Thursday, April 26, 2007

Who’s got money for dik?

This is the second entry in a series of entries from dik founder Marcus:
It’s pretty cliché to say that money makes the world go around, but for anyone who has ever started up their own company, you know that is as true as it gets! We’re no different here at dik, and we’ve been careful with our cash right from the start.

Despite that, there are major expenses you need to incur before you get anywhere close to selling product and recouping costs. Registering the business and doing the trademark search takes money; the lawyer needs to be paid for his work. After that, if you’re like us and place a premium on how you present your company, you need to start thinking about the website. So at that point a web designer comes into play.

And of course there are lots of little things that add up fast; getting a mailbox, getting supplies, registering domains and email addresses and such, designing product, marketing ideas, photoshoots, models and the list goes on. But none of it compares to the manufacturer and their costs (hundreds of thousands as a ball park for minimum orders with the big players). Then of course there’s your marketing plan....

So, what do you do? That’s a lot of capital needed to get going and the average person probably doesn’t have it. Well it’s an interesting experience! Luckily for us, we have a bit of a reprieve because our export guy in China is working hard on getting us payment concessions to make the orders more affordable. But despite that, there are still huge numbers tossed around.

The easiest answer for quick money is find a venture capitalist. But be careful because you are swimming with sharks. No offense to them, because they simply have a job to do, but their goal is to make as much money from your company as quickly as they can. So really take the time to research what all the different options are and what the VC is really asking you to give up. They’ll all want a piece of your company (large percentages, don’t be surprised when they want a 50% stake), so you need to know how much you’re willing to give.

We’re really close to finalizing something. But having said that, if you’re interested in talking to us about opportunities, let’s chat! Because after you’ve secured manufacturing, the cost of marketing is huge. Right now that’s what we’re ironing out. You’ve already seen the fruits of that labour on places such as this blog. However, you’ll be seeing a lot more dik in the near future.

The dik crew here knows exactly what we’re willing to concede to an investor. We know they want to make money. That’s fine, we want to make money off their investment as well. And since getting a loan from a bank for a new company is nearly impossible (given that the company has no credit history – a bit contradictory for those in government saying they want to endorse small business growth), we’ve turned to VC’s.

It’s been a great experience and will allow dik to be what we want it to be. But if I have any advice to give it’s that you should never rush a decision and know exactly what you are willing to sacrifice to reach your goal.

-Marcus

3 comments:

Anonymous said...

"Dik" has to be the dumbest name for an underwear brand I have ever heard. Why on earth didn't you spend more time researching this aspect? I for one would never wear underwear with "Dik" written on it. Not off to a very good start, I'm afraid.

Marcus said...

Hi there. Thanks for your opinion, however, we did research it with multiple segments of the market. If I were to update that spreadsheet, I would have to put you as the first entry under 'total dislike'. But everyone is welcome to their own opinion, so thanks for yours.

Marcus

Anonymous said...

I agree with Marcus that launching a new brand of men's underwear certainly has its challenges! We will be launching our new brand in 2008 and have many fascinating stories to tell about the business.