CO’s like Neiman Marcus & J Crew START off as a (fashion) brand
Then step into the “we gotta grow” game
They stopped operating as a fashion brand when they got into
- Commercial Real Estate game
- Investment game
The further a Company strays from its inception, its original GOAL, the closer it gets to its death. A house of cards if I may
Patterns of Peril
Many of the companies you’re seeing going bust are having the same issues. Here’s how you start ending this cycle
A few years ago, officials from the cities of Miami and Doral asked me “how do we become a tech hub and attract top talent?” Between the private and public sectors, they were doing great in checking off all the boxes they considered essential for a tech hub
networking events, speaking engagements, festivals, a handful of startup accelerators and co-working spaces to name a few
Now they, a lot like the startups they set out to help, were facing growing pains. As the crowds grew, so did their ambitions. In came the VC’s/Investors to finance a dream here and there.
And here is where so many amazing goals get hijacked, in no way shape or form am I saying investments are bad, no, its the way most Venture Capital and Investments operate that aid in turning amazing opportunities into short term fads
Take Neiman Marcus for example, a few years ago they were raided… oops, I mean raised by venture capitalists in what was spun as “expansion”.
Their massive debts leveraged to structure a win for lenders and a loss for the thousands of employees as their bosses pretty much transferred debt from one to another, “robbing Peter to pay Paul” as the saying goes.
If there’s anything successful people have taught me is that
“In order for a con to work, the mark has to be greedier than the con(wo)man”
J Crew is one of the latest companies to head to bankruptcy court to save their investors yachts, summer homes, bank accounts and negotiate the terms of their surrender
The company had planned to use the proceeds of an upcoming IPO to pay down its $1.7 billion debt
What originally starts off as a fashion brand, eventually gets into commercial real estate when they take on a huge lease (or buy the property), which then puts them in the investment game as they have quotas to meet to keep investors happy
The cities of Miami and Doral originally set out to be an attractive platform for startups and top talent, eventually getting into the Venture Capital game as they format their initiatives to get the attention of Jeff Bezos and Lenders
Some CONS of Venture Capital/Lenders
- Strings attached
- Forced Management, you now work for them, not the customer
- Limited Decision-Making Abilities
How You Break The Cycle
Venture Capitalists and Lenders look for a few things to lend you money that includes
- Top Line Revenue
- Can I replicate this idea cheaper?
- Will their growth meet our earning expectations?
Instead of polishing your business for borrowing money or a buyout, set out to
- Solve the problem
- Serve the people you do exceptionally well
- Simplify how the first two happen every chance you get
Which means an easy to remember process
- Solve the problem, for ONE person exceptionally well
- Come up with your true north (for example Southwest Airlines bases all of its decisions on their true north, Delivering the Low Prices)
- Master serving 10, then 100, then 1000, and so on exceptionally well, do not skip steps
- Steps 1 through 3 increase sales, increased sales finance your operation, your investments
- Borrow when you don’t need it, and borrow for assets only (you can always return, sell them if you hit rough times)
How will you put this into action? If you’re on Instagram or LinkedIn, click on my signature below and let me know, would love to share your story with thousands of Creatives who are charging forward with you
Here’s to escaping average