Value Added: Making Mistakes
By Thomas Heath
Then there was the phase (don't laugh) where I was going to get rich buying early American rare gold coins. My wife put the kabosh on that.
But I admire entrepreneurs, both those who succeed and those who just try. Kelly Harman succeeded in building a Manassas-based marketing firm called Zephyr Strategy for technology companies, but her venture into monthly-delivered desserts -- with the tantalizing name of "Spoonful of Sin" -- fell flat.
I called Harman and she agreed to do a post-mortem on what went right and what went wrong with "Sin."
The name came to her after a big Italian dinner -- martini, caesar salad, pasta -- in New York City a few years back, when all she wanted was a small dessert and some coffee to top it off. The restaurant was offering giant-sized desserts only.
"I came out of the restaurant and I said to myself, 'All women want is a spoonful of sin.' I fell in love with the idea of the name and the brand 'Spoonful of Sin,' " said Harman, 46, of Manassas.
"I wanted to make a business around the brand."
And that, said Harman, was her first mistake because. She said she should have a good product in hand before worrying about the clever marketing. She even imagined selling the company before she had delivered her first dessert.
"I knew and felt like I could build a brand, not a huge empire, but something that was attractive for acquisition by somebody else," she said. "That was the wrong way to go about it."
Harman did some homework, attending food and candy shows, networking with women's business groups, talking up her idea in her monthly wine group. Not shy, she would prowl around bakeries and then follow customers out the door, peppering them with questions on what they would pay for desserts. She learned that $25 was the tipping point between what people would pay for a monthly dessert.
"People who have business ideas are always afraid to share that idea because somone might steal it. That's not the case. I shared it a lot and got a lot of ideas that way."
People warned her not to make the desserts herself. Be a middleman, they told her. You don't want the headache of building a kitchen, obtaining a health license, stocking food inventory.
Harman eventually landed on the idea of a Sin of the Month, which would be a specially made dessert delivered to a subscriber's office for $24.95 a month. Customers would be primarily individuals who wanted to give a gift to a friend or loved one. Eventually, Harman envisioned a big customer base in the corporate gift market.
The monthly dessert would be made by a Washington area pastry chef who would sell it to Harman at cost of materials ($6). The chef and his or her establishment would get free promotion from Harman's company, including a brochure delivered with the dessert and a photo feature on the Sin web site.
But the chefs were a problem. "Here is what we didn't anticipate: Pastry chefs are very, very, very busy and getting their attention and getting them to commit on being a Sin of the Month was a lot harder than I thought. We had one chef who said it was a great idea and he backed out at the 11th hour and I had no sin. It was panic time. That month we showcased wonderful desserts from a small food artisan shop in Atlanta."
In retrospect, Harman said she should have done more research.
"If I had taken more time to talk to the pastry chefs and really get a feel for what the pastry chefs were interested in, it would have helped. When it came down to the chefs being committed, it wasn't enough to maintain inventory."
Starting in October 2007, Harman and her helpers would pick up the desserts from the chefs every Tuesday and store them in the refrigerated space she rented. She would package them herself and have two unpaid assistants help her ship the desserts to customers, usually at the office. They only shipped on the East Coast or couriered locally because of the shipping cost. She promised the helpers a cut of the profits if the company eventually took off. The customers came from Google advertising ($200 a month), friends, networking, word of mouth.
They even had magnetic signs created that they slapped on their vehicles: "We could be delivering your sin next," said the signs, which included a photo of a dessert and the name of the company's Web site. But there was one glitch; the signs kept getting stolen.
She quickly learned that she was spending more time on the dessert business, packaging and delivering the goods, and not enough time on her marketing company, Zephyr Strategy.
"It was very labor intensive," she said. "I couldn't afford to hire anyone else to do the packing until I could get more subscribers."
And costs kept accruing. There was $5,000 for the trademark rights to the name "Spoonful of Sin." A booth at a food show in the District cost $3,000. A launch party in July 2007 in downtown Washington ran nearly $5,000. There was insurance, a trip to a show in New York, promotional brochures, packaging, payment to writers for advertising copy.
Her advice to would-be entrepreneurs: "Have more than three times the amount of money than you think you need."
Sin peaked at around 175 customers, which brought revenues of just over $4,000 a month. But that wasn't enough to cover costs, so Harman subsidized the business with $500 a month from her own pocket.
"We were breaking even only because I worked for free," Harman said.
When the economy started to slow last summer, cancellations started pouring in. Subscribers dropped to around 90 a month.
The final dessert -- which was a small cake and truffles -- went out last August.
But don't feel sorry for Harman. She still owns the catchy trademark Spoonful of Sin. And the Web site is still up and running. She wants to resurrect the brand with another product.
How about hot dogs from Syracuse?
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