PURPLE BLAB

In case you’re wondering, I was a good 60k in the hole. And believe me, every dime of it hurt – it was a life’s savings and it was dwindling with a list of expenses still ahead.

Could I have spent less on press materials? Yes.

Could we have tried to negotiate better terms with our vendors – i.e. don’t pay half up front but maybe 1/4? Maybe. But I didn’t and I didn’t quite know how to do so and as a new company, we have such little leverage.

In hindsight, everything is 20/20.

Bottom line: I needed money. Fast.  There was the monthly retainer to Whisper PR, marketing costs, a launch event I envisioned for some fab bloggers (that wound up being ridic – we’ll get there eventually), business cards (forget fancy ones I once treated myself to when I needed personal cards), letterhead, travel and entertainment for retailer events and trainings for their staff, payment for the rest of the inventory, warehousing, shipping. Oh, I could go on.

Did I mention that to ship to the UK, you  must have a European address. I had no idea where to get one. A friend told me I should get memberships to industry organizations like the CEW and ICMAD, both of whom offer support and networks to insiders. I did. And with the ICMAD, you could pay $1,500 to gain access to an EU address in Belgium which would allow a certain amount of shipments overseas (if you ship more, you upgrade).

Done. But $1,500 here. $2,000 there. It all adds up. And every time I turned around, there was a surprise invoice coming our way. God, we hadn’t even built the website yet!

Oops, did I mention that in the contract with the main retailer, I committed to visiting each and every store (that meant all 62 in the UK and 14 in the US) to train the staff and do P.A.s (public appearances)? That’s gonna leave a mark on the bank account!

I didn’t feel badly or awkward asking people for money. I had an actual business with potential and two really respected retail chains supporting the brand. I just didn’t know how – or how much and when I got money, how much of the company’s equity do you give away.

A friend’s investment banker husband started talking about “valuations” (i.e. how much the company is worth – based on revenue, I would have said nothing but based on potential, who knows… millions?!?!). When you get a valuation, the investment represents a percent of it. So if there was a $100 valuation and I got $10, someone would own 10% of the company.

I naively thought I could meet with moguls and investment firms and tell them my idea, show them the traction and imagine and I’d get money. That was far from the case.

I needed a business plan. I bought the guide book for dummies. It may as well have been written in Arabic. And while Todd is a savvy business man and entrepreneur – a real estate investor who is completely self made – this was not his cup of tea either.

We stressed. We attempted. We often disagreed. We realized we needed help.

That’s the next post – B-plan city, finding investors, and taking a family loan (thanks Dad and Jason for all of your support!).

Mwah!

Karen

Purple Lab Creatrix

Tags: Beauty, Business Plan, Cosmetics, Hoodia, huge lips skinny hips, Karen Robinovitz, Lip gloss, Lip Plumper, Makeup, Purple Lab

This entry was posted on Saturday, July 4th, 2009 at 1:31 am and is filed under Karen Robinovitz, Purple Lab Behind the Scenes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.