The Right Way to Grow a Business Today (Spoiler: Bigger Isn’t Always Better)

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Part 1: Talking Entrepreneurship With Mike Michalowicz

 

David: When I went to your website earlier this week, I saw lots of language there that wasn’t there a couple of months ago when I first reached out. So for example, your homepage now says, “Entrepreneurship simplified for uncertain times.” It also says, “Start a business in a weak economy.” It says, “It’s hard to grow a business when the economy is working against you.” 

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So there’s lots of language, lots of updated language about the current economic climate, and there are a couple of things we can glean from that. 

First off, you know full well that the craziness going on right now might be making entrepreneurs a little bit nervous. And second, you wanna make sure that people don’t lose faith in their ability to launch something even in these, as you say, uncertain times. 

So what are your thoughts on the current economic condition here in mid-April as they relate to entrepreneurs and people who have just launched or who are looking to launch a business? 

Mike: So I think this is actually the greatest opportunity. It doesn’t feel that way and it is difficult because there’s no free lunch now. The economy is whirring along and as Warren Buffet says, “When the tide goes out, you see who’s been swimming naked.” There are a lot of businesses that are gonna collapse now.

But why I think it’s such a great time is we are experiencing the ultimate petri dish for entrepreneurship. Shifting needs, new needs, and entrepreneurs will step in to satisfy that.

We just have to look at things in a new way. So what’s funny… The new business owner comes in with a clean slate. They don’t have a history of experience. They don’t have a bias toward that. They can really listen to the needs of their client base, and prospect base. And the greatest way to listen to needs, by the way, is to just watch wallets.

Respond to the consumption and people speak the truth through their wallets, not their words. So I think this is a great opportunity, but I think we have the… Established businesses would respond by looking at things at a bite-sized level moving forward in small incremental steps, by changing our offering. Keeping our core competency, but changing things.

I think the new form of communication that small businesses need to take on is bite-sized, tangible pieces of service. And the other components… I’m not saying, “Give yourself away.” Don’t say, “Hey we still wanna be of service to you and we’re not gonna charge a thing for it.”

Just satisfy the customer’s needs and if there’s something that they could buy from you, I think we have an obligation to sell it because we have to be fair to our customers, but we have to be fair to ourselves. We need sustainability. 

So I think we’re actually in a great market where the potential is gonna go. But it is gonna be a very bumpy, trying time for many businesses including mine. But if we can stick through it, if we can see it from a new perspective, I think for the ones that come out of this, new brand-new startup sort of established businesses are gonna flourish.

David: You’ve been at this for a while, you’ve been in the entrepreneurship space for years, and years, long enough to start and sell multiple companies, long enough to write multiple books. 

Is there anything that you would have said was a rock-solid truth back in like, I don’t know, 2012 or even before that, that you would throw out the window now? Has your thinking done a 180 on anything that you used to hold dear? 

Mike: Well, yeah, I think I learned something very early on, probably before the 2008 recession, I’ve been through three recessions now, this being our third and it was that what got me here will get me there. And it’s not true. What got you here won’t get you there. There is dynamic shifting. So I was wrong there. 

The second thing too and maybe this was even a greater lesson was I used to believe that I need to pivot… That’s the popular word now, or adjust or change to the customers’ offering. And in fact, I already indicated that you need to do that, but there’s one other component that didn’t lead to that’s critical and it’s alignment.

I, in the past, would change my business offering to a business that was sustainable in sales, but I hated doing the work. And that’s actually even worse and I feel like I’m trapped by my own business.

So the one thing I thought was true was to keep changing to the customer’s needs. And it’s really to keep aligning to the customer’s needs and your needs.

In times like this, I see businesses saying, “Well you know what, people need masks. I’m gonna make masks.” And before this, they were, I don’t know, they were selling services. They were a cleaning company and now they’re making masks. It’s a full about-face and the question is, “Are we just responding to an immediate need and being opportunistic here, or is this really something that’s aligned with what we want to do?” Because when you start a business, for most of us, it’s a lifetime endeavor, it’s a long period of time.

So right now, as I’m making adjustments to my business to better serve my customers, I’m always asking myself, “Is this an absolute alignment of what I wanna do and feel called to do?” ’cause if it is, it’s gonna be a joyous experience, and I’m gonna be able to deliver on it. If it’s just a quick money move, it’s not gonna be sustainable. 

And someone that is committed to the process, whatever I’m competing in, that loves what they’re doing, I’m just doing it for the money, they’re doing for the money and the love, they’re gonna beat my… They’re gonna beat me down every time.

The 10-10-10 Method to Reflect on Consideration

 

David: So it’s about finding that sweet spot between the viability in business terms, and then also something that you can see yourself doing not just for the next month, but medium and long term.

Mike: Exactly. So, there’s this method, it’s not my method. It was written by a woman named Suzy Welch. She’s married… She was married to Jack Welch; he passed away, he was the CEO of GE for a period of time. And she developed this method called the 10-10-10 method and it’s a really great way to reflect on consideration. 

Many people consider the immediate concern. She calls that the first 10 minutes. So many people say, “If I do this, I will feel like that.” But she says, “We really need to reflect on the mid and long term”. So the first 10 is 10 minutes, but the second 10 is 10 months and the third 10 is 10 years. 

And what we do here is we ask ourselves, whatever consideration we’re making now, “How will it serve us in the next 10 minutes, how will we feel about it?” Then we ask, “How will we feel in the next 10 months?” 

And when you look back, now at something that’s a knee-jerk reaction and it feels good in the moment, in 10 months, it may not be.

So if I’m considering a new product offering, say, “You know what, I’m gonna start making masks. Well, the next 10 minutes, I feel I have something to do, I feel there’s a purpose here, and the nice thing is I can make some money quickly, so in the next 10 minutes I’ll feel great.”

“Next 10 months, now I’m gonna be making mask after mask. Well, mask demand may go down, but the other thing is, I don’t wanna make masks, I don’t wanna be a manufacturer. So in 10 months, I’ve started the drudgery of something I don’t wanna do.”

“In 10 years… Well, that’s a major downer, because now I’m way off the course of why I’ve been in business in the first place. I wanna change lives in a certain way and now I’ve gone down a whole different path that the rewind… So looking at it with that perspective of the immediate mid and long term, I can make much more thoughtful considerations than just a knee-jerk.”

The Realities of Entrepreneurship

 

David: One thing I like about your writing and just your general approach and I think that this relates well to what we were talking about with the economy and those challenges is how much you talk about the downsides of this life, the downsides of entrepreneurship. 

There was a great passage in your book Clockwork where you write, “At this point in my life, I had built and sold one multi-million dollar business to private equity and another to a Fortune 500 company and written to business books. Sounds like I was living the dream, right? You would think that I’d retired my workaholic badge for good. But I hadn’t. I wasn’t even close and it was clear I was definitely not alone, neither are you.” 

Where does this attitude come from, of really seeing and even kind of embracing and really attacking the ugly part of entrepreneurship? Because it’s something that you definitely don’t shy away from. There’s not a lot of sugar-coating, I don’t think with your content, with your books where does that come from? 

Mike: Well, a couple of things, first of all, I don’t want anyone to see me as a pandering academic. “Here’s what you should do. And this what I’ve studied in my lofty,” you know…

David: “In the tower.”

Mike: “Tower,” exactly, exactly. I don’t want people to see that ’cause it’s absolutely not who I am. But I also don’t think that information isn’t nearly digestible. It becomes very theoretical, but not actionable. So I wanna first give people the context. 

I call it the arm over the shoulder. I want people to know, I’ve been through this, I continue to go through it. I still own businesses today and it is a tough journey, so I think there’s a way to connect that way. 

The second thing is I really think it’s the true thoughts of most entrepreneurs. You see the resume of someone else and like “Wow, they got it. I haven’t figured it out.” But when you hear the real story behind it, you’re like, “Oh my gosh, this person, their journey is very similar to mine.” 

So the bullet points like selling a couple of companies and so forth. Those are nice for the CV, but the reality of the journey is the raw struggle. And when it came to workaholism, there’s a reason it’s called workaholism, it is a version of a disease.

And what it destroys is any kind of productivity, any form of efficiency.

So I was sitting in my office starting the day out, and I remember looking at the clock and saying, “Well I’m gonna work till midnight anyway so I can goof off a little bit here.” 

And I wasn’t focused on getting stuff done and I don’t need to hire someone, ’cause I’m gonna carry the load myself. And it became this perverted pride in… “Can I work harder than someone else?” 

I remember I had a call with a friend of mine named John, and he calls like, “Dude, I had such a long night last night, I worked till 3:00 o’clock in the morning.” And I go, “Dude I pulled a… Till 4:00 o’clock in the morning”. 

I was bragging I worked longer like there was some kind of trophy for that, and now… Oh my gosh, what an idiot I was. 

The reverse is if we realize that our job is not to carry the load on our shoulders but to empower others to do work, to give employment to people, to satisfy a vision, and choreograph the resources around us. That has become more empowering for me.

I still struggle with workaholism. I still have this ego inside that says, “I gotta work harder and prove my worth by just cranking it out.” But I realized that now that’s actually counter-productive.

Fix This Next: A Sneak Peek

 

David: Now I wanna ask you about Fix This Next, which is a book everybody should check it out, when it’s available on April 28th but it’s… In addition to a book title, it’s also a business approach. So Fix This Next, what is it? Unpack that a bit for us.

Mike: Yeah, so Fix This Next… So, it takes me about five years to write a book. It takes me a long time to write. It’s a labor of love, but I’m not an efficient writer. I also do research interviews and then we test… We guinea pig these systems on my own businesses and other businesses. So it takes a long time. 

So, five years ago or so, I emailed that to my readers, and said, “What’s your biggest challenge now?” And the power in that question is you learn what people need and do I have to solve a sales problem, or a marketing problem or what have you. 

And the interesting thing is, the feedback came back, but some people even answered the same question multiple times on the same day with different answers. And that gave me absolute clarity that the biggest challenge business owners have is actually knowing what their biggest challenge is. We’re in this trap of constantly trying to get out of a crisis, but not moving the business forward.

So, most business owners who feel that they’re constantly putting out fires, that grind and hustle are gonna get them through and yet they’ve been grinding and hustling for years in, years out, clearly proving it’s not working. What’s the path they need to take? So that became the thesis or the inception of Fix This Next.

Using the Survival Trap to Understand Why We Stay Stuck

 

David: And then one of the things that you talk about in there is this survival trap. What is that? 

Mike: Yeah, so, survival traps are a great illustration of why we stay stuck. So, you can do this on a piece of paper or you can do it in your head, but I’ll walk you through it quickly. 

You would just draw in the middle of a large piece of paper, draw the letter “A” and put a circle around it. And what “A” represents is where our business is right now at this moment. For many businesses with the pandemic going on, it’s a crisis or a challenge.

And then we say, “Well what’s the way out”? And that’s step two, you can draw an arrow out from “A” in any direction you choose, a short distance out. Also as part of step two is draw another arrow out from “A” in a different direction.

And what that represents is yet another choice you could make to escape the challenge or crisis you’re having, and repeat this over like five or six times. Now you have arrows going all different directions. 

Well, now, in the bottom left corner of that piece of paper, draw the letter “B”. And chances are very few of those arrows, maybe even none of the arrows is pointing directly toward “B”. But “B”, represents the vital need, the specific thing our business needs to actually move it forward, the one thing you need to do.

But we’re not considering “B”, we can’t even think… We don’t even know what “B” is. So what most businesses do, is we just keep on escaping “A”. And what happens is we simply move to a new “A”.

So whatever choice you make to get out of crisis gives you relief now, but then tomorrow it’s the brand new fire and we’re in a new crisis and we escape again.

And so that’s why many businesses stay stuck in this pattern. It is just a simple illustration to point to, you got to know what “B” is, your vital need for your business, so that you can serve it, and once you know what “B” is now when we escape the crisis, we make sure that we’re always moving out of the challenge, but in the direction of what the business needs.

The Business Hierarchy of Needs

 

David: And then, and then, how can somebody use the, what you call a hierarchy of needs to identify where you… Like you said sometimes “B” is hidden. So how can people use this hierarchy that you talk about to identify where that is and then start getting their way over there? 

Mike: Yeah, that’s a great question. So “B” is, is the action we need to take and it resides within this hierarchy of needs. I call it the business hierarchy of needs and the business hierarchy of needs was translated… I translated it from Maslow’s hierarchy of needs, which is about human needs. 

There is one significant difference. Human needs… We are neurologically wired into ourselves. So if I am experiencing a physiological need that’s the base of Maslow’s hierarchy like I’m not breathing, someone put a bag over my head, I’m suffocating, I will tear that bag, I revert biologically to taking action to satisfy a need. 

But in the business hierarchy of needs, we’re not neurologically wired into our business, so our gut instinct actually does not serve us well in business. We need empirical data to back those thoughts. 

So here’s how we go about it. What we do is the base of the business hierarchy of needs is sales and sales is the creation of cash, it’s the equivalent of oxygen for businesses.

The next level above that is profit. Profit is the creation of stability and what that is, is the retention of money so that we have longevity. We don’t have to react, shoot from the hip all the time just to get more sales in or more money in.

Above profit, we have order. Order is the creation of efficiency. It’s where there’s no dependency on the owners themselves in a small business where the business can operate on its own. Actually no, it depends even on linchpin employees.

The next level above that is called impact. Impact is the creation of transformation, it’s where our business is not providing just a transaction, it’s changing people’s lives. And the highest level is legacy, which is the creation of permanence.

And how this works is we simply ask ourselves at the most foundational level. Now, in the book I, I strip down to what I call the DNA of all businesses. There are 25 kinds of core needs of every business. But at the very base level, what we simply ask ourselves is two questions, “Do we have any sales coming in right now”? And if the answer is no, that means your business is suffocating, right, there’s no cash coming in. We have to get sales. 

But the next question then is, “Is there an adequate amount of the level of sales to support the next level above it?” It’s like building an actual five-level structure. You would never build the fifth story of a building in thin air and just let it collapse on the ground and likewise, you would never build this massive foundation the size to support a skyscraper and then put a little tool shed above it that falls within it. They have to work in relation. 

So once we say we have sales, the question is, do we have adequate sales to support a degree of profitability? And if the answer is “We have some sales,” we then have to evaluate profit and say, “Can we generate profit from these sales?” If so, we have a profit challenge, we gotta fix that. If not, we may have a sales challenge. 

And then we keep going up a level, from level to level doing the same thing. Do we have any profit? If not we have a profit challenge. Do we have adequate profit to support a degree of organizational efficiency? If yes, then we look at organizational efficiency and you continue up the chart.

Now, the one thing that’s important to note is that you don’t climb this like a ladder, it’s not like you get to the top and you just hang out there. 

We’re gonna kind of ping pong around. Like, you know, the economy shifted as it did now, we gotta jump down and maybe focus on resolving profit. But I just do wanna remind people, is that when we just trust our instinct, we often make these massive moves out of “A”, but we’re not considering what “B” is. 

So, I see businesses right now saying, “We need to sell a lot more immediately, we gotta cut prices to sell more.” There’s one company that cut prices by 50 percent to get more sales volume. Well, I looked at their margins, their profit margins, they were having about a 10 percent margin. So that means they actually are losing 40 percent. Every time they sell something, the business is actually getting in a more difficult spot.

So it’s not about selling more, it’s about resolving potentially the profit problem. 

So we have to look at the data behind our assumption, that they work in correlation. But don’t trust your gut alone when it comes to the business hierarchy of needs.

The OMEN Framework

 

David: You know, this idea that the original hierarchy of needs like you said, from Maslow, is, there is kind of a hard-wiring where you’re… At some point, you are kind of triggered without choice to act on it. But yeah, with business, it’s just different. 

And I guess that kind of brings us to your method for evaluating where you should focus your fire, which is this OMEN method. O-M-E-N. Talk a little bit about that and how somebody can use that to evaluate where they are in their hierarchy and maybe where they need to shift or adapt? 

Mike: Yeah OMEN is a framework. So once you know what you need to do within the hierarchy, then it’s how you do it. And OMEN is a way to measure and enhance our process as we resolve something.

OMEN is an acronym. The first two elements many people know. The second two,  many people know but they won’t execute on it. But collectively, they’re all critical. 

So the first part is “O”, which stands for setting your objective. So, what do we need to achieve?

So say we have a problem in sales, well, we need to drive further down, it’s not just a sales issue, there are specific elements and actually, in the book I talk about each level has five core needs that’s true for all businesses. And for sales, for example, maybe converting prospects into clients. So the objective is to convert more clients into… Or more prospects into clients. 

Then the “M” stands for measurements, well what’s the measurement of success on this? The other two parts are what people often miss… The next one, “E” stands for evaluation and it’s really an evaluation of frequency. How often are we gonna measure our progress? 

Many businesses say, “Forget it. We need more sales. Okay, let’s do that, let’s double our revenue by the end of the year.” And they don’t even think about it. And then the end of the year comes, and they say, “What was our goal or what did we set?” 

Other ones evaluate way too frequently, they say, “We need more sales”. The next day, they say, “Well what we’re doing is not working. Let’s do something new. That’s not working,” and they’re not giving yourselves time to collect empirical data. Nor are they even evaluating the data. 

So evaluation frequency is to get into a rhythm, kinda like the Goldilocks, not too hot, not too cold, get the right temperature frequency to be evaluating our progress on our objective and our measurements.

And then the last component is “N”. It stands for nurture. Nurture means that we must afford ourselves the flexibility and the approach to adjust settings. When we set those objectives and those measurements and the frequency, it was based upon the data set we knew at the time. 

Well, over time, you may have a different perspective or different learning, so that’s when you start to nurture or change the process or what you’re doing. Change the objectives, change the measurements. 

Additionally, this is where you engage… And you may wanna do it right from the get-go, I think. Engage your frontline. So if you have a small business… We have a tiny one here. We have 12 employees.

The frontline people, the people that are actually doing the work, know better, potentially, how to solve that problem than the people sitting up in leadership positions.

So it’s really getting the active input of people close to that problem to get their direction on how you nurture it. And by doing this, by setting the OMEN, now you have a framework to move through what you need to resolve.

And the goal with Fix This Next is to bring it to either complete resolution or bring it to predictable resolution, where you set on a path that it is resolving. We have a conversion rate now, of one a week. And in a month from now, it’s two a week. A month from that, it’s now three a week. Okay. We know it. We can see the trajectory to five a week. Now we can pick the next thing to fix. 

Now, it’s not set and forget it, I’m gonna keep looking at that conversion but I don’t have to devote my time there, so I can go through this business hierarchy of needs again.

And that’s what happens, is this tool, the business hierarchy of needs and evaluating what to do, is something you iterate through. When a problem is resolved or it’s on a predictable path to resolution, you evaluate again. So you can use this any time and you definitely do use it repeatedly.

Finding the Right-Sized Business

 

David: You write and speak a lot about finding the perfect size for a business, and you really rail against this idea that bigger is always better. And the vocabulary that you use when we talked about the hierarchy, you have “sales”, and “profit”, and “impact”, I think these are terms that people do kind of instinctively think, “Oh, more sales is better. More profit is better,” etcetera. 

But that seems to be a mindset that kinda grinds your gears a bit. So if entrepreneurs should be focused on growing a business to the right size, instead of just growing it to its biggest possible size, what should they be keeping in mind and how can they tell when they’re in that sweet spot when it comes to size? 

Mike: Yeah, I think there’s a real measurement of personal comfort. And what I talk about on Fix This Next is, first of all, what are we looking to achieve for ourselves as business owners? Because when we start a business, there are usually two components. We want personal freedom and financial freedom, and neither are defined or they’re defined very loosely. 

“I wanna be rich and I don’t want to have to work much.” Okay. Well, we have to have more clarity about that. What is lifestyle comfort? What gets you to the base where you’re not panicking or worrying any more? ‘Cause that’s the starting point of a healthy business, is that, “I don’t have to panic every day to pay my bills at home.” Well, once that happens now you’ve reached the base level of comfort, what do you want next? 

And what we found is often for business owners, myself included, is once I hit a base level of comfort, the motivation is no longer about acquisition.

It can be for some people. But getting more stuff at a certain point seems like not so fulfilling and it often transitions into the impact phase and that’s where business can’t have explosive growth where it’s about, “Wow, we can change the world if we have more size and magnitude.” 

But I also see this compulsion of business owners often keeping up with the, what I call the “entrepre-jonesses”. We look at these other people and say, “Well they have a $10 million business, I better do that.” Well, someone else has a 50 million and Jeff Bezos has a billion-dollar company. I better be the next Jeff Bezos or Sara Blakely. 

And I think that is just arbitrary and I don’t even think it’s necessary, I don’t even know if it’s healthy to say that, “Amazon’s achieved what it has, so I need to do the same.” Amazon… Jeff Bezos is absolutely a phenomenal leader, but there’s a lot of good fortune that came into that. I wonder if Amazon tried to start up today or start up earlier… I think they were in the right place, the right time, and that played into their good fortune too. 

So, I don’t think we should use them as a measurement. I want people to disconnect from judging themselves by judging others. It really is just what is your comfort factor and how do you define it for yourself. And that is the right size business for you.

I’m very impressed by business owners that love their business, and it’s “only a few employees” and “only doing X number dollars”. But they’re happy.

That, to me is the definition of right-sized business, is where you achieve that satisfaction and happiness.

David: Yeah. I love getting to talk to Oberlo users who… Maybe they’re doing something like five figures annually, but it’s their side hustle, they have a different job as well and it’s a creative outlet and it’s fulfilling… Fulfilling in the ways that you’re talking about and not just like where you wanna make a YouTube video and show your dashboard with all your sales. I think that that’s… There’s a lot of value in that, even if people who have that mindset maybe aren’t quite as loud as the other group. 

Cool. Mike, we can leave it there. Thanks so much for taking the time to chat. If you wanna check out more from Mike, fixthisnext.com, that’s where you can find info about the upcoming book. Mikemichalowicz.com, that’s a mouthful to spell, so we’ll just link to it.

Mike: Yeah. I have a shortcut because so many people struggle with that. So, I also own the domain mikemotorbike, which used to be my nickname in high school ’cause it rhymes. So mikemotorbike.com brings you to my site. 

And also, at Fix This Next, we set up a free evaluation. So you don’t even have to have the book. If you wanna evaluate your business right now and pinpoint what to work on, you can take the free evaluation. No download or anything, you can just click on it, take the test, and figure out what you need to do right now.

David: Awesome. Mike, we can leave it there, thanks. Thanks again for taking the time.

Mike: Thank you, David, I appreciate this.

Part 2: Courtney White

 

David: So you had done some entrepreneurial stuff before your first successful ecommerce store, this included. I think there was cake-decoration, sewing, you made dolls. So various creative artistic things. Give us a quick snapshot of your earlier ventures and what those looked like? 

Courtney: Yeah, absolutely, so I started around 2008 on Etsy. I had a little crochet shop, I sold not only items that I made but patterns, and then that kinda segued into sewing and doing some dolls and things like that, some baby clothing. 

And I just found it was a little difficult to not only get noticed on the platform, so just trying to do the normal marketing because you didn’t have a lot of control over who was seeing your shop there, but then also just the time that it took, I felt like I was tied down every time someone placed an order, I would have to take hours to make it and I really didn’t feel like I was making any money. It wasn’t enjoyable anymore. 

So then, I decided to give the cake decorating a try. I just always needed a creative outlet in some way, and I thought “Oh that’ll be fun.” But again, I ran into the same problem just being tied to these customers. They wanted to order things on the weekend, so my entire weekend would be tied to making these cakes which took hours and hours and again, as much as I loved it in the beginning, I just didn’t love it in the long term.

I felt like I was just kinda tied to these orders and just it wasn’t something that was sustainable.

David: You use the term “creative outlet”. Is that kind of what you were looking for with these things? You have a “day job”, you have a normal nine to five. Were you trying to find something that was more… That kind of fulfilled things that you weren’t getting out of the normal job? 

Courtney: Oh, absolutely, I just I’ve always loved to work with my hands and do things that were creative, whether art, painting or drawing, doing sewing and I always have ideas running around in my head and so I have a very technical job, and so that creative outlet was probably more of a way for me to express myself in that creative way, not necessarily to be a huge moneymaker, but that was certainly part of it. If I could earn a little bit of money then…

David: So be it, right? 

Courtney: Yeah, exactly.

Starting a Successful Business on a Whim

 

David: So fast forward to today, and you have an ecommerce store, Finer and Dandy, that specializes in items for babies and there’s other stuff in the catalog as well. But the baby clothing and baby apparel is really at the heart of it. 

What was it about ecommerce that latched on in a way that those other side hustles didn’t? 

Courtney: Well, I actually started Finer and Dandy on a whim. It was just something… I had been reading about ecommerce and seeing it online, and I just said, “Hey, why not? I’m just gonna give this a try.” 

So I really didn’t have a lot of experience or knowledge and didn’t know the ins and outs of really what I was getting into.

But I picked the baby clothing on a whim, to be honest, I thought once I got into learning about product research and how to choose something, I really didn’t know what direction to go in and I said, “Oh there’s a lot of cute baby clothing. Let me just do that.” 

It seemed easy, it really didn’t turn out to be as easy as I thought that I think being a mom myself, wasn’t something that was unfamiliar territory for me.

David: We have a success story about you on our website over at the Oberlo blog which everybody should definitely check out, by the way. But in there, you talked about how you were kind of floored when you made your first sale. 

And so, you mentioning that you started the ecommerce store on a whim, that kinda gels with what you said about your first sale. In that story, you were quoted as saying, 

“I was shocked, but I think ultimately what happened was it opened my eyes to, wow I could really make this a legitimate business. Somebody bought something from me.” 

So, it sounds like you weren’t really banking on Finer and Danny taking off. Talk about that first sale and kinda what that did for your mindset in terms of what this could or could not be?

Courtney: Oh, absolutely. I went into it as I said, on a whim, I chose the product kind of on a whim. I didn’t have any expectations going into it, which probably wasn’t the best entrepreneurial mindset. But I said, “I’m just gonna give this a try. I’m gonna start marketing and seeing what happens.” 

I didn’t have probably a lot of faith just because of my past experience on Etsy and how difficult that was, but I started reaching out to just regular people via Instagram, and kind of connecting with them in an authentic way. 

And so, yeah, when I did get my first sale, I was shocked, to be honest, and I thought, “Okay, well let me just keep doing what I’m doing, and maybe more will come.” And it just really… It started slowly but it definitely just started kinda snowballing from there.

Succeeding With Unconventional Marketing Efforts

 

David: And I think that your Instagram strategy that you just mentioned was really interesting. So basically what you did was you ignored paid advertising and you ignored big influencers and you focused on, for lack of a better term, regular moms. 

And I think that this is interesting because paid ads are usually the first thing that people would think about when they wanna market their ecommerce store. And the second thing is probably influencer marketing. And so, you ignored both of those, when it comes to initial marketing efforts. How did this strategy come about? 

Courtney: So, I didn’t have money to spend on ads, to be honest, or didn’t wanna spend my own money. I didn’t really… I didn’t have the right mindset, I didn’t think I was really gonna sell anything, I didn’t have any expectations and so, I really wanted to try those other methods. 

I see a lot of people and hear people talking about these influencers, well, I think more of my strategy had to do with my own confidence in the beginning and maybe feeling a little intimidated or not knowing what to say, I’m gonna reach out to this huge influencer, what am I gonna say? 

And so I think that kinda just made my mindset change a little bit because I thought, well this person that has only 100 followers or maybe even less than that. They are still a consumer, I can develop this relationship and so that’s kind of what I did just started chatting with regular people and that seemed to work and they became my biggest fans, they became brand ambassadors and they became repeat customers as well.

And so that was when I thought I’m really kind of onto something this might be a little bit different method but I’m comfortable talking to these people, I’m not comfortable yet maybe reaching out to some million-plus follower influencers.

David: Sure, I’m gonna circle back to the VP customer thing in just a couple of minutes but I wanted to ask you about this Instagram strategy not just at the beginning but now that your store is more than a year old is this something that proved scalable or maybe was it just something that you needed to do at the beginning and now it’s become self-perpetuating. What did this early strategy look like after three years or six or 12 months? 

Courtney: Yeah, so really my strategy today, in all honesty, is not all that different. I’m still not at a place where I’m running… I’ve dabbled a little bit in the paid ads but I think even in that regard I’m doing it in a little different way than what I’ve heard talked about. 

So I just really continued doing just what I talked about, reaching out to regular moms. That’s what I did all last year and it kind of kept snowballing and when really they would tag me in photos or tag our accounts in the photos of their children, that gave me content to post and so I had a whole library of reusable user-generated content that helped grow that account and get us out there. 

And so I really just stuck with that approach and it worked and as more people followed and I kinda grew this ambassador program more people wanted to join the ambassador program. 

So my approach honestly is not all that different today but I have started running some little ads and what I mean by that is I can spend even just as little as a dollar to get some new people there to follow us.

And then I will follow up with every single person, thank them for following and just try to be authentic and people really love that sense of community.

I think it’s something that you don’t often see from brands and so I feel like just building that initial customer base and repeat customers may take a little longer with that strategy but I think it’s given me a solid foundation now to explore other areas.

David: So you’ll run paid ads that are not designed to get sales but just designed to get people to follow you, is that right? 

Courtney: Oh, absolutely. I ran one yesterday, I spent $10 on it, I only ran it for one day, the idea was honestly to get people over to the site where they would see our sign-up form where we offer a discount code for new subscribers and I ended up having 399 people sign up and that was at I think, two cents cost per unique link click which I think is fantastic. 

I’m not trying to sell these people anything, I will go and follow up with each of them and I do that in a personal way and just thank them for engaging with us and invite them to join our community. It works really well, I think, not doing the hard sell and that’s where I feel comfortable. 

I feel that I am building some real relationships with people and even if they don’t buy something, I welcome their feedback. I’ve gotten such great feedback from customers and that’s how I’ve kind of developed my strategy as far as the products go as well.

Doing A 180 on Building Relationships

 

David: In the story that I mentioned earlier you joked that you have this technical background and that you have a background in technical writing and that you weren’t always really… You didn’t think of yourself as a people person, that you were better off behind computers not interacting that much and you even joked in there that you used to say that you don’t like people which was a funny way to put it.

But it sounds like the approach that you’ve adopted with Finer and Dandy is really like a 180 from that, that this has been something where you’re actively cultivating relationships, you’re literally paying to get people on board to not necessarily to buy but just to join the community. 

Talk about that flip from being kind of thinking of yourself as a little bit isolationist or whatever and now being… Having your whole business kind of underpinned by this outgoing attitude.

Courtney: Yeah, it’s crazy just how much my mindset has changed over the last year because you’re so right. I would jokingly say, I do not like people. I have worked from home in my day job for over 10 years.

David: Since before it was cool.

Courtney: Yeah, and so I’m used to being isolated and kinda doing even my hobbies, whether it was crocheting or cake decorating and sewing those were kind of solitary things. But as I began interacting with these regular people and regular moms, I kind of found that sense of belonging and it was easy to communicate with them and relate to them and just kind of build this community around that openness and willingness to share and accept feedback.

And it’s really like I said, just really changed my whole mindset in that, now, I go, “Well, I love people”.

I love this feedback, and interacting and not only with my customers, but I’m engaged with a lot of other small business owners and I don’t mind sharing my tips and sharing things with each other, and I think that just really has done a lot to help me personally grow and not be afraid to reach out to people, it’s developed my confidence a lot more where I could reach out to a huge influencer now if I wanted to, but I haven’t found the need to do that yet, but it’s helped my confidence, just tremendously.

David: I assume that was kind of a surprise that you didn’t get into ecommerce thinking that it would be like a personal development tool, or was that the goal? 

Courtney: No, not at all, no, absolutely not at all. But the more that I put myself out there and just said, “Hey you know what, this worked, I got a few sales, let me just keep trying this”, and then I would try something new or try to put myself out there more. 

In fact, I am actually partnered with Children’s Miracle Network, a charity that helps raise money for children’s hospitals, and I just simply sent them an email. They’re a huge organization, they bring in something like seven billion dollars a year. And I was just shocked that they said, “Yeah, let us build a custom plugin for your website and allow people to donate directly.” And so, when people check out through our site they can actually make a donation directly to a local hospital in their area. 

But I never would have had the confidence to think that anybody would wanna talk to me or my little business. And so each step along the way has just done so much for personal growth and confidence. It’s so much more than any revenue that has been made.

David: But the revenue’s nice, too, right? 

Courtney: Yes, I can’t complain about that.

Finding Motivation and Energy

 

David: Now, you have three kids, you have five dogs, you have a full-time job. And so I’d love to know where you get the energy to do ecommerce. So if you have some scheduling hack, if you have a napping routine that you like to share with the rest of us who are always tired, what does your day look like and how do you handle a life that seems like it’s bursting at the seams on one hand, and then on top of that, you have this business that you run? 

Courtney: Yeah, so I have always been a morning person. I love to get up before everybody else when it’s still dark, it’s quiet in my house, it’s very just zen-like. There’s nobody else here, the dogs are asleep. 

I get up at four in the morning and that gives me a solid two to three hours before anybody else is up and I find that I can just focus my attention on those key, crucial things that I need to get done every day. 

And then I can work my full day job and the rest of the time it’s honestly just five minutes, 10-minute, 15-minute increments. I can hop on Instagram, send out some messages, follow up with emails and that flexibility is one of the things that I love about this business.

But in terms of a hack, I would say getting into ecommerce and just learning more about the business and watching these little successes and things that have happened, that is the only motivation I need.

Every morning I’m excited to get up and just see what the day brings. And so that’s really what my experience has been, is just kind of the thrill of building something and building this community and doing this on my own makes me excited about what I’m doing, and it’s easy to jump out of bed at four in the morning.

Kick-Starting It With Dropshipping

 

David: This store started out with, I think, a lot or maybe, exclusively, dropshipping. So that was kind of the fulfillment method that you used, so you weren’t creating your own products, or designing your own products, you were using Oberlo to source them, and then dropshipping them and that has kind of evolved. 

And so you know, you just mentioned this idea of learning about ecommerce and learning about the tricks of the trade. This is something that a lot of people learn where they might start out with one business model or one fulfillment method, and then as the business grows, or as the business evolves they kind of evolve into something else. 

Talk about that evolution going from dropshipping into now having your own designs and the different model that you’re now using? 

Courtney: Yeah, so I absolutely started out just strictly dropshipping. I mentioned earlier, I kind of chose my… The baby clothing, it was a little bit on a whim. I didn’t do a whole lot of research, I just found some cute stuff and put it up there. 

But it really evolved over time as I got data and I saw who was buying and really paid attention to what styles they were looking for and who I was interacting with on social media. And so I first initially started out kind of just more… Keeping the clothing that I offered in a specific style that I saw people were buying and so, I really pared that down and it was more of a minimalistic and more of an earth tone color palette. 

And so over time, I learned that and knew who to reach out to. But another thing that really influenced going more away from the dropshipping model was some of the current events, being… The first one was the Chinese New Year, which definitely affected the timelines as far as when things were shipping.

David: It’s a headache for many a dropshipper, that New Year…

Courtney: Absolutely. And I had dealt with this, my first year, last year, and it really was not a problem for me, I didn’t anticipate it being a problem. I had developed great relationships with my suppliers over the course of a year, and I contacted them all a month ahead of time and was prepared and I had a backup plan and everything was great. 

And then the global health crisis with the coronavirus, having that happen at the same time really kind of helped me make the decision to go more into the print-on-demand.

I had had about 50 percent print-on-demand products in my store already, and so it wasn’t that I was preparing for anything, it was just I wanted to have that diversity available even six months ago when I started doing the print-on-demand, I thought that it was good to have those options. 

And so it was a really easy transition for me and I already had the audience for it to kind of shift away from dropshipping. 

And I do still have some dropshipped items. But I think just being prepared for those things and you can’t have your business stop because of one thing that happens in the world. And so I think that’s important for people to have these backup plans. Even if they’re still dropshipping, have some other suppliers available to fill those gaps.

The Role of the Product Versus the Community

 

David: With how important community is and has been from the beginning, I’m curious if there’s anything that you would say about building a community around products that are dropshipped versus products that are print on demand, is it any more difficult to cultivate that sense of community when you’re dropshipping things? Or is the product almost secondary to the other stuff that you’ve mentioned like outreach and answering emails, and those sort of personable things? 

Courtney: I don’t think the product is as important. My audience definitely likes the uniqueness of having a print-on-demand product that they can’t find anywhere else. But I think they were just as excited about the dropshipped items. 

But I think most importantly is just building that community that is gonna rally around anything that you offer. And that comes just through those personal interactions and really listening to the target audience. And I think in a sense, being able to relate to them. 

I honestly feel that if I wasn’t a mom myself and didn’t have many areas that I can relate to my audience on, I may not have had the success.

I don’t think a 20-year-old young guy may have that success if he tried to create a baby store, but if it was something in fitness or that he loved to talk about, it just makes it much easier, it’s natural. I don’t feel like I’m selling anything. 

And so that definitely makes the community much stronger and willing to kind of look at anything that you might put in front of them, whether it’s a dropshipped item or something that you created yourself.

David: Yeah, that checks out and it reminds me of what we’ve heard from two guests that we had on the podcast last year. These two women from Utah and their whole business is based on this Facebook group, they don’t spend money on advertising either, and so they basically, they’ve cultivated this thing over a long period of time. 

And I asked them something similar, if people were off-put by products showing up with a bunch of Chinese writing on the packages or if there was any sense that people didn’t like the dropshipping element and they said, “Absolutely not, that there’s really no… People know that a lot of this stuff comes from China, people are much more concerned with the stuff going on in the group, and in the community,” and that that’s where they were aiming their focus as well. 

And speaking of community, I wanna circle back around to something you mentioned earlier. And that is the returning customer rate. Last that we checked in, it was north of 14 percent. So I’m curious how you’ve gotten this returning customer rate so high and what are the things within the community element that have fuelled that? 

Courtney: I think it has a lot to do with my marketing strategy from the beginning, and just having that personal touch. That may not be sustainable for everybody in the long term, but that’s what’s working for me now. 

But yeah, I think people that are part of that community and that we are interacting with or I’m interacting with them on Instagram, I comment, I don’t just bring them in, market to them one time and be done with it, but I try to really get them involved. 

Many of them have become brand ambassadors and so that definitely helps foster the sense of community and many of them follow each other on Instagram, and so they’re engaged with each other’s accounts and with the other ambassadors and so I think it feels more like a team of people and so when the ambassadors are posting their stories, or sharing new items that we have, it’s getting out to a much larger audience.

But many of them are the same audience that follow my account, that follow these ambassador accounts. And so I think that really just helped foster that sense of community and they get excited when we have new products.

Not Being in It for the Money

 

David: In 2019, your store did just shy of $20,000 in revenue and I’m curious, as the business owner and as the person who’s built this thing up, how you view the 20,000 revenue number ’cause I think some people might think that that’s not nearly enough, that you gotta have six figures for this to really be bonafide or you need to do X per month. 

But it sounds… Correct me if I’m wrong, but it sounds like you’re at a pretty good spot with the size of it, that you have the community that’s stable and strong and that you’re actively engaged with, and you enjoy interacting with. 

Is this 18-20,000 a year mark, is that something that you could do indefinitely or am I being too narrow-minded and no, you wanna grow this thing into a million-dollar monster? 

Courtney: I would love to grow it. But I’m really happy with the place that I am right now, and that’s why I have continued being engaged in every aspect of the business. 

I have not really tried to scale yet because I think it’s important to build that foundation.

But I think $20,000 to a lot of people just starting a business, is also something they go, “Wow, maybe I could do this by myself, not needing to have a whole bunch of people helping me. And I can do this in a couple of hours a day or five or 10, 15 minutes here and there.” 

So, my plan is to grow the business and I’m working on it every day to do that. But I am in it, I think, more for the long-term and building the right foundation rather than just going the route of running paid ads and having to bring new people in all the time. 

And so, I don’t know what my strategy might evolve from here but that’s working great for me right now and I’m definitely comfortable there. And I think, for me, becoming an expert in that one area is more important than trying to do 20 things at once to bring people in.

David: I think that there’s value also in having the workload be such that you’re not overwhelmed ’cause you mentioned earlier that that’s some of the other forays that you had into side hustles were doomed because it was taking up your weekend or it was encroaching on parent time or whatever. 

So, I think for me 20k is awesome, full stop, no questions asked. But 20k in light of the fact that you’re doing it on your own schedule while you’re maintaining a variety of other things, that makes the number that much more attractive, I would say, that it’s fit in within a very normal, healthy balance of things and not something that you’re pulling your hair out trying to achieve.

Courtney: For sure. And I would say, that first year, last year was a year of learning, learning not only how to create a website and find the products, and how to get them in front of people but now I’ve slowed down a little bit. So, I have become an expert and really quick at the way that I’m reaching out to people and doing my marketing to where it only takes me an hour a day. 

So now, I feel like I’m an expert in this one thing and I’m starting to now dive into email marketing more. And so, adding on another piece that… 

I think it makes it much easier to add one piece at a time, learn it well and then you can grow slowly. I don’t think there’s any shame in that.

Not everybody needs to be making six figures their first year but having something that’s manageable with a full-time job and is not gonna be overwhelming and not getting discouraged if those things don’t happen right away just because you threw a bunch of money at some ads.

David: And just for the record, we’ll have you back on when you do hit six figures.

Courtney: I would love that.

Personal Growth: A By-Product of Entrepreneurship

 

David: It’s a standing invite when you go from 20k to 200k. One last question for you, Courtney, then I’ll get you out of here and it’s something that you’ve mentioned throughout the podcast, and that’s mindset. 

And one of the things that we… Maybe we don’t talk about it enough at Oberlo but the advantages of ecommerce. For us, it’s oftentimes that you can be a digital nomad or that you can quit your day job, or that you can work on your own schedule and those are all legit, and those are all real, and people absolutely relish those aspects of entrepreneurship and of ecommerce. 

But for you, it sounds like this mindset shift that you’ve undergone kind of by accident, if that’s fair to say, that that for you is… The money is cool, the expertise is cool, it’s a creative outlet and all that, but you’ve also gotten this personal growth. 

Is it fair to say that that’s one of the things that’s been most rewarding for you in addition to the relationships and the money, and all that, that there’s been this real somewhat surprising growth on the personal side? 

Courtney: For sure, yes. That has been more valuable than anything that I could put a price tag on and things that I didn’t even know I had needed a mindset change on. So, I don’t have a college degree, I think probably like many people, I grew up having to work extra hard to get a good job or get a promotion and had maybe a little bit of a self-esteem issue because I didn’t feel as good as somebody who had a college degree and always having to prove myself in these jobs that I had. 

And while I have a wonderful job that I love now, it took a lot of work to get there and I didn’t even realize that I had a limited mindset within myself. I just thought that was the way it was. I needed to work harder and that was just the way it was.

So, a lot of this, for me, has really been, I thought, proving to other people that I could do it but that’s not the case.

I think that I needed to prove to myself that I was capable of doing this and that just really opened my eyes to so many things. And even a lot of the ecommerce groups, I know Oberlo has a group, Shopify has an entrepreneur group on Facebook that I’m a part of as well, and just reading stories from even young teenage kids that are doing this, and I’m like, “Wow, they are doing this and they are successful,” and that is so inspiring to somebody like me who had this limited mindset for all these years, and it’s just really opened my eyes. 

I’ve got a teenage son, he is thinking about starting his own store, we’re gonna work on it this summer and just for me to be able to pass that on to my children, “Hey, even if you don’t go to college, you can be a success,” has been just eye-opening and I hope that I just continue to grow even more and learn even more as I discover things along this journey.

David: Awesome. Courtney, we can leave it there. Thank you so much for joining us. If you wanna check out Courtney’s website, it is fineranddandy.com. Lots of cool stuff over there, some adorable baby pictures as well, so go for the clothes but then stay for the baby pics. Courtney, once again, thanks so much for chatting with us.

Courtney: Thank you, David.

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