Business Owner Profile: Guido Molinari

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Guido Molinari sees his business as his baby. He grew a passion for frozen desserts into a company that he’s raising to stand on its own. Moinari’s business, Divino, is a manufacturer and distributor of frozen fruit filled with gelato that is sold in retailers across the country, including Whole Foods.

Molinari recently spoke with us to share his unique approach to finding investors and his thoughts on assembling the best business team.

Starting Out

Why did you start your business?

I’m originally Italian and have a big passion for gelato and ice cream. I came here and realized what I could find in grocery stores was not the same as what I used to eat when I was growing up in Italy. With my business partner, we thought, “Why don’t we find the best of Italian desserts and create a company and a brand, and find a manufacturer to scale up to bring all American consumers something we think they’re going to like?”

There’s always been that passion for the product, which I think is important for any person starting out. I will say, you need to love it deeply, because you’re going to be dealing with it every single day, maybe for the rest of your life.

How did you get the funds to get going?

One thing we learned is that, for a business like ours that makes a physical product, you do need money to make money. Also, sometimes when you enter stores, there are placement fees.

We had a business plan, and we asked, “How much do we need? How much are we going to spend in the next 6 months? Or the next 12 months?” We went to friends and family first. We realized we had a great product. We let them taste it and fall in love with the product. Then, they could really see the potential.

We knew we were going to have to eventually raise more money. I post very regularly on my personal Facebook about the business. A lot of my friends “like” it, and then their friends see. When I’ve asked my friends, “I see you like the business, do you know anybody who has money?” They’ve said, “Oh, yeah, I have friends who have seen what you have been doing on Facebook and told me ‘If your friend ever needs money, let me know.’”

You have to plant the seeds right away so that when it’s time to collect, it’s already there. Let people know what you’re doing. Don’t brag about it in an obnoxious way, but just let them know things like when you get a new distributor or when you launch a new product. Then people get passionate about the story you are building and they become fans. People want to help you. When I need more money, I just post on my Facebook and I’ve gotten a very good response.

Have you heard of business credit?

Yes, I have a banking background.

When you open a corporation, any bank that’s going to give you a credit card will give it on your personal credit score. No company in the beginning is going to have any kind of a credit score, so when you go to the bank, tell them, “I know you’re not going to allow a $5K, $10K, $20K credit card on the business because we’re brand new. But, I have a good credit score on a personal level, so the business benefits from that.” You can negotiate with them. Of course, they’re not going to give you what you want right away.

You are going to have to put in a little bit of your own money to start, but I would rather have everything else on the business side, because it limits the liability. If things go wrong and you have things on your personal credit, not only is your score going to be affected, but you’re going to need to repay that money. More than 90 percent of businesses fail. If you have used your personal credit, you’re going to have to repay that loan.

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Managing the Business

What’s most challenging about running your business?

It’s difficult to delegate decisions to people with more expertise than you and trust their judgment. When you start your business, it’s like having a child, it’s your creation. Imagine having a one-year-old child and needing to trust the judgment of someone else for a major important thing, like something medical.

My theory is that every time you have a business meeting with your team, you should be the stupidest person in the room. Everybody you involve should be smarter than you, so that when you have to delegate to them, they’ll make a smart decision. It’s not an easy thing because you have to admit your own limitations as an entrepreneur, and entrepreneurs like to think they can do everything. You have to trust people with your baby, which is tough.

How do you finance your business to manage cash flow or growth?

We are in one of those businesses where you can really work on your working capital. We are able to get paid most of the time before we have to pay manufacturing. Normally, in the food industry, you have net 30 days. We normally pay our manufacturers in 90 days. So, as we grow and get more orders, we are able to have negative working capital, so the growth is financing itself.

What’s the biggest mistake you made early on?

At the beginning, you need other people to succeed. Say we needed a graphic designer, for example. We asked friends and family and hired a friend of a friend, but didn’t really do any due diligence. We hired a lot of people at the beginning who were not that good, but who were friends of friends. Unfortunately, you really need to look at their work and judge on what they’ve been doing rather than on the connection you have with them.

When you start, some of your friends will really want to help you, but you have to ask yourself, “Are they really helping and providing anything positive for the business?” We made this mistake. At the beginning, you just want help, but you need to develop a critical eye.

What’s the smartest thing you did in your first year?

Whenever you start a company, you need to think about the upside potential. For us, that has been a driving principal behind all our decisions since Day 1. We would say, “Let’s look at these two options. What is the upside?” That has allowed us to make investments early on that have paid off. People are sometimes reticent to spend money because they look at the short term. You need to have a longer-term perspective. That’s put us on a good path. You plant the seed, and it takes time, but you know it’s going to grow.

What’s the most rewarding thing about owning a business?

It’s what’s happening for us now – The business is becoming bigger than just me and my partners. Back to the metaphor of the business being like a child, the business has started going on its own, like a child walking. It falls the first few times, but it eventually starts walking by itself. The corporation and brand now have a life of their own beyond the founders. It’s like “wow,” to have created something from nothing.

Future Plans

 What does the future look like for your business?

We are growing. We hope to be in about 2,000 retailers across the country by the end of 2015.

What advice do you have for someone starting a business?

Try to test the market. Whenever someone comes to me and says, “I have this idea for a product, but I don’t know how I’m going to manufacture 10 million,” I say, “No, no. Just start in your kitchen with your friends and get feedback. Feedback early on is key.” What we do today is so different than when we started. We’ve made so many changes as we went along because the market asked for it. Don’t be stubborn. If the market doesn’t like what you’re doing or the way you’re doing it, change your product. It’s not easy, because it’s your baby. But that’s why a lot of startups die. You should always be a student, not a teacher. You have to listen to and learn from what the market says. If you listen, you’ll eventually succeed.

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About the Author — Jared Proctor is Brand Director at Nav. He has over fifteen years of financial services experience and is passionate about small business issues. Jared is married to a small business owner and he's a father of twin toddlers, so discovering time hacks is a matter of survival.

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