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| Carol's Daughter Founder Lisa Price picture courtesy Associated Press |
Yesterday it was reported in the Wall Street Journal's "Bankruptcy Beat" digital section that Carol's Daughter had filed for Chapter 11 Bankruptcy protection. I became aware of this only today.
Here is how the article started out "Companies affiliated with Carol’s Daughter filed for Chapter 11 bankruptcy protection Thursday in connection with the beauty brand’s move to close most of its stores." Wow I remember Carol's Daughter from back in the day.
I remember when Carol's Daughter was just a neighborhood business starting out because I'm from NYC and lived in Brooklyn a few blocks from the original store for many years. I even met the Founder Lisa Price when she first started out. I even remember when I first noticed her early distribution of products to other Black specialty and Afrocentric stores.
Later her products got national attention on Oprah, and drew celebrity investors like Will Smith, Jada Pinkett-Smith, and Jay Z. It was not the 1st neighborhood business I had seen go national or international. However, since she is a "Brooklyn home gurl" I want to see her do well.
I understand Lisa Price no longer owns Carol's Daughter it is owned by the private equity firm Pegasus Capital Advisors. However, just what is her present involvement is sketchy and seems to be not easily publicly available for obvious reasons.
Later her products got national attention on Oprah, and drew celebrity investors like Will Smith, Jada Pinkett-Smith, and Jay Z. It was not the 1st neighborhood business I had seen go national or international. However, since she is a "Brooklyn home gurl" I want to see her do well.
I understand Lisa Price no longer owns Carol's Daughter it is owned by the private equity firm Pegasus Capital Advisors. However, just what is her present involvement is sketchy and seems to be not easily publicly available for obvious reasons.
When I first saw this headline online I
thought, this isn't the end of the world. How many times did Donald Trump and
other brands do the same thing?
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| Popular Carol's Daugther Product |
Nevertheless, Black women are patrons of this brand and are understandably worried about its future. Having personally meet Lisa Price a couple of times I am confident she and the Carol's Daughter brand will emerge from this bankruptcy protection stronger than ever.
The strong impression I had of her is she is a resilient and resourceful business mogul. I am confident She will regroup and probably come back stronger.
Moreover, I read her business challenges are due to her retail
expansion and that her retail stores weren't profitable since 2010. I can relate to this scenario.
The Wall Street Journal Reports "In new court papers
filed Thursday afternoon, Mr. Elmer said most Carol’s Daughter stores
have been unprofitable since 2010. Before the bankruptcy filing, the
company closed all but two of its seven stores and terminated 29 of its
42 employees. It hopes to use its time in Chapter 11 to reorganize and
consolidate its operations around its two open stores, in Brooklyn and
Harlem. Besides the stores, Carol’s Daughter products are offered for
sale on its website and through such third parties as the Home Shopping
Network and Sephora."
After reading this I had to reflect on my retail experience as an owner of a couple of boutiques in the past. Retail is a notoriously tough
business. I learned in retail that even big
corporations like the Gap are hard pressed to make a bottomline of 15% net
profit. This is well known in the retail industry.
Retail has long hours, high start-up costs and overhead, HIGH capital expenditures, shrinkage, spoilage, and low profits. I had a couple of retail stores and know from personal experience it is a tough business.
Retail has long hours, high start-up costs and overhead, HIGH capital expenditures, shrinkage, spoilage, and low profits. I had a couple of retail stores and know from personal experience it is a tough business.
Retail is a brutal business. Word to the wise stay out of retail! I could have told her that. She did Retail in Brooklyn or Harlem OK she was pushing it.
But national retail? Hell Naw, peeps stay out of retail unless you're publicly traded with a large market cap like the Gap. Nothing good can come of it.
LOL! Seriously retail is tough you better know what you’re doing from every angle doing retail!
This is why you don't see a lot of Black businesses in retail in our neighborhoods. Many entrepreneurs and Black business people are sticking with ecommerce and wholesale. You'll lose your lunch doing retail. OMgoodness! Retail NOT Good! Gezz
Even if you have a promising retail business like I did the landlord can raise your rent exponentially or ask for a percentage of your sales. If you do retail try to own the building or you're in for trouble.
Nope I'll stay online like Amazon it is much more promising and less risky - thank you very much!
Lisa Price is a smart business woman and I think she will regroup and come back more business savvy. More importantly Carol's Daughter has other significant business supplying to over 2000 other retail outlets. She still has a strong business. You can read the full Wall Street Article here.
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| Popular Carol's Daughter Product |
LOL! Seriously retail is tough you better know what you’re doing from every angle doing retail!
This is why you don't see a lot of Black businesses in retail in our neighborhoods. Many entrepreneurs and Black business people are sticking with ecommerce and wholesale. You'll lose your lunch doing retail. OMgoodness! Retail NOT Good! Gezz
Even if you have a promising retail business like I did the landlord can raise your rent exponentially or ask for a percentage of your sales. If you do retail try to own the building or you're in for trouble.
Nope I'll stay online like Amazon it is much more promising and less risky - thank you very much!
Lisa Price is a smart business woman and I think she will regroup and come back more business savvy. More importantly Carol's Daughter has other significant business supplying to over 2000 other retail outlets. She still has a strong business. You can read the full Wall Street Article here.
Essential Practical Advice for Retail Business Owners
To end this article on a more constructive note if you are thinking about owning a retail business here are some suggestions you may want to consider:
1. The most important thing in Retail is: Location, Location, Location, Location! Without a great location you are going to die a fast death. Don't go for a location even just 100 feet from a great location you will die a slower death - but you will die! Did I mention get a great Location?
2. Have plenty of cash and financing in place to pay for a high traffic location, expensive renovation, and lots of stock at the very least.
3. Try to see if you can get the landlord to renovate or find a high traffic retail location which will take a minimum amount of renovation. If you have to build new walls, fixtures, etc. It is gonna cost a lot of money.
4. Understand the seasonal highs and lows of your business. In some seasons you may make a lot of money like around the holidays but around the summer your business may be almost dead. Manage your cash flow accordingly or ELSE!
5. Take meticulous records of what sells and what doesn't. Get smarter every season about what items sell the best and others that don't perform well. Typically you will have a 20/80 rule. Twenty percent (20%) of your merchandise will make about 80% of your sales. Mark the others down and move it out fast to make way for what sells better in future seasons.
6. Digitalize your business as much as possible. You'll need to supplement your retail income with e-commerce these days to stay viable. Consider starting an Amazon and eBay marketing presence in addition to your local retail business. Please remember eBay/Pay Pal and Amazon are doing hundreds of billions of dollars in e-commerce. That's a lot of money. If you can't beat them join them. Multiple streams of income to survive in retail is needed in an e-commerce world just sayin!
7. Create a powerful Internet marketing strategy. This is also apart of digitizing your business. I work with a lot of local businesses these days and you have to have a strong online marketing presence to grow and even protect your business brand.
Google and Facebook refer billions of people to local businesses throughout the world these days. Some of the things you want to do are create a Google G+ local business page, a website, blog, social media presence, and select a email marketing platform to direct people to your local business. We are living in a time of geo-targeting local business technologies. If you have no idea what I'm writing about or want to learn more contact me at Search Engine Plan
Also for more Info about ownership issues at Carol's Daughter and Retail challenges see the comments on the end of this post. My Facebook friends helped get more information on this breaking business story!
See How Carol's Daughter is using a digital marketing Strategy Below...
About the Publisher of Kamau's Qu!ps
Kamau's Qu!ps is Published by Kamau Austin. Kamau is a popular Blogger, Writer, and Internet Marketing Professional helping small businesses grow more profitable businesses online. If you need web design, blogging, search engine or social media promotion contact him at Search Engine Plan
I was asked to explain more about why retail is such a tough business. People like the glitz of having a retail location. It sends the message that you have a more established business.
ReplyDeleteBlacks and startup businesses like the allure of a beautiful retail location. But I'd try the Internet first.
In retail many times you'll need 4 months rent and security for a good retail location. If rent is $5,000 a month that's $20,000.
If the renevation is a low ball $50,000 to $100,000 that's a conservative $120,000 without buying stock and merchandise. Believe me these are low figures.
If your merchandise to stock the store is $100,000 you are running a quarter of a million dollars without paying yourself a salary. You can get a good ecommerce presence up for $5,000 or less and it runs automatically and you can keep your job if you have one. It is passive income.
You can set up an ecommerce store on Amazon or eBay for less than a few hundred dollars and start generating sales if you have a desired product. Who wants to spend $220,000 for a retail store on the low end and find out you don't have a viable product?
Lisa Price, is showing her business savvy by closing the stores. She gave them a few years. It is time to cut her loses and focus on her more profitable businesses.
ReplyDeleteI've seen businesses Chapter 11 Bankruptcies do it all the time. It gives them some relief from creditors to restructure their business. It can actually be a good thing.
ReplyDeleteA Facebook Contact claims "Carol's daughter is not owned by Lisa Price, she is an advisor for the brand she sold it to private equity firm Pegasus Capital Advisors." I haven't confirmed this as of yet.
ReplyDeleteOK here is a couple of links about the ownership of Carol's Daughter: http://www.reuters.com/article/2013/03/27/carolsdaughter-sale-idUSL2N0CI25D20130327 and http://www.pcalp.com/pdf/cs_carol_daughter.pdf
ReplyDeleteThey're keeping a tight reign on the information for obvious reasons. One of my Facebook friends comments "I'm sure they want to keep the face of the brand. The story is too compelling to turn off. The celebrity spokespeople, etc." But the control of the company is a different story."
Bottomline for startup small business people I know from personal experience. You work like crazy even weekends and holidays, it's a lot of money invested in other people's property. In one retail location I had I was making good money but the mall I was in wasn't doing good.
They closed the mall and put me out of business even when I was making money. The mall went bankrupt.
Oh Hell naw avoid the retail trap especially when you can sell through trade shows, ecommerce, or on eBay or Amazon. Avoid it at all costs. If you do get a great location and try to own the building you're in or there's trouble down the line.
Carol's Daughter started as a local store and then branched out. In fact their stores in Harlem and Brooklyn are still viable and open.
ReplyDeleteHowever national retail in this economy is very tough. Even seasoned retailers have a hard time making a bottomline 15% net profit.
Retail is a brutal business with high start-up investments, long hours, high overhead, shrinkage, spoilage, low profit margins and can be dangerous. Plus e-commerce is really eroding the profits of retail. For instance Amazon and eBay/Pay Pal are on target to do about 100 billion dollars each soon.
That kid of money being spent online is making retail a very hard business to make profitable. I feel Carol's Daughter will rebound and make strengthen her core business. Actually chapter 11 is a good thing for her.