Like first-time parents, entrepreneurs launching a new business are often bombarded with advice, even from those who have never done it themselves. As the saying goes, experience is the best teacher; the most relevant and valuable guidance comes from those who have traveled the same road and met the same challenges.
In honor of Small Business Week, we’re taking a look at a few lessons one can learn from three very successful startups which all sought different forms of small business startup funding.
Don’t be Afraid to Change Direction: Chewy.com
Recently sold to PetSmart for a reported $3.35B, Chewy.com is the wildly successful online pet supply company that almost wasn’t. Ryan Cohen and Blake Day were just days away from launching an online jewelry business in 2011, having purchased $25,000 in inventory, when Cohen was inspired by a trip to the pet store for dogfood to change the company’s course and sell pet supplies instead. He thought pet owners would love the convenience of having items like heavy bags of food delivered to their homes every month and convinced Day that the need and potential to cater to pet owners was greater than the need for jewelry. Though they had carefully considered their options before settling on jewelry, Cohen and Day were not afraid to take a risk and change direction upon recognizing a better opportunity.
Test the Waters before Diving In: Stitch Fix
Having worked as a consultant for traditional brick and mortar companies before attending Harvard Business School, Katrina Lake saw how lack of data about customer preferences and experience could limit a business’s success. This revelation led her to conceptualize a new model of online retail store, one that would focus on data collected to ensure customer satisfaction and repeat sales. Lake partnered with a friend in the apparel industry to launch the startup which would eventually become Stitch Fix, using online survey forms to gather friends’ style preferences and Excel spreadsheets to log the data. They maxed out personal credit cards to purchase inventory at full retail price; the early version of the business never made a profit. It did, however, prove that the idea had potential. When approaching potential investors, the information they’d gathered from the experiment made all the difference in their ability to score the financing needed to get the business off the ground.
Shoot the Gap: letgo
While the practice of exploiting a competitor’s weakness is not new, it is a challenge to execute properly and to one’s advantage. The creators of the letgo free buying/selling mobile app saw potential in the US market where online marketplace Craigslist had failed to modernize its platform to keep up with users’ increasing desire for mobility. Launched in 2015 and later expanded by merging with a larger but less popular competitor, letgo distinguishes itself from similar apps with features like self-written headlines based on your photo and product placement in a clever video for advertising on social media. As CEO Alec Oxenford stated in an interview with Bloomberg, “One thing that makes us very special is that users actually love us. We’ve grown from 0 to 45M downloads in 18 months. I don’t know of any other mobile app that can say that.”
We hope these stories provided you with inspiration and motivation to get your small business going. Bibby Financial Services offers alternative financing solutions for small to medium size enterprises in a variety of industries including manufacturing, wholesale/distribution, staffing and transportation. Contact us today at firstname.lastname@example.org or 877.882.4229 to get the right small business startup funding.