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a day ago
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Rebecca Minkoff's boss advice for putting your name on a brand
Listen and subscribe to The Big Idea with Elizabeth Gore on Apple Podcasts, Spotify, or wherever you find your favorite podcast. This week on The Big Idea with Elizabeth Gore, noted fashion designer and entrepreneur Rebecca Minkoff joins the show to answer the question: How do you leverage your personal brand for a product? Minkoff shares her experience as a multi-hyphenate fashion designer, podcaster, author, and media personality and the best ways for entrepreneurs to find success when their names are tied to their business Finance's The Big Idea with Elizabeth Gore takes you on a journey with America's entrepreneurs as they navigate the world of small business. This post was written by Lauren Pokedoff How to y'all. I'm Elizabeth Gore. Welcome to the Big Idea from Yahoo Finance, the show that navigates the world of small business and entrepreneurship. All businesses start with one light bulb moment and I'm going to take you on a journey with America's entrepreneurs. As the co-founder of the small businessfunding platform. Hello, Wallace. It has always been my mission to ensure entrepreneurs have the tools they need to live the American dream. We're going to get between the spreadsheets with these operators to flow from their smallest failures to their biggest successes. So let's cowboy big idea question is how do you leverage your personal brand for a product? What this means is, how do you use your own name to elevate your business? Our industry's focus will be fashion. I love fashion, whether it's boots or stilettos. So here weJoining me today is Miss Fashion herself, Rebecca Minkoff. Rebecca is a multi-hyphenate. Not only is she a fashion designer, but also an author, influencer, podcast host, and a former real housewife of New York. She is also the co-founder of the Female Founder Collective, a great partner of Hello Wallace, that is a network of female-led businesses that works to enable and empower each other. So let's get to talking to Rebecca.I can't believe you're here. I'm here. You like my dress. I love your dress. I mean, I'm bringing it back. I was like, I have to wear a classic Rebecca Minkoff. I have it. So I just 20 years in this business. What does it feel like? You know what, it feels like a 100 lifetimes. You know, it just feels like the amount of people I've been and the amount of stages of the business that I've seen, um, it's wild. And the big idea question of the day is, when do you use your own name to create your brand?And I want to back up 20 years ago when you know you didn't name this, you know, Sally's. Like, why did youchoose your name? I chose my name, so I worked for a designer for 3 years before I went out on my own, thinking I knew I said, if I'm going to work this hard, it's going to be my name because I want everyone to know who I am. And I also felt like as a, as an inspiring designer, I connected with designers that were their own names. I read the autobiography of Chanel, you know, I connected with her story and how scrappy she had to be at a time when women had like no rights at all. Um, and other, another incredible woman, Donna Karan, you know, Alexander McQueen, he's not a woman, but still like these people that you're like,I don't just like your clothing or your bags, but I like who you are. And so to me that was kind of, you know, the starting gate for my own name. So what are some pros and cons in tying your personal identity to the business? There was this saying throughout the company for a long time, like if I wasn't in the room and a decision would be made, well, will Rebecca wear it? Will she like it? What would Rebecca do? Yes, exactly. And that can also be hard to act as a business because you do have to to take something again, you know, the 80/20 rule and commercialize it. And so it can't always be what Rebecca would want. And so we had to sort of get that mentality out of the company, like, what is great for the business, what looks like the brand, which is Rebecca, but as I said before, it's the expansion ofthat. And has there ever been a time when you're like, oh, I wish that wasn't my name? There's never been a time that I wish it wasn't my name. There have been times where my name has been on product that I didn't agree with that, how does that happen? Because I know you, you are in control. You know your products. I mean, you're an incredible CEO, so how does that happen? So it happens when you are at a critical point of business and there was a time where many of our wholesale partners were coming in and almost playing designer, and if you said no, they just didn't so you sort of look down the path and you're like, do I give them what they want and be in the store and sell and have a, you know, high volume business and by that time you're very big. So you're like, if I say no and we shrink, that means loss of business, loss of people. And so for a while weYes, and it didn't help us. That's the hindsight is it didn't help us, you know, to have a laptop bag that said nerd alert on it did not help us. OK. Then COVID happens and everything goes away and you're forced to reevaluate. Well, what, what do we want to stand for? And that, you know, in many ways having that exercise was the best thing that could have happened to us. I remember once you and I had a conversation that you had to have a really on pricing. I think it was after the market crash here or something with some of your big stores and you had to walk. Do I remember that right? Well, we had to lower our prices where they were going to walk and we did our prices and thank God we did. That's a time where it was good that we listened every singleOne of my competitors evaporated. Interesting,interesting. The same woman who was making X amount of dollars was either not making that anymore or her 401k was gone. And so her ability to be nimble and pay $500 for a bag evaporated. And so we thank God we did that because, you know, that is our pricing structure today is affordable luxury. You know, I'm pulling out, you always talk about her and she and and what you know your customer wants andWhen I originally met you was because you were doing so much work for and with other female founders. Tell us about that journey. So it was 2018. I was quite lonely as a female founder. I had my brother, my co-founder Rebecca Minkoff, but again, he had a very certain way of how he liked to share information with others and I was like, someone, please, is this as hard? Is this hard for everybody? Is this? And I just needed other women. And within the fashion industry, it was also incredibly lonely because no one wants to share the bad stuff with each other because it's so competitive. So I began to peer outside of my industry. I met you, I met other like-minded the power of that unlocks something like, you know what, we can all help each other. This isn't a competition. And if we surround ourselves with community, with education, then hopefully this makes a difference in the in the future success of other businesses. Brought on Alison White as my co-founder, a couple of months later, so together with our amazing team, we really built an amazing membership community, but an education based. All the unsexy parts of business. You want to know what your CRM platform or how to raise capital or what to do with it once you have it. We're here to teach you. And how do folks find that? Female right? And I want to go back to your name again because I think a lot of small business owners, whether they have a storefront, whether they have, you know, a consulting service, is it, you know, putting your full self out there? So of all those people you've been, which one do you feel the most sorry for and which one are you the most proud of? Uh, wow, that's a good question. I feel the most sorry for me. Uh, 20, uh, let's just say 2011, um, we thought that the way to grow and the trend was grow at all costs. Margin doesn't matter. And I wish I would have dug my feet into the ground and said, margin matters, we're building a profitable And again, when everything seems to be going in an industry a certain direction, you think you have to jump on that bandwagon. Taking money from investors doesn't cure your problems. Man, tell me, right? Yeah, right? You know, and really quickly the grow it all cost thing. I mean, Silicon Valley for a while had this split scale and do this and throw money at everything andSmall business owners, that is a very dangerous proposition, right? It's incredibly dangerous and it makes every small business owner think I have to raise money to be successful. We've stripped Americans of the idea that they can have a beautiful small, which means under 25 Profitable business that provides a lifestyle for myself and my family and my colleagues. There's nothing wrong with that fun, right? Now let's go back to the one that you that you liked the most or had the most fun. I'm like. Oh yes, I hate like, oh, yours are your best, but last two years have been phenomenal. Well, you know what, and you have 4 beautiful kids. You're, you've got a podcast going, you have a book going. I love what you do for other female founders. So you said you've been multiple people over 20 years. So if your brand is your identity and you are changing and evolving, how does the brand follow along? Well, I think it needs to if you want to stay happy with it. You know, for a while when I first had kids, we had an unfortunate hire who said,We don't want to talk about your family or your kids. So let's just freeze the customers. She apologized to me later. Yes. A little too late for that. But you know, we froze the customer at 26, then I could no longer identify because I was having very different experiences and my core customer was also becoming a mom. And we weren't talking to her anymore. We were talking about going to the club. And so you, you have that disconnect. So II think if you can imbue as you're evolving what you love and say into your brand, most likely your core customer that loves you is in that journey with you and usually is experiencing the same thing. You're not going to theb. I'm Rebecca, is being authentic profitable? You don't have to be showing every part of your life to be authentic. But you have to be authentic about what you do show. For instance, if you see me changing diapers, having a messy my kids like, you know, wrecking the house and it's clean. Does that make you want to buy a bag? Probably not. It makes you laugh. It makes you feel like, oh, she's so fun. But if I'm in the business of trying to sell you accessible luxury, that's what I want to show you and have you connect with me on many different levels, and that's what I have to be authentic about. So being here with authentic or showcasing how to style something and being authentic, that's where you want to show up and be real. I think that is some of the most brilliant advice I've ever heard, particularly for this next generation. You don't have to show everything in your life, but what you do show, be authentic 100%. All right, hold that thought. We will be right back on the big back to The Big Idea. I'm Elizabeth Gore here with the amazing Rebecca Minkoff. So now you've got a book for your list. You've got this incredible podcast. So tell me about both of those. And again, that's just just putting yourself out there even more. Like, tell me your thought both of those. My thought process is if we imagine Rebecca Minkoff as the hub, then you have all the spokes that are like our brand pillars. So it's obviously women supporting them through lots of different ways. So if you're a founder, it's female founder collective. If you want to have more fearless life, its reading the book and applying the rules. And then the podcast is for those that need their weekly dose of likeI interview someone like you and they're like, oh my gosh, she had a tough time. This is what she applied in her life, and this is the problem she's solvingfor me. I'm enjoying doing this podcast because I'm learning so much in the chair. I'm just curious, a couple of things that you've heard that you want to pass you were just mind blown when you were doing your podcast. Yes, I think the two that I'll say is I believe that I was interviewing Patty from Fortune. Patty Sellers, and she said if women talked about money, the way they talk about sex and children, how much moreMoney would we all have and would would the gender gap be as large? And you notice it everywhere you go. You're the first to pull out the pictures of your kids, or, you know, talk about good or bad in your sex life. Would you ever be like, how much money you making? Did you, what did you do to diversify your stocks? Did you get crypto? Like, we need to be having those conversations because it's happening on the golf course for the men and in the boardrooms, and it's not happening enough for women. So I loved her advice for then the second piece, and I feel like I say it all the time, but hopefully your listeners have not heard me say it yet, is Kristen Ozolski from Nomaical Wines said, Never take advice from a person whose life you don't want. Oh, I love that because when you're starting a business, boy, are you going to get a lot of advice. You're going to get great advice, bad advice, neutral advice, and I think what I like that lens. Like, is this the person you really want to listen to and you're going toYou have to distill it either way, right? Yeah, and you can AB test advice. It doesn't mean that like, you know, try it if you think and approach it like an engineer. There's not a single engineer that I've ever met that gets emotional about AB testing. Like, I'm a failure. A didn't work. They're like, A didn't work, go to B. What if you approached your business and failure that way, you know, and it's not the end. It's just that didn't work, so what's B? Plan Z, right? of plansy, we talk about dirty unicorns, right on this show, some pretty massive mistakes that you've learned from and can pass knowledge on. Can you drop a few of those to us? Yeah, I think you'll be surprised at how much money you think you need to be successful in terms of scale. And, and actually, if you invest in the right things, I think we, when we took in an investment in 2012, that money was gone in three then upgraded website, sorry, an upgraded website in some new product categories. We could have had one store with 1/5 of the footprint. That was actually the proper size that we needed because we discovered it later through a pop-up. We could have not blown up the company to 115 people, and we could have just focused on going back to our community, which we're very enmeshed in today, butJust being with your community, learning, surveying, and them come along for the ride. And when, when in that moment, cause you know like getting really granular where you're like, oh crap. Oh crap was I knew what we were spending on the New York City store. I have a friend down the street who opened her store and spent 10th of what we spent and profitable almost right away. And I was like, wow, we really, we thought we had to have the Madison Avenue or 5th Avenue, like big branded fancy store with custom everything. Actually, it turns out she got all her furniture at different auctions and flea markets and spray painted it all black and it looked just as great. Going back to this, don't, don't grow at all costs. I mean, I think this is the thematic of our day here. I mean, that's just, it's so interesting when you learn it the right way, learn it the wrong way. If, if I'm, if I'm in fashion, which is our industry today, and I, I want to get started and I just look around and I think, oh my gosh, it's Rebecca Minkoff. How could I ever get to that level? I mean, what is your advice on that, that person who's drawing and designing and sewing their own clothes and ready to go to market right now? I think that you haveSocial media on and not on your side. There is no traditional route. Start documenting what you're doing, bring people along for the ride. Focus on one thing, you know, one thing, what is your t-shirt and is it the best and what sets you apart, and how are you getting people emotionally connected to what you stand for and who you are? And you might not be good at being on camera right away, but that's where it is. Video is here to and people want, they want to say I'm wearing this brand because I identify with X, Y and Z to you, your, your story. Now you said there's good and bad with social media. What'sthe other side of it is that there's a million other people doing what you're doing. So how are you going to stand out and how you get through and the traditional forms are eroding, you know, the press that we get have the same metrics for sales as it did, you know, back in the day. If my jacket was on the cover of a magazine, 10,000 units. Today, cover of a magazine, a couple 100 units, you know, so it's like you have to begin to sort of be creative in how you're showing up and it has to unfortunately be everywhere, which for a lot of founders can be overwhelming. So that's interesting. So howHow, what, maybe in the last couple of years, what was something you did that did sell 10,000 units? I'm just curious. Well, we didn't have 10,000 units, but we did a collaboration with Wicked for the launch of the movie, and so we did 2 bags. We kept it really tight. We go I was like this better sell out, and it sold out. It was like a nice, it was a nice feeling to have. Yeah. Where did that come from? How did that idea manifest? It manifested because I had just had my last baby. I was 10 days out. I get this urgent call. It's NBC wicked. We get on a Zoom, they're like, we'd like to invite you to come to London in a couple of days. You're going to get the whole experience. We want you to be our collaboration crazy hormone cocktail me was like, I could do this. I could leave. I'll take the baby. And I was like, wait, I can't even give him a passport. And then I was like, I can't do this. And I just looked at him and I said, I'm not leaving him and I can't take him. So I'm going to say no to the opportunity, even though this is a huge deal. And I called him and I said, I just had a baby, like I can't leave and I can't bring him. So thank you so much. And I said, Well, who's your second, you know, have her come. And so we sent Mary and she had an incredible experience, and she was actually the right one to go because she made all the connections and then we negotiated for a long time on what the deal, you know, and information and how that works would look like, and then product design, we got access to the art, we got to touch and feel the props. It was an incredible experience. I want to thank you. That's amazing, but I do want to pick up on something as mothers. SoIn in those moments, doing the right thing for you, your baby, your child, I think a lot of folks would be like, well, how can you run an effective business? And you chose the right thing, it came back around to you and then it still was effective. I, when uh when I had the great opportunity to work for Michael Dell at Dell Technologies, I was very, very pregnant with my same thing, I turned, I said, I'm, I, I don't know if you know, but I'm pregnant, and there's no way I can take on a job with this capacity. And they came back around and was like, take your full maternity leave, we'll be here when you're done, but we'd like to know that you're coming. And it was, you know, so, um, I just, II lift these two stories up for a second because I want women to know you can pursue, make the right choice for your child, and still run a really effective company. You can, and there will be sometimes opportunities that do go away, but it's OK. You don't have to take every opportunity, and I say this in hindsight because I thought I did, you know, with the 1st 3 children.I took every opportunity just in case it goes away, and then you miss out on these moments, you know, luckily enough that I had a 4th that I could be like, oh, I missed that. I missed that. I missed that. I missed that. I'm not missing anything else. And so now I'm just like, you know what, if it's too much time away or, you know, it takes my attention too much off of something, like I just have to walk away. Yeah. I love, I love the wicked collaboration. I do think withThe noise partnerships are such an effective way to break through, you know, because your funnel, if we all talk about marketing funnel, and if you're talking to the same people over and over and suddenly you have, you know, you partner up with someone, you have this whole other set of eyeballs. It's quite powerful. It's quite powerful. And when you look at the overlap of like you have the Rebekah Minkoff legacy fans, you have the wicked fans. If you can make that magic happen, then it's golden. That is brilliant.I want, I want to pick up on the best advice that you've had in the early days. We'll go back to your not this 20 years, that you just now realized it was the best advice. Maybe in the moment you couldn't, you know, saturate it because I, I think we look back on things and be like, holy crap, that was good. That was good. I get it now. Do you have any of those? Oh, I have a lot.I was so committed to my craft and my art and like just blind vision. I was never good at figuring out and commercializing it and my my uh colleague of like Rebecca Minkoff, if you look at it like a pyramid, let's just say I'm at the top, and as long as everything when it's diluted still looks and feels like you, but it's made for people maybe that live in more rural communities, that having a stud on their flip flop is their edge, you know, it's OK, you can let go. It doesn't have to be fully studded flip flop or a fully studded bag or the aggressive leather jacket that, you know, that I want everyone to want. And so as soon as I could sort of wrap my head around that, you grow a business, you commercialize it, it pays the bills, you know, up until that point, because I was so committed to likeIt has to be the most aggressive form of every design I do. That's a very tiny niche business. If you can afford to do that, great. You know, if you can afford to just have those customers, awesome. You know, there are a lot of successful brands that have done that. And so I just wish I would have embraced that a Well, I got to tell you, your book is aptly named Fearless. I hope everyone reads it. I actually know I will walk out less fearful thanks to you and thank you for being on the show. You are such a vision. You're a great mom, great business owner, and a great human being. Thank the end of each episode, I like to give a shout out to a small business who is doing great work. Today, I'd like to shout out Gurley Garage, so cool, founded by train mechanic Talina Hanley in San Diego, California. Gurley Garage teaches and empowers women in automotive education, consulting, and repairs. So go get your car fixed or check them out at you, Rebecca, for coming on the show today and thank all of you for joining us. We hope you've learned a lot. This has been a big idea from Yahoo Finance. Please make sure to scan the QR code below to follow Yahoo Finance podcast or check us out at the Big Idea wherever you get your podcasts. And if you follow on Amazon Music, just ask Alexa, play the big idea. You can also come say howdy to me on any of my social channels at Elizabeth Gore USA.I'm Elizabeth Gore and as my grandmother always said, hold your head up high and give them hell. See you next time. This content was not intended to be financial advice and should not be used as a substitute for professional financial services. Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
Rebecca Minkoff's boss advice for putting your name on a brand
Listen and subscribe to The Big Idea with Elizabeth Gore on Apple Podcasts, Spotify, or wherever you find your favorite podcast. This week on The Big Idea with Elizabeth Gore, noted fashion designer and entrepreneur Rebecca Minkoff joins the show to answer the question: How do you leverage your personal brand for a product? Minkoff shares her experience as a multi-hyphenate fashion designer, podcaster, author, and media personality and the best ways for entrepreneurs to find success when their names are tied to their business Finance's The Big Idea with Elizabeth Gore takes you on a journey with America's entrepreneurs as they navigate the world of small business. This post was written by Lauren Pokedoff Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
'Food Network Star' chef explains 3 ways to finance a new restaurant
Listen and subscribe to The Big Idea on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Russell Jackson, a chef who's appeared on shows like "Iron Chef America," "Food Network Star," and "Going Off Menu," has learned some key business lessons after financing and running three separate restaurants. On Yahoo Finance's Big Idea podcast, Jackson shared the three different ways he funded each of his restaurant ventures, including the one method he would recommend above all others. "I would probably always say try to go with an SBA loan," Jackson advised budding restaurateurs, referring to the loan through the Small Business Administration that funded his Harlem-based fine-dining restaurant, Reverence. "It's still a sizable chunk of down payment that you have to come up with, but the terms are better than any other bank can get for you." This embedded content is not available in your region. Before opening Reverence, Jackson created and eventually closed two other restaurants: Russell's in Los Angeles and Lafitte in San Francisco. Russell's was Jackson's first business venture, which he said he opened with capital largely amassed from those close to him — a move he said he would "absolutely not" recommend others take. "I had some friends and my family ... [who] kicked some money in," he explained, detailing some of the names who were integral in getting that first venture off the ground financially. "My father kicked the lion's share of money in — and that was tough. Closing that restaurant was exceedingly difficult. But again, we went through some very unprecedented things when closing that restaurant." Read more: What can I use a personal loan for? Lafitte, on the other hand, was financed through private equity. Though that removed the emotional connections that can complicate getting a restaurant off the ground, he noted it also required him to forfeit quite a bit of say in the big decisions for the restaurant. "Ultimately, ... I didn't have the highest amount of equity," he said. "I had a percentage that was a reasonable voting block, but the decision was out of my hands in the respect of, 'Do I continue on with this while we're losing money, or do we have to close?'" In those situations with private equity investors, Jackson explained, "you lose the ability to have that say and control you need." In the end, when Lafitte closed, it wasn't ultimately his decision. "The investor said, 'Eh, we're done,'" Jackson said. Jackson was able to open Reverence thanks to an SBA loan, though he admitted the process was far from easy and one he said he didn't think would ultimately be successful. "The labyrinth of red tape and hurdles ... it always seemed like a sheer impossibility," Jackson admitted. "So I applied for the SBA loan in this respect, almost as just trying to turn over a last rock, not having any expectation whatsoever that this was a possibility. So when I got the notification that I had gotten it, I realized that I had turned into a unicorn." Though Jackson ultimately made the difficult decision to close Reverence this year after facing setbacks from the COVID-19 pandemic and in the restaurant industry, he noted he's not one to give up easily when fighting for his business. "I've said this before ... you can never give up," he said. "You just have to keep fighting until you are utterly dead. I think that if I look at some of my other ventures, giving up when I did might have been construed as a mistake. I think that that's why now I'm willing to go down with the ship in a spectacularly fireball way and keep trying to figure out how to make it work to some degree or another." Every Thursday, Elizabeth Gore discusses real-life stories and smart strategies for launching a small business on The Big Idea podcast. You can find more episodes on our video hub or watch on your preferred streaming service. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
'Food Network Star' chef explains 3 ways to finance a new restaurant
Listen and subscribe to The Big Idea on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Russell Jackson, a chef who's appeared on shows like "Iron Chef America," "Food Network Star," and "Going Off Menu," has learned some key business lessons after financing and running three separate restaurants. On Yahoo Finance's Big Idea podcast, Jackson shared the three different ways he funded each of his restaurant ventures, including the one method he would recommend above all others. "I would probably always say try to go with an SBA loan," Jackson advised budding restaurateurs, referring to the loan through the Small Business Administration that funded his Harlem-based fine-dining restaurant, Reverence. "It's still a sizable chunk of down payment that you have to come up with, but the terms are better than any other bank can get for you." Before opening Reverence, Jackson created and eventually closed two other restaurants: Russell's in Los Angeles and Lafitte in San Francisco. Russell's was Jackson's first business venture, which he said he opened with capital largely amassed from those close to him — a move he said he would "absolutely not" recommend others take. "I had some friends and my family ... [who] kicked some money in," he explained, detailing some of the names who were integral in getting that first venture off the ground financially. "My father kicked the lion's share of money in — and that was tough. Closing that restaurant was exceedingly difficult. But again, we went through some very unprecedented things when closing that restaurant." Read more: What can I use a personal loan for? Lafitte, on the other hand, was financed through private equity. Though that removed the emotional connections that can complicate getting a restaurant off the ground, he noted it also required him to forfeit quite a bit of say in the big decisions for the restaurant. "Ultimately, ... I didn't have the highest amount of equity," he said. "I had a percentage that was a reasonable voting block, but the decision was out of my hands in the respect of, 'Do I continue on with this while we're losing money, or do we have to close?'" In those situations with private equity investors, Jackson explained, "you lose the ability to have that say and control you need." In the end, when Lafitte closed, it wasn't ultimately his decision. "The investor said, 'Eh, we're done,'" Jackson said. Jackson was able to open Reverence thanks to an SBA loan, though he admitted the process was far from easy and one he said he didn't think would ultimately be successful. "The labyrinth of red tape and hurdles ... it always seemed like a sheer impossibility," Jackson admitted. "So I applied for the SBA loan in this respect, almost as just trying to turn over a last rock, not having any expectation whatsoever that this was a possibility. So when I got the notification that I had gotten it, I realized that I had turned into a unicorn." Though Jackson ultimately made the difficult decision to close Reverence this year after facing setbacks from the COVID-19 pandemic and in the restaurant industry, he noted he's not one to give up easily when fighting for his business. "I've said this before ... you can never give up," he said. "You just have to keep fighting until you are utterly dead. I think that if I look at some of my other ventures, giving up when I did might have been construed as a mistake. I think that that's why now I'm willing to go down with the ship in a spectacularly fireball way and keep trying to figure out how to make it work to some degree or another." Every Thursday, Elizabeth Gore discusses real-life stories and smart strategies for launching a small business on The Big Idea podcast. You can find more episodes on our video hub or watch on your preferred streaming service. Sign up for the Mind Your Money newsletter Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Why new cannabis companies face high barriers to entry
Listen and subscribe to The Big Idea on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Securing financing for a small business is no easy feat, but it's even harder for those in industries where there's evolving legislation. On Yahoo Finance's The Big Idea podcast, Erin Gore, the founder of cannabis company Garden Society, detailed the extra hoops those in her industry have to jump through to build a company. 'What we don't have is access to credit, and what we don't have is services around it," Gore told podcast host Elizabeth Gore, who is also her sister-in-law. "So, like, we cannot get a 401(k) — we keep getting denied for 401(k)s for our employees because of the federal illegality of it. We can't get a line of credit for payroll. We can't access any financing services, like equipment financing or mortgages. Our personal bank accounts get shut down.' This embedded content is not available in your region. The cannabis industry was estimated to be worth $38.5 billion in 2024, and marijuana is currently legal for medical use in 39 states and for recreational use in 24 states. However, because marijuana is still classified as a Schedule I drug federally, traditional financial institutions often avoid working with cannabis companies due to the risk of federal penalties and running afoul of anti-money-laundering regulations. One piece of legislation introduced in the House of Representatives in 2023, known as the Secure and Fair Enforcement Regulation (SAFER) Banking Act, would offer protections to federal financial institutions that offer banking services to cannabis companies in states where it's legal. But the bill has stalled in Congress. As a result, while an industry with this much capital and growth may seem like a prime opportunity for some budding entrepreneurs, these owners face significant financial hurdles. Without usual lines of financing, Gore has had to get creative to ensure her business can continue growing. Cash flow has been essential to keeping her company afloat. She shared that a potential investor once asked her what her cash-to-cash cycle time was, meaning how quickly she saw a return after investing in a product. Gore said the cash cycle is around 160 days for Garden Society-branded products, 'on a best-case scenario.' But she found that by manufacturing cannabis products for other companies, she could have those firms pay for materials and manufacturing up front, drastically reducing that cash-to-cash cycle timeline and bolstering her profits while diversifying her company's streams of income. "I shortened my cash-to-cash cycle time, which covered my overhead," Gore said. "It allowed me to invest in my brand. I all of a sudden had different revenue channels that offset my business and put a lot of resiliency and cash flow and profitability into my business." Even with these adjustments, which increased her company's cash flow and made Garden Society one of California's biggest cannabis companies, Gore still faces significant risk without the additional protections other businesses can get. "In cannabis, you have no bankruptcy protection," she said, explaining that this became a problem when one of her distributors went out of business unexpectedly while it owed her almost half a million dollars. "I don't have credit," she explained. "I'm dependent on that cash to pay my payroll, pay my employees. I can't go to a bank and ask for help. I'm only dependent on investor contributions." With almost a decade in the industry under her belt, Gore has also spent a fair amount of time lobbying for policy changes on the local, state, and national levels. "Nobody's better suited than the business owner to build policy and build the rules," she said. "But like we always say in the industry, we're building the plane and flying it at the same time." Though she's seen some progress, there are still plenty of challenges in the industry. 'You have to be so resilient and creative and nimble,' she continued. 'And I think people underestimate how opportunistic and open to change you need to be.' Every Thursday, Elizabeth Gore discusses real-life stories and smart strategies for launching a small business on The Big Idea podcast. You can find more episodes on our video hub or watch on your preferred streaming service. Click here for in-depth analysis of the latest stock market news and events moving stock prices
