When my 10-year old daughter informed me last week that she wanted to start a slime business, I got really excited. Finally, this was my chance to bring my years of experience in the business world to bear in a rare teachable moment. Little did I know that it was she who would be doing the teaching.
Over the course of the next week, she proceeded to deliver a masterclass in business strategy. Here are some of the highlights
Lesson 1: The art of the deal
As she needed seed capital to buy the ingredients for the first batch of slime, she approached me for a loan. I explained that the repayment terms would be quite onerous and suggested instead that I take a 10% equity stake in her business. She was reluctant at first but after a few minutes she presented a counter proposal.
“If i am going to give you a stake in my business, I need to know how you are going to help besides putting in the money.” I told her I would assist in driving her around to buy the ingredients and do some sales and marketing. She thought about this for a while. “Okay, here’s the deal,” she said. “I’m going to give you a two-week trial period as my partner. If you are a good partner, you get 15% of my company. If you are an average partner, you get 10%, and if you are a bad partner you get 5%.”
Somehow, she had come up with a plan in which I was the one having to prove my worth. I had no choice but to accept her proposal out of sheer admiration.
Lesson 2: Marketing to your audience
In my attempt to add value as a business partner, I thought I would start with marketing. After all, I founded and built one of the biggest PR and strategic communications agencies in Africa. “Okay, you need to make a list of your products and prices and show it to your friends at school,” I told her. She gave me a look that was a mixture of horror and pity.
“Here’s what we’re going to do,” she replied. “I’m going to post a TikTok video of me making the slime and asking them to message me with order requests.” For those of you who are over 20, TikTok is a new video app that allows…….never mind…. it’s like a mixture of Instagram and YouTube used mostly by kids.
In about 60 seconds flat she had recorded, edited and posted the video. 60 seconds later she started receiving enquiries and orders from her friends.
Lesson 3: Building brand loyalty
One of my main areas of concern with the business model was around profit margins. I tried to explain that in order to maximise profits, we needed to keep the prices high and the costs low. This meant buying cheap ingredients and containers and keeping the slimes small. She wasn’t having any of it. “First we need to get the kids to try the slimes. If we charge too much in the beginning, they won’t buy them. Also, if they buy them and they aren’t good or are too small, they won’t buy them again. But if they are good and they like them, I can probably charge more later on. She then proceeded to make extra big batches of high-quality slime, which she said went down a treat with the customers. She has since received a number of new orders from other kids who have been impressed with the quality of the slime and want some for themselves.
Lesson 4: Show me the money
From my own experience, whether it was running an unsuccessful sweet business during my junior school years, to my aforementioned PR agency, I knew that getting people to pay was often the biggest problems in business. I have spent many sleepless nights chastising myself for getting into a position where I was owed huge amounts of money, despite having already delivered the product or service.
She had already thought of this. “The kids have to pay within a day or two of placing their orders. I told them that if they don’t bring the money, I cancel their orders and if I’ve already made the slime, it will be sold to someone else and they will have to wait until I make the next batch. They definitely don’t get the slime until they have paid.”
Good idea. Why didn’t I do that instead of making excuses for my customers – and even blaming myself sometimes – when they failed to pay on time.
Overall, she seems to know what she’s doing when it comes to running a business. Now that I think of it, maybe I did well to get that 10% stake.