April / May 2006 Report

Major Accomplishments
We've been quite busy getting out new products and we released our first official entree into the Travel world, with ParisSmarts - question and answer cards about the world's most beloved city - just in time for graduation and summer travel season. We've already received great reviews about it and folks are flocking to our online store to pick up a copy. We're busy getting other new products ready for press that we're really excited about - they include BabySmarts (with a portion of the proceeds going to the Nurse Family Partnership), DogSmarts (with a portion of those proceeds going to Canine Companions for Independence), and CocktailSmarts, plus other ad on accessories to some of our other top selling products. We're thrilled to be working with great non-profits and giving back to the community.

We've also been doing a great deal of analysis on our financials and our sales are up-up-up! While our sales growth has been only 30%over the past couple years, so far this year our sales are up 78% - $Million, here we come! Thanks to all the attention we've received from OPEN and Count Me In and having a sales manager on contract who is dedicated to increasing our sales and distribution channels, we are now getting a great deal more attention from brokers, distributors, sales reps, and major retailers we believe we are poised to dwarf the 78% growth rate over the next few years once some of these major deals are closed.

3M Support
With the dramatic growth in sales comes increased stresses in our cash flow (most of our sales do come in in Q4, but we still have to pay for product in Q2 & Q3). We had a sort of unrealistic dream that getting in this program, that problem would go away, but unfortunately we've realized that our cash flow problem only gets bigger and scarier. While a couple years ago, we were short maybe $10K, this year we're looking at over $150K in negative cash over the summer months! GULP!!! This realization involved a pretty major panic attack by Jen and myself. While prior to being in the program, we didn't have access to capital, so it wasn't really a problem, we'd just limp along with 30% sales growth and grow organically with through our profits. But now we do have access to loans and lines of credit from Count Me In and OPEN, but it's really scary to take on this kind of debt - and personally guarantee it! And we've been told that no matter how large we get and how great of credit the company has, we will will always have to personnally guarantee loans and lines of credit. The joys of entrepreneurship! And what's worse, it'll only get bigger as we grow. DOUBLE-GULP!

So, during this little panic attack we called every advisor we knew to figure out ways not to go into this kind of debt. We also developed about 4 different strategies to avoid this situation: start some sort of dot-com, sell the company (oy - I said we were panicked), take on high-interest A/R loans that we don't personally guarantee. And then we sat down with our beloved Nell, and she knocked us over the head and told us to get over it! We have to take on risk if we're ever going to get anywhere. We have to think bigger! Well, now we are. We are now looking at growing the company 3 x's larger than our plan early this year. We've developed a whole vision and strategy to grow the company to 100 active titles by 2010, plus enhancing our on-line presence dramatically. And we're looking at bringing on outside investors and partners to help us get there. (Plus today, we're feeling much more comfortable about the debt, because we know, come December we'll once again be rolling in the cash).

So once again, we have to remind ourselves that we're not alone in this journey and we need to continue to reach out to our mentors and advisors for help when times are tough and we're freaking out. There are tons of people who believe in what we're doing and where we're heading, and Nell and the folks at Make Mine a $Million are at the front of the line.

PR & Promotions
As the only SF company from the original Make Mine a $Million award recipient group, we've had the fortune of being able to help promote the June 2nd competition. We've hosted workshops, attended women's conferences, got a panel on women-owned businesses at the Commonwealth Club that Nell, myself (Julie), and a couple other women served on, and were interviewed by KALX radio about being part of the program. It's such a fantastic opportunity to shout the merits of the program and share the lessons we've learned over time with other women (and as an added boost, more people get exposed to our fantastic products). We've also been featured in the Miami Herald, style.com gift guide, and held a webcast about our WineParty on chefsline.com (another cool woman-owned startup).

PS - Congratulations to the 20 2006 Make Mine a $Million Award Receipients. Welcome to the Club!

March 2006 Update

Major Accomplishments
The biggest news is our TV and Radio spots for OPEN have hit the air. This was quite a fun project for us and while you may not see much of us, it involved 3 nights of filming all over San Francisco (apparently in the film world they shoot tons more than actually makes it on screen). It was fun being TV stars for a few days. Our other major accomplishments include release of two new products - our WinePassports to France and Bubbly. These guys are packed with great information on the regions and are quite handy for all sorts of trips - from the liquor store to the Burgundy region of France. We're also busy developing marketing partnerships with companies such as ZipCar and ChefsLine (a new woman-owned business providing phone and other advice for home chefs) where we offer fun games and product discounts to their members.

3M Support
We're thrilled that the Make Mine a $Million conference and awards will be held in San Francisco on June 1st & 2nd, and we've had a lot of opportunity to see everyone's beloved Nell and to get involved in marketing the program. We're looking forward to seeing everyone in June and getting caught up on all the exciting news that's going on. I think we are yet again at a crossroads for our business, and we're at a point in finding new and creative ways to spur our growth into new sectors and channels. We continue to have challenges with our identity, but thanks to our mentor, Vivian, and some of her colleagues, we're getting closer to really understanding our strenghts and where we can get some help.

PR & Promotions
In addition to the TV and radio spots for our friends at American Express, we've been featured in their employee magazine (along with Denise, Cynthia and Saundra), Play Things Magazine, Inside Magazines, Gifts and Decorative Accessories, and the Atlanta Journal Constitution. In addition, one of our writers, mentioned us on her blog, which drove a ton of traffic to our website. If you're looking to increase your web traffic, hitting up top bloggers, MySpace.com users, and other online writers is a great and cheap way to go and can really generate lots of traffic to your website.

February 2006

SmartsCo Update
Once again we had a crazy month. We finished up our Spring trade shows and got lots of pre-orders for our new products - ParisSmarts and our WinePassports to Bubbly and France. We look forward getting these out on the market. For us, this time of year is pretty slow so we have time to take a breather and do some strategic work. We hired a contractor to help us build out our sales channels and help us recruit more reps and manage licensing, international sales and certain target accounts. We've worked with her for years, so it's great to have her on our team. We also brought on a PR agency to help us with marketing, and they got us some great hits on various online media and on VineTimes radio which is on iTunes and was broadcast on Sirius satellite. It was pretty fun and you can listen online from the link. Finally, we assembled all the folks on our new sales and marketing team to help us take a step back and do some strategic planning for the year, which was really useful - we were able to think about our priorities and came up with some great ideas with respect to our brand and creative marketing activities - stay tuned.

Mentoring & Counseling
Our mentor Vivian continues to be a great sounding board for us and pushes us to think strategically and get our priorities in order and she's helping us touch base with various subject matter experts on the areas where we're struggling. We also started interviewing coaches from the Coaches Connection that CMI has set us up with. This is a different process from the mentoring as their focus is less on specific business objectives, and more on our personal goals and challenges. For Jen and I that's tough as all we think about are the business issues at hand - I guess we're really fortunate to have and awesome partnership and to have great people on our team. We're looking for that "Tipping Point" that will really get us on the map, and we hope a coach can help us open up our own creative juices to get there. Also, we took the opportunity to to a financial review with our friends at OPEN regarding the company. It was sort of strange and we learned things about how bankers analyze financials in evaluating company loans. The only problem is, if you're a small business (I think under $5 million), you're not really considered a company, and you're basically evaluated based on your personal credit history and the collateral you have. We were hoping after 4 years and us nearing a $million mark that things would be different, but it doesn't seem to be the case. Thankfully, CMI gets it!

On a personal note ....
It was our 4-year anniversary of the day Jen and I met over a glass of wine to discuss the idea of making a wine trivia game, and we celebrated by taking our staff (all 2 of them now) and a friend for each of us out for some yummy Indian food. One of the best things about owning SmartsCo is we get to work with great people every day and are there for each other when times are tough. We're fortunate that despite Jen and I starting a business together a week after we met, that we have a very positive and supportive partnership. We know we're very lucky. Having two people running the show is great as now we can start taking vacations (I write this as Jen is off to London for a family reunion and I actually got several great ski weekends to Colorado and Tahoe this year - the first ones in years). It's so important to have balance in one's life and time off if you're going to have a sustainable business or you'll completely burn out - I think we're finally getting to that place.