The 4 Big Mistakes Made in Launching Green Businesses

By Dennis Salazar
Created 2012-02-03 04:00


This month we are celebrating the fifth anniversary of launching our green packaging company. There were many times, especially in the first year or two when my wife/partner Lenora and I were not sure we would ever make it this far and questioned the decision we made of quitting two lucrative jobs we were extremely good at to become inexperienced entrepreneurs. (Please note, we made that decision before we and most of the country realized the country was on the brink of an economic meltdown….)
Yet we have survived five of the toughest economic years our country has ever seen, a softening of the green market and mostly some very bad, rookie business owner decisions we made. Keep in mind, in February of 2007 my wife and I had nearly 40 years of combined packaging industry experience, which included many managerial positions but neither of us had ever owned and operated our own business.
We have been fortunate to teach as well as to learn much from the many other green companies we’ve served and have worked with so it is in that spirit of community; we share some of the mistakes we made in mostly chronological order:


1. A Rose by Any Other Name May Not Actually Exist
We have learned a lot in the last five years but one of the most important things we’ve learned is the importance of having a good company name, and domain name, as well as how they need to work together for SEO purposes.
Today, it’s all about being found on the internet by people and search engines, and having a popular search name for our company and web domain is a crucial part of that strategy.
Like many new entrepreneurs, we were thrilled to see our name (Salazar Packaging) on the front door and on our website but what we didn’t realize at that time is that both parts of our company name are terrible SEO search words. Not only are they not specific enough, they really don’t communicate what we do.


Also, people are unlikely to search “Salazar Packaging” unless they already know who we are. We would have been much better off if we had incorporated key and popular search words such as green packaging, sustainable packaging, or eco-friendly packaging into our names. Five years ago company names with those key words were readily available, and good search term domains could be had for less than ten dollars.


We work with a wide range of new companies and truly enjoy doing so. They are typically enthusiastic, eager to learn and appreciative of the help and guidance we can provide. Quite often, however, they have company and domain names that are personal and/or cute but rarely mean anything to anyone other than their immediate circle. We’ve learned that Google does not reward being clever.


2. Bandwagon Hoppers are Never in a Position to Help Push
Of course it is flattering that anyone shares your dream and vision and is eager to get in on “the ground floor” but, personalities aside, adding staff and cost prematurely is never a good idea. The situation can only become more complicated when it is friends and family who are eager to hop on board.


The fact is, most people believe entrepreneurial success will come easy and quickly and few have the patience or fortitude it takes. When you are “all in” you need people who are equally vested in terms of heart. Building your own business is a lot like parenting in that the effort you put in now may pay off, but it is likely to be years before you enjoy a positive end result.


In addition, there truly are not a lot of advantages of being a new start up company but one of them is the incredibly valuable ability to be flexible and change course quickly to take advantage of changing markets or opportunities. For example, when we started we believed green packaging products could be as much as 25 percent of our total sales; today they amount to almost 95 percent of our overall sales. Hiring people too early can handcuff you when the people you add do not fit the business plan you later grow into.


3. Has Anyone Seen My Soldiers?
We all often go into battle believing that we have more support behind us than we ultimately do. It may be a fraternity, association, church group or other business organization that has encouraged us to make the move to start your business with their undying support. However, after we make the leap we find out the support mostly comes in the form of encouragement, advice and, if we’re lucky, with prayers.


In our case we thought our ace in the hole was our MBE (Minority Business Enterprise) status. What we soon discovered is that even though there are huge corporations who literally spend over a billion dollars with diversity companies, no one is eager to do business with a small, new company, especially in tough economic times. Have you heard of “vendor rationalization?” In addition, we also discovered we were competing in a very crowded diversity field with many fine, more established WBE (women owned), DBE (disabled owned) and VBE (veteran owned) businesses.


I am proud to say that five years later we are very pleased to be doing business with many large companies with committed diversity programs — but their interest in us is because we are good, not because we are an MBE. Looking back, in year one we probably should have re-directed the enormous amount of time and resources it took to secure and promote our MBE certification into more immediate needs.


4. Be Careful What You Ask For
We literally pursued an opportunity with a large retailer for more than a year, spending countless hours and resources in the process. Their people were re-assigned, priorities changed, and our “opportunity” was grounded and restarted a number of times.
When we finally received our well-earned order — and without getting into a lot of details about rebates, incentives, chargebacks, etc. — let’s say we soon discovered how lopsided our vendor agreement was and why our customer is huge and we are not.


What we thought would be good, incremental business turned out to be business that consumed a disproportionate amount of time and was very costly to maintain. Combine that with the low margins we agreed to, and you have a recipe for disaster. It only took a few short months before we determined the business was not in our best interest and we politely opted out of their program.
There certainly were no hard feelings on our end, and we chose to consider it an expensive education. However, the losses far exceeded what can be easily calculated from a cost and resale perspective when we consider the time and resources we spend pursuing, securing, implementing, supporting and eventually terminating the business.


We’ll never know what we could have accomplished if we devoted the same time and energy in other potential business opportunities. As devoted baseball fans, we were reminded that while home runs are exciting, most games are won with singles and doubles.
With gratitude these are snippets of a book we hope to publish later this year where we will expound on these points as well as others. It is sincerely our hope that others will find this advice useful and perhaps they can save them some headaches as well as money.


Mistakes and problems aside, it has been the ride of our lives and we are grateful for the experience we have gained and the many eco-passionate people we’ve met. We also have special thanks to the good people at GreenBiz who have understood from the very beginning what we are trying to accomplish and have supported our efforts by publishing posts by and about us.

 

Published on www.GreenBiz.com

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