Armed with a second-hand sewing machine, an idea and a little bit of grit, Kristi Soomer built a 7-figure fashion brand from her kitchen floor. Today’s guest started her brand with no fashion background and some pretty sad sewing skills, but she had a passion for her brand mission and invested in mentors and service providers to fill in the gaps. Hear Kristi’s story about how she build Encircled and what it REALLY took for her to get there.
Today we have a fellow product-based business owner on the show, Kristi Soomer, founder and CEO of encircled, a Canadian-made line of versatile, sustainably made clothing that helps women streamline their wardrobe.
Inspired by her love of travel and dislike of checking a bag, Kristi started Encircled in 2012 with a sewing machine she found on Craigslist and she created her first product the Chrysalis Cardi on the kitchen floor of her condo.
In today’s episode, hear Kristi’s story of how she went from launching a clothing brand with NO fashion experience to building a seven-figure business that was named a Certified B corporation in 2018. Kristi is committed to meeting high ethical and sustainable standards in all aspects of the business from using fabrics that honor the environment to providing good working conditions and fair wages for her sewers.
And today she’s giving us the lowdown on what it really takes to launch a fashion brand, knowing when it’s the right time to invest in inventory and the two things that were the true game-changers in her business, content marketing + showing her face. No matter what level of business you’re at right now, you’re sure to pick up nuggets from my fellow data-loving friend, Kristi Soomer. Here we go!
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When was the moment you decided sure I’m going to do this crazy thing and become an entrepreneur?
For me, it all started with a product idea. The business really grew out of a desire to travel lighter, more stylishly and more comfortably. I used to be a management consultant, which means you travel from client site to client site usually by plane on a weekly basis. You basically live out of an airport and you only want to have a carry-on bag because you don’t want to waste time checking a bag or waiting in line.
My travels really inspired me to create our first product, the Chrysalis Cardi, which is an eight-in-one cardigan that transforms from a tunic to a one shoulder gown to a cardigan to a circle scarf. From that one product idea grew a whole business. My goal was to design really cool products that were sustainable, ethical and that would make a big impact in a woman’s wardrobe.
Was sustainability a passion for you even before you started a businessa?
Before I started the business, I had an interest in sustainability. As a kid I was a vegetarian, I was — nerd alert — in the recycled paper club at high school. I had a genuine interest in animals, the environment, being outside and appreciating traveling and the planet.
Until that point in my career, I hadn’t had the opportunity to be involved with a brand that was making a positive impact. When I started Encircled, I wanted sustainability to be at the core of our values. I wanted to use fabrics and materials that were good for the planet, so I set up our business model in a way that we would limit our carbon footprint and reinvigorate local manufacturing at the same time.
You can really take your core values and infuse them into your business, it doesn’t have to be separate. You can create a business that’s still very, very you.
How did you figure out the design of your very first crazy convertible product?
My background is not in fashion and I have very little sewing skills, even though my mother was a very talented seamstress and tried to teach me when I was younger.
Growing up, you gravitate towards a career in which you have the most talent. Now it’s very different, because you can hire out people easily to fill those gaps while still pursuing your passion.
I had an interest in fashion, but I didn’t really know what I was doing. It took a lot of up leveling of skills to get there. One of the first things I did was to connect with an incubator in Toronto that had a lot of resources for the fashion industry. I wanted to learn how the industry worked and how to move through each stage of making a product.
I bought a very boring book that I highly recommend to any entrepreneur who wants to get involved in hard goods or soft goods manufacturing called the zone product guide for entrepreneurs. It is the most boring read, but it will walk you through the exact steps to make a product. From there it was just a matter of finding the right people to involve in the process, including a pattern maker and finding a manufacturer which is arguably the most challenging part of the process.
From ideation to launch it took me about nine months to perfect the design, prototype it, get it made, find the right fabric, all that good stuff.
Be willing to make that investment in time, money and learning if you really want to do it.
How did you find the right manufacturers to bring your design to life?
There are probably courses online on how to start a fashion brand, which would have been really helpful. But the online course and education space back in 2012 was nowhere near what it is today. The fashion industry, in particular, from a product based business standpoint is one of the most secretive industries out there. It’s one of those industries where you have to network and get to know people.
One big tip is asking other people in the industry for referrals to manufacturers, fabric suppliers, and pattern makers. We found one of our best manufacturers who we’ve been working with since the beginning, through a networking event. A woman mentioned she’s making these different kinds of leggings so I asked for their number, and they became a long-term manufacturer for us.
It often takes a lot of grit and perseverance to start your own business, you have to be a resilient in that initial process, because it is quite difficult. A lot of people quit at that moment but really, the success is in keeping going and making those mistakes and learning from them and keep pursuing your dream.
How did you start your business without much capital and creating your own crappy graphics
I started Encircled with about $20,000 in savings. To some people that may seem like a lot of money, but it’s actually not when you’re trying to build a website, get inventory made, get products made.
If you’re doing a sample from end to end of a product, let’s say we want to make a T-shirt, and you’re going to make it from scratch, that’s going to cost you somewhere between $1000 to $3000 per sample for the pattern, the technical design, the sampling. And that’s before you’re even able to sell it.
You need capital for the prototyping stage of your product, and a lot of that money came from selling my car. And that got me pretty far. The initial investment went mainly towards product development, setting up the website, and when I initially launched I hired a PR firm for three months.
From there, I could create a business model that self funded itself from the get go. I could get away with having to put very little money into the actual business because we used a pre order model — sort of like a Kickstarter model where I would run production and pre-sell the product and then we would buy fabric, make the product and then deliver it just as I’m getting paid.
That’s a model that we still use today actually, because with product based businesses it’s super inventory intensive. A lot of businesses just can’t even supply the demand for their product. When you’re just starting up, it’s really important to get creative with ways to fund your cash flow.
Preorder models are a great way to qualify your product, too. If you have five items that you are trying to pre-sell and people are not biting on one of them, maybe that’s something you need to drop from the line because your customers have already told you and they don’t want it. You can save your money and not produce it at all.
What made you invest money in hiring a PR firm in the beginning?
This will speak to the fact that the way you do marketing has changed a lot in the last eight years, but the most accessible marketing tool seemed to be PR because I wanted to get word out there through papers and news media. Once that happened, I figured I’d just get all these sales and it’ll be amazing.
However, when you only have one product, after you’ve been in 10 publications, they run out of ways to pitch your product and tell about your brand story. It’s not interesting to the editors anymore. So that ran its course in the first three months.
Once I stopped working with the PR firm, I realized I had no digital marketing plan and I had to start from scratch.
At the time, I took a course that was really popular about content marketing and digital marketing, and that course sparked my interest in email. She was teaching the basic principles of content and email marketing — building a list, engaging with people, delivering value added content, which for me, was content around how to travel lighter, and packing lists. Having a plan in place turned the business around dramatically.
Now, there’s other tools like Facebook ads that brands can use to get up and running quickly. But when I launched unfortunately, Facebook ads weren’t a thing, we were just working with what we could.
When did you decide to invest in more help? Did you feel ready to hire people or did you just jump in?
I am definitely a more conservative entrepreneur. It took me two years to quit my full-time job because I was at a really successful point in my “actual” career. I was working in my perceivably dream job and I was making quite a good salary, but I just didn’t feel super aligned with my purpose and my values, as we touched on at the beginning.
I really wanted to create something from the ground up, but making that decision was really difficult. Before quitting my job in November 2014, I was running my business primarily on weekends and I would answer customer service emails in the evenings. I actually tried to quit it two times before that. My company at the time talked me back into it because clearly, I wasn’t ready anyway.
It’s really difficult to make that leap for many people, especially if they’re later in their career. For me, it became a question of whether I was holding the business back by not being in it full time. You can hire virtual assistants and other contractors part time, but at the end of the day, you’re the founder and CEO so your brain and your strategy is what’s going to drive a lot of the initial growth in the business.
If you’re in the business part time, it can only go so far. We were growing, but I felt like I throttled that growth by not being available enough. Once I leaped, the business started growing and hitting high triple digits.
That’s when I moved into an office space, but it wasn’t until six months after I quit my job that I hired a part-time person — I wish I’d hired people sooner.
Again, coming back to that bandwidth thing, when you’re starting up a product based business, especially if you’re self fulfilling product, you can spend an inordinate amount of time on customer service, fulfilling orders and stocking inventory. They’re not value-added activities.
Whereas if you’re spending time writing an extra email every week, or doing more social media, that could really impact the growth of your business. I always advise people to hire out tasks that aren’t necessarily income producing fairly early on, so that you can grow faster.
When you do make that leap, you’re in a different headspace and you have much more energy to give to the business as well.
How did you get over your fear of showing your face in your businesses?
We’re gonna have a vulnerable moment here. I was doing Encircled as a side hustle and in my day job I was “quite important”. I was in the press and doing PR all the time so I didn’t want my face seen in two different places, I thought it would be confusing and it might also upset my employer. Not to mention, I’ve been camera shy my entire life.
One of the most pivotal moments was doing a branded photoshoot. My photographer taught me a lot about how to frame my body and move properly and I left that photoshoot feeling really beautiful and really photogenic, which turned it my confidence around.
After that, I felt able to put myself out there more. A lot of us have insecurities about how we look, no matter what shape, size or age we are, and I was just not comfortable being the center of attention. That’s been something I’ve had to get over because one of the most important things that I’ve learned running a business is that if I’m going to compete with Zara or H&M, one of the biggest points of differences, other than the ethical and sustainability parts, is my story. People need to see why I started the business, who’s running the business and really connecting emotionally with my customers. To do that, you have to show your face. It can’t just be a product photo on our about page. Pushing myself out of my comfort zone definitely paid off in the end. Now I’m super comfortable on podcasts and video and I’ve done live TV many times. I’ve really come a long way, but it was definitely a journey.
Put as much of yourself in the business as you’re comfortable and then do a little bit more. Because you are the thing that’s different. Think about all those people out there doing TikToks in the middle of the street, you will probably feel a lot better about your photoshoot.
Remember, if you’re comfortable being an entrepreneur, you’re doing something wrong. You should feel uncomfortable, because it is a journey. We always have to stretch and grow.
How do you handle inventory in your own business?
Inventory is probably the number one struggle of a lot of startup entrepreneurs in the product based space. In the first three to four years predicting and forecasting in eCommerce is really difficult.
When you’re dealing with mediums such as Facebook ads, you can have an ad that picks up and then suddenly it’s getting traction and a product in your collection blows up, and you don’t have the inventory to support it which means you’re essentially leaving money on the table. That can be a bit of a challenge.
On the other hand, you don’t want to invest a million dollars in inventory when you’re just getting started because you just don’t have the capital. It’s really about setting up systems, which is not the exciting answer for many people.
Step one is setting up a process to manage your months on hand getting forecasting tools in place. They don’t have to be fancy, it could be just a Google Sheet. Look at what you’ve sold today and look at last year, and try to come up with estimates and forecasts for what you’re going to do. A lot of it’s going to be guesswork at the beginning, because you will not have the data. If you don’t start making some assumptions and guesses, otherwise, you will perpetually be out of stock.
It will be really difficult if you have a very small assortment, and you’re always out of stock because you will never have cash coming in. Having huge gaps in cash flow can be very detrimental, especially if you have a team or a payroll.
Step two is running analytics on your assortment to understand which products are driving most of your sales. Generally, 20% of our assortment is driving 80% of our sales. Make sure you’re aware of what your core products are, so you always have those in stock and have,
Let’s say you have a six-month lead time, then you have at least six months on hand, more if you can afford it. The items that aren’t as fast moving will have less on hand. Figure out that ideal balance and then periodically review your assortment to make sure that you’re discontinuing products that aren’t performing.
As a small business, you have to be super picky with what you have and make sure it’s all holding a unique place in your assortment.
Step three would be to get creative with your cash flow. I took on an angel investor in 2015, but not everybody goes down that equity route. You can also get a line of credit, or there’s a lot of debt financing options as well.
If you feel you have a product that has a lot of demand behind it, but you can’t supply it because you’re missing the cash, there’ are a lot of places that will fund that inventory for you so that you’re not out of stock. At the end of the day, a lot of these products are going to be gaining you new customers. And if you don’t have something to offer them, they might never come back and shop again. We want to make sure that the cycle of inventory is always there and available.
It’s going to happen — you’re going to be out of stock for sure. Sometimes you just underestimate things, and that’s just the way it is. Having a waitlist is a great idea because you’ll be able to gauge the demand before you even launch. That’s gold. Start thinking more strategically about your inventory and how you manage it. That’s key for startups.
How do you let go of products and ideas that aren’t selling?
Not all products are winners. You think it’s going to be a winner just because you fall in love with the idea and it’s easy to get emotionally attached to what we create but if your customer tells you they don’t want your product (because they haven’t bought it) there’s going to be a point where you just have to say this is not working, and move it out. Recoup as much as you can and then lean into what is actually driving your business.
We’ve got a product in our collection at Encircled, our dressy sweatpants, which have been in our collection for almost six years, and it’s magic to me to have a product that long in the fashion space. That is an A++ product, but not all of them can be that. Be very intentional in your product development process, especially if you are in a product, skincare, fashion or jewelry space. Be really engaged with your customers to understand what their needs are when you’re starting out that development process as well.
What has been your biggest failure in your business so far?
If I had to sum it up, it would be not understanding why people buy. Sometimes we get carried away with our own ideas and we think that because we value something, our customers will value it the same way. But the reason people buy is emotional connection. Early on, I was very connected to our product development, but as you scale it becomes a more difficult and you lose that connection. That can be really difficult because you end up making products that don’t sell and you assume that somebody’s going to buy it because it is sustainable, but sometimes your consumers just aren’t there yet. They still want to prioritize style and comfort so they don’t want to sacrifice. You need pieces that check all the boxes, which was a huge learning curve for us. You can’t just go with the most sustainable option, because it has to perform like a regular product and deliver on all those other things. Otherwise, people aren’t going to buy it.
What do you think would have been your biggest success in your business so far?
Surviving 2020. We hit high double digit growth last year in a year that arguably started off really well and then went into a tailspin of triple digit decline in revenue. Being able to pivot really quickly and change our business model quite a bit in what we were making and then weather the storm to grow in 2020 is probably my biggest success so far.
If you can give my audience one thing to take away from this episode, something that they should 100% implement in their business, what would that be?
Content marketing, which encompasses email marketing. Figuring out how to add value to your customers lives beyond your brand and create a connection with your customers. For example, if you’re a skincare brand, can you do videos on how to do the perfect face mask or the ideal nine step skincare routine, even if it doesn’t involve all of your products.
Create value added content that you can push out on social channels or on emails. Anybody can write a product based business newsletter, but actually crafting value added content that will land either in your customers’ inbox or in their feed, that’s what will separate the longesvity of true brands from others.
Start with that pillar content, everything else, the social media, the emails become much easier when you actually have content to share there. We get stuck on thinking we have nothing to say, but if you had that content ahead of time, you would.
If you knew then what you know now, is there anything you would do differently?
I would have pursued more capital earlier on in the business. When I was starting, it wasn’t really that popular to raise money. Now you can go on Twitter and everybody’s an investor. It definitely was not that landscape back then. The only ways you were getting money was if you knew somebody or you were on Shark Tank. There wasn’t really that same pitch space for product based brands at that time.
I would have put more effort into joining a true incubator accelerator program, something that had an equity component because setting up that structure and getting that mentorship is really key to early stage businesses.
You make a lot of mistakes, but if you have the right people in your corner, somebody who’s been in your shoes advising you, whether you hire a coach, work with a mentor, volunteer for experience, or get a board of advisors, that can really accelerate your business growth and help you avoid making those critical mistakes that are integral in the startup phase. I don’t even think I ever knew it was an option.