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LETS GET DOWN TO BUSINESS.

Question :
When markets closed we where deep in negotiations to bring investors into our business we are a Natural Skin Care and Fragrance business. As of today one has pulled back as their market was Asia and the other is in wait and see what happens mode having verbally agreed in January to commit.I am going to be brutally honest. It had been a hard year before I swallowed my pride and went back to working the night markets around Auckland in November. This swallowing of pride was at the encouragement of good friends and that my wife is due to have our first baby in early June and I needed to do something other than do what was failing which was work online with no budget.We had always had the framework to build a solid business but never the fuel in the engine to get it to where it needed to be and had good interest from industry leading business to work with us before they sold.Before the shutdown of events and markets started happening in March we were starting to make progress and were feeling confident with what 2020 was presenting for us both domestically and internationally. Post lockdown we have driven off a cliff with 2 or 3 sales. We got consent to sell some not all of our products as essential service last Thursday but have been nervous to start marketing due to negative reactions we have seen with other companies in the same category.In the last 3 weeks pivoted to an area I have good knowledge and expertise in the food sector and have seen building demand domestically and internationally for specific Ketogenic  products and both me and our business partner have significantly more experience and ability to execute at scale. We started working on this 18 months ago while my biz partner was living in the USA running another Ketogenic food business he owns there. The food sector is where I cut my business teeth first bringing Virgin Coconut Oil into New Zealand in 2012 from Papua New Guinea.I have two questions 1. How do we communicate we are open as an essential business with out blowing a hole in the side of our business by looking opportunistic. We sell toiletries and skincare so fit with in category. We have limited runway with Govt wage subsidy barley touching the sides though we are grateful for it  no end and my wife starting maternity leave from her job mid May. Her wage pays our rent and keeps our lights on.2.Is it worth it or should we use the opportunity to pivot into a sector we know has fast growth , low to no cost of entry due to existing market relationships and demand and come back pick up the pieces when we have the capital to fund the growth. Or can we run both concurrently? 

Question submitted 15/04/20 @ 01:30am
Industry: Business Growth
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  • The world as we know it has changed probably forever so every business has to consider very carefully
    1) who can we help – what products/services and what markets
    2) how can we help – what approach/channel will be best – the answer at the moment is almost exclusively digital
    3) when can we help – you will need to figure this out by engaging and talking to your who – the answer might be not now …
    A pivot away from your current business plan is pretty much inevitable when a fund raising round collapses – its hard to give up on a dream and something you have put your heart and soul into but its also an opportunity to learn and grow

    Kia Ora Tamati,

    I have more questions than answers but:

    1) what’s the cost / benefit analysis of marketing now during lockdown vs waiting a week (possibly longer)?
    2) do you think you could do both businesses justice, or would you need to focus on one?
    3) the round you had underway – what was that money for?

    Now is definitely a good time to make tweaks and test new ideas. But don’t feel like you need to change everything during this time! Take care of yourself and your whanau.

    Ngā mihi,
    Anna

    1. Being open, honest and transparent with your customers while staying on-brand is critical here. A note at the top of your website or online platform works well: “We are deemed an Essential Business. This means we are open during the Lockdown with extra precautions in place including ….”

    2. What is the cost of pivoting to the new sector? And how does that look relative to what you can afford right now? Is the fast growth proven and evidenced based or a gut feeling? If there is low cost to start up and clear sales opportunity then go for it. Build strong online sales channels as you go so that you can continue to sell if we swing in and out of Level 3 and Level 4.

    Hi Tamati

    You did not mention your background or your cofounder. One thing to consider with so many talented people looking for something new is whether you could expand your team to bring in any skills you may be missing, possibly as co-founders or sweat equity remunerated if you pivot into a new opportunity. Having a well rounded team is a KPI for future success and may help you choose which opportunity to pursue and how.

    The strongest teams I see are where there is someone who knows in detail the market and product, someone who can lead sales and /or marketing and someone to provide adult supervision, usually a numbers person.

    The right team that can identify and then capitalise on a great market is often more valuable than an initial product.

    kind regards

    John

    Hi Tamati,

    Fundraising is a hard road, I’m sorry you’ve had this happen.

    A couple of points from me:

    1. Deals are most definitely still being done, so if it is possible for you to look elsewhere, raising capital is still an ption. Typically these guys have longer term thinking than 1-2 years and look past even crises like this. Particularly Asia-based investors.

    2. I wouldn’t announce that you are classed as essential and therefore operating. I would be using social as a tool for education, brand building, content that is logical for you to post alongside your brand. I wouldn’t post anything overly product-y. I totally understand the anxiety around this and it’s well founded. Some brands look incredibly out of touch at the moment which will be a long lasting impression. But there are ways to get people engaged with your brand, leading to your website where you can then have a statement saying you have been officially classed as essential and that they can purchase if they want to. You need to be writing blogs and posting those.

    3. The second question I suppose is really based around what do you want to do the most? As Anna said, can you do both well? Or should you just do one and do that brilliantly? Skincare is remarkably saturated, but there are absolutely ways to stand out and the opportunity is enormous. If you can do the ketogenic stuff full-time and run NR and build up your digital presence whilst looking for another investor… well why not? Have you actually really truly looked into it though, or is it feeling?

    Brianne

    Hi Tamati
    You can call me 0211214866
    Thx
    Graeme

    Thank you for your response Brianna,

    It is very helpful it has really helped to confirm my gut feeling on what we should be doing and have been endeavouring to undertake. We have a small announcement banner on our website saying we are open but have resisted making announcements on social. We have been posting light and informative info on our social platform as we did not want to come across as you have stated out of touch. My wife is doing video blogs that have taken a little longer to get up and using Instagram stories of training and working at home.

    Yes, I 100% agree skincare is an incredibly saturated market as we have learnt the hard way after coming out of the blocks hard we foundered due to the ability to support growth. In regards to doing both businesses, I have always been more comfortable in the food sector the beauty space is my wife’s expertise as a trained music teacher, makeup artist and performer. We partnered with good friend and business partner James Ehau who already had the fragrances and another food business who we were working within our wholesale of Virgin Coconut oil and Spices of Papua New Guinea. For the last three years, my wife Rebekah and I have been running Native Rituals on our own back here while continuing to support James and his Keto business in the USA with content creation when has needed it.

    The jump into retail or B2C food is one we have long wanted to do but had been unable to as would have stood on the toes of retail partners we where supplying wholesale to. This is now no longer an issue as we pulled back from wholesale supply 12 months ago.

    Our original drive into business was two-pronged one was to support Rebekah’s whanau on Misima Island in Papua New Guinea in bringing their agricultural product to market changing the perception of the country through food and to help the fight against type 2 diabetes within Aotearoa a preventable disease that has had a direct impact on my whanau with my Papa dying from diabetes complications in 1981 and a number of my whanau who have it and battle daily with this preventable disease today. The aim was at the start and still is to help reshape the NZ food sector and dietary guidelines so they are not operating from a harmful basis.

    I think we can build the digital side of Native Rituals and the new Keto food biz giving us a chance to in some ways reshape our narrative for the new world that will emerge on the other side of Lockdown. Thank you for your reassuring advise. Appreciate your time and consideration

    Kia ora Greg,

    Thank you for your reassuring advice. These are definitely three questions we have been working through and endeavouring to answer over the last few weeks. Sometimes how we answer them can create tension that we have to work through as a small team of 2 in Auckland plus 1 in Nelson.

    Yes, that is a big challenge to lay a dream down, but in many ways we know we need to for it to actually survive in the long term and that it is a piece of a puzzle that will be a very different picture for the world on the other side of Covoid 19. We have learnt some tremendous and painful lessons that you can not buy in recent tines and since we started our business journey importing Virgin Coconut Oil from Papua New Guinea in 2011

    Kia ora Tamati
    I’m sorry to hear how obviously tough this is for you and your new family for a while now.
    Q1: I agree with Brianne to be content-led via social media. Be relevant, be informative, be useful – build a personal connection that cements your positioning vs a lot of the “we’re still open” desperation that’s showing up with some brands right now. A simple statement that you’re open on your website home page is good. Don’t overplay this.
    Q2: You want to find a sweet spot between where there is solid market opportunity with where you can really shine with your product offering. If you can pivot into a fast growth sector with low entry costs AND provide something of real value that’s unique, then go for it. Without knowing more, I’d be inclined to focus on this vs running both concurrently as doing both will exhaust your energy as well as money. As you say, you can always come back to it at a later stage. It might not be the path that prioritises your dream, but it’s pragmatic and gives you cash. BUT make sure your offering is strong, as it sounds like it will fast become a crowded market.
    Go well
    Melissa

    Kia ora Florence,

    Thank you for taking the advice, it is very helpful for our thinking about setting the path forward. We are fortunate that we have a global leader in the ketogenic space to partner with to launch new initiative and our low cost of entry is due to existing industry relationships and industry knowledge which were pretty costly to build over the last 10 years. That time seems to have flown by can not believe we have at since 2009 where I was sitting in a broom cupboard at my old job hustling Coffee and Virgin Coconut Oil from PNG to going full time, November 2011 then starting Native Rituals 2014 such a short space-time can feel like a lifetime. I have learnt the hard way that pivots in business are changes that are hard but necessary. The advise we have got this morning from everyone has been very helpful to help us set our path forward. Thank you

    Kia ora John,

    Thank you for your wisdom and advice. I grew up in the far north in Whangaruru and whakapapa to Ngati Kuri in the far north from a small village called Te Hapua.

    My first job was pruning pine trees, selling firewood and watermelons selling them on the side of the road to batch owners on holiday in Whangaruru in summer and hay bailing for rugby coaches and working in hospitality cooking before falling out of school midway through 1999 ending up with a Diploma in Cultural Tourism and Travel and Bachelor of Maori Development from AUT.

    I worked at the Ministry of Maori Development Te Puni Kokiri, holding the youth and education portfolio for Auckland from early 2005 to to 2011 working in Govt departments from 2003 to 2011, looking after youth portfolio in all those roles.

    While working at TPK I started working with my wife’s whanau in PNG from 2009 onwards (after-work-hours) to establish export markets for their agricultural products and supporting family members into study here in NZ and PNG. I left TPK November 2011 to start RoMack Industries Ltd and was then asked August 2012 to be the Vice Chairman of the New Zealand Papua New Guinea Business Council. The PNG Hon. Consulate General, the late Dr Peter Goldsmith, asked me to fill this role which I was in for 4 years.

    During this time I also served two years as the Chairman of Crosspower New Zealand, a Youth Services provider that was based in Otara. At the time it was one of the largest un-referred youth service providers in NZ. I volunteered/worked at CrossPower for 12 years.

    In 2014 my wife and I partnered with James Ehau and his business Native Enterprises to extend the perfume range he had created by creating a natural skincare range for Native Rituals, using raw ingredients which we sourced from Papua New Guinea. This business went live in April 2015 after a year of research and development.

    Throughout this time I have maintained my craft as a Photographer, most recently working for my Iwi Ngati Kuri’s Tourism arm building our digital presence for the Tourism business and creating content/new product development for the various business I am involved with.

    James Ehau is cereal entrepreneur futurist if there ever was one. He has had multiple businesses over the years including Native Enterprises, Pure Health Delivered, Ti Tonic and Ketologie in America among other businesses. James hails from the East coast born and raised in Nelson and like me spent his early life chasing the Rugby Ball up and down sidelines around NZ -in his case the USA.

    My wife Rebekah is the third partner and keel to my sail full of wind that stops me from tipping over. Rebekah’s Dad is Kiwi and Mum is from PNG. She was born in Port Moresby and raised on Dobu Island in Milne Bay moving to NZ when she was eight with her Mum, Dad and sister in 1988. She is a music specialist of 16 years. She has been teaching for 16 years and has a passion for beauty and trained as a makeup artist through her involvement as a performer. She is currently the Head of a Performing Arts department at a West Auckland High School.

    Kia Ora, Tamati – great you reached out. Such awesome advice so far from so many people. I’d like to focus just on your Question 2 on a pivot and whether you can do both. And, I’ll answer it from my own personal perspective in start-ups. It’s less of a rational response, more on the emotive side. As you know, starting and growing and operating a business is really hard. It takes a lot of blood, sweat and tears. Plus a lot of time and capital. Some times it works and some times it doesn’t. Leaving aside the market opportunity / size of market / market economics, what makes one a success over another is the determination, resilience, grit, and energy of the founder. You need to go where your heart is telling you to go, where you know deep down you are excited and can totally commit, and you know there is a big enough economic return for all the hard work and effort. I would argue that your time and energy is the most valuable resource, rather than capital. Given your focus is such a valuable resource, you want to expend it very carefully. Both on what will drive you each day to push and push harder. And, what will wake you up excited to hit the ground running, and going to bed at night still thinking of more ideas to grow the business. I’d struggle to think how you can truly do both at the same time. It’s better to focus on one and give it your best effort then a half-job on two companies and perhaps not achieve in either. In saying that, you need to ensure your investment of your time and energy is worthwhile, so which ever business you focus on, you need to make sure you can get a good financial return. Which do you have a competitive advantage, a unique skill set? Which has a large market in which you can get a meaningful share? Which market has good unit economics and good margins, so you can gain a fair return for your efforts. Combining your heart and some business economics should lead you to a great place. Best wishes. Feel free to each out on LinkedIn if you want to chat further.

    Kia Ora, Tamati – great you reached out. Such awesome advice so far from so many people. I’d like to focus just on your Question 2 on a pivot and whether you can do both. And, I’ll answer it from my own personal perspective in start-ups. It’s less of a rational response, more on the emotive side. As you know, starting and growing and operating a business is really hard. It takes a lot of blood, sweat and tears. Plus a lot of time and capital. Some times it works and some times it doesn’t. Leaving aside the market opportunity / size of market / market economics, what makes one a success over another is the determination, resilience, grit, and energy of the founder. You need to go where your heart is telling you to go, where you know deep down you are excited and can totally commit, and you know there is a big enough economic return for all the hard work and effort. I would argue that your time and energy is the most valuable resource, rather than capital. Given your focus is such a valuable resource, you want to expend it very carefully. Both on what will drive you each day to push and push harder. And, what will wake you up excited to hit the ground running, and going to bed at night still thinking of more ideas to grow the business. I’d struggle to think how you can truly do both at the same time. It’s better to focus on one and give it your best effort then a half-job on two companies and perhaps not achieve in either. In saying that, you need to ensure your investment of your time and energy is worthwhile, so which ever business you focus on, you need to make sure you can get a good financial return. Which do you have a competitive advantage, a unique skill set? Which has a large market in which you can get a meaningful share? Which market has good unit economics and good margins, so you can gain a fair return for your efforts. Combining your heart and some business economics should lead you to a great place. Best wishes. Feel free to each out on LinkedIn if you want to chat further.

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