Why the Founder of KOLLO Ditched Her 20-Page Business Plan Almost Immediately

December 10, 2021
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We know how daunting it can be to start a new business, especially if you’re disrupting an industry or creating an entirely new one. When there is no path to follow, the biggest question is, where do I start? There is so much to do, but before you get ahead of yourself, let’s start at the beginning. To kick-start the process, and ease some of those first-time founder nerves, we’re asking successful entrepreneurs to share their stories in our series, From Scratch. But this isn’t your typical day in the life profile. We’re getting into the nitty-gritty details—from writing a business plan (or not) to sourcing manufacturers and how much they pay themselves—we’re not holding back. In this edition, we chatted with food and beverage entrepreneur Nicole Dean about how she started her luxury tea brand, KOLLO, and the important lessons she’s learned along the way.

Did you write a business plan? If so, was it helpful? If not, what else did you use instead, and why did you not take that approach?

Coming from business school, I felt compelled to create a laughably long and detailed business plan that I have never referred to or used since. My experience has been that potential investors and partners are much more interested in a well-made, succinct, and straightforward slide deck, rather than the old-school, 20-page business plan. 

With that being said, I do believe that business plans are a great way to help organize your thoughts and bring to light any glaring holes in your go-to-market strategy. If you do not know where to begin, there are so many great online business plan tools such as LivePlan that walk you through each section, which is very beneficial at any stage of your business.  

How did you come up with the name KOLLO, and what are some of the things you considered during that process?

I have my older brother to thank for helping me choose the name KOLLO. I had been tossing around several “California-inspired” name ideas, all of which my brother vetoed as being too “forced” feeling. One day he asked me if I recalled being nicknamed KOLLO as a child by a family friend, which I did but had forgotten about over the years. He said that he always thought that would be a cool brand name, so I immediately considered it. 

From there, I wanted to make sure that the name did not have a strong existing meaning or association in the English language, as well as was not already trademarked, which is an important consideration. I love that KOLLO is meaningful to me and my family, but not a direct derivation of my name. I also made an early decision not to add “Tea” to the brand name, as this could prove to be limiting if future product line extensions are made outside of tea. 

What were the immediate things you had to take care of to set up the business?

I relied almost exclusively on the California Secretary of State website, which has a great section for starting a business and was found by a simple internet search. The site provides links for all pertinent paperwork and fees and was the only resource that I used to form the initial LLC, secure the business name and register with the state. It can be overwhelming to think that you can start a business from your couch, but I did it without any outside assistance and it just takes patience to read all of the instructions carefully. 

From there, I had zero idea how a person purchases and builds a website or social media channel, so I began asking friends who ultimately led me in the right direction and made introductions to their network. We are so lucky that so much information can be accessed via a simple Google search nowadays. I recommend that if you see other brands that you like, find out who designed their site or marketing materials and start there. I found my web designer who happens to live in Australia this way, as well as our brand photographer who worked on another local brand’s look-book. 

What research did you do for the brand beforehand? Would you recommend it?

I did LOTS of market research prior to launching, conservatively about one and a half year’s worth prior to launch. I had the idea that someone needed to satisfy a segment of the ready-to-drink tea market that I had not seen being met, but I was also not bold enough to enter a space with lots of existing competition. This meant reading lots of beverage market news and trend forecasts, which helped reinforce the opportunity that I felt intuitively. 

The biggest hurdle was that I had zero background in food and beverage, so I had to painstakingly research the regulations of producing a beverage. This was a very time-consuming process but allowed me to hit the ground running once things started lining up. As the saying goes, “measure twice, cut once,” and I think taking so much time researching the market beforehand, allowed me to launch with a well thought out product, rather than one I would have to reiterate many times after launch. 

How did you find the production facility that you use? What advice do you have for other founders?

In my case, all roads lead back to Google. Once I realized that I wanted to make the product myself rather than use an outside contract manufacturer, I needed to find a commercial kitchen space for rent. I knew that building out a facility was not financially possible or logical considering I had no product to speak of, so I started looking for commercial kitchens in the Los Angeles area. 

I was extremely lucky to come across a great facility called Amped Kitchens, which provided yearly private commercial kitchen spaces of various sizes and is pre-outfitted with permits and staff to help you upon move-in. While each business has its own private kitchen, there are many shared resources such as staff, shipping and receiving, mailboxes, etc. Working in a space with other food producers has been invaluable in terms of shared knowledge, and helped me feel comfortable starting out by myself. 

I have learned so much from all the other brands at the facility, and urge others to seek out workspaces where you can learn from others at similar stages of business if possible. I would also advise speaking to as many other similar companies and founders as you can to see what has worked or not worked in terms of using outside manufacturers. Do not re-invent the wheel if you do not have to, try to learn from others’ mistakes. 

Did you self-fund the company? Did you raise seed money or initial investment money? What would you recommend? 

I have self-funded my company thus far, but am currently working on our first round of investment. There are advantages and disadvantages to bootstrapping, but ultimately I have been very happy I have done so. I am a firm believer that you should know every part of your business inside and out, so I have been my own production person, delivery driver, accountant, and CEO for the first two years of business. If you have the resources to self-fund, it is a great way to learn to do a lot with a little, but it is restrictive in terms of being able to scale quickly. 

I personally have always been very sensitive to the trade-offs of taking on partners in terms of investors, which is why it has taken me this long to do so. I wanted to make sure that I had a solid product and business before I asked others to take on the risk and/or opportunity depending on how you look at it. So many businesses need constant infusions of capital to scale, and beverage is no different. In order to grow and provide our products to as many people as possible, in our case outside investment is necessary. 

What is your #1 piece of money advice for new entrepreneurs? 

No money is “free,” and it is worth being thoughtful about who and why you are choosing to invite in as investment partners into your business. Know what level of involvement your investors are expecting once they invest, and decide if you are comfortable with that. Some investors want to take a back seat and let you do your thing, some want intimate involvement in the activities of your business. I have heard many stories of founders taking money from investors that required so much of their time and energy that they feel it was detracting from the business itself. 

Do you pay yourself, and if so, how did you know what to pay yourself?

While self-funding I have not taken a salary but will include it as a line item in any subsequent fundraising activities. I started with a very low salary number that I thought was reasonable based on the stage of the company and added in performance-based milestones. I feel this is a way to compensate me for my work, but also show investors that I value their contribution and should be rewarded relative to the success of the business as a whole. 

Image: Courtesy of KOLLO

How big is your team now, and what has the hiring process like? 

We are a team of two full-time employees and about seven part-time contractors. Living in Los Angeles allows access to amazing talent, many of which work as independent contractors for several companies, rather than full-time for one company. This has been a great arrangement for us being a small company and allows for us to work with high-level partners, that we likely could not afford full-time or would not make sense at this stage to do so. 

Referrals and recommendations have been instrumental in building out our team. For example, my attorney is a friend from my previous life at a biotech firm, one of my marketing team is a family friend, and two others were introductions via my husband’s co-workers. One of our main objectives in the upcoming fundraising round is to allow for the hiring of additional full-time in-house employees, which I am really looking forward to.

Did you hire an accountant? Who helped you with the financial decisions and setup?

Quickbooks is a fantastic way for small businesses to do much of their own accounting, invoicing, tax filings, and payroll. I highly recommend it for anyone starting out and we continue to use it for our day-to-day activities. As we’ve grown, it has been my goal to outsource tasks that begin to require more of my time that could be used to grow the business, so we do now have an accountant. Finding a good accounting and bookkeeper is also a great way to help think through your business’s finances on a more strategic level. Similarly, investors will want to see that you have a good handle on your finances, as well as what you plan to do with the funds. 

Looking back, I would have enlisted the help of a bookkeeper sooner to free up more of my time, but I feel fortunate that I now understand all the moving pieces involved in our accounting, payroll, and taxes so that I can have more effective conversations with our accountant about the status of the business. 

What has been the biggest learning curve you’ve faced in the process of establishing a business?

In our case, the FDA regulatory requirements and local permitting surrounding the food and beverage industry is a huge undertaking and ever-evolving, so that has been a huge learning curve. Being organized and keeping good records of permits for example is of the utmost importance, and failing to do so could really negatively impact our business. Keeping good records from the beginning has helped me feel organized and in control, which can be as simple as keeping separate folders for each part of your business. You can always clean up the folders content periodically, but at least you quickly know where to find what you need. 

What do you wish you could go back and tell yourself when you were first launching your business? 

There is a solution to (almost) anything, just be patient! We had an instance early on where I spent months and months trying to find a bottle cap to fit the bottle we had purchased. I foolishly did not realize that our bottle supplier did not also supply caps, and only after purchasing thousands of bottles realized that the particular cap used a European thread that was non-existent in the US and impossible to find in Europe. After stressing for months, I finally found a manufacturer that made a custom cap for a fraction of the price I would have encountered had a found what I was originally looking for. Trust the process. 

Can you recall a time you failed and how you recovered from it and turned it into an opportunity?

Early on, we were approached by a large European luxury brand that wanted to do a collaboration. Seeing as we were just starting out, I jumped at the chance and was willing to spend as much effort as necessary to make the deal work. In the end, between two trips to Europe to discuss the deal and countless months trying to negotiate, I ultimately had to walk away from what felt like the opportunity of a lifetime. 

Knowing what I know now, I believe had the deal gone through, I would have financially run my business into the ground and taken away valuable resources that needed to be dedicated to business in the U.S. I learned an incredible amount about the art of negotiation with large companies, as well as when to walk away and for what reasons. Having that experience has given me the confidence to approach partnerships that previously seemed “out of our league” and have a much more level head about the need for both sides to benefit equally without compromise

How did you get retailers to start stocking your product? Were you told no? How did you handle that rejection? What advice can you share?

Once we had product samples, I personally would, and still do, visit target accounts and pitch them on the product one by one. No one can speak to your product better than the founder can, so I think it is important to get real-time feedback personally so that you can properly help educate sales support in the future. 

Being told “no” is all part of the business, and it can be very emotionally taxing in my experience. It is easy to conflate feedback about your product as feedback about you personally, as you have put so much time and effort into creating a brand. My biggest piece of knowledge is that sometimes a “no” has nothing to do with you or your product, but outside circumstances. Countless times I have anguished over not getting placement in an account, only to hear later that the business was internally facing their own struggles and went out of business as a result. There is a HUGE world out there, and products will find their home. Find accounts that truly love and believe in your product and keep knocking on doors!

Do you have a business coach or mentor? How has this person helped you, and would you recommend one? 

While I do not have a formal mentor or business coach, I rely heavily on my co-workers to help guide my path and strategize. My co-workers are the experts in their field and many have been with KOLLO from its inception. They know how my brain works, where my moral compass is at, and how to help get me back on track when I feel like I am floundering. Having a network of individuals within your same industry that you can call on for advice is also a great way to share resources, ideas, and struggles. 

Family and friends are also instrumental because they help ground me and remind me of the bigger picture. They might not know the details of your business, but they know where you want to go and why. Having one or two people in my personal life that you can provide honest and open feedback has been more valuable at keeping me motivated than I believe a business coach could at this stage. 

How did you promote your company? How did you get people to know who you are and create buzz? Did you know anything about marketing before this venture?

We do a mix of traditional PR outreach and events, as well as gifting and partnerships with like-minded brands. I am a big fan of gifting, as I believe the more people who have the opportunity to try your product and take it home with them, the better. I am also a fan of non-traditional partnerships, meaning partnering with a brand or opportunity that does not necessarily immediately seem like a fit. For example, conducting an event with a luxury car brand rather than a restaurant or bar. Some of our more unusual partnerships have been our best. I am my own target customer, so I try to work off intuition about what speaks to me in terms of opportunities, events, and account targets.  

What is one thing you didn’t do in the setup process that ended up being crucial to the business and would advise others to do asap?

Ask for help early on. When I am stressed, my natural tendency is to isolate, which has always worked against me and slowed me down. Ask friends for introductions, network with other entrepreneurs in your sector at conferences and events, just ask for help. More often than not, people want to help you avoid mistakes and alleviate stress if they can. If all else fails read books, so much information is at our fingertips, and no need to re-invent the wheel. 

For those who haven’t started a business (or are about to) what advice do you have? 

If you are a career changer like myself, I suggest taking the time to really research your market, the idea, and how your concept is positioned to be better or different. It will help build confidence to speak about an industry you might know little about at the start. 

Most importantly, just have the courage to try! There is likely someone else in the world with the same idea that will not have the courage to give it a go, so just keep going one foot in front of the other. You will have bad days, but if it was supposed to be easy everyone would do it.

Images: Courtesy of Nicole Dean and KOLLO

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