New business plan: Put it on wheels, and call it a party
A couple of entrepreneurs adjust their business model for a weak economy by turning a boutique into a traveling shopping party.
After developing their business model and forecasting expenses, many aspiring entrepreneurs are suffering from sticker shock. The thought of investing a large amount of money or going into debt is scaring many away from their startup dreams.Skip to next paragraph
Jeff is the Jack C. Massey Chair in Entrepreneurship and Director of the Center for Entrepreneurship at Belmont University in Nashville, Tenn.
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Aubree Phillips, who is graduating from the entrepreneurship program at Belmont University this spring, has dreamed of starting a clothing boutique since the day she arrived on campus. She gained experience by working in the campus-based clothing store called Feedback and worked on the plans for her store in every entrepreneurship course she took.
But with graduation looming this spring, the thought of spending more than $100,000 to open her store in a weak economy gave her cold feet. But she did not abandon her dream. Instead, she partnered with her friend Natalie Sawyer, a Lipscomb University alumna, to brainstorm about ways to meet shared goals by bootstrapping.
The biggest single financial commitment was the physical space to house their boutique. So Phillips and Sawyer decided to change their business model from a store to a "traveling boutique" called Fringe and Lace. Rather than setting up in a traditional storefront, they take the clothing directly to their customers' homes.
"We specialize in clothing, jewelry and accessories," Phillips said. "All items are trendy and under $100. Our customers find that shopping at home, surrounded by friends, is a fun and relaxing alternative way to shop."
They are able to keep staffing costs down since they do not need employees for a brick-and-mortar store. Phillips and Sawyer staff all of the parties. When the business grows beyond what they can handle, they plan to hire interns and part-time employees to help.
Fringe and Lace has relied on bootstrapping for its marketing. Word-of-mouth has been a big source for securing early customers, which they have encouraged through the use of social media. They have also been using a blog approach to their website, www.fringeandlace.com, to keep their customers current on their new inventory and to help build a community of loyal repeat customers.
Inventory is the final major cost for their business. "After each party, we make an order to update our merchandise," Phillips said. "This way we do not have too much inventory on hand. It also helps us to continue to offer new and different pieces. We try to be smart about our buying so we don't end up having too much or excess inventory that we can't sell."
They store their inventory in an office at Sawyer's home.
Rather than letting the economy discourage their dreams, Phillips and Sawyer showed how changing the business model and bootstrapping can make the cost of a startup more affordable.
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