I have a friend who can do miraculous things with fabric. I’ve seen her turn leftover clumps of velvet into a show-stopping shawl. And she adores kids.
She decided to break into the toy business.
For four years she tried to sell a better diaper bag to Fisher-Price or a new kind of catch toy to Mattel. She went to the right trade shows, got the right meetings, was careful about whom she associated with, how she positioned herself, and how she pitched her goods. She watched her expenses like a hawk. And she kept 100 percent of the equity.
There were some close calls. Fisher-Price started going to contract on the diaper bag. Mattel asked for more details. But each time, at the last minute, they turned her down.
She eventually realized that she was competing in a world where she wasn’t wanted. Toy companies work hard to keep inventors away because they’re scared of lawsuits and the hassles of dealing with outsiders. They’re not overflowing with happy, Tom Hanks-like luminaries, looking for the next Big Idea. The toy industry is a business, and a cutthroat one.
She had made a mistake. She built a business without a business model. She tried to invent a process that could turn into a living, to become an entrepreneur with a royalty stream in an industry where there are very, very few role models. She could still design her clothes and bags as a hobby, but she knew it wouldn’t give her enough income to make a living.
She had to find another way.
She took a look around and realized that the book business published 50,000 new ideas every year, relies 100% on outsiders, and hires editors who look for ideas from the outside.
Armed with this knowledge, she spent some time getting to know her customer base. Here were thirty major publishers, all with money, all eager to buy something, all willing to pay money in advance.
Here was a totally different industry in which the process she had worked on for four years would work. The system of meeting people, inventing products, licensing them, and earning a profit — the system she had tried to build in the toy business — was working every day in the book business. Different products, same job.
After six months of hard work, she was able to get meetings with three publishers who shared her vision of the market. She listened hard. She worked to understand what they wanted, what their customers wanted, how the industry worked.
Without spending any money, she was able to understand the market. She was able to invent some concepts for books that she thought might sell. And then she was ready to get serious. So she found illustrators and researchers who could capture the messages she was trying to communicate. And she didn’t give them equity — instead, she paid them a share of the front money.
One publisher decided that her concept for a calendar was worth a shot. They paid her a small advance and published it. Two years later, her company has more than 2,000,000 copies of their work in print. Her calendars are often at the cash register at Barnes & Noble. She’s been hired as a spokesperson by a nationally marketed brand, she makes products she loves, she gets fan letters from people all over the country, and she’s having fun.
Did she succeed because her calendar idea was the most unique, original idea in the history of publishing? Or because she was a skilled novelist?
Not at all.
She succeeded because she understood what her market wanted and because she persevered for years and years to build her reputation. She was careful with expenses, didn’t waste her equity, and set herself up for success while protecting against failure.
All without a bank loan. All without a lawyer. All because she picked the right business model, selling a product in a way that made sense to people who wanted to buy it.
Spend some extra time to figure out what your business model feels like and save yourself some headaches later.
Don’t worry if you need a little extra help, we’ll get you there.