CHAPTER 1: Announcing & Planning The Original Hundred Dollar Business/Kiosk Project

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The Announcement: Thursday, December 1, 2006

The Hundred Dollar Business Experiment

For the month of December, I’m doing an experiment to test concepts I’ve been learning in my entrepreneurship class at BYU, as well as from our amazing local business community.

Limits of the Experiment

A budget of $100, 30 days, and I have to go to sleep by around midnight every night.

Minimum Goal

Set up a well functioning business, pay all business/personal expenses for the month, and make at least $100 back in order to (possibly) start a next Hundred Dollar Business in January.

Core Ideas to Test

1. Networking: Who do I know? What do they have or know, and who do they know?
2. Negotiating: Use principles of good negotiation to create win-win situations.
3. Money Is The Last Thing Needed to Start a Business: If something costs money and I must have it, find a way that will pay for itself. Don’t carry overhead or stock purchased inventory.
4. Be smart. Learn about the options, do the research, and make calculated decisions.
5. Be focused. Have a plan. Spend time only doing the things that further the plan. (If the plan changes, that’s ok– just don’t spend time & resources on distractions).
6. Keep it balanced. Run, get reasonable sleep, and eat. Work hard and play hard. And then take a break when it’s done. (Mark your calendars now– I’ll be on vacation the first week of January).
7. “Franchise” the business. Streamline essential functions and set up systems so it can easily be run by someone else and could be replicated 5,000 times.
8. Be Resourceful. What do already I have that I can use: ideas, skills, things, and tools?
9. Get Around Obstacles. Have a plethora of contingency plans–at least three additional suggestions or options in case the ideal doesn’t happen. Don’t accept the challenges at face value.
10. Think Virally. Use cheap, effective marketing tactics– word of mouth, viral marketing and natural traffic.

The concept is not completely unique (I didn’t steal it, just didn’t realize I wasn’t the first to come up with it until after the fact). Similar experiments have been done in September 2006 by local Matthew Reinbold and November 2005 by Search Engine Guide’s Jennifer Laycock.

Additional inspiring, but somewhat unrelated, projects include Blendtec’s amazing “Will It Blend?” viral marketing campaign, LogoWorks’ “Date Lance” campaign, and local MBA student, Ryan Byrd’s “Green Paperclip Experiment”.

I’ll be blogging about my experiences here on www.hundreddollarbusiness.wordpress.com, as well as on The Carolynn Blog and BizImpresario.

Wish me luck!

Part 1 Overview of Experiment Planning: November 25-27

I had the idea to start this experiment last Saturday, November 25th. Before I went public with the blog, I wanted to make sure I had a viable project opportunity.

So, to catch you up to speed, here is a basic summary of the process I went through to plan out the business I wanted to start:

First Step: Find a Problem to Solve That Will Make Sales Fast
There was no end to the ideas, but I wanted one thing to be my ultimate priority: what will make sales as quickly as possible?

To start, I brainstormed a list of typical problems for people in this area (Utah County) during the month of December. The reason being that if something is a current problem, someone is more likely to purchase a solution to it.

I considered doing an online product or service, but realized that the learning curve would be greater for me to set that up, so I decided instead to build the project locally.

Potential Problems I Could Solve

Among the prizewinner ideas were: scraping ice off windshields, giving rides to students during the snow, entertaining fussy kids at the mall, or providing a fun environment for people to come to while doing boring holiday tasks, such as addressing Christmas cards, wrapping presents, etc. If you think those are idealistic, you should see the entire list–maybe we’ll post that for fun later…

So, I settled on the “fun environment at the mall idea”, and decided to approach both local malls and determine what was available.

Report of Planning: Monday, November 27th

To be honest, Monday was not the most effective use of time. I spent a lot of time thinking more about what I could do, and probably also a lot of time questioning my experiment. You know, the usual fear spectrum– “what if this doesn’t work, what if it’s lame, what if I can’t make it happen quickly enough, etc.”

I also mapped out a quick “business plan”, which frankly, was only used that day, and hasn’t been relevant since. (I had good intentions, but it seems that especially for this experiment, that things would change too quickly to keep a formal plan.)

I did spend some time doing research on both local malls– the University Mall and Provo Towne Centre. On both websites, you can find leasing information, demographics on traffic, specs on current tenant stores, etc. I also set up appointments with both management teams for the next day– with the idea, believe it or not, that finding a space would be no problem and we could even get the mall to donate the cost. Now that is optimism!!

Later that night, I re-hashed the business concept with Rachelle Anderson, who is also involved with the project, and who has been an excellent co-worker for several months.

We changed it from being a “holiday-event center for bored shoppers with selling our products on the side” idea to that of being a “Secret Santa Delivery”, where we would offer 5 core holiday products (candy canes, hot chocolate, bundt cakes, Santa hats, and Christmas cards) that someone could purchase and have delivered to a friend by someone wearing a Santa Suit.

With the new plan in place, and the mall appointments set up, we were ready for the next step!

Part 2 Overview of Experiment Planning: Tuesday, November 28

The Ideal….versus The Reality…

Report of Planning: Tuesday, November 28th

Well, with the concept in hand, Tuesday morning began with a trip to the Provo Towne Centre mall, where I learned that there was an available kiosk, but it came with a hefty price tag.

(You do not want to guess how much!! Let’s just say it was slightly more than $100.)

On one hand, that seemed like a complete shut-down to the mall idea. How can you come up with thousands of dollars when your budget is only $100, not to mention, who as a student has thousands of dollars sitting around?

But on the other hand… principle 3 of our experiment says that “Money is the last thing needed to start a business”, and principle 9 says “Get around obstacles.” So with that tucked away, off I went to an appointment at University Mall in Orem.

At this point, my idealistic notion that a mall would just… I don’t know… “donate” some space to us, at the busiest, most profitable month of the retail year… was becoming less idealistic, and more “what is plan B? plan C? plan D?”

I had a great discussion with the management at University Mall, but discovered that there were no empty spaces, and they’d been booked for months. So, back to the drawing board.

At 2 p.m., Rachelle and I met with a mentor from BYU’s Center for Entrepreneurship.

Two key things he said were:

1. Don’t think about if it will work or not– just do it.
2. A good business has three things: Sales, Finances, and Product. Make them work together, or you’ll bomb.

At this point, I had come up with a plan– we had 5 products in mind, why not see if any of their owners would split the cost of the kiosk? For 1/5 of the normal lease, they could get their products into a mall at the busiest month of the year.

One of things I’d done over the weekend was to compile a list of the people I know, and what businesses they’re involved with, and how they could be included in our plan. As we got started, it was amazing how principle 1, networking, is seriously underestimated in its value at growing a project.

The good news was that by Tuesday afternoon, we’d developed agreements with 2 vendors to feature their products in our business– books & other miscellaneous, nuts & gift trays, and had leads to at least 5 more vendors.

But, when we approached vendors, the sponsorship idea was a no-go. So the roadblock continued, for a little while!

By the end of Tuesday, we were gradually gaining a more solid concept– that we would assemble holiday-type gifts (whatever we could find), and then offer the Santa delivery service as a fun extra. The only things left to get were: a Santa suit, more vendors & products, the cost of the kiosk lease, not to mention business licensing, bank info, etc.

Yikes. On to Wednesday!

Part 3 Overview of Experiment Planning: Wednesday, November 29

First, I was seriously tired Wednesday morning. There’s no doubt about that. But, welcome to life in a startup. (Even a 1-month startup is still a startup, right?)

Anyway, our first appointment was with Granite Publishing & Distribution, our book vendor, to see what inventory would work well. One thing that absolutely needs to be mentioned, is that everyone who has agreed to be a supplier for us, has been really encouraging about the experiment, and also extremely generous with their time and willingness.

Since we knew we couldn’t pre-purchase inventory, we asked all of our suppliers to work with us on consignment, with the option to return unsold merchandise. And miraculously, we have succeeded, largely because this amazing business community has been so supportive!

After the meeting, we started to get really enthused, because it seemed like things were coming together. Though, we wanted to launch on December 1st… and that was really coming fast!

The big accomplishments for the day were adding on two additional vendors, one for SignBabies sign language flashcards, and the other for Channing’s Bundt Cake Factory.

We still needed a Santa suit, as well as more products, so we trekked out to Costume Craze, a Lindon-based online costume supplier I’d heard about when their owner, Katie Maloney, spoke at my entrepreneurship class. Once we got there, we set up an appointment for the next day, and then poked around some shops in Lindon/Orem, looking for additional vendors.

During this time, we approached several stores looking for people who had an applicable holiday product, but didn’t have a mall presence and could benefit from the inevitable brand recognition they’d find by being in the mall.

It was a little more difficult than I’d anticipated– I guess I thought that all I had to do was ask the original five shops I had in mind, and we’d be set to go. At one point, probably Tuesday or Wednesday night, I drove up and down State Street, looking for candidates– and assembled a list of about 20 backup shops in case we needed them. (A throwback to principle 9, by “having a plethora of backup options”.)

Among the ones we tried were a candy cane/chocolates store, a paper store, a Christmas card supplier, another candy cane/trinkets shop, a ceramics shop, a mistletoe-poinsettia supplier, and more.

As a back up option, my friend Channing had offered the use of her store, Channing’s Bundt Cake Factory, so we at least had somewhere to set up shop to sell the gifts and arrange the deliveries. What a generous thing to offer!

At this point, I realized that the mall kiosk had way too much overhead, and that based on the resources we had available (frankly, only $100…), it would be an extremely poor risk, one that I certainly couldn’t justify. I was disappointed that our ideal was unreachable, but determined that to continue putting my time into trying to find a way was actually slowing the project down, so I gave up on the idea– but also saw that instead, we could turn our efforts to marketing to help drive traffic.

I think Wednesday is the only night so far that the 12 a.m. curfew has been a realistic option. But, at least I’m striving for sleep! (January 1-8… I’m planning a nap that will last about 168 hours).

And on to Thursday!

Part 4 Overview of Experiment Planning: Thursday, November 30

Thursday was the day we got over the major hurdles. No question about it…

I started by meeting with Katie from Costume Craze. To be honest, I was really nervous.

She gave a really fantastic presentation at my Entrepreneur Lectures for Women class, and from that, I had seen how detailed and organized her business is. So I wanted to present her with some really thought-out options, and see what she would be willing to do.

We were interested in having her Santa hats in our kiosk, as well, that the Santa Suit was seriously crucial to our delivery concept. And so, I invoked principles 2- utilize negotiation to create win-win situations and 3- find a way that required costs can pay for themselves.

A note about the negotiation: personally, I think there is a world of difference between negotiation and manipulation. And it’s all about the intent and how you treat the individual and the transaction.

George Ross, of The Apprentice-Donald Trump fame, taught a lecture at BYU a few weeks ago, and gave us a really thorough look into how to negotiate good deals. The most important thing is that both parties feel comfortable, I think, and happy with the end result, and that you’ve created an ethical situation.

So anyway, we did work out an arrangement that was agreeable, and I realized that when we’re done with the suit, it can likely can be re-sold, thus paying for itself. Which is definitely nice.

We also found an additional vendor– Sweet & Charming, a line of really cute princess/fairytale-themed clothing, books, and toys for children.

After that meeting, I had another meeting again at the Provo Towne Centre mall. By the way, just in the few talks I’d had with them already, I was really impressed with the efficiency and organization of their staff. I have never really thought about what it takes to run a mall, but I’m sure it’s a hardy effort. And they do an extremely nice job.

I went to this meeting knowing that it wasn’t really financially feasible for us to secure the kiosk, but I wanted to see what was possible. At the end of the meeting, I had some really amazing options, which essentially consisted of a refundable security deposit and flexible payments, or a lowered monthly lease if paid in full.

During the rest of the day, amazing things happened. We found a sponsor who, after making sure that our concept and sales strategy was sound, and that we would provide an ROI, offered to provide the deposit. That in itself was a miracle.

After that, two of our vendors agreed to split part of the lease agreement, leaving a smaller cost to be paid at the end of the month by revenue generated by sales.

Now, that’s still kind of risky. It just is. (And I’ll talk more about this in the next post).

But, consider these options side by side:

Option 1.

The opportunity to sell a variety of extremely sell-able holiday items, in a bustling mall during the month of December (though involving a degree of personal risk, as I would assume the responsibility to sell enough to cover the remainder of the lease).

Option 2.

The opportunity to set up a display table in a store in a local shopping center that gets decent traffic, but that would require a huge marketing effort to draw in customers, as well as more emphasis and organization on the Santa delivery-service as part of the business.

The clincher was when I asked the mall management for some stats on average holiday traffic and kiosk sales. By no means is that a guarantee that we’ll be wildly successful, but it does provide a context for making the decision.

Essentially, the traffic in the mall on a holiday weekend is about 50,000 people. So, being in the mall over 30 days including 4 weekends… would dramatically increase our chances of doing well.

The low average sales for kiosks… do very well, and besides that, being in a high-visibility location would provide each of these vendors’ products with a great audience– especially as some of them are fairly new/local projects that can definitely use more attention and brand recognition.

To make a long story short, we determined to move forward with the plan of acquiring the kiosk lease, finalizing inventory orders with all of the vendors, completing the necessary paperwork, the mall lease application, bank and tax forms, and anything else that came up.

Friday was looking like it would be pretty busy…

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