No one ever thinks about Santa as an experienced business owner, but he’s been running a wildly successful enterprise for well, forever. So before the holiday crunch, I invited Santa to sit down over cookies and cocoa. I wanted to pick his brain for the secrets to his long-running success. I’m a pig. I couldn’t pass up this opportunity, so I also asked for a red Tesla. I’ll let you know about the Tesla at a later date, but here are some thoughts from that great entrepreneur now.
Find a niche. Define your audience
“When we started out,” Santa explained, “I wanted to deliver a gift to every person on the planet. Mrs. Claus wisely advised that I was thinking too big. ‘Don’t try to be all things to all people,’ she said. ‘Focus on a smaller group.’ We settled on children who celebrate Christmas and were well-behaved.” Great advice. You have a much better chance of succeeding of you identify a specific market segment. Everybody is not the right answer.
Start lean. Identify your core product or service
“I had dreams of developing all kinds of toys, I was seriously undercapitalized,” said Santa. “Being cash-strapped actually worked in our favor. It forced me to focus on launching one core product first–just basic wooden blocks. But that established my reputation. Over time, we expanded, based on feedback from real customers. When you start out, get your product or service out the door and later make improvements. Those blocks are still a hit, especially with our youngest demographic.”
Develop a business plan. Make this a working document
Part of Santa’s wild success stems from his careful planning, ability to execute and remain nimble. “When kids started playing on digital devices,” said Santa, “I lost weight, I was so worried. How was my workshop going to survive?” Santa and Mrs. Claus sat down and came up with a plan. They hired a team of tech elves to develop electronic devices and apps. He’s been so successful that both Mattel and Hasbro gave Santa buyout offers. “I don’t want to sell out, and I’m already a spokesman for Coca-Cola.”
Watch your cash flow. Make realistic projections
“We do 100% of our business on one day, December 24th. But we spend hundreds of thousands of dollars and months preparing for that day. We have a very detailed and aggressive production schedule. We purchase our materials in August, the elves start crafting toys in September, and despite my best efforts, I always end up getting killed with overtime in December. I also have fair amount of overhead. I have to board the reindeer year-round, Rudolph’s nose keeps shorting out, and vet bills are crazy.”
Santa’s tips for managing your cash-flow
- Make cash projections of money coming in and going out.
- Be careful with inventory; this can become a sinkhole.
- Get a line of credit ASAP; it can be your lifeline and pay for expenses when income lags
- Save during high-income periods and invest money back into your business.
Think green. Embrace renewable energy sources
“Up here in the North Pole, we’re already living with the dramatic effects of climate change,” lamented Santa. “It’s breaking our hearts to watch our magnificent polar bears dying because their food sources are no longer available, but my beloved reindeer are affected as well. Learn from me. In your startup, seek renewable energy sources, low-waste or no-waste production methodologies, ways to reduce shipping use and expenses. You always need to be thinking about saving money and the environment—it’s not only my future—it’s everyone’s.
Get help. Develop and cultivate a team who can grow with you
Most people don’t realize that Mrs. Claus is not only Santa’s wife but also his CTO (chief toy officer), a hardworking member of the organization. He relies heavily on her, his team of well-trained elves, and of course, his reindeer. In your startup’s early stages, you try to do everything yourself, but you need to scale if you are to grow. Hire the best people you can find and let them to do their jobs. You don’t have to completely let go of the reins—only Santa gets to fly the sleigh, after all, but at some point, you must learn to delegate if you are to grow and be successful.