I’m not a practical business person by nature. My mind tends to follow a more creative track, or it would if I didn’t have to spend so much time working. But I do like to sit back and observe while I work, so I appreciate businesses who do things right.
My first business experience (not counting the dreaded door-to-door Girl Scout cookie sales) was through Junior Achievement (JA) in high school. This is the non-profit organization that brings volunteers from the local business community to mentor students in leadership, financial, and business skills.
Our town had a very active organization, where volunteers helped us set up businesses and learn about manufacturing and sales. I joined not because I was interested in business but because it seemed like a good way to meet boys. Plus, I actually got to leave the house on a school night.
When we arrived for our first meeting, we were each assigned to one of six fledgling businesses. I noticed that both the local utility companies had brought in appliances and set up working kitchens. One company made chocolate fudge and the other made salad dressing, which they created and bottled right on site. Oh, how I wanted to switch to that company! Then I looked around my company’s area. Our little manufacturing site consisted of band saws, sanders, glue pots, and wood varnish. This might be interesting, I thought.
1. Find investors
It’s important for any start-up company to have some cash on hand from the first day. This money keeps the lights on and covers a company’s overhead until it can generate revenue on its own. I had no idea what stocks were until we started selling them. I was too shy for sales. I had the lowest sales of Girl Scout cookies in my troop and I did not step enthusiastically into my role as a wooer of investors.
It was easier than I thought, however. Even my uncle Gerry, who rarely parted with a dollar, handed me five of them for five shares of our stock. I was warming to the concept of capitalism.
2. Keep the quality high and the production cost low
Our town still had a company called Fisher Body that produced auto bodies and interior parts for automobile manufacturers, largely General Motors. If you or your father owned a General Motors car in the 1950s or 60s, there was probably a medallion on the door sill plate that said “Body by Fisher.” Our JA volunteer worked at the local Fisher Body plant. He arrived with a car trunk packed with scrap foam rubber from car seats and brushed aluminum “punch outs” that were left over from dashboards. An opening would be punched out for the radio and our industrious volunteer gathered up all the scraps so that we had the (free) component parts for our business.
3. Find a need and fill it
Our product would be lint brushes! Who couldn’t use one or two lint brushes? It was a brilliant idea, especially because our manufacturing costs would be ZERO. Even I, as right-brained a person as they come, could see the potential for this business. I was giddy with greed.
We made our lint brushes in two sizes: a 1 x 3-inch piece of foam glued to one of the aluminum pieces and a 2 x 3-inch brush with a varnished wood handle. They turned out to be very good products. I occasionally still find one, forgotten, in the back of a drawer. The foam is dried out, but that glue really holds!
4. Pay your sales staff well but spread out their territories
Once we built our inventory, we were set loose to go out and sell our product. My parents, of course, bought several but my eternal gratitude goes to those kind and patient families who lived within a three-block radius of our Junior Achievement building. Theirs were the first door bells we rang and they bought it all: the salad dressing, the pegged coat racks, the chocolate fudge…whatever we were selling, they were happy to buy.
Our confidence buoyed, we fanned out to new sections of town. We sold so many lint brushes that we received some paychecks. This was way better than babysitting.
5. Learn from your mistakes
After a few weeks, however, our sales volume started to decline. We had saturated the market with our trusty brushes and we began to see the flaw in our business plan. These brushes were too well made. Unlike the companies that sold salad dressing and fudge, we would not find any repeat customers, which meant that we needed a new product.
We looked to our volunteer for new ideas, but he was tapped out. The foam and brushed aluminum scraps were perfect for lint brushes, but what else could we do with them? Were there other scraps from the Fisher Body plant that we could recycle into a new product? (I believe we may have coined the term “recycle”! Too bad we didn’t patent it.)
We brainstormed (another patent opportunity missed). We talked. We briefly tried making bean bag ashtrays because nearly everyone smoked in those days, but there were too many of them on the market already.
It seemed nothing could top our lint brushes. We met one week, then two trying to decide what to do. The paychecks stopped.
Soon I learned a new word: Bankruptcy. We had managed the dubious achievement of being the first company in our local JA organization to ever file for bankruptcy. But we were not mocked by the students in the other companies. That’s because they never noticed. They were all too busy making their fudge and bottling that damn salad dressing.