93: Chasing the Barefoot Spirit with Michael Houlihan and Bonnie Harvey

This week’s Misfit Entrepreneurs are the king and queen of the wine business. Michael Houlihan and Bonnie Harvey are the co-founders of Barefoot Spirits, the world’s largest wine brand. You no doubt have had some of their product before. In fact, my wife and I toasted in the New Year with some Barefoot Bubbly just this year.

As you can imagine, Michael and Bonnie have won just about every type of award and been featured on every major news outlet you can think of. But, they haven’t just created an amazing business, they have created a mission to help others do the same. After writing their #1 New York times best-seller, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 wine brand, they set out to teach entrepreneurs how they can create their own success using the principles they learned in starting Barefoot with no money, no knowledge of the wine industry, and a vision.

It’s these principles that I am most excited for them to share with you in this episode.

www.barefootwinefounders.com

Mike and Bonnie were never really interested in getting into the wine business. But, they did like the wine country. After a year of being together, Bonnie came to mike with a crazy idea. They were both consultants in the area and an opportunity came up to help a client of Bonnie’s collect on some large outstanding payments from a winery. Mike went to help negotiate and found that the winery had just declared bankruptcy. In the absence of Money, Mike negotiated for bulk wine and bottling services.

Now, they had to figure out how to bottle and sell the wine. By the time they had everything together, the winemaker they had worked to get the deal for said he wasn’t interested in selling it. Bonnie and Mike cut a deal to take it over and sell the wine paying the client back in full for the payments that were owed. That is how they got into the wine industry.

At what point did success come and what did you learn that helped it to happen?

• Mike and Bonnie had to learn that the wine business was totally different that what they thought. It’s understanding distribution, warehousing, selling, etc.
• It took 3 years before they really saw success
• They realized that distributors weren’t going make the sale for them, they had to do it all the way down to the individual store level – they had to go direct.
• They asked questions of everyone they met in all the aspects of the supply chain. It was their curiosity that helped them become a success.
• What really made a difference was taking on some of the distributors work for them. They secured the orders and services the retailers.
• The biggest challenge was to understand how to make the most out of all areas of the distribution channel front to back.
• No one is going to put the focus and energy into selling your products like you will.

What is the Barefoot Spirit?

It is the spirit behind the Barefoot brand. From starting in a laundry room with no knowledge to the success they have had – it came to down to belief. Believing in yourself and your business through the challenges, the ups/downs, and working in a good relationship with everyone that touches your product. It’s about creating the win-win-win.

At the 14 min mark, we talk about why Bonnie and Mike’s book is dedicated to Randy Arnold, how he supercharged the growth of Barefoot, and what they learned from him.

“One of the best ways to grow a brand is to turn your customers into your advocates…”

How can people find ways to turn customers into advocates by being involved in the community?

• Work with an organization that has a territory that is local to your market. Work with small non-profits or community fundraisers.
• Become part of the organization and collaborate with them – don’t just give or donate samples of product.
• Promote your shared goals together.
• Your brand is a way to help others and make a real difference.

What are the 4 stages of growth?

Startup

This is the phase where you have just begun, probably not making money, and learning lessons.

Buildup

You’ve got 1-2 big customers paying the bills and your company can exist.

Buildout

This is the stage where most businesses fail This is the stage where customer growth has to happen, but many grossly underestimate the cost of sales and servicing your clients You really have to understand all of the costs that go into growing the business at this stage.

Enterprise

Your company has expanded and is solid But now you have divisions of labor and isolation – this can beget a corporate mentality which can lose the entrepreneurial culture where everyone knew that they could still go out of business, so everyone sold the product and had “skin in the game.” The greatest challenge here is losing that entrepreneurial spirit.

What can companies do in each stage to be successful?

Startup

Don’t make the mistake that your product is so good or needed that it will sell itself. At this stage, you have to be more interested in making a sale and getting your product into the marketplace before improving the product. You have to get it out there to get feedback so you can give the market what it wants. Don’t fall in love with your product yet in this stage. Get it out there, learn, make adjustments, and dial it in. The little things matter here.

Buildup

You have to discover who your strategic allies are. Ask yourself, “who gets rich if you get rich?” Those are your allies. You are looking for that one or two “sugar daddy” clients. Mike and Bonnie use the example of connecting up with Trader Joes when they only had 3 stores and growing with them together.

Buildout

This is a tricky stage. You are growing your footprint and sales organization You will run into challenges in this stage – good challenges. Like a client wanting more than you can currently service – so you have to figure this out with your strategic partners and find the ways to deliver. You will feel growth pressure and cashflow issues You should have a cost-accountant for your business in this stage. Someone who gives you to cost of your product or service where you sell it. They will help you understand where you can afford to sell and create cashflow.

Enterprise

You must be aware of the disconnect that can happen in this stage between sales and sales support. They must function with the shared goal of growing sales and making the client happy. Each area needs to help the other understand how they can grow together and collaborate. Do not let your company get siloed or become victim to status management where just because you are a C-level or management level doesn’t mean that you are better or even understand what is happening in the business better than those on the ground.

At the 42 min mark Mike and Bonnie give a few points from their programs on skyrocketing sales and “shelf smarts.”

Why is entrepreneurship so important in today’s world?

Entrepreneurship is the growth engine and innovation engine of our economy. The big companies are acquiring the startups and small companies because they are the ones with the ideas and taking the risks. This is an amazing time to be an entrepreneur.

 

Best Quote: “One of the best ways to grow a brand is to turn your customers into your advocates…”

 

Michael and Bonnie's Misfit 3

1. Start small. Learn your lessons in a small place. Get your act together before you take it on the road.

2. Find a strategic ally. Ask “who gets rich if I get rich.”

3. Keep sales on top. Keep your communication lines open between all areas of your company. Make sure all areas have a healthy appreciation of what each other does.