Money does not grow on trees

Yesterday I had a major breakthrough.  After weeks of wishy washy conversations about what we want to sell, and what amazing our brand and shops will be, I have finally managed to arrange our first financial and business planning session.

I know exactly how much money I can invest in my enterprise (and it is not much), so it was interesting to learn how much my potential partners are ready to invest.  That is a good starting point.

Any attempts to push the topic of the legal and shareholders structure, and how business activities and products will be funded, and how people will be financially encouraged to work if they do not contribute any capital, are EXTREMELY PAINFUL at the moment, but at least everyone now agreed that we will need to make a decision sooner or later.

And, more importantly, I convinced everyone that we need to calculate and consolidate information about all potential costs before we even start contacting manufacturers or selecting stock.  Bingo!  We have got our first formal to do list, where everyone is assigned to collect specific piece of research or cost information.  Bless project management :-)

NB:  Need to find somebody experienced who can advise on legal, shareholding and funding options.

Image source: http://www.student365.co.uk

Place to discover tomorrow's talent today

Last week went to the East London Design Show, apparently, according to the Guardian, this is the event to discover tomorrow's talent today.  I felt it was more of a place to  buy Christmas cards and Christmas presents.  Not many furniture companies, in fact only two, but if there were more, I would not have had such indepth conversations.

First of all, I have met an amazing guy who has been designing furniture for M&S most of his life and he gave me good idea on the industry challenges and potential costs of prototypes.  He has just teamed up with another person who is covering mass production and distribution (they have already placed some of their products with http://www.futoncompany.co.uk).  From his partner, I learnt about the painful process of selection of manufacturers, and I am still a bit shocked with regards to the costs of batch production - I really did not expect each chair to cost £200 if you do a batch of 100 (small batch = high cost).  And we are talking about the Baltic countries, not even the UK where labour is extremely expensive.  That means that before I even think about any marketing, packaging, delivery or admin expenses, I will need to pay £21-23k just to design and manufacture a batch of chairs.  So it looks that I will need to find buyers before I do batches, otherwise the economics just do not work.

Then, I talked to a lady who even does not produce chairs - she finds old stuff (which is not valuable antiques, but some mass produced 50s armchairs supplied mostly from Germany), and then reupholsters them with fabrics from young modern fabric designers and sells the chairs on for £500-1200 a chair.  On top of that, she has got an amazing marketing green story of sustainability and upcycling as she not using new timber or electricity.  Just brilliant.  Again, this is not new, but we are more used to restored valuable antiques, so she is basically turning old rubbish which is not that rare into gold.

Anyway, what an amazing day.  Both companies have kindly agreed to discuss potential future co-operation.  I have got an invitation to their workshops.  I cannot wait to follow up with them and see what we can do together and what else I can learn from these creative, resourceful and inspirational people.

Just in case you have got interested:

http://www.galapagosdesigns.com/

http://www.fowlerco.co.uk/

NB:  http://www.eastlondondesignshow.co.uk/  could be a good place to launch the business next year if we decide to go ahead with it.  Need to explore other events as well.

How to make a small fortune

Everything in my research so far indicates that getting into furniture design and manufacturing is a very bad idea.  The costs are high, the demand is low, the competition is fierce.  The high-end furniture business is doing well, but if you do not have an Italian brand with a century history (like http://www.cassina.com has), or you haven't raised millions for marketing and branding (like made.com did), then how do you get through there?

The first craftsman told me that he has given up on bespoke furniture and switched to kitchen accessories production instead.

The first young designer with furniture design degree told me that he is happy to work with me, but he does not want to do furniture.  Instead he would like to make crystal or pottery vases.  That deserves a separate post, as I think that might be a good project to start with.

The first furniture company I talked to at the Design Show, told me the following joke: 

 - How to make a small fortune?

 - Take a large fortune and invest it in furniture business.

And that came from the experienced furniture designer who spent most of his life creating furniture pieces for Marks&Spencers.

Should I take a hint at this point?

Image from http://www.allvoices.com

Christmas starts early

While the business concept about my furniture business is shaping up, I do need to learn more about the industry.  At this stage I am not prepared to pay for proper research, so I browse internet and talk to anyone I can find in the industry.

A friend of mine recommended to talk to somebody who has a small wood workshop.  It turned out that the serious furniture business has pretty much died and evolved into wooden kitchen accessories, mostly cutting boards.  It was a really interesting conversation with the person who is highly skilled to produce bespoke furniture, but just cannot compete on this market with larger companies, and makes more money from selling chopping boards !!!  Got plenty of very good advice.  The main conclusion is that if you do it, don't do it middle price - go for high-end.

And then, just like that, he asked for my address and the next day I received a huge box with chopping and serving boards, placemats and coasters, and even a bird-house.  All objects are absolutely gorgeous -  rounded, smooth, tactile and smelling beautifully of wood.  That was an amazing Christmas moment that came just a little bit early.   My whole family spent an evening putting together the birdhouse, and I just thought about this man's generosity and what I can do for this person in return.

If anyone reads this - check them out http://www.olive-design.co.uk  and buy something nice.  Highly recommended.

Let's see what else I will get out of my research activity :-)

Exit strategy

Isn't it remarkable that now even before you start a business, you already have to think about exit strategy? This really worries me, because if you start doing something with the ultimate sole goal of exiting it, can you really enjoy it?  

Well, I totally understand that it is awesome if you are lucky enough to build a good brand or/and collect a huge amount of customer data and you can sell it for billions to somebody else. But I still feel a little bit nostalgic about old good times when people wanted to start a business without thinking about exit.

Source: http://wisesyracuse.wordpress.com/2012/11/14/plan-your-exit-strategy/

Young talent

I love working with smart ambitious creative young people.  They give me good energy.  Well, most of them.

Working with students or graduates to create new designs/products is not a new idea.  In some areas, this has become really lucrative business.  Say, in arts - you take works of a young artist for pretty much nothing, do a bit of marketing, and two years later you sell his paintings for several thousand pounds, and also get commission for all his new works as his agent.  All you invest in is marketing. There are no expensive materials or prototypes, there are no costly manufacturers...  Furniture is a different matter - before you get your product, you need to spend a lot of cash.  So at the moment, I just do not understand how the maths works, and how smaller furniture companies survive.

Apparently, when made.com started their business, they wanted to do the same, but quickly figured out that students are a bit difficult to work with - when you are young, you have a lot of ambition and self-belief, but you lack commercial or business sense.  I do not want to generalise, but really, can a design student make a realistic costing model and make recommendations for the efficiency of the manufacturing process, or assess what would be the most optimal wholesale and retail price?

Furniture idea

Well, sometimes you just know that this is not the best business idea, but circumstances are just pushing you into it.

First, I accidentally got enrolled to an upholstery course.  Was looking for something to do with hands rather than brain, and found these amazing courses in Peckham Rye sponsored by local council.  After years in corporate offices, spending time in a workshop was both a pleasure and revelation. I suppose I am still struggling with all the new terminology, but hey, I know now how chairs, sofas and ottomans are constructed and what they are filled with.  Even those with the horse hair!  Outrageously, the council encourages new students, so enrolling to repeat the course turned out to be almost impossible.  So I will do woodwork from January instead.

Then, I am catching up with an old friend and it turns out that her dream is to set up business trading in high end furniture.  On top of that, she is thinking about manufacturing her own brand furniture.  Slowly, I am getting involved in the discussions about the business, and I just feel that as an ex-project manager and accidentally qualified management accountant, I could actually help a bit with the structure and plans...

Finally, I am meeting a young graduate - a talented responsible girl, whom initially I asked to give me a few lessons in VectorWorks, and it turns out that she would have wanted to design furniture - if only somebody could pay for the project.

So here I am writing a business plan for a furniture design company, and development plans for furniture export/import company.