Growth from within
Senator Bennett's fourth annual rural business conference Part III
|Shawn Nelson, CEO of LoveSac was a presenter at the conference.|
LoveSac CEO, Shawn Nelson shares secrets of success - A Strategy for all Seasons
Shawn Nelson, CEO of LoveSac, presented a breakout session for Sen. Robert Bennett's Rural Summit in Price. His session was called A Strategy for all Seasons. Nelson began with a history of his own successful company.
Nelson stated that to grow a business in a cyclical business climate takes perseverance. His story of LoveSac's beginnings was riddled with attempts and failures, unexpected events and happy endings.
"We did everything backwards, but we persisted and succeeded. An easier way to succeed in a cyclical market is to implement a business strategy from the beginning," said Nelson. "We have learned many lessons over the past three years."
The LoveSac was born when he was 19 years old. He wanted an oversized bean bag chair to relax in and watch TV. He purchased 14 yards of fabric and his girlfriend sewed it together. Then came the onset of the first problem. What to use to stuff the chair and how to cut it up. Nelson tried old blankets, foam mattresses, and anything else he could find.
Three weeks later, he was the owner of a seven foot chair. "When people sat in it, they were always surprised," he said. "There's my market, making people happy." But, his mission call came, and the bean bag type chair was put on hold.
Following his return from his mission in China, he returned there to work as a consultant for Professional Way, Ltd. in Shanghai. His duties included team-building and teaching courses in leadership and presentation skills.
When Nelson returned for good to Utah, he learned that his friends and cousins had continued to toy with the idea of making the chairs to market. "I'm going to start this business," he decided. "So with $20 to secure the LoveSac name, I hired all the ladies in the neighborhood to sew the sacks together. My friends and cousins all invested time and resources to make this work, and now seven years later, we are all still here."
During those seven years, they group experienced every possible calamity that can be expected during the early stages of building a business. They maxed out credit cards to purchase fabric, they experimented with ways to shred the foam, and they drove trucks to deliver the finished products.
"One day my phone rang, 'LoveSac' I said, knowing full well that the corporate office was my cell phone in my pocket. The person on the other end of the line wanted to order 12,000 LoveSacs for delivery in five months. The problems began soon after," Nelson stated.
"We began to really believe we could make this work. Following several trips to China to purchase enough fabric, several trips to Roosevelt to purchase a shredding machine and a tractor, we began production in a small warehouse in Salt Lake," said Nelson.
Nelson completed the story of the first big LoveSac order by saying that the company made enough money to pay the bills from filling the order. No money was left over to reinvest in more supplies. So everyone began to max-out the credit cards again. "We learned to embrace economic pressure. Without the pressure none of us would have been as driven to make it succeed. We decided to make it work at all costs. We began to sell franchises and open stores, the expansion happened almost too quickly.
"This point in time was the worst time ever for me to be absent from the business, but I got a call from Rebel Billionaire. I learned that Richard Branson was going to be doing a reality TV show and someone would win the opportunity to run his company Virgin Airlines for three months. I was asked to participate, and I wanted to do it, so I did," he said. "I hired a chief financial officer to handle things in my absence, and later learned that this is something I should have done in the beginning."
The next two months, Nelson was basically in seclusion making the show. Upon his return, he was under contract not to divulge any information about the show until after it aired. He had won the show and earned the chance to run Virgin Airlines for three months, which kept him away from his own LoveSac business.
Branson asked Nelson to work for him, but Nelson refused, and he offered Branson the chance to invest in LoveSac. "The thing I have learned through the past seven years is that financing is the key to success. If a chief financial officer had been on board from the beginning, I'm sure things would have run smoother. He could have handled the financing and we could have handled the production. For every successful business, there is a very able, competent financial officer close at hand.
"Remember to embrace financial pressure, be patient; persevere, don't give in, and also, risks don't ever go away, they just get more zeros behind them," said Nelson.