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Spring 2007 The Hundred Dollar Business

From the beginning, Carolynn Duncan’s business proved that necessity is the mother of invention. When she and a friend, Rachelle Anderson, were laid off from their jobs last November at a Utah tech start-up, they saw the holidays looming, their bank accounts dwindling and the need to make money—fast. With $100 in the bank, Duncan started brainstorming ideas for a business she could start with her lone C-note as start-up capital.

The entrepreneurship class she was taking at Brigham Young University gave her some ideas, but it was her real-world work experience that really influenced her. Even though she’d been laid off, her experiences at the start-up gave her an interesting perspective: “I saw what they went through to start a business, including funding, structuring a corporation, all kinds of different things that were needed,” Duncan recalls. “I saw a lot of people waiting around for funding and other things, which appeared to be reactive. So I wanted to see what a proactive, low-budget approach would do.” The idea was to start a business—now—and overcome obstacles as they presented themselves.

The first order of business was deciding what type of business to start. “Going into this experiment, I knew we needed to have either product to sell or a service,” she says. “A service would be way more difficult to market and establish, especially with such a small window of time. A product would be automatic.”

But what product? And what type of store could she start at warp speed? “We knew we had to have a [retail] space… that has traffic coming in, because obviously it would be easier to sell to people who were passing by than to do the marketing to get them to come into our store,” Duncan says. Soon she was on the phone to the specialty leasing managers of a half-dozen area malls, finding out as much as she could about what it takes to open a cart—in late November.

A speedy start

Relative to normal grand-opening schedules, Duncan’s approval and setup happened lightning fast. The weekend after Thanksgiving, she and Anderson brainstormed product ideas. The following Tuesday, Duncan met with a handful of specialty leasing managers in the area. The middle of the week was spent talking with potential vendors to fill in the missing products piece.

By Friday, Duncan had a half-dozen product suppliers lined up and her concept was solid enough for approval by the leasing manager at Provo Town Centre mall, where a cart tenant wanted out of a lease and Duncan wanted in. The first obstacle was figuring out how to pay $4,000 in December rent, with only $100 in the bank.

Based on her entrepreneurship class, Duncan had written down ten core ideas that would guide her new business and number nine was “Get around obstacles.” Putting her negotiating skills to work, in no time Duncan had the outgoing cart tenant signed up to kick in $1,000 toward Duncan’s rent (less than he would owe the mall for the remaining term on his license agreement), two product suppliers each kicked in $1,000 (to be paid back first from initial sales), and the leasing manager agreed to accept the remaining $2,000 in four weekly payments after opening day, as sales came in. A vendor even agreed to let Duncan use the company’s merchant account and credit card processing equipment to process sales.

image“We moved our stuff in on Friday night and opened Saturday morning” as Treats & Treasures, she says. “The Hundred Dollar Business” was born. The entire process, from concept to reality, took less than two weeks. “There was nothing to lose, really,” Duncan says. “There was only $100. We didn’t have jobs anyway. The worst that could happen was that people would tell us no. We saw all the doors as being ‘open-able.’”

That attitude served her well as she navigated the entirely new world of specialty retail. “The fact is, we had to go through the same approval process that everyone else had to do to get into the mall—all the forms, all the requirements,” she says. “We just did it faster. Every time that we came upon a situation that called for completing a task, we completed it. There was no point delaying anything. If it called for something that we didn’t have, such as legal papers, it became a problem-solving exercise. We would check the options and use the quickest way to get it. We broke it down to actionable steps.”

A little help from friends

A huge part of Duncan’s strategy was stocking product she could get on consignment, bypassing the need to purchase inventory up front. “I have absolutely no retail experience whatsoever, and I’m not sure exactly where or when the idea of consignment came up,” Duncan says, “I knew—vaguely—how consignment works.”

Duncan and her friends already had relationships with some product vendors, either through past working experiences or personal connections. The networking aspect served Duncan’s condensed timetable well. Practically overnight, a half-dozen companies agreed to sell their products through the Provo cart on consignment, with Duncan collecting anywhere from 20 to 40 percent commission on sales, depending on the product.

The final product lineup included: Nutty Guy packaged nuts, Granite Publishing and Distribution Christmas picture books and tapes, Sweet and Charming children’s dress-up costumes, Channing’s Bundt Cake Factory bundt cakes, Sign Babies sign-language education aids, and Packard Technologies electronic books and software.

“The reason it worked for our vendors is that we didn’t approach them with an attitude of ‘We don’t know you; we just want your product for our business,’” Duncan says. “Instead, we told them that we would like to do a consignment deal for this experiment. Everyone knew that it was an experiment. We also told them that we would advertise their product and sell their product full-time in a mall.”

imageVendors also benefited from additional exposure on Duncan’s website, www.hundreddollarbusiness.com, which included a blog and promotional video. The video was produced—for free—by Cammon and Lorri Randle from Copper Rain, a local video production company. The Randles had read about Duncan’s business on a mutual friend’s blog and were interested in helping The Hundred Dollar Business get off the ground.

Once the cart opened for business at the beginning of December, the hard work really started. All labor was volunteer, with a lot of help coming from friends and friends of friends who became aware of the business through Duncan’s blog. Even one of the vendors, Kelly Anderson of Sweet and Charming, pitched in. “Carolynn was able to start a business quickly and effectively by pulling together excellent products available on commission, resources and basically a bootstrapping model that didn’t require a lot of upfront funding,” Anderson says. “For me personally it was very successful because I couldn’t otherwise participate in a [cart] on my own during the holiday season—with staffing, expenses and such—so by having the opportunity to be there with my products and have Carolynn run it with a commission for any sold merchandise was super for me. It gave me a sense of what products people liked and what I can do in the future to have my own [cart]. I learned a lot.”

And made a few sales, too. December sales topped $10,000. Taking into account the rent, various payments to vendors and miscellaneous start-up expenses, Duncan estimates that the cart “lost about 1,200.” In an ironic twist, Duncan flunked the entrepreneurship class—distracted as she was by her actual entrepreneurial endeavor—but passed her real-life entrepreneurship test by launching and managing a 30-day holiday cart on a budget of just $100.

Lessons learned

image“It’s certainly a possibility” that she will open another cart in the future, Duncan says while enjoying a post-holiday break from the 115-hour workweeks. She plans to maintain relationships with her vendors, and the mall is now interested in continuing with a few of the products Duncan sold. She’s entertaining the possibility of operating a cart during Valentine’s Day, graduation season and, of course, next Christmas.

Although the intensity of the holiday selling season took its toll—Duncan confesses that she considered closing the cart early a few times—she is glad she hung in there. “Running a business is about being responsible,” she says. “There were times when I just didn’t want to be at the [cart] because I was tired. But I was a business owner, and that was my responsibility. I think anyone starting a business has to realize that.”

Supplier Kelly Anderson says entrepreneurs “can learn a lot from the principles of The Hundred Dollar Business. I mentor women entrepreneurs at StartUpPrincess.com, and I would highly recommend the concept to any of them wanting to try a [cart] with like products or similar products…. Really, to be successful with this you need to find the right people and products—and then work hard.”

Duncan agrees that good old hard work was the deciding factor that put the business in the black. “As for the experiment, in a lot of ways it was successful,” she says. “In terms of execution, it was a big success. We got in there and we sold like crazy, applying core business principles as best we could.”


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