A Funny Thing Happened On My Way To The Poorhouse
I have waited six months to write this post for many reasons.Time has given me perspective and now, I'm ready.I hope you enjoy hearing my story. It's full of twists and turns and for the most part, it has a happy ending. It's made me who I am today. As most of you following my blog know, I entered into a licensing deal with a big baby products company after my third child, and first son, Brendan was born 2006. Brendan had major health problems (severe eczema, allergies, RSV, ear infections, etc) and required my full attention. Like a "perfect storm", this coincided with major growth for my company - my second invention, Blankeaze, was picked up by One Step Ahead and forecasted sales were BIG. Motherhood trumped entrepreneurship and I had to do something with my company. And fast. As fate would have it, I read an article about Summer Infant in my local paper. They're based in RI, too and the article talked about how they'd gone public and were looking to expand their product offerings. Ding. Lightbulb moment. So, I pitched them on buying my company and they bit, but with a licensing offer instead. They said they could incorporate my products into their lineup very quickly and that my royalties would be handsome. Very handsome. So, I signed the licensing agreement with great confidence & relief--it was a "win-win". They would manufacture and market my products, I'd receive royalties. Things couldn't have worked out better. Or so I thought. Turns out that "incorporating" my products, Swaddleaze and Blankeaze, took longer than they thought. If you visited their website, you would not find my products listed on there. Why? Because unbeknown to me, they had to first revamp their entire website, which took a whole year. My retail & wholesale customers couldn't find my products and I bet you know what happened - sales waned, interest waned and my royalties waned.
Over a one year period, I earned about $1,700 in royalties. No, I didn't forget a zero. $1,700. Divide that by 12 months and it'll make your heart stop. Mine practically did.
Before the licensing gig, I had been earning about $7,000 per month in sales. I used this money not only to contribute to our family (of five!) income but also to make monthly payments on the loan I'd taken to start my business. So now, I had $141.66 per month to accomplish this. And I haven't even finished the story. Being a huge Google fan, I am a big user of "Google Alerts". Basically, you can have Google search for anything and if they find it, they'll email you an alert. I had always done Google Alerts for Swaddleaze & Blankeaze to see if either of them were being mentioned in the news. So, I decided to set up a Google Alert for Summer Infant even before I pitched them. I wanted to learn about their company so I could make a well-informed presentation. After I signed the licensing deal, I kept the Google Alert so I could stay abreast of their earnings, news and press releases. Can you guess how I found out that Summer Infant had purchased one of my biggest competitors? Yep, trusty Google Alert. Kiddopotamus, the maker of SwaddleMe, was now part of the Summer Infant "family". How would this affect me? I had no idea. But I figured it couldn't be good for my already paltry royalties. So, I made it clear to Summer Infant that I was VERY open to any alternatives to the licensing deal, say, a buyout for instance. About a month after they bought Kiddopotamus, they offered to buy my patents and trademarks. Their initial offer was laughable and I did manage to negotiate a better sale price. But frankly, I was at their mercy. I was struggling and desperate to pay off my debt that was accruing interest at warp speed. Did I get a fair price? Only God and Summer Infant know for sure. But I can tell you what I DID get: an education that no money could buy.
Here's what I learned about life and licensing deals:
LIFE:
1. I have everything I need already. 2. Motherhood is the most important job on earth. 3. I will not die if I don't have the latest bag, shoes or designer jeans. 4. My children will not die if they don't have 72 Webkinz each. 5. God answers all prayers. Sometimes, the answer is "no". 6. My husband is a keeper. He stuck by me even after I had caused great financial stress for our family. 7. Be kinder than you have to -- everyone is fighting some kind of battle. 8. Being "poor" makes you "rich" in gratitude for what you DO have. 9. Living "without" can become a way of life. 10. Even after everything that happened, I am still so blessed in so many ways. Thank you, God.
LICENSING:
1. It's BUSINESS, not personal. Bottom lines trump boo-hoo's. This is hard to understand for mom entrepreneurs, because for us, our businesses ARE usually personal. They're like babies to us. 2. Things don't always go as planned. 3. No one will care about your products the way you do. 4. Expect communication breakdowns. Or no communication at all. 5. It's not always the best option for small, mom-owned companies.
How have your tough lessons helped you in life and business?