Most of us have heard the saying, "Do what you love, and the money will follow." It's great advice, and it's worked for many successful entrepreneurs. But how exactly do you start? What are the secrets of turning a passion into profit?
We asked one of LegalZoom's customers, Janet Long, CEO of Elaine's Toffee Company, to share her thoughts on starting a business around something she loves.
Start with a Great Product
"Well, it may seem obvious," says Long "but first you need a great product. If you don't have that, you can't get your first customer."
So how do you know if your product or service will sell? Here's a hint—look to the people around you. For years, Long's mom and dad made toffee that was a huge hit among friends and relatives. Sensing there was something special about their toffee, they chose to keep the recipe a secret—just in case. When Long was invited to sell the toffee at a school holiday boutique, it suddenly became clear just how special it was. She and her dad made 70 pounds of toffee for the event and it completely sold out.
"After the event, I received several phone calls from people asking to buy more toffee. That Christmas, my two sisters and my dad and I were all together for the holidays and we discussed the idea of taking the product to market."
Do More with Less
Elaine's Toffee Company was officially launched in 2005 as a tribute to Long's late mother, Elaine. To bring the family closer together (and save on labor costs), Long, her two sisters, and her father shared all of the company's day-to-day operations.
"My dad was a big supporter from the start. He thought we should do it as long as it didn't cause any strife among us. When we first got going, he rolled up his sleeves and pitched in with cooking and packaging the toffee. Now he's our "pricing guy" and answers phones three days a week. My sister, Linda, handles all of our internet orders. And my other sister, Anita, not only handles customer calls from her home in Illinois but also manages corporate orders."
As the company's CEO, Long focused on marketing their product and keeping their expenses low. This included experimenting with low-cost packaging; renting a commercial kitchen for just one day a week; promoting their toffee at local events; and reaching out to friends who worked at companies that needed corporate gifts.
"My sister Linda's husband was a bankruptcy attorney and had many words of wisdom about protecting ourselves through incorporation. We wanted to make sure there was a definitive line between the business and our personal finances. I heard about LegalZoom on the radio and thought it sounded like a smart way to take care of this important step. And it was a great decision—very easy and affordable."
Personal liability protection is not the only benefit to forming a corporation. Incorporating can also save you thousands in taxes and make it easier to raise capital.
Secure Working Capital
Small businesses have a number of options for securing working capital. These include taking out small business loans, opening a business line of credit, or borrowing funds from friends and family. Raising capital through private investors is another option—one that is much easier if you decide to incorporate your business.
"Cash flow is a huge issue for small businesses like ours," says Long. "We pay for everything up front, but most of our wholesale customers want to pay in 30 days."
Long's recommendation? Open a merchant account for your business. This way you can ask your wholesale customers to pay for their first order with a credit card, giving you the initial funds necessary to produce their order.
Take the Plunge
Janet Long never dreamed she'd make money doing what she loved. But soon after giving it a go, she proved the old saying true. In three short years, Elaine's Gourmet Toffee has gone from school holiday boutiques to private labeling for major retailers. This vivacious mother of two attributes their success to having both an exceptional product and the resourcefulness to deal with new challenges.
"If you have a dream, you should absolutely go for it. My advice is to keep going until you hit an obstacle and then figure out a way to remove it. I've found you can start a business with very little money. You just need a willingness to see things through."
Elaine's Gourmet Toffee is sold at select gourmet food stores, all Williams-Sonoma Outlet Stores, and Dillard's Department Stores this holiday season. You can also purchase toffee directly at www.elainestoffee.com