March 29, 2024

You’re the Boss Blog: Will a New Software Release Get Silver Lining Out of Debt?

She Owns It

Portraits of women entrepreneurs.

Carissa ReinigerSara Krulwich/The New York TimesCarissa Reiniger

At the end of our last post, Carissa Reiniger, founder of Silver Lining Limited, was out of cash and about to miss payroll. Buying herself another few months, Ms. Reiniger told the other members of the business group, she managed to negotiate a $250,000 convertible note with a friend.

“So, the same thing you were doing before,” said Alexandra Mayzler, a group member who founded Thinking Caps Tutoring. Ms. Mayzler was referring to Ms. Reiniger’s past practice of borrowing from friends and family at high interest rates and then borrowing from others to pay them back.

“No, it was a smart deal — not a promissory note with a crazy high interest,” said Ms. Reiniger. The note, she said, was convertible to equity. In June, she raised an additional $100,000 by selling royalties on future sales of Silver Lining’s software to 20 people who each paid $5,000.

“It’s creative,” said Susan Parker, the group member who owns the dress manufacturer BariJay.

Ms. Reiniger agreed and said she had also cut costs in every possible way: “We haven’t spent money on anything that we haven’t had to.” She said Silver Lining’s operating costs, including software development, had been covered by the convertible note, royalty sales, revenue of $350,000 and personal money, including some from the sale of her condominium in Canada. She also went without salary for several months.

The software — the Silver Lining Action Plan, or SLAP — went on sale in October, and Ms. Reiniger said she had 120 customers within three weeks. On the product’s site, Ms. Reiniger appears in a video, outlining the basics of the plan. SLAP, she explains, is a five-step system that helps owners clarify their visions for their businesses, set one-year financial goals, determine their ideal client, create a 12-month program with quarterly goals, and, finally, execute the program. The software is intended for businesses with revenues from $100,000 to $2 million. The product’s motto is, “Every small business owner needs a SLAP!”

The software sells for a monthly subscription of $99. Plans with additional support are available for monthly rates of $500 and $2,500. “In theory, this whole scheme that I’ve had will pay off,” she added.

But she’s still saddled with about $145,000 in old debt. Additionally, she said, Silver Lining’s accounts payable list is up to about $35,000 — money owed to creditors, including former employees and vendors. Ms. Reiniger said she is repaying the money she owes some and trying to hammer out payment plans with the rest (some of Ms. Reiniger’s creditors dispute that she intends to repay them).

“That’s not bad, considering,” said Ms. Parker.

“Right,” said Ms. Reiniger. “I’m actually pretty proud of where we are right now. We’ve paid off a ton of debt and done amazing things with very little money.” But still, she said, “I’m skating this very fine line between having it under control and not having it under control.”

Ms. Reiniger said she was trying to decide whether to sell some equity or to maintain full ownership and control. Assuming she could find an investor, the first option could help pay off her debt more quickly. She said that while investors have shown preliminary interest in Silver Lining, she recognizes that that doesn’t necessarily translate into writing a check and putting it into her bank account. Without financing, she said, she could “totally right the ship” within six months. “I think the end result is the same. It’s just about timing and ease of getting there,” she said.

Ms. Reiniger said she felt she had come too far to give up any control of Silver Lining. “I’m almost done with this battle,” she said. “Why stop when I own 100 percent of my company?” On the other hand, she said, the notion of paying everyone back sooner — including some vocal detractors who could cause bad publicity when she least needs it — is appealing.

Ms. Parker asked why Ms. Reiniger was so sure she could pay everyone back within six months.

“We’re not talking about millions of dollars,” she said. Silver Lining, she added, has a detailed financial model that enables her to predict conversion rates. And because the company has been in business since 2005, it has a large database and network of prospective customers.

“Sales are not a mystery to me,” Ms. Reiniger said.

You can follow Adriana Gardella on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=ea7cb0b68bae3da10c6554d36137c386

You’re the Boss: What Do Small-Business Owners Want?

She Owns It

Portraits of women entrepreneurs.

Small-business owners are often described in monolithic terms. But as I rediscovered during a conversation with three women who run companies, their goals and motivations tend to vary. When I met recently with Jessica Johnson, Susan Parker and Carissa Reiniger of our newly formed business group, we talked about their long-term goals. (Alexandra Mayzler, the fourth member of the group, couldn’t make the meeting.) I was particularly curious about their thoughts and attitudes about eventually exiting the companies that they or their families — in the cases of Ms. Johnson and Ms. Parker — built.

Ms. Johnson said that exiting Johnson Security Bureau would feel like walking out on a spouse: “My daily struggle is, how do I keep the business going successfully for as long as possible, while protecting myself and my interest?” She added that she did not want to turn 75 one day and find that she was still trying to find security guards to cover a client at 2 a.m.

She wants to leave the business in the best possible hands, and she hopes to keep it in the family (neither she nor her brother, Charles, a part-owner, currently have children). “African-American family businesses generally don’t make it past the second generation,” said Ms. Johnson, who is a third-generation owner. She said she felt “called to go beyond the third generation to a fourth or fifth if that’s a possibility.”

From an operations standpoint, Ms. Johnson acknowledged that her skill set was limited. For that reason, she said, she knows it will be best, at some point, to bring in an outsider who is subject to family control. “I could have someone who’s not a Johnson running it, but a family member would still have to be involved in setting strategy,” she said.

Ms. Johnson has received offers to buy her company, but, she said, “If you buy the firm, you won’t be a Johnson and it won’t be Johnson Security Bureau.” She doubts that someone outside the family would bring the same level of passion to the business.

Like Ms. Johnson, Ms. Parker said she hoped to keep Bari Jay, the dress manufacturer she owns with her sister, in the family. But she didn’t always feel that way: “I grew up hearing my father say, ‘I don’t want you in this business — it’s horrible.’” Over his lifetime, manufacturing had shifted from domestic to overseas, and he became disenchanted by that change and others.

Upon learning that her father had left her and her sister the business, Ms. Parker was unenthusiastic at first. But her sister Erica was thrilled. Ms. Parker said she decided to “give the business a shot” in order to work with her sister and because it was “the only thing I had from my father.”

At the time, Ms. Parker said, Bari Jay was sinking. But the sisters gave it their best efforts and turned it around, she said, adding that she is now “reaping the rewards of those efforts.” She said she was “shocked” by how much she enjoys the work and likes being in charge. “I didn’t realize I was a little bit of a control freak,” she said, adding that she also appreciates the lifestyle that the successful business provides for her family. For that reason, she and her sister have ensured that their children (each sister has two) will have the opportunity to enter the business.

Still, Ms. Parker is not categorically opposed to selling Bari Jay under the right circumstances. When the sisters first took over, potential buyers approached them, and they listened — “you should always hear what someone has to say,” Ms. Parker said. But no offer has been tempting enough. She sees far more potential in staying, and said it would be “really difficult” to get her to leave the day-to-day operations to someone else at this point.

By contrast, Ms. Reiniger is more than ready to step aside. After a failed exit attempt in March, she is eager to find the best person to build her business, Silver Lining Limited. “I know what I’m good at and what drives me,” she said, “and as much as I care about the mission, running the business has become less interesting to me.”

Ms. Reiniger said she favored new adventures. “Business has become like a game to me,” she said. “To play it in a big way, I need to prove to myself that I can build and exit,” she said. Ms. Reiniger said there’s an “unspoken rule” that entrepreneurs need an exit to validate themselves. “I think it will be fun to see how many of these big-scale entrepreneurial boxes I can check,” she said.

We will continue the conversation in future posts.

You can follow Adriana Gardella on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=2be15c8c2ba28cfa1429d8de54540e24