Starting From Scratch … Without Investors (Article #6 – Employees, Or Peace Of Mind? … you choose?)

(This is the story of Embrazio, a leather accessories company in Boulder, Colorado complete with lessons learned and a few tools and exercises all brought together for your entertainment and hopefully a bit of learning to boot.  The story is told in the form of a series of articles by Embrazio founders Scott Schaefer and Stephanie Boyles who also happen to be married.)

Article #6 – Employees, Or Peace Of Mind?  … you choose?

In previous articles we discussed how we, Scott Schaefer & Stephanie Boyles, had incorporated Embrazio, a leather accessories company in Boulder, Colorado.  We’d gotten a design patent on Steph’s idea for a curved belt.  The belt is curved to shape with the natural contours of the human form for a better feel, fit, and no gapping in the back.  From that starting point, we took readers through the concepts of a business plan and business case, how we handled production, and then our approach to marketing and selling.  In this installment, we’d like to lay out the logic and method of doing all this with your own business while not hiring a single employee, including yourself.  

Figure 1:  Embrazio belt curved to shape with the natural contours of the human form

The End Of The Job

In the mid-1980’s Fortune magazine (or maybe it was Forbes?) themed an entire issue around “The End Of The Job” and it featured a big burly arm cocked with a fist and a tattoo that said JOB with a line through it or something like that.  The article really made an impression on Scott at the time as we were both climbing the corporate ladder inside a 100+ year old company named AT&T.  The hypothesis of the article was that this new thing called the internet, along with all of the advancements being made in computer hardware and software were quickly making the industrial age concept of big companies with lots of employees obsolete.  While not an entirely accurate prognostication, the truth is that you can go a very long way building and scaling a company today without any employees … including the founders.  That’s just what we set out to do!

Lesson #6 – Don’t hire them, engage them as needed. 

Don’t get us wrong, we love working with people and leading teams.  Between us, we’ve led all kinds of groups from loose knit consulting teams to 4,000+ person departments inside Fortune 100 companies and there is much satisfaction to be had from being an effective leader and manager.  The downside, however, is that hiring people is a very time consuming, expensive, and risky proposition.  When starting a new company, you’re not in a position to exactly know what the “job” is going to be or exactly what skills are going to be required.  It’s quite likely that you need someone to do 3 or 4 different jobs that each require significantly different skills and you probably don’t have the budget to hire the best talent in any one of those skill sets.  Fortunately, there are two great alternatives and you should consider them in this order: do it yourself, contracting.

We have yet to find anything we can’t either do ourselves or hire someone on a project basis to perform.  Consider our design patent for example.  Several people told us we should seek to obtain a US Design Patent for our curved belt design.  While we’d been around the patenting process during our tech careers, those patent applications involved technical teams, corporate lawyers, and occasionally even people called “patent managers.”  We had none of those.  

Figure 3:  Embrazio Curved Belt design patent ... layout view drawing

Well, what’s a mother to do?  To make a long story short, Stephanie wrote and submitted our patent application.  She went through a couple of rounds of rejections from the patent office and then made friends with the supervising manager whose subordinate was reviewing our claim. From the supervisor, Steph got very specific advice that our drawings were the hang up and she should get an illustrator specializing in patent applications to polish up our drawings according to governmental requirements.  She found such an illustrator not too far from our home. Within a couple of months and a few hundred dollars and a belt (we always try to barter as a way of conserving cash) we had our application granted.  

Figure 4:  Embrazio curved belt design patent

Conversely, we have contracted with Michael Barnhart of United Content almost from the beginning for our web site work and online marketing.  We felt he brought knowledge and talent we just didn’t possess.  He’s also been willing to learn new areas of the online world as it evolved and as our needs changed.  Even when we hire a specialist in this area, we often engage Michael to manage them as he has our trust and has far more knowledge on the subject then we do.

Figure 2: Michael Barnhart - Marketing Firm United Content

Find It All Via Google Or YouTube

We’ve done lots of similar things ourselves with the help of Google and YouTube searches.  When we needed a privacy policy for our web site, we searched for the best policies out there and combined them to create our own.  We’ve designed our own logo, business cards, and email templates.  We figured out international shipping, sourcing of materials including pearls for our jewelry, and even found a bronze metal caster who’s also become a good friend.  We’ve designed and created our own signage, online product descriptions, and do all of our own selling.  

The same is true when it comes to contracting for special skills and services.  We have a “web guy” who we’ve been working with for almost the entire life of the company.  We’ve retained, and released, several PR firms and Online Marketing experts/firms, worked with multiple bookkeepers, have bartered with many different fashion models for our product shots and bloggers for our product reviews as you can see on our web site.  

Figure 5:  www.embrazio.com

First, Do It Yourself If Possible

Not infrequently, we start with doing a task ourselves and then move to a more skilled/talented contractor or we start with a contractor and then decide we can do it ourselves just as well and for less time and money.  For example, we initially hired professional photographers to do our product and lifestyle photoshoots.  We watched what they did, and saw what we spent, and decided to give it a go ourselves.  Given the cameras inside new smartphones, we’ve been able to get lifestyles pics that are just as good as what we got from most of the pros and it takes much less time, money and coordination.  We now do our product pics in our basement using second-hand lights from Ebay, a photo box we got on Amazon, some Jimmy Buffet music, and a stiff Chopin martini I make myself.

Figure 6:  Scott setting up for product photography

In the other direction, we did our own bookkeeping for the first few years but found Quickbooks takes too much time and effort and we were making mistakes (okay, Scott was making mistakes).  We found a local bookkeeping firm that now keeps our books error free and, because they have direct access to our ecommerce platform, we don’t spend more than an hour a month on our financials including reviewing reports.  Whichever is better, faster, cheaper we either do it ourselves or engage a contractor.  

Figure 7:  Photoshoot – photographer Valerie Palmer, stylist Savannah Schaefer, model Kate Sotiroff

As you consider what to do yourself and what to farm out to others, be aware the education and understanding you get from doing it yourself is invaluable even if you choose to outsource a particular function down the road.  This knowledge is key to determining methods and procedures and eliminating unnecessary steps.  It also forms the foundation and leverage for negotiating with service providers if you outsource. You’ll get a good sense for what can be done just as well or better by others (e.g., bookkeeping) versus things that must be done by you (e.g., product design).

Figure 8:  Steph prototyping Embrazio's Renaissance backpack

Flexibility & Control Are Key … Especially In The Early Daze!

Finally, outsourcing to skilled contractors gives you tremendous flexibility and control.  We use a “work order” (attached below) as an attachment to our contracts so that both parties are crystal clear about objectives, deliverables, schedules, and payment form & timing.  An engagement with a consultant/contractor is basically a project with a beginning and end.  When something isn’t happening to our satisfaction, we can usually terminate the agreement right away with no severance payments, employment disputes, etc..  So far, knock on wood, we’ve only had to part ways with a few contractors prior to completion and in all cases the termination has been clean, quick, and simple.  In addition to the Work Order, you’ll need a Confidentiality Agreement to protect your intellectual property and to clearly establish that you own everything associated with the project you’re hiring the contractor to complete (subject to negotiation of course).  

Knowledge/Skills Matrix

Below are shown sample columns and they are not meant to be all inclusive by any means.

10 = area of expertise
1 = totally new to me/us

	Product Design	Manufacturing	Marketing	Sales	Inventory	Shipping	Finance
Me/Us	3	2	8	9	3	2	7
Leticia	6	9	2	2	3	5	5
Rel. #2
Rel. #3
Rel. #4
Rel. #5
Rel. #6

As you think about the table above with regard to your business, consider what columns best apply to you.  For example, if you’re opening a physical store, important columns might include Merchandising, Advertising, and Supervising, etc..  Once you have a robust set of columns, be brutally honest about your own knowledge and skill in each cell versus cells where you need outside help.  Finally, think about the order and time sequence in which you need outside help.  For example, if you’re starting from scratch and need to physically produce a product, getting help in product design and manufacturing is much more urgent than Inventory and Shipping.

Figure 9:  Selling we did not delegate as selling affords an unparalleled opportunity to listen (photo – Bowties Boutique) 

Build Depth Into Your Supply Chain

If you find the matrix approach helpful, you can refine it even further by qualifying/grading your relationships.  By that I mean, some relationships perform/produce better than others and the match between your needs and theirs continuously ebbs and flows.  We can almost guarantee you’re going to need alternatives and additions to your existing set of relationships.

Figure 10:  Scott touring impressive hardware manufacturer Vedia in Mexico City with Managing Owner Irene Steenbock

For example, we knew early on some of our cut and sew resources wouldn’t be able to keep up with our growth.  As a result, we set aside time while in Leon to locate and build relationships with other cut and sew shops as a contingency.  We also began to realize that a shop that is excellent at making belts may not be the best at making complex bags so we started diversifying our manufacturing.  That move to diversify really helped us sleep at night and gave us a lot of flexibility when the proverbial fecal matter hit the fan with an existing supplier … and, according to Murphy’s Law, that will happen to you as well!

Summary of Lesson #6

1. WHY HIRE?  At least in the early stages of your business you can get everything done by doing it yourself or engaging a contractor with special skills.
2. GOOGLE & YOUTUBE CAN TEACH YOU HOW.  There is a video on how to do just about everything on YouTube and if it’s not on YouTube you can find excellent advice and instruction via simple Google searches.
3. DO IT YOURSELF IS THE 1ST OPTION.  Ultimately, you want to spend your time on where you create the most value and differentiation for the business so you may move quickly to outsource non-differentiating functions.  Still, doing it yourself, even just a little, gives you knowledge and leverage valuable for negotiating with contractors.  
4. INCREASED FLEXIBILITY & CONTROL.  These key benefits come with good contracting and they are very valuable especially in the early days of your business when things are changing rapidly.

Embrazio Standard Work Order

Name of Contractor:   ________________

Date Submitted:  __________________

Work Order Number (last name + number):  _____________

Start date for work to commence:  _________________

 

General Description of work to be done:

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Specific Deliverables and associated due dates:

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Compensation in return for deliverables:  ______________________________________________________________________________________________________________________________________________________

Payment Terms:  ______________________________________________________________________________________________________________________________________________________

___________________________ Date:__________

Contractor

___________________________ Date:__________ 
CEO - Embrazio