Amanda Neville had been a business and brand strategist for nearly 15 years and loved every minute of it. But she also craved new challenges. She felt the urge to build not just teams, projects and companies, but something physical as well. Moreover, she was an activist in the past, and missed the community-building aspect of that.
One day in 2009, while standing in line at a sandwich shop, Amanda started chatting with another woman from their Capitol Hill neighborhood in Washington, DC. The woman mentioned that she frequently drove to Virginia to buy her wine because there weren't any nice wine stores nearby. A long-time wine lover herself, Amanda realized this may be the challenge she was seeking — to open a unique wine shop where shoppers could count on inspired decor, an intuitive organization and knowledgeable and approachable staff. And conveniently, her old college roommate Alan Greene had a retail and sales background — and 500 bottles of wine.
Amanda wound up leaving DC, but she and Alan opened a wine store, called Tipsy, in Brooklyn, New York. It’s more than fulfilled Amanda’s desire to build a new and different kind of business that allows her to market directly to a community. But despite their combined business smarts, the journey has been long, winding and full of unexpected bumps. Here, in her own words and fresh off the celebratory high of last month’s opening, are the top four lessons Amanda wishes she’d known about opening her business before she started.
1. Plan conservatively: Everything will take much, much longer than you think. When you’re opening a business for the first time, you’ll be doing so many small things that you’ve never done before — and because you’re doing them for the first time, they will take a lot longer than you’d expect.
For instance, even though I work on content for huge websites through my consultancy, I made a classic mistake and underestimated how long it would take me to write unique, short product descriptions for each wine — not to mention edit those provided by the distributors and winemakers. I’m still working on them!
Spending more time on tasks also means spending more money than expected. In your financial models, give yourself some leeway when estimating how long it will take to build up your customer base, and assume that purchases will be lower than you might think at first. Be very conservative in your planning, and make sure you have the cash to do what you need to do and to stay afloat when it takes longer than you expect.
2. Don’t reinvent the wheel. Ask the experts how things work. Alan and I did a fair amount of networking with other people in the industry, but looking back, we also let a lot of opportunities go that could have helped us learn more.
From all our networking, we thought we grasped the basics, but still didn’t realize just how important storage would be. It's quite complicated to balance out the assortment you want with the quantities you need (i.e., not too much, but not too little) with the order minimums and pricing breaks that different distributors give. It's like a giant logic game to make an order. Meanwhile, our basement is extremely hot because the heating pipe that runs along our ceiling isn't insulated and there isn't an easy way to cool the space. This means that, until we figure out a solution, we can't store any inventory there.
Having more conversations with more store owners and distributors would have helped us realize the importance of being able to accept extra inventory. You should talk to as many other people in your industry as you can. Find out what their biggest obstacles were when setting up their businesses. Learn the inside scoop. And then, when you think you’ve learned enough, talk to more people.
3. You always need a back-up plan. For everything. Even items on your to-do list that seem taken care of can suddenly fall apart. For example, we first signed a lease for a space in south Williamsburg in Brooklyn. But even with the lease in hand, we should have kept looking for spaces. New York law says your entrance needs to be more than 200 feet from the main entrance of any schools or churches, and even though we had worked with a lawyer to qualify our space, our liquor license application was denied. It turned out that a charter school had moved into the building and was using an entrance that was within 200 feet. We walked away with about $15,000 to $20,000 lost in rent, minor improvements and architectural plans. Then it took us another five months to find our new space in Clinton Hill.
Another example: Our Internet went down one day, and we realized we needed an alternate way to run credit card transactions. We were able to use my phone as a hotspot to get us through, but I won’t always be around. Now we’re looking at getting a separate device to be the hotspot, as well as one of those old-school carbon-copy sliders in case there is a broader internet outage.
If you’re unsure what types of plans need backups, ask your network for their experiences — what you’ve missed and how to create a back-up plan for it.
4. Be careful about how and when to involve family and friends. My boyfriend built our shelves, which saved us at least $15,000 and four weeks of time. But whenever you’re having business dealings with someone, or whenever someone is doing you a favor, there are bound to be sensitive conversations. And obviously, it's way more delicate to express concerns about money, staying on schedule or to say you don’t like the design of something, when it’s someone close to you. Being under the gun only makes it worse.
For us, it was worth it because we saved lot of money and were able to open in time for the holidays. But I did underestimate how much stress it added, not to mention that it dominated every conversation my boyfriend and I had when it might have been nice to keep my personal life a bit more separate. Do the math to figure out whether it's really worth it to involve close friends, romantic partners or family members. If you're only saving a couple hundred dollars, it probably isn’t.