Friday, February 8, 2019

Need help from an investor to launch your perfume?

Here's how to manage the money men!
     Look at this situation. You have a well developed concept for a perfume, the scent, the packaging, and the market. You've researched it. You've put hours into the planning. Everything is ready to go -- but you don't have money. It's the typical starting point for many successful promotions.

    Because you have all the details worked out (all except for the money!) you think if you could just find a few people with money, the perfume could be produced and marketed and everyone would make money. Sometimes it does happen like this, on nothing more than a handshake.

    But not always. Issues arise. Who controls the accounting? How are the books kept? Who selects the vendors? Is anyone getting kickbacks for placing orders? Are legitimate profits being sucked out of the business by tricky invoices? Do you have the right and the power to see how your money men are managing the financial side of YOUR business? [I could go on and on about this -- through experience!]

    The sad result that (really!) can happen is that your perfume sells well but, due to some major ignorance on your part, in the end you are left bitter, broke, and sorry you ever got involved with these people. It doesn't have to be this way.

    Over the last week I've been giving these possibilities quite a bit of thought. My "entry point" for this meditation was a new look at a celebrity licensing contract I've been offering for sale for a number of years. My ad never attracted many buyers and I thought a little editing might spark up demand. The big question was, "who cares about what's in a celebrity licensing contract?" I doubt if I'll ever meet a celebrity much less work with one. If I don't expect to work with a celebrity, why should I think you might?

    Then it struck me. Remove the celebrity (referred to as "OWNER" in the contract as the celebrity "owns" the rights being licensed) and remove the marketer (referred to as "LICENSEE" in the contract) and the entire contract can be seen as a negotiated arrangement between a creator (like yourself!) and a marketer (like your potential investors!). Or, to spin it the opposite way, as you, the marketer, and your investors "the creators" (they create the possibility that your project will fly.)

    Now this contract becomes exciting! It's a battle of wits, each side trying to protect their interests while extracting as much as they can from the other side. If you bring investors into your project your negotiations with them will be similar. Consider just these few issues --

    - Who will have the final say over development of the fragrance, its production and packaging? You or the investors? (Get it in writing!)

    - Who will have the final say over advertising and marketing decisions? You or the investors? (Get it in writing!)

    - Who will select the vendors to be used? You or the investors? (Get it in writing!)

    - Who will keep the books and will you and YOUR accountant have full access to them? (Get it in writing!)

    - Who will own the trademark (the name of your perfume) after the promotion has run its course? (Get it in writing!)

    - Who will be responsible for any taxes owed? Any customer service problems? Any queries from government regulators? (Get it in writing!)

    - Will the venture purchase product liability insurance? Will it protect you? (Get it in writing!)

    The list goes on -- for 42 pages.

    In fact, this celebrity licensing contract is really about covering all that must be done right and all that could go wrong in a marketing venture between two parties operating at arms length. If you bring investors into your project be careful not to assume "we're all in it together."

    I know when you are starting out, getting attention from someone with money can be awe inspiring. It's easy not to want to rock the boat and just allow yourself to be led. But this celebrity marketing contract gives you a huge bank of knowledge you can use to guide your investors and protect your own interests! This is what got me excited when I re-read the contract. The celebrity's fame was forgotten.

    Hope I haven't said too much. I could go on and on on this topic.

    Thanks for reading another of my messages!

    -- Phil


Friday, January 25, 2019

"What will it cost me to produce my own perfume?"

"What will it cost me?" It's usually the first question on people's minds when they think of creating their own perfume and the question is important. But the really most important question that must be asked is "How much can you make with it?" If the potential for great profit is there, the real question is "How much can I spend per bottle to make the profit I envision?" Now the discussion begins to get realistic. If the potential is there, the question becomes, "Where can I find the money?" You might not have to look very far.

    Before having the success with perfume I've documented in Creating Your Own Perfume With A 1700 Percent Markup! I had two other encounters with perfume, one of which I would just as soon forget. The other, until recently, was almost forgotten.

    In the almost forgotten episode I was a new, inexperienced employee in a company that was making money selling perfume among the many other product of various natures they were marketing. The owners were promoters. Perfume was just another promotion. They made their money with perfume and then went on to something else -- towels, jewelry, electronics -- then sold the company and briefly retired.

    My next encounter with perfume was something of an embarrassment. I was riding high on a string of successes with other products and someone suggested we do a perfume. "Okay," I said, "Put it together and let's see what happens." They put it together and I butchered the advertising -- horribly. I don't recall what we spent to produce the perfume but it was far less that then $15,000 I flushed down the toilet on advertising media and production -- without producing a single order. Why? Because I was arrogant, I thought I could walk on water but the truth was I didn't have a clue about perfume, the market, or the media. I thought it could all be just one big (expensive) ad. I thought it would be easy. A lesson was learned.

    But then, perfume again and this time success. For this adventure, documented in Creating Your Own Perfume With A 1700 Percent Markup!, our budget for the production of 1,000 bottles of a men's fragrance was $2,000. Our cost per bottle came in at under $1.50. We advertised the fragrance at $26.95 and sold out out entire production. Advertising expense was minimal as it only involved producing a page for our own catalog.

    If you asked me what it would cost you to produce a perfume today my answer would be "Anything from a thousand dollars or so up to ... the sky's the limit." But the real issue is your market. How much are you going to sell? If you can sell a lot you can spend a lot; if your market is small, to be profitable your perfume has to be produced on a budget that can make it profitable in that market.

    So here's my advice. If you want to be involved in perfume, study how it is made, what goes into. Then study your potential markets. Can you spot a marketing opportunity, and do you have a marketing strategy that will work with that market.

    Get your ideas together. Estimate how much perfume you will need to serve that market profitably. Then start to calculate how much you can spend per bottle to address that market profitably.

    Now the real fun. Developing a product -- your perfume -- that can be produced at an acceptable cost. The hard work, the planning, can be done without spending a penny. But it will involve some serious thought.