Why do owners buy businesses? Why would a person not retain their 9-5 well paying jobs instead? What is the lure of becoming an entrepreneur?
In this blog, I will share some war stories of a resilient entrepreneur and her journey…
In November 2019, Jennifer Archey, purchased Playful Potter for $80,000. Paid cash from savings that she and her husband saved from their regular 9-5 jobs.
When they met a financial planner, they realized that their savings, and rate of savings will not sustain them in retirement. Both Jennifer and her husband are in their mid thirties. She wanted to be proactive, and be financially independent within 10 years. Playful Potter, wasn’t the business she had set out to purchase. Her original plan was to buy a self storage facility. Jennifer had done her research, and knew they make great investments. I agree. Watch Episode 7, if you want to know why.
She used to visit Playful Potter as a customer with her two young children. While searching for self storage investments, she stumbled upon Playful Potter and leaped on the opportunity, thinking what’s better than owning a business that her family enjoys.
After the acquisition, Jennifer immersed herself in the business, and the results started to show. Her business took off. Moreover, the cash followed.
COVID-19 hit. A brick and mortar owner’s worst nightmare.
What was she to do? It was a crime and medical hazard to open.
Playful Potter’s 2019 revenue was $181k, which dropped by half in 2020. All her expenses, including utilities, online presence, marketing, accounting, subscriptions, all stayed constant. Her biggest problems were – 50% drop in sales, recurring expenses that were now greater than revenue, uncertainty of future of her business, OSHA inspectors looping over her aching to hand out $5-10k fines for non-compliance for COVID-19, and $37k spent to keep the business afloat since March, which is in addition to the $80k she spent for the business.
Being the resilient owner she is, Jennifer decided that she has to move her business’s customer interface online. She did. Jennifer pushed all her inventory online. Created packages online. Revisited pricing. Rebranded her services. All within 12 hours of the COVID-19 shut down. It helped. Regular customers who couldn’t part from their ‘art’ fix, started purchasing online, and her business finally received the most needed oxygen.
She furloughed one out of three employees. Received 22k from PPP and EIDL. And worked with her landlord who forgave one month’s rent, and delayed payments for two additional months. This is what she could do from an appraiser’s perspective.
Double down on social media…feature her customers, feature birthday parties, involve non-profits
Develop tutorial videos…
Develop a monthly and quarterly membership plans for the 50% of her regular customers. This will ensure she is secured for the $8k of her monthly fixed expenses. In addition, if she is considering selling her business, a new owner will only purchase Playful Potter if they see recurring revenue.
“What separates successful entrepreneurs from non-successful ones is pure perseverance” – Steve Jobs…