Conventional wisdom has it that anyone thinking of launching a new product should do the groundwork before committing time, energy and capital to minimize the risks. And as any good business advisor will tell you, market research is essential. Are there people out there who will actually be prepared to buy what you’re offering? You might even want to apply some kind of formalized product/market fit framework to your researchers and there are plenty of experts who will tell you how to do just that.
But what if you start a business on a hunch? An assumption or a gut feeling that you’ll find customers. Is this kind of instinctual approach a recipe for disaster, especially if the product you plan to sell is not exactly mainstream?
Well no it isn’t. A couple of weeks ago, I spoke to Becca and Jess Stern, the sibling founders of rapidly-growing furniture company, Mustard Made.
On the face of it, the two sisters haven’t made it easy for themselves. The company was started on the premise that consumers would embrace the concept of brightly coloured metal lockers as home or fashionable office furniture, with little or no research evidence to back up their belief. To complicate matters, the Sterns were living on opposite sides of the world, Jess in London and Becca in Australia. And in terms of finance, when the business started there wasn’t even a company bank account. And yet, last week the company took up position in the Sunday Times 100 list of fast-growing British companies.
When I spoke to them, I was keen to find out how they had managed to start a family business with very little capital and an idea that would look – to some eyes, at least – a touch off-the-wall.
From Grey To Colour
It was Becca who came up with the big idea, namely lockers. Now, you’ll find lockers everywhere. They are often grey and hidden away in dusty corners or factories or offices. You’ll also find variations on the theme in schools and changing rooms. They have locks and slits and can look a bit mysterious. To Becca, they became something of an obsession. “They had a history to me.” She also thought there was potential to sell brightly-coloured fashion furniture.
“The idea was that they would fit into living rooms, kids’ bedrooms and places like co-working spaces,” she says. It was a belief, rather than something backed up by evidence of demand.
And far away in England, Jess was more skeptical. “My first thought was who would want to buy lockers,” she says. She was eventually won over by her sister’s enthusiasm and a long-held ambition to run a company together. “Within six months we were looking at samples in China,” she adds.
But everything was pretty tentative. The sisters borrowed $25,000 (Australian) to take a stand at a trade show and at that point the company didn’t even have banking facilities, as it would have cost money to open a business account. “We could take orders but we couldn’t take money,” says Becca. Nevertheless, there was enough interest to justify a consignment from China. In the U.K. the company followed a similar strategy.
Bootstrapping
It was, you could argue, an object lesson in bootstrapping. As Becca acknowledges, borrowing AU$ 25,000 to launch an untried product was a risk, but perhaps not a huge risk. Once orders had been received, the company could commit further cash to order a consignment from China. That would pay for the next round of marketing/trade show activity. “And that led to the next container.”
It was nonetheless challenging. “I came from a buying background,” says Jess, who had worked for retailer Primark in the U.K.. “But ordering furniture in containers was very different.”
And there was also an intermittent flow, with goods being available on a consignment-by-consignment basis. “We sold out of certain models and colors,” says Jess. That did, however, create a certain scarcity factor which helped drive interest.
Things have changed. The company’s products are now stocked in big retailers in the U.K. and Australia and the U.S. market is the next target and the sisters have hired a merchandiser to manage the flow of orders.
Brexit And Other Challenges
There have been continual challenges, however. Covid disrupted supply chains and there were unexpected problems such as ships being stuck in the Suez Canal. The fallout from Brexit – which introduced a lot more bureaucracy into trade between Britain and the European mainland – reduced the potential to build a European following. One major problem was that European customers sometimes found themselves paying unexpected duties and taxes. “We had to stop shipping to Europe for six months.” That problem has been solved by setting up a warehouse in the EU. Working simultaneously in Britain and Australia has also been a challenge, largely because of the unhelpful time zone difference.
Nevertheless, the company has enjoyed pretty consistent growth and achieved revenues of £6.4 million in 2022, compared with £5.5 million a year earlier and £2.7 million in 2020.
So should we forget all that stuff about market research? If you have a good idea, should you simply go with it? We’ll probably not. In fact, you could argue that turning up at a trade show constitutes up-close-and-personal research with orders providing the evidence of product market fit.
But that was a little bit down the line from the initial lightbulb moment. Sometimes, having an inspired idea that you believe in can be the basis for a business.
Read the full article here