Discover Your Inner Entrepreneur & Limit Financial Risk

Recently, my business partner and I were invited to be part of a women's conference at our alma mater. We were on the panel for the discussion called "Discover your Inner Entrepreneur." It was a nice surprise to discover that 1. I haven't completely lost my memory, as I recognized a lot of alumni in the audience and 2. that there are many women out there who are thinking about starting their own businesses.

One of the best questions posed to us was, "How do you limit your financial risk when starting a business?" A few months ago, I read a story in the New York Times about a woman who was starting a t-shirt business geared toward moms (sound familiar?). She started out by having 1,200 shirts made to sell via her Web site. That's one way to get started-- dive in, head first. But that takes a certain amount of capital.

Here's what my partner and I did, and it certainly limited our financial risk. We first came up with half a dozen lines to embroider on t-shirts for moms: "I need a playdate", "Trophy Wife", "Secretary of Transportation", "Nanny Deprived", "Chicken Nuggets or Pizza?" and "Whine? No. Wine? Yes." Next, we had 12 prototypes made-- six shirts for each of us. Then, we started wearing the shirts around our towns: at soccer games, book club, and out to dinner, in order to gauge the reaction. In other words, we used our communities as focus groups. The response was amazing. Even strangers would stop us to comment on our shirts and share a laugh about it. We then amassed a small inventory-- 150 shirts-- and sold them out of the backs of our cars. In a month's time, we had run out of shirts! (And also began feeling a little too much like Willy Loman.)

Inspired by the quick sales and great reaction, we decided to create a Web site, www.PlanetMomTShirts.com , in order to sell our apparel. At first, we had the shirts embroidered to order, instead of stocking up on a big inventory. Although we knew that locally our shirts were well received, we didn't know about the rest of the country. As we received more and more publicity, word got out, and the orders kept coming. It was only then that we invested the money we had already made in an inventory.

There's an important reason why you should limit your financial risk when starting a business. According to that New York Times article, 80 percent of start-up businesses fail within the first two years. Happily, Planet Mom turned 3 years old last week.