In 2002, former software engineers (and husband-and-wife team) Laura and Doug Zander emptied their savings and opened a 500-square-foot yarn shop in Truckee, Nevada (population: 16,000). "I was just hoping to make $30,000 a year," says Laura. Instead, Jimmy Beans Wool has become a market leader in the last decade, with a projected $8 million in annual sales this year, a shipping center in Kansas and a huge new store space in downtown Reno. (For comparison: The average yarn store does $177,000 in sales per year.)
How did two San Francisco software engineers become successful business owners of a booming business selling yarn? Zander spoke to us about her "accidental journey into entrepreneurship" and the role that imagination played in helping her business bloom.
Laura Zander: I actually had pushed that out of my memory. But yes, you're absolutely right. We moved to Truckee, which is a resort town, and I thought I could build self-sustaining websites for businesses. I tried everything. I was literally knocking on doors. But the bottom line is, I totally misread the market. People move to Truckee as a lifestyle choice, not to make a billion dollars. So they don't want to pay $10,000 or $20,000 for a website. At the time, they could call anyone and get a simple site done for $300.
How did that work lead to the yarn shop?
One of my two customers was a yarn manufacturer, and I had just started knitting about six months before, so I was really obsessed with it. She convinced me that I should open a yarn store. We didn't do any market research but you didn't really have to: The closest yarn shop was 90 miles away. So my husband and I decided we were willing to lose $30,000 in savings—no more—and we opened it up. I literally used sofas people gave us and furniture from my house. My husband's skills were much more advanced than mine were, so he could still make a living to support us. We agreed we wouldn't put any more money in, and we never had to.
When did the business really take off?
In 2004, we opened a second location. [They later closed the original.] By 2006 or 2007, we had hit $1 million in sales. Then in 2007, I saw that a restaurant I'd been to had had a makeover done by Fortune Small Business and I thought, "We can do that!" I crafted my email pretty carefully: 'Yarn photographs really well, you've never done anything like this.' A couple days later they called. After that, both because of the exposure and because of all of the great things we learned, we were just on fire. We’ll do about $8 million in sales this year.
Keep reading to find out how Jimmy Beans used social media to drive sales.
What did that teach you?
I had always sort of been a fly on the wall in our industry: We didn’t advertise; I didn't go to trade shows—or I did, but I didn't talk to anybody. It never occurred to me that you need to blow your own horn. The PR person they sent to sit with us taught me that. So when the piece came out, I immediately sent our vendors and every magazine in our industry a note saying, "Our industry just got a five-page article!" And it just snowballed: We got more exposure and more exposure. When I got invited to the White House two years ago, I sent out another note: "Jimmy Beans takes yarn to the White House." How great for this whole industry!
I understand the Web played a big role in your growth, too.
One of our core purposes is to make our online customers feel like they're in the store and as if they know us; we're trying to break down that Internet barrier. So in 2007 or 2008, my husband Doug had the foresight—before Zappo's, before Amazon—that we needed to do YouTube video reviews for every single product that we carry. It was also about rankings: Google had changed their algorithm so that if someone typed in "Rowan Big Wool" and we had a YouTube video with that title, you'd see a snapshot of our video on the first page. How great is that? Now we're on Facebook, Pinterest and about to start an Instagram campaign.
What about social media?
We're not a discounter, we're not promotions-heavy: Our competitive advantage is great customer service and that we're storytellers. Our whole goal is for you to get the brands that we carry on a personal level. Social media is a terrific way to accomplish that goal. About six months ago, we set up a hot tub in our warehouse and filled it with yarn: We're kind of in the middle of nowhere, but we get a lot of people coming to visit us, so we wanted to give them a unique experience. So now they can take pictures of themselves in the Jimmy Beans hot tub. And, of course, they post those on social media. For the Olympics, we're going to fill it with red, white and blue yarn.
Jimmy Beans shows up in pretty eclectic places: You have a multi-year partnership with the U.S. Ski and Snowboard Association; you did goody bags for the Emmys one year. What’s that about?
We focus a lot on mainstream publicity and partnerships. I advertise in knitting magazines, but nobody's going to notice us because everyone's advertising knitting stuff. I want to advertise in Car & Driver because I can guarantee that every one of the magazine's readers knows someone who knits or crotchets or sews or quilts. And that ad is going to pop.
If someone who was starting a brick-and-mortar store asked you for three pieces of advice, what would you say?
First: cash-flow management. It sounds really textbook, but you have to get QuickBooks or some program like that and write down every pen you buy, everything that you spend money on and categorize it and look at it every single month if not more frequently. Look for patterns. At least in our industry, people just don't do that. Instead, they send in all the receipts to an accountant at the end of the year and say, "Did we make money or not?" That's one of the biggest mistakes. The second thing is, if you have employees, you have to recognize everyone. They have to know each job is as important as every other. Management was really hard for me at the beginning—I didn't know how to communicate my vision to managers who worked for me. I had to work really hard on that because they're the ones now communicating with customers and vendors. The third is customer service. The customer's always right. You have to think about how you'd want it if you were shopping. In every single situation, flip it around.