28 December 2009

Persistence, Loans Rescue Ypsilanti's Realkidz Inc.

Detroit Free Press

This Christmas is extra sweet for Merrill Guerra. In August, the first-time entrepreneur wasn't sure her business would make it to the end of the year.

"We're still alive! Yeah!" the CEO of RealKidz Inc. declared earlier this month in her brightly decorated Ypsilanti office located around the corner from Depot Town.

Staying alive is no small feat for this start-up company, which sells average-size and plus-size clothes for young girls. Though RealKidz added a fashionable new line of fall and winter apparel, sales have gone nowhere because of a major blunder.

Guerra had hoped to quickly create a strong network of independent sales representatives to sell RealKidz's clothes at private home parties, similar to how Tupperware and Avon products are purchased. The company attracted slightly more than a dozen sales representatives, but none of them were able to generate significant sales.

"We could sign them up but just didn't have the support they needed and the knowledge to help them grow their businesses," Guerra said in late October.

The representatives lost interest in RealKidz, and Guerra now has to rebuild her network, missing the crucial Christmas shopping season. This time around, she has enlisted an experienced direct-sales veteran that she believes will help RealKidz avoid further pitfalls.

Though this kind of mistake could have killed RealKidz, the start-up gained some additional time to make its business plan work, thanks to financing from the state. In May, the company obtained $142,000 from the Michigan Pre-Seed Capital Fund in exchange for a small equity stake in the business. And this month, RealKidz received approval for a $50,000 loan from the Michigan Microloan Fund Program.

The loan couldn't have arrived at a better time because RealKidz was starting to run out of money. "The loan was extremely important," said Guerra, who plans to use a large chunk of it to make more clothes in the spring.

After 20 months in business, RealKidz offers a larger variety of clothes than when it first started out, including blue jeans, skirts, shorts leggings and kids shoes. Each new line the company brings out is more sophisticated than the last. For example, its sweatshirt hoodies come with rhinestone zippers.

Now the company has to find people who can sell.

"It wasn't until August that I really started feeling the weight of being an entrepreneur," said Guerra, who's trying to meet the expectations of RealKidz's investors and small staff. "I'm so far into it now. It's about so much more than me. The pressure is greater."

But like other die-hard entrepreneurs, Guerra refuses to let her company's daunting challenges overwhelm her. "It's been a roller coaster," she said. "But we're getting all these different pieces figured out."

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