What Claudio’s Italian Ice Taught me

Written by natsusi
I had the honor of speaking to about 60 students at SDSU’s entrepreneurial society a few months ago, and I was asked to tell my story and offer some advice to the students about starting a business. I relayed this Italian Ice story, and I told them about these important tips that I learned the hard way in the process:
  • Pick your business partner like you’d pick your spouse. There’s a whole other blog just on this and this story accounts for many pages of writing, but just briefly here, I learned that in the future, I would take the decision of choosing a business partner almost as seriously as choosing a spouse.
  • It’s incredibly important to create a business plan. Flesh out your ideas and your business model on paper, take the time to create a marketing plan, and get your numbers in order. Spend the time and effort that it takes to do this work first. If my partner and I had done this, we would have learned very quickly that we needed a lot more money than we had to make our idea profitable. And, I would have even more quickly learned that he was not the right partner for me. He wasn’t interested and wasn’t really capable of making the effort to sit down and write out a whole business plan, and that would have been a clear indicator to me that the partnership was going to be a complete bust.
  • Once you understand your numbers and see if it’s a viable idea, get the right people in place from the beginning to do your legal and accounting work. If you screw this up, it is very hard to fix it later, and it ends up costing an extraordinary amount of time, energy if it’s not done properly. It’s truly worth the money to do these things right the first time around
  • Finally, if the product/service isn’t on the market already, it isn’t always a great sign. Competition is good for any business, and it’s also an indicator that there’s a market for your idea. Occasionally, someone will create on a brand new idea that is totally original and is totally profitable, however, generally speaking, if your idea isn’t on the market in some way, shape, or form, it could be an indictor that people have tried selling it before and were unsuccessful. In my case, there was another East Coaster who had the same idea as us and who tried to sell Italian Ice in a store front in a perfect, busy location in San Diego by the beach. Within 6 months, he was out of business. We quickly learned that people didn’t even know what Italian Ice was, so before we ever sold a cup, we had to educate the marketplace on what the product was and why it was valuable. People weren’t walking into that guy’s store to buy Italian Ice because they didn’t even know what Italian Ice was. It was a completely different landscape than the East Coast. Even though it seemed like it was fit perfect for sunny San Diego, we were going to have to spend a lot of time and money educating people and sampling the product before we were ever going to get sales, and of course, we didn’t have the money to do this, so it was a huge uphill battle that was probably not going to get much easier for us.
Back to the story… We may not have been selling a ton of Italian Ice at the farmer’s markets, but we were delighting our friends at their request by bringing Italian Ice to their dinner parties. Everyone loved our product and used it to make low-calorie, all-natural cocktails. It was a treat that everyone enjoyed.
At this same time, I was still teaching, but that part of my life was quickly sidetracked by the CA budget cuts, and I was laid off from my position at SDSU.
I loved my job and I was pretty disappointed. I went home and made myself an Italian Ice cocktail, and that’s when the light bulb went off. I realized that there was nothing on the market that offered better-tasting, low-calorie, all-natural cocktails, and I knew I could be the one to bring it to market.  I figured it would be much easier than making Italian Ice since I could send it to a manufacturer to make it, bottle it, and label it. I truly thought this process would be no big deal. Again, I was blinded by my optimism and pure ignorance about what it took to create and sell a retail product. My ignorance is baffling to me when I look back on it now. Creating and selling a product to the mass market is pretty difficult, and on top of that, I had picked one of the most competitive markets where people paid big to play. I had absolutely no idea what I was getting myself into
We blindly pushed forward, and we found a manufacturer who would do a short run.
People often hear that it takes 3-5 years to make a business profitable. In our case, it took 5 years just to get the product up and running. I always tell people we spent a year on Italian Ice, which eventually led to the cocktail mixer. We spent a year solidifying logistics, finding the manufacturer, and getting our first pallet of bottles produced. We spent a year rebranding it from its original name, SoCal LowCal to Bare Mixers. In that year, we also make a few big sales that ended up being enough to keep our heads above water, and then we spent another year changing ownership from my original partner to 2 new people. In the final year with my new partners, we increased sales a little bit, but progress was slow, and as a result, I was incredibly frustrated. My hands were tied on any marketing or sales efforts, so I was unable to do much in the way of growing the brand. To their credit, the new partners did help me stay out of bankruptcy and they bought me enough time to keep my head above water and find the right partners for the job. Before they came around, I had no money to purchase new inventory or to pay the bills. In fact our two biggest clients were without product for a month because my original partner failed to put in an order for product and as a result, we lost the accounts. I was able to get them back, but it was a daunting task.
I had no idea what to do, and then three events happened that reminded me that things happen in life just the way they are supposed to. Just when you think everything is a mess and there’s no solution in sight, the universe drops something in your lap that restores your faith and rights your world again. In this case, my parents came to visit and one night at dinner, my dad gave me a gift of $5,000.00. I was so taken aback by this since I had never told him about my issues with purchasing inventory, and although I insisted it was just a loan, he pushed back that it was a gift and he didn’t care what I did with it. This was also a testament to my dad’s intuitive ability to always know what I need and when I needed it. I don’t cry often and I hate crying in front of people, but I cried at that dinner table. I come from a humble background. We were just a regular middle class family and my parents worked very hard for every penny they made. This was a huge sum of money, a sum that didn’t come close to the usual $200.00 I received on my birthday. It validated my dad’s belief in me, and it gave me the push I needed to keep moving forward. I was determined to make him proud and not waste his money. This ended up being just enough money for two more rounds of inventory, and it lasted just long enough until I found new partners.
And so the second event occurred. Through a long, convoluted string of events, I found new business partners. This is how it happened. I hired a sales person to help me push product in San Diego. He then connected me with a distributor who was very interested in Bare Mixers. Of course, I didn’t have the funds to purchase the kind of inventory that he was requesting, so he connected me with an acquaintance of his who as he said, “Was a very savvy businessman who was interested in investing in Bare Mixers.”  I called his acquaintance and we hit it off instantly. Our first conversation lasted about 40 minutes and he said all of the things I had ever wanted to hear someone say about my product and what we could do with it. And, the clincher for me was when we were just about to close the conversation and he mentioned as a side note that he always liked to link his companies to some sort of charitable cause. I was hooked and thought this person would for certain be my business partner. One of my biggest goals in starting a company was to offer a percentage of profits to a charity. I thought about it all of the time, and I wanted so badly to have it make sense somehow for Bare Mixers. Everyone thought it was terrible idea and didn’t see how I was going to possible link a charity with a cocktail mixer, but I was determined to do so. This was the moment that I realized how similar the experience of finding investors is to dating. You meet new people along the way and some of them you click with and others you don’t. When you find the ones that you’re excited about, you’re on a high when you first speak to them and you’re constantly checking your phone and e-mail to evaluate each and every word for any sign of “affection,” trying to gauge if the feelings of connectedness are mutual. Unfortunately, my perfect partner would have to wait as he had some health issues and kindly backed out of any new negotiations for that year. I was disappointed, but I was also confident that my gut instinct about this person was right, and I knew that I would eventually work with him in some capacity in the future. That is a story for later…
As luck would have it though, I did not have to despair for long since the third event came into play. I was quickly introduced to two new people who were interested in Bare Mixers. To stick with the dating analogy, they were not “the one,” but they ended up being the “ones for right now.” I was nearing a desperation state at this point, and I had to think about these guys seriously since my capital, yet again, was depleted. They were aware of my situation, and they made me a deal that haunted me for a few weeks every night when I tried to go to bed. They offered to split the company equally three ways and they agreed to purchase inventory, so the company could grow slowly based on demand, and to pay off the minimums every month, so I would no longer be responsible for managing all of the debt. The debt was a huge stressor for me, and I understood how my precarious situation. I didn’t want to give up control of my “baby,” and I struggled with it for some time. I remember watching countless episodes of “Shark Tank,” so I could learn how deals were negotiated. It was the only thing that could calm me down. I finally signed on the deal, and we got started. Things moved slowly and there were many hiccups because they stayed true to their agreement that they would only pay for inventory and not for my salary or marketing expenses. I continued to work 3 jobs, and Bare Mixers work was always done late at night and without my full focus. At this same time, I had been in a relationship for 3 years with the person I thought I would spend my life with. Because of many factors, namely my business, we were dealing with a long distance relationship. I was hoping in bringing on these new business partners, that I would have the ability to move back East and start focusing on moving my personal life goals forward since I’d have partners on the West Coast, however, I wasn’t ever able to leave, and as a result, my relationship fell apart in the last year.  It went on like that for a year, and in that time, my boyfriend of 4 years broke up with me and all of my jobs fell through.
I woke up one day with a completely different life that I’d had the day before. One day, I was
To say I was upset was a complete understatement. I was a mess. My whole wo
My partner at this time was still engaged in the process although his interest was dwindling by the day. We got in many arguments about who was responsible for what, and I most often felt like I was taking on the brunt of the work and most of the financial burden as I was working 3 jobs to pay off the debt that had accrued in creating the Italian Ice company. Things were getting worse by the minute between us, and he soon bailed and told me to find new business partners.
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