Kendra Scott knows the ups and downs of starting a small business. She launched her first venture, a store called The Hat Box, when she was 19. Though she had to close her doors five years later, she says, she received a crash course in business management along the way. She also made an important discovery: Her homemade jewelry she sold in the store sold much faster than her hats.
She soon began making jewelry in her spare bedroom and her side hustle grew into a namesake $1 billion brand. Even though her business isn't so small these days, Scott still deals with entrepreneurs, investing in small businesses in her native Austin, Texas, and vetting up-and-comers as one of the investors on the ABC show "Shark Tank."
Grow caught up with Scott ahead of the inaugural Women's Summit held by the Kendra Scott Women's Entrepreneurial Leadership Institute at the University of Texas. Below, she shares three of her top tips for success.
Wondering whether your side hustle or business idea has real potential? Make sure you're offering something unique that can stand out, says Scott. "You've got to be disruptive. You can't be doing what everyone else is doing," she says. "So one of my first questions is, 'What's going to differentiate you? What makes your product or your idea special?'"
Scott cites Austin-based Tiff's Treats, a cookie company that delivers still-warm cookies to customers' doors, in which she invested earlier this year, as a disruptor. "They created mini distribution centers that allowed them to deliver warm cookies to people's homes and businesses in under an hour," she says. "It was kind of like, wow — like when FedEx said they were going to do overnight."
Video by Stephen Parkhurst
There also needs to be "white space" for your business, says Scott, a thirst in the market for a product or a need that has yet to be filled. Scott recently invested in Waterloo, which is hardly the first flavored sparkling water brand on the market. But the brand fills a niche, says Scott, as a "craft" producer that promises more vibrant flavor and effervescence than competitors.
Above all, Scott says, if you want to attract investors, you'll have to prove you're passionate about your business. "I love the entrepreneurs who did this because it mattered to them, or because it mattered to someone they loved, or they were frustrated," she says. "The ones who are doing something just because they think, 'Oh, I think I could make some money on this'? They're probably not going to be able to sustain."
Scott's number-one piece of advice for small-business owners: You don't have to do it all by yourself. "The most important thing that I did to help me through my journey was always having really good mentors," she says. When Scott was the sole investor in her business, she nevertheless built an advisory board, hoping to rely on the wisdom of more experienced businesspeople.
And even as her business has skyrocketed, she continues to lean on mentors for advice. "I wake up every day, and I'm running a company bigger than it was the night before," she says. "I still have amazing mentors who have run businesses bigger than mine, who I pick up the phone with and say, 'Hey, this is happening. What are your thoughts? What do you think I should do here?'"
And if you don't have a business role model in your life, go out and find one. Even a complete stranger may be happier to help than you think, she says.
"I think when we're starting a business, we think, 'Oh, they'll never talk to me.'" she says. "The worst that can happen is somebody says no. You haven't lost anything."
Scott is the first to admit that she made plenty of missteps on the road to fame and fortune. "I can tell you lots of mistakes I made about money; we wouldn't want to have time for all of them," she said. One stands out to her, though. The biggest landmine for business owners to avoid, she says, is debt.
"I would say the biggest one is becoming overleveraged. That's scary," she says. "When the recession hit, I had a very big line of credit, and they called my note." That means the lender demanded she repay her debt then and there. She didn't have the money. Luckily, another lender bailed her out.
"I was really fortunate that a Texas bank took that note on for me," she says. "If they hadn't, you and I wouldn't be sitting here today. So doing your best not to get overleveraged is really, really important."
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