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.
Disrupting an industry isn’t easy.
Just ask Carolina Contreras, who decided to open a curly hair salon in New York City the very same year that New York state legally banned discrimination based on hair texture at work and in schools. The law, which went into effect in 2019, marked a long-overdue step in defining mistreatment based on hair texture or style as racially discriminatory, especially when you consider that Black women are 1.5 times more likely to be sent home from the workplace because of their hair.
“Miss Rizos is a curly hair salon that helps women and little girls love themselves just as they are,” the founder and CEO explained during our Digital Money Moves Summit pitch competition, which awarded a $10,000 grant to the deserving small business owner. “We use not only our curly hair salons but also our social media presence to redefine beauty standards and create a more inclusive picture of what it means to be beautiful. Our goal is to change the world one curl at a time.”
In this installment of From Scratch, Contreras shares the nitty-gritty details behind what it really takes to get a business off the ground, including what it took for her to self-fund the company at the beginning (spoiler alert: all her savings) and how COVID-19 has impacted her brick-and-mortar business.
CREATE & CULTIVATE: Did you write a business plan?
CAROLINA CONTRERAS: When I first started my business, I wasn’t sure what I was doing. I knew we needed a mission, vision, and values, so my little tiny team of two (my best friends, btw) and I took a two-hour car ride to our favorite beach town in the Dominican Republic, Las Terrenas. There, we hashed out all of our ideas and goals for a curly hair haven in a place where our hair wasn’t validated or celebrated. Before the salon, Miss Rizos was a blog, so we used this online platform as an inspiration for our space. I’ve written long- and short-term strategies for the business, but we are just now—five and a half years after opening—actually putting a real business plan together. I say, do it early if you, can because it will help you strategize and reach all of your business dreams.
How did you come up with the name Miss Rizos?
Originally, I named my blog Miss Rizos for a few reasons. First, there weren’t any curly hair beauty pageant winners, so calling it Miss Rizos (Miss Curls) was satirical. I also felt like my curls were adorning my head and making me feel powerful, sort of like a crown, and misses wear crowns at these pageants. The name Miss Rizos embodies this idea that I can make my own rules and define my own beauty.
What were the immediate things you had to do to set up the business? What would you recommend to new founders reading this?
I definitely trademarked the name first so that no one would use it. I registered the website the moment I thought of the name and created a social media handle I thought we could potentially use. Finally, defining the mission, vision, and values of a company is so important, and I recommend people actually spend time doing this because these principles will guide the way and help you make the best decisions.
What research did you do for the business beforehand? Would you recommend it?
I recommend benchmarking within and outside of your field. I love watching videos about digital marketing and really understanding the importance of the digital space in this very digital era. Finally, I would look at all of the administrative details of your company like permits, licenses, and tax information. Don’t let this stuff intimidate you from starting, just start!
How did you find the first hairstylists that you partnered with? Did you have any bad experiences? What did you learn and what advice do you have for other founders looking for trustworthy partners?
Omg, I’ve had my fair share of terrible experiences with business partners. USE CONTRACTS! Make sure agreements are legally binding and that you are incredibly transparent with all of the terms. Hire slow, fire fast. This means take your time hiring, do several interviews, and invite other people in the team or in your community to do interviews with you. Finally, hire and fire based on the values you defined for your company. It’s nothing personal, if someone doesn’t align with the values of your company, they will bring down team morale and potentially ruin a relationship with a client.
How did you fund the company?
I used a lot of my savings, actually all of my savings! I also pre-sold appointments and apparel using crowdfunding platforms. I have bootstrapped mostly, but a year ago, we acquired a new partner who also an angel investor. Again, this person’s values aligned with ours and our relationship has been incredible.
How did you determine how much to pay yourself?
I still struggle with this so much and hope to be able to make peace with it soon. I actually didn’t pay myself until like two years in. It’s really a symbolic payment more than an actual salary. I do have the business cover a lot of my expenses like phone, transportation, etc., and this is super important because it allows me to live a decent quality of life and be more present for my business.
I say, if you’re just starting, make sure you have savings that will support you for three to six months, so that you’re not putting a financial burden on the new venture. Then, it’s definitely important to create a salary or arrangement that will allow you to have peace of mind and concentrate on running the company. Finally, I say create a plan to get to that dream salary and work your way there.
How big is your team now, and what has the hiring process been like?
We started with the team of two, and now we are a team of nearly 40 people. As I mentioned before, hire slow, fire fast and let your values guide the way. I had lots of experience hiring from being a project manager in the nonprofit world for many years. Interviews should be a two way conversation and not an interrogation process.
Did you hire an accountant?
I hired an accountant late in the game and it cost me thousands if not hundreds of thousands! Get a CPA early in the game, learn the taxation system in your state and country. Get an online bookkeeping platform and keep all receipts and the books organized. When you can afford it, get a financial advisor who has experience with small businesses and can help you make sure your prices are right and identify what new strategies need to be implemented. Learn early what your point of equilibrium is, this is how much you need to make to break even. This will help you come up with a number of what you need to make a month, a week, a day, and even per hour. Be comfortable and in control of the numbers. It will empower you to make better decisions.
What has been the biggest learning curve during the process of establishing a salon business?
Definitely human resources. It’s not easy putting a dream team together.
How did you promote your company? How did you get people to know who you are and create buzz?
I created a community before I had a business and this helped tremendously. I also created a lot of buzz surrounding my activism, which got me a lot press. Social media has been instrumental, but more for my community-building than the actual random reach. Create good free content, give value to your potential clients. I’ve had a marketing team since the beginning. She worked for free for a while, now she owns 20% of the company. Hire a publicist as a consultant even if just for an event to get you in the media or for one to three months, if you can’t afford it. Marketing is important, but not more than the quality of what you’re offering and the customer service experience. Word of mouth is GOLD.
Do you have a business coach or mentor?
I didn’t for years. Get one when you can afford it, in the meantime there is Youtube.
How has COVID-19 impacted your business operations and financials? What tactics and strategies have you put in place to pivot and ensure your business is successful through this period?
We had to close our stores. We pivoted by moving sales online and doing online consultations. We were very intentional about applying to as many grants and financial opportunities as possible, including pitch competitions, and I am grateful to have won the pitch competition for Create & Cultivate.
What short-term changes will be crucial to your business strategy long-term post-COVID-19 and what plans are you making for when we get back to “normal?”
We are definitely going to invest more on our online e-commerce experience. We plan on making sure we are generating revenue in lots of different ways and not just the salon experience.
What advice can you share for small business owners, founders, and entrepreneurs who are also reeling in response to COVID-19?
APPLY to everything! See what aspects of the business can be done online. Create a new product or revamp an old one that could be sold online. Give your community lots of free important content, with this you’re communicating how important they are to you. Check up on clients. Call your landlord and let them know what you’re doing to pivot and think of ways to negotiate the rent payments without being defensive. Honey pulls more bees.
For those who haven’t started a business (or are about to) what advice do you have?
Be curious. What do you love doing and would do for free because you love it so much? Now find a way to make this, or an aspect of this, your business.
What is your number one piece of financial advice for any new business owner and why?
Scale slowly, not too slowly, and listen to your clientele. Don’t get into a bigger store or buy a ton of inventory you don’t need. Cash is king, so don’t just go crazy on making your overhead bigger if you don’t know how it’s going to get paid. It’s not magic, it’s strategy and planning. Robin Sharma says vague planning equals vague results. Strategizing and planning in advance, allows you to make the best decisions about growing your business. Take risks, but smart risks.
If you could go back to the beginning with the knowledge you have now, what advice would you give yourself and why?
Get a CPA and make sure to always use contracts!
Anything else to add?
Being a business owner is scary! There are so many responsibilities. So it’s important to have purpose and define it so that when things get really hard, you can always visit that “why.” Insecurities, doubts and fears will always exist, don’t let them paralyze you. Do it afraid. The worst thing that can happen is that the business fails, but you’ll learn in the process and will gather tools, resources, and networks to do it better the next time.
We’re dedicating proceeds from our Digital Beauty Summit ticket sales toward a $10,000 grant for a small business owner in the health and wellness industry, including beauty, health and wellness, and self-care. We’ll be selecting three finalists to pitch their businesses LIVE to a panel of judges for a chance to win the grant. Want in? Click here to check out the official rules and apply by Friday, July 17, 2020, at 11:59 PM PDT.