El Camp is a coworking space in El Segundo that promotes innovation and accelerated growth in a collaborative space.
For our lecture there we were with Founder, Eric Johnson, who taught us about revenue generation and business models. We first learned about endcap marketing that focuses on accessibility in retail markets. This is also important for internet accessibility. This led into us talking about DTC which has become increasingly popular in the present moment. He said that DTC has the highest margin, and is hardest to scale. Retailers are different because they need to share more margins and pay for distributors. He said for DTC you first need to decide on a distribution mix in order to maximize revenue. DTC also allows you to sign up repeat customers through subscription which helps to maximize sales because these customers are now loyal to the brand.
To also minimize and account for other costs, he told us to focus on our overhead, research and development, and cost of goods sold. For overhead he told us that costs usually lie in allocation of staff, office space, and warehousing. For research and development he said that we need money to develop that. For cost of goods sold, he said there are costs in processing, labeling and shipping.
For marketing he said that money should be allocated between 3%-15% of sales. He said that we should use investment to acquire the most customers.
Finally, for our workshop for the night we were asked to make a pro forma financial statement for the potential products for our M4G project. A pro forma financial statement is a financial model based on assumptions and forecasts about events that may occur in the future.
We focused on a statement for t-shirts and our group learned a lot about how important it is to calculate out money before we move forward with our project. There are a lot of hidden costs to be accounted for and learning how to lay it all out in an organized way into a pro forma statement was very helpful. It was also nice to see how a coworking space looks and operates, I really enjoyed the visit.
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