Hi, I’m Kristy. I’m your host for the vibrant entrepreneur podcast.
My passion is to help you become a very successful entrepreneur by developing and sharing with you systems to help you develop a product, grow your business, and optimize your operations through automation. I’m really passionate about it because I started a few businesses and they see how much not having system drives chaos in our entrepreneurial lives. How it reduces our chances for profit and it also reduces our chances for success.
And today I’m going to share with you I really fun story. I lost $100,000. Okay. Not so fun. Actually, pretty shitty. Really shitty actually. And but I thought, you know, let’s start off really honest. Like let’s just cut to the, cut to the crap and, and just talk about our deepest, darkest, saddest moments that were recent. Just, just shows that like, I am not that good at things sometimes, but actually I don’t want us to take it that way. I mean that’s, that’s dark places I went and I don’t want you to go there. And just because you failed doesn’t mean that you’re not good at something is what I have told myself now. So I have gotten, I’ve gotten to the stage of failure was an opportunity.
So, so let’s go to the story. But my reality of that happened not too long ago. So I started a tennis school called bumblebee tennis in New York city right after I got to New York city. And I was in my twenties. I don’t want to date myself. And I that that did well, except it was so hard. It was trying to get instructors all over the city and facilities. It was just really difficult. It’s really stressed. I was always into fitness, so I thought, why don’t I open a gym like this woman’s gym? And I did that.
That’s a whole another story. So yeah, we haven’t gotten to the point yet. The point is, is that did well, I decided why not open a cycling studio. I love cycling half the time. And I was thinking I could open it in Jersey city where I was living at the time or I could open it where the woman’s gym was in Brooklyn. And this is basically one of the most difficult decisions I made. Or pivotal really. I ended up opening it in Brooklyn near the studio I had because a spot opened up and it seemed like an easy way to do it.
So was that the right decision? Well, let’s just say once it opened, I was so excited once I had to start paying rent and I realized how few people were walking in from my expectation was. I was losing between three to $7,000 a month depending on expenses. And I was losing my mind. Like I felt so isolated and I’m scared and like a failure and just, just like this train wreck was, was happening or it was about to happen and I, I couldn’t stop it. And basically I closed it about a year later and then even a year after that I had to sell stuff, get rid of stuff. I’m still getting rid of a few things and it just haunted me and I thought, why, why didn’t it do well, I had a few successful fitness businesses and they made money and I had never really had to deal with losing so much money.
So that was my twenties and thirties. Everyone. and now I’m reflecting on that and I have a new business I want to start. And I’m going to take with me the lessons I learned from that cycling studio. So I can truly say it was helpful. And that I was going to help me bring success into hopefully my next venture. And hopefully you will take the lessons I learned to not do, do the same mistakes.
So what is the lesson I learned?
Well, one thing I always said to myself is, I wish I was dating an accountant because if you date an accountant, you have, you could probably, it’s illegal to do this. Okay. So let’s not really say I’m going to do this. And then look, I’m not dating an accountant, but you could find out all of the information they have about or all like the P and Ls of all the different types of businesses, all that data of their, their profit margins and their, their expenses, what really drives their costs, how much revenue they’re making. These are the private businesses. Maybe that little falafel store on the corner is, is cashing in, but it looks like a shit hole.
Oops. You know, or but, but then that cute boutique, you know, store with what looks like a lot of customers doesn’t actually have high sales. So that’s kind of what I would want to know. That data. And because what I realized is that I’m sitting in the cycling studio watching these people go by. I’m on the, I’m on the 86th street in Bay Ridge, Brooklyn. There’s tons of people. It’s sunny outside. I have a cute display. This one girl told me, so. Okay. So yes, it was, and, and, and no one walked in. Like we would just sit there and no one would walk into the darn store, the cycling studio. And I just thought just by being open, people would walk in.
So that was one of my first mistakes. Another mistake I made was thinking that I could will, my way to making it successful, I could just convince people how awesome it was or keep optimizing the experience.
But the bottom line is people weren’t willing to pay what I needed them to pay at a very minimum amount for cycling classes. In fact, I don’t even know if they were willing to pay for cycling classes, period.
And the goal of this podcast is to explore how to get that data, get that information before you or I invest $100,000 — $50,000 — a thousand or even $500. Because sometimes we get a lot of things right. I thought, I think that the cycling studio, the actual execution of it was A minus B plus. Wasn’t perfect, but it’s pretty good. And I think in a different location it would have done better with people who maybe where Jersey city, where people are used to and have the disposable income to pay for premium cycling or fitness experience.
So if I had that data, I might be having a different story. I might be saying I made $100,000 which would which would be a lot cooler. As much as I enjoy being able to tell people I lost $100,000. I, I think I might enjoy saying like I made that much money in a year. So this loss has made failure really real to me.
At least they can say, I didn’t lose someone else’s money. I didn’t lose $1 million. But that could happen and that could happen to any of us. And it doesn’t mean we’re bad entrepreneurs. It means very likely we have the wrong product. So now that I’ve learned that failure is real, real okay and it can really set us back, it can make us not achieve our dreams of being an entrepreneur and changing of the world to going back to a job, which isn’t terrible, but that’s not what we’re about.
The point is is that failure is real. It’s so real and it’s so real that maybe that’s why you’re not starting the business. You see what’s happened to other people. But the optimistic, awesome answer is that success is real and we can get there through by minimizing our risk through using data and systems.
So I went back to a book that I read before I opened Alana Life and Fitness as I was actually trying to create a content business, I believe, which was the Lean Startup. And another book called The Write It by Alberto Savoia. And these books basically say, what we need to do is come up with a hypothesis about what people want and then before creating an actual product to see if people want that. Because at that point that’s me and the cycling studio fully equipped. That’s you and the prototype of the self cleaning toilet bowl wand. Instead, you find out that data before you create the product.
So that’s one of the biggest ahas. And another big aha is that, is that there’s different reasons why a product doesn’t succeed and lots of people think it’s execution. They didn’t execute the product right. Or maybe they didn’t market it right and people just didn’t know about it to buy it. But what the lots of these books are saying is that it’s just the fact that people are just not that interested in the product. The product is just not solving something that’s really painful for the customer, that they’re willing to open their wallets to pay for it. So the idea is to find out if people are willing to open their wallets and pay for it by, if you can offering the product somehow, which we’ll figure out, offering the product, seeing if they’re going to pay for it before even having the product.
So one example to make it really brief is instead of me opening, and this is an example sort of from The Right It book, instead of me just opening a cycling studio, sitting in there and basically putting my hands together and praying to God that someone would walk in the door or standing outside and invasively hollering at everyone to come in, which is what I did. I did that. Also on a bicycle. I would take the bicycle and I’d holler instead of doing that, I pay the landlord a hundred dollars and I put up a sign in the window “Cycling classes, you know, $10. Come in and talk to me when you’re ready” and just see how many people walk in. And I would have known from that, just that specific data point for doing that for one week with $100, maybe even try to get 50 — why not? How many people would actually come in interested in cycling classes for let’s say $10 or $15.
So he calls it sorta like he says, Pretendo type. And in the Lean Startup, they have like the MVP, just a minimal viable product. But you know, go even farther than that is what I read in The Write It. I’m still like rereading the lean startup and the analytics part. But going further than that, see how much data you can get with just $5 invested or as little time invested. And why? Because it’s a, it’s a process. It’s a cycle of having a hypothesis about how the product should be or who it should be sold for, how it should be sold, seeing if people will actually pay for it and respond and then seeing your data, seeing if you’re right. Will people — in The Write It, he talks about second day sushi at half-off — do people, would people really be willing to eat half second day sushi if it’s half off? So actually offering it, maybe it not actually be second day and you put a label on it and you put second day, even though it’s fresh, just see how many people actually opt to buy that at half price.
So the exciting thing is you’re incrementally getting better with very minimal investment. The worst thing is what Seth Godin talks about in sunk cost is me cycling studio $100,000 in and thinking and making decisions and not even off of data or even what I want, but because I’ve lost so much money that it seems like such a loss to close the studio to, to throw the bikes away, one person said and, and to to say, “yeah, the a hundred thousand dollars did nothing for me.” That was really hard and that became a sunk cost and that became a reason that times for me to keep it open, but that’s not the right reason. If I just looked at the data that people were not interested in buying a cycling class or willing to pay or enough people were willing to pay, I could’ve made a better decision.
So we want to also avoid decision making off of sunk cost and go back to data. So if we use the process of coming up with a hypothesis and saying, I think that 50% of the people on 86th street are going to walk in, or 50% of the woman, because we’re a woman’s only gym, mainly are 50% of the women are going to walk in show interest. And of those 50% 10% are going to buy, and that’s going to leave me with at least 10 customers a day buying $200 worth of stuff that’s $2,000 and Hey, we could live off of that.
That could been a hypothesis. And what I could do is do an experiment and see how many people actually walked in before actually renting the place or even putting up a table, seeing how many people actually did I get 50% of the women to stop by? Of those 50% did I get 10% to buy something? And if it turns out it’s not 50%, it’s 10% and of that 10% it’s 1%, then I know that maybe this is not a good business or that’s not a good location. So the whole process can actually be used not just for a product. You know, is this, do people want this product but is it the right location or is it the right demographic for that product? Or am I selling it even the right way? Maybe I need to sell it, not, I mean obviously the, the scenarios, maybe I have a a table. But maybe I need to sell it online. I dunno. Just an example.
So the methodology can be used in a lot of different ways and even if you have a current business and you want to develop a new product line or figure out new opportunities, it’s also something good. So my goal is to really understand these processes and as I do my market research to start my new business that I want to share with you the PR, the journey. Cause hopefully it’s really, it goes really well. Where, and hopefully my market data hypotheses show that there is a demand for it is to just to have a lot of these processes ingrained so that I can use it to keep iterating and not just come across one great opportunity, but to make it the right product market fit for the product.
The second thing I’m passionate about for entrepreneurs so I can see their success is avoiding burnout. Avoiding the feeling that we need to sacrifice our souls, sacrifice our relationships, sacrifice everything to be, to, to make it happen. And I’ve, that’s why I believe systems can help us on systems that helps structure our day systems to remind us to meditate and exercise. So I really want to share the, the holistic side of being an entrepreneur so that you can maintain your energy because that is going to be the most important thing. And, and as an entrepreneur, no one necessarily above us telling us, okay, you’ve done good enough. Stop now. Or you can, it’s okay to give yourself a pat on the back. It’s okay to give yourself a break or feel good about that. We have to do it for ourselves.
I don’t remember what venture capitalists quote I heard this from, but it was they told an entrepreneur there are funding, like the most important person you need to manage is yourself. And that’s absolutely true. I wouldn’t say I’ve managed myself very well all the time. But I’m learning and the structures and the ability to use a structures to, to get back, I’m going, it’s really important for your happiness so that you can keep being an entrepreneur and helping the economy in the world. The format’s going to be sharing some, some learnings from books. I’ve read, new processes I’ve developed from what I learned that I think will work for me in a very direct real way. And also talking to other entrepreneurs or people who do bring products to market or have to deal with automation and systems and learning from them and hearing their story.
So I’m super excited and I’d love to hear how, what your experience has been. Have you experienced starting a business and losing a ton of money and wishing you did it in more of a lean way and tested that as a product market fit? Or do you have some best practices that worked for you and that you’re sharing with other people?
So I’d love to hear it in the comments or on social media. So I look forward to talking to you and I appreciate your support. I can’t wait to share with you more about the business I’ll be starting and what I’m learning and putting together for my next venture. So I’ll talk to you soon.