m supposed to be. So I don’t want to go back to a place where I’m really cumbered down by so many people’s issues and some of those human resources and team building and scaling. There’s a lot of good that comes with that, but there’s a lot of stress that comes with it as well.
Guillaume: For sure, especially when you’re growing brick and mortar with real physical location and lots of staff. Yes, you’re a product business but you still have so much staff, that human aspect is major unlike for example, an e-commerce store that can be way more scalable as a truly product business with maybe just a few support agents. And then maybe you have a three PL, third party logistics partner there that will do the shipping and handling of all your orders, like Amazon Prime and Fulfilled by Amazon. That’s basically independent from Amazon, so it’s very different, still a very human aspect. From your experience, let’s say if you wanted to scale that, let’s just pretend it would have interested you, what would be the one, two, three bottlenecks that would prevent it from going to 100 percent?
Ciara: I think just having the right people is really important. So when you start a franchise or any business, what you can afford and who you need, the skill level and the talent that you could hire for is very different as a startup more often than it will be when you’re a larger business. So your people change and what they can do for the business will change and that can become a bottleneck. I’ve seen it with lots of companies that are scaling, people that start out with you in business may not be the right people for you as you grow, and that’s something really interesting. I think another thing would be marketing, the way that you market your business when you are new and a startup is very different from how you would market it, or you can market it or should market it as you scale and grow. Of course, you have different resources so we do a lot of guerilla marketing; boots on the ground, door knocking, all of those things because we have more time than money when we’re starting. Then as you scale you end up most often with more money than time and so how you would play your hand at marketing might be a bottleneck if you aren’t willing to observe, change and grow with that piece of it.
Then the third piece, I think, some inventory, just making sure and you mentioned this earlier that you aren’t solely reliant, I was just talking to a client and her main vendor is not someone that she would really enjoy doing a lot of business with, but that vendor brings her a lot of sales. And I said, you know, ‘We’re getting to a place where I think you need to look at that because you don’t want to be solely reliant for a huge portion of your sales on a vendor that you don’t really like. The business philosophy is very different, can pull the plug at any minute, what’s going to happen when that vendor changes their mind and decides to leave and you have so much of your sales revenue wrapped up in what they supply?’ So I think that’s another piece too, as we grow and scale we need to continue to look at those vendor relationships and make sure that we’re not bottlenecking ourselves or getting to a place where we’re so reliant on someone that can really dictate the growth of our business.
Guillaume: Absolutely, both on the product side and the service side you never want not to have the luxury of being able to fire a client or a supplier if they violate your values, or they lack respect, or if they don’t come up with the right level of quality. So yeah, you may pick up a little tip there on the cache but you should always be able to pick it, otherwise, it is somewhere really at the top of the priority list to fix. And we’ve seen that, there is a very sad war in Ukraine right now. We’ve seen companies like, the BP company, British Petroleum, petroleum companies that probably have bad reputation and you can question their ethics and all that, but they move extremely fast, they’re like the first ones out of Russia, and that’s like 25 billion screwed up. So it’s like, ‘Wow! That’s a very strong move’, most likely value based but we don’t know the whole story and we’ll never know. Maybe they would have lost that share anyway from the company side or something and be like, ‘This is impressive, no, money is not the deciding factor, it is the value question’. And we are able to act on our value and X company decisively and pick the $25 billion loss.
So you want to have that same ability with any clients and any suppliers as well. So there’s that fine act of balancing the suppliers list and not having a too crazy bottleneck on the operation side of things. Because it’s easier for the product based business to have a minimum order when you’re a retailer with a lot of your distributors, than when you receive small orders, especially for an e-commerce store, we see like a $50 order but you have a $500 minimum because of either a badly negotiated or you just don’t have volume or whatever with that distributor. Then your net negative cash flow is 450 bucks, and you receive a 50 bucks order and then you’re stuck with inventory that you can just hope you’ll be able to sell later. This is actually not helping you scale in any way, it’s super negative, because each time you get an order in you create yourself a negative cash flow because of having too many suppliers for the volume you have and not having a selection of good sellers and so on. So it’s something really important to think about.
Guillaume: Okay, so just as a shotgun question, is there anything else you’d like to share from your experience in the franchise world?
Ciara: I think we covered it. I mean, I learned a lot. It’s really very interesting. There’s a lot of emerging franchisors. Because if we look at McDonald’s, we look at Arby’s, we look at the really successful franchise businesses. But just remember that an emerging franchise is again, capital intensive, time intensive, and you just really need to understand what you’re going through. There’s a lot of resources, though. The International Franchise Association, I know there are a lot of Canadian members in that as well, is a great resource. So just do anything, do your homework, ask questions.
Guillaume: Okay, very good. So let’s move on to the next topic. So now you’re pretty much a business coach for product based businesses, so let’s talk a bit about that. What are some of the key areas that you’d like to work the most on improving, or that needs improvement the most? It may be a different size of business, small to medium business, or a 25 million business or something like that. Talk a little bit about that.
Ciara: Yeah, I think it doesn’t matter if you’re very small, starting out, or you’ve been in business for a while. I see a recurring theme, and that is, not understanding your metrics, your numbers, your key performance indicator. So when I visit a client for the first time, a lot of times I’ll talk to someone and they’ll be, ‘Oh, I’m so overwhelmed, I have no time’. You know, they feel like all of these superficial problems are the actual rot. And we dig right in and say, actually, your main problem is that we don’t know your numbers well. You’re making decisions off of gut, off of reaction, off a feeling instead of off of data. So we just dig right into understanding the numbers, you don’t have to be an accountant, you don’t have to be a bookkeeper to know and understand the numbers that are important to your business.
Guillaume: So we’ve agreed that you need both to have a better detail right. The gut feeling and the data both say no to something, but you need both. I’ve a surprisingly good approximation with those. I can think of some businesses in the e-commerce world who scaled up really quickly by acquiring customers almost at cost and building a good lifetime value pipeline out of them, making money on order number two, and number three, but when you do this you really need your data number so that it’s actually scalable. And you’re sure you’re making money with order two and three, in a global way, with the cohort of customers acquired, let’s say in the first quarter, or the second quarter for the year, and then the next year, and so on.
So the data is critical for that kind of e-commerce strategy. In the very competitive landscape that we have people try less and less to make money on the first order they do. Of course, they would love to do that if it is possible and it can be great. But there’s more and more shifts towards the more established e-commerce merchants, like let’s make order number two and three the profitable ones, on just acquired cost. So that’s more difficult for the newcomers coming in as they don’t have that whole pipeline of lifetime customer value yet. They compete with those bidding way harder on the advertising to acquire customers. How do they make money? Well, they don’t and he’s not on the first order or the second order. So anyway, that’s the most important point. What else do you have in mind after the data?
Ciara: I think it just all really boils down to the data and then knowing how to use it because you might know how to pull it or find it, but what do you do with that information? Then being able to really break down your data into very granular pieces, for example, setting sales goals. A lot of small businesses don’t set sales goals or don’t know how to set sales goals or don’t want to set them. But we can get them to a place where we say, it’s important to set your sales goal. Now you have, let’s say a monthly goal, how do you break that down into granular pieces so you can accomplish it, so you can share it with your team, so they understand where you’re coming from and how they should accomplish meeting that goal. I think that’s a really important skill to learn as well. Knowing what to do with the data and knowing how to break it down.
Guillaume: Yeah, especially with lots of data then you need to turn that data into insight. So you can actually do something like, what does that data mean? Then of course following through, which is always something challenging when we’re talking about human resources and managing people. We have a bunch of ‘to dos’, did you follow? Did you fill it in a reliable way? And by the way, we like EOS a lot, for small businesses with under 250 employees. It’s a very good system, the Entrepreneurial Operating System, EOS, check this out. It’s a really good framework on how to operate a business. And you can tie that in with other frameworks like Profit First. Maybe you can talk to us a bit about that later. So yeah, that’s a good point. Okay, so what would be the next point? Now that we have our data, we have insights and the follow through, we have a sales goal, we have an action plan on trying to achieve that sales goal. Are there other missing parts in the game?
Ciara: I think challenging yourself to continue to be curious. I was just visiting with my mastermind clients about this concept of curiosity. As entrepreneurs when we start we are very curious. How is my product going to work? Where am I going to find customers? How do I fit? How should I market? But as we grow, we can lose that curiosity and the ability to ask why? To look critically at our decisions and dig deep into finding answers for problems that we have to solve or for being able to look at the horizon of what might be coming down the pipeline, especially when we’re making money. I always say cash hides a lot of things, so when you’re making money and you’re doing really well, cash can hide a lot of mistakes and upcoming issues. So remaining curious, I think is a really important skill that entrepreneurs and small business owners need to continue to hone in their journey.
Guillaume: Pretty good. I’m kind of curious to just bring us again, just for fun, but the startup time of your business there is acquiring customers, because you talked about acquiring customers. It is always stressful, let’s say somebody it’s starting a new business or even if you already have a successful business offline and then you start an online business, the portion of acquiring customers and traffic and volume and scaling online is also stressful. So yes, you can think of Google ads. Let’s hope that works. Because almost every successful online store has a successful ad campaign also going on. But what if that ad campaign is not that profitable, and then you need to look at other ways of scaling. Newcomers can be scared of the customer acquisition journey. So I’m curious to talk about this with you, how did you acquire customers? How did you do your marketing, even with the guerilla marketing stuff? Like how did you push the business in the startup?
Ciara: I think a lot of it is relationship driven. So thinking about building relationships, and connecting with your customers, listening to your customers, doing the hard things, going the old fashioned route.I talked to my clients about this, that old fashioned route and retail where you actually had people’s names and phone numbers in your book, and when you got a new delivery you called them and said, ‘Hey, I think you’d be interested in this product’. There’s ways we can modernize that but I think we need to go back to the roots of that good old fashioned customer service and building relationships. That goes a long way to building because our tendency now is just fast. We want everything to happen fast and we want to pay for it. Like, what can I pay for marketing? What’s the newest greatest marketing like you said Google ads, Facebook ads, Instagram ads, Pinterest? Like, what can I throw money at to get people? But if we really want to build a strong sustainable business, we need to add the element of customer relations and customer service into that. Because that old fashioned ‘word of mouth’ is really what’s going to grow a really good solid foundation for us.
Guillaume: You are saying you were doing solicitation of past clients like calling them up and saying, ‘Hey did that new collection just arrive?’ Or something like that?
Ciara: Yeah. I mean when I started my Boutique Workshop business or the subscription box, I literally went onto Instagram and looked for boutique owners and DM them. ‘Hi, this is Ciarra, this is what I’m offering? Would you be interested?’ You know, ask people and do it the old fashioned way. Yes, a lot of people don’t respond. Yes, you may get some negative answers, but I’ve gotten amazing clients that I found by just asking if they would be interested. Can I send you a sample? Would you be interested in a free class? It takes time, but again, most often at the beginning of our journey we have more time than money. It’s a good skill to learn and hone in on. A lot of times when clients are finding themselves kind of in the doldrums, I’ll say, ‘Give this to a team and go back to the drawing board’, have your team, DM or call 100 people a day or 10 people a day. Set those metrics up and accomplish them too. So don’t be afraid to reach out and ask for business.
Guillaume: Okay, so when you say boutique owner, was that for your mother, a business that they would later resale?
Ciara: No. It was another one of my recent businesses.
Guillaume: Yeah. Okay, that sounds like a totally different business model of having like other business owners reselling your product.
Guillaume: Okay. So you talked about Profit First, and I’m kind of really interested in that. We use it here. Would you like to talk a bit about it?
Ciara: Yeah. Profit First, is really interesting. I think for a while it became kind of a buzzword. Everyone thought, ‘Oh, my goodness if I just do Profit First, I’ll finally grow, I’ll have money’. It’s not a magic pill, but it’s an amazing cash management system. So it’s just another way, it’s another layer that you can add into your business to give you discipline, to focus on the right things. So the main premise behind Profit First is, if we have a big plate of anything in front of us we’re going to consume it, if we have a big plate of spaghetti we’re going to eat it all, if we have a big plate of cake we’re going to eat it all. So if we want to eat less we need a smaller plate. That follows through with everything in life, the more we have in front of us, the more we will consume. So why would you not apply that to the way you manage your cash, if you allow all of your cash to dump into one main account and it’s all in front of you, you’re going to consume it. You’re going to buy marketing, you’re going to spend frivolously, you’re going to hire everyone you can, you’re going to way overspend on inventory. We can instead create many small plates and each of them have a purpose. In other words, many small bank accounts. One has a purpose for paying your taxes, one has a purpose for paying you. One has a purpose for odd taxes and so forth and so on, then the cash that’s in that account is what’s going to be consumed for that activity. So Profit First is not an accounting system, it’s just a cash management system. It’s a way for entrepreneurs to really focus their mind on the right parts of cash management in their business.
Guillaume: I totally agree and it’s so simple. I do it about twice a month, with just an Excel export of the bank statement and then you get the total and then you put that into a few accounts and the tax amount is put aside and we never touch it. The profit amount and whatever’s left that’s what we can reinvest. It’s awesome. Like it’s so simple. We can have a pushback from accountants saying, ‘Oh it changes nothing’. That you spend first and what’s going to be left is the profit that you put the profits first and then the change is nothing you just flip the equation. That’s a mathematical way of thinking, it doesn’t reflect reality. Like you said, when you have more cake you eat more. So when you do take the time, what’s the total and just split that into a few accounts and it doesn’t take long. It does secure that cash by putting it aside. It’s all the same, seeing all the accounts but it separates them and gives you your budgets. Even though our accounting is done to the day or yesterday like, we’re almost up to date with the accounting. It’s still better to have that approach than relying on all this data. There’s this much for taxes, there’s this much for that, and then go look at your QuickBooks, and then you know how much you can reinvest.
Ciara: Yes, it refocuses.
Guillaume: Yeah, exactly. It’s a strongly recommended simple technique. Is there anything else that you have in mind from your clients experience either with Profit First or perhaps with growing their customers list? Maybe on social media or maybe some other way. I’m very interested in the fashion apparel experience that you have there. Is there anything else that is interesting that you have in mind about growing that company?
Ciara: Yeah, I think on the Profit First side. Like you mentioned, I’m Profit First certified and my main focus is to help inventory based businesses. Profit First can be very confusing when you read the book. If you just read the book and you hear about these maths and subs, and what does that mean? For me, I have inventory. So with my clients, I really focus on setting up an inventory account as well and managing your inventory spend with Profit First too. So I think that’s something that’s important for your listeners. If they have inventory, which I know they all do with their product base, and you want to follow the Profit First model to think about how inventory also plays into the movement of money, or cash in your business. Then I think on the apparel side business, it’s just really important to understand who your customer truly is. So as we were building our retail women’s apparel business, really understanding the avatar of our customer, who she was, where she hangs out, what are her pain points, I always encourage my clients to think about what problem you’re solving, not just what product you are selling, because it’s very easy for customers to just think like, ‘I’m selling XYZ’. But really, you’re solving a problem, you’re providing a solution, coming from that standpoint.
Guillaume: You have a point there. And talking about another accounting system called Throughput Accounting, and I don’t want to confuse things because you can still do Profit First. You can do Throughput Accounting as well, in addition to the classic accounting. But that’s something that is highly recommended for anyone’s inventory. Because classic accounting has a few false assumptions, I’m not going to get into that for an inventory business. So inventory can be seen as an asset or a good thing. It could actually be a liability, it may be value broken, it may be damaged. it’s cash that’s sitting there, reinvest it. So Throughput Accounting is really interesting in the sense that it’s more like how much volume do you move? More like optimizing the cash and profitability and trying to reduce inventory to the maximum. It’s very logical. There’s a book called, The Goal, it’s written by Eliyahu Goldratt, a very famous business book, some people almost made it their religion. It’s so highly recommended, Throughput Accounting, check that out. It’s complimentary to Profit First which is way easy to apply. Then the next step to graduate after that would be to use Throughput Accounting, classical accounting, to scale up a business very quickly. So anything else you’d like to share on the growth of the company or property or clients, anything interesting that you’ve seen recently for customer acquisition or something like that?
Ciara: Nothing comes to mind other than what we’ve chatted about. Just really focusing on the numbers, understanding your business model, and willing to listen to the customer feedback to pivot and change the direction when needed. You know, we’ve seen a lot of that in the last couple of years with COVID and everything that’s happened with business people wanting to go all online, and then they want to be brick and mortar again, and now the consumer wants to be online. Consumers are very fickle and so being really in tune to what they actually want, and how to solve a problem before it arises, I think is really important for entrepreneurs to be in tune to that.
Guillaume: We talked about product sourcing for your former business at first. What I heard is, pick up the phone book more or less and just cold call them until you find something. Do you have any other tips around the sourcing product and building a product base?
Ciara: I’m very relationship focused, so it’s all about the relationship and the ‘ask’, I mean, that’s my philosophy. So you cold call, you do the hard work, you pound the pavement, and then you build relationships. Because when you do that with your customers, or you do it with your vendors, they’re going to recommend other customers, they’re going to recommend other other vendors. That’s how we built our business, being open, having conversations, asking. Asking, ‘Hey, we love working with you. Do you have anyone that you could recommend? Do you know of any other manufacturers here in the city that would be interested in talking to me?’ So for me, it’s all about relationships. I think we rely as a society, even our entrepreneurs, on just Googling everything, looking for everything instead of just talking to people and asking, put in that time to ask and there’s a lot of strength in relationship building. So I think that’s a really important piece even in product procurement.
Guillaume: Awesome. Is there anything else that you would like to share on today’s episode, for business or product inventory?
Ciara: I think just on that relationship theme, from a developmental standpoint as well, continue to surround yourself with really wise people. Always have people that are two steps ahead of you in your sphere, two steps behind you, we learn a lot by teaching too. So if you have that person behind you that you know, an entrepreneur that’s coming up behind you and you’re helping them, you’re going to learn through that help. It is the same thing with following an entrepreneur that’s been there and done that, asking questions, building relationships, building your circle, making the deposits into the relationship community that you have, so that when you need help and support, you have a community around you. I think more than ever, that’s so important.
Guillaume: And if people want to get in touch with you Ciara, what’s the best way?
Ciara: Find me at TheBoutiqueWorkshop.com. You can connect with me there on Instagram, Facebook, all the links are there, email. Yeah, so just head on over to TheBoutiqueWorkshop.com. I’d love to connect.
Guillaume: Awesome. Well, thank you for being here today Ciara.
Ciara: Thank you for having me.