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!