Excellent article on entrepreneurship, and using existing business models to lower the risks of owning one's own business!

Link to the original article here.

Creative Business – Tie Society

2012 by Mark Shead

Some time back I wrote an article called You Are Self-Employed. The premise was that being an employee doesn’t really offer any job security and if it doesn’t offer job security, you may want to consider starting your own business. I also mentioned that it is probably easier to start a business today than it ever has been. The comments were where things got interesting though. It turns out a lot of people think of starting a business as something that requires huge amounts of capital. But not every company requires millions of dollars to start–particularly if you are willing to be creative.

This past week I got a call from a company that is doing just that–being very creative. They are called Tie Society and the best way to describe them is Netflix for neckties. The idea started when Zac Gittens and Otis Collins began trading ties to keep variety in their wardrobe without buying new ties all the time. They took that idea and created their company that lets you borrow ties, keep them until you don’t need them anymore, and then send them back for different ties. Pricing is $11 to $50 per month. The cheapest plan lets you have a single item out each month while the top plan lets you have 10.

If you only wear a tie every few month, Tie Society may not make sense. But if you wear a tie every day the economics can start looking attractive–particularly if you are in a position where you need to have a lot of variety in the way you dress. Tie Society also gives you the ability to purchase the ties that you decide you need as a permanent part of your wardrobe.

In addition to ties, Tie Society also carries cuff links and pocket squares. The shipping process is very much like NetFlix. You get a mailer prepaid mailer that can be used to ship items back when you are ready for a change.

The thing that impressed me the most about Tie Society is the creativity that went into their business model. $80 seems to be typical price for a tie at a men’s clothing store, but sales are very common at up to 50% off. Tie Society skips the clothing store and buys direct, so their costs are presumably much lower. At their $30 plan, the cost is probably similar to buying a new tie every other month, but Tie Society gives you 5 items and the ability to swap them out at any time.  So for the consumer who wears ties all the time and needs lots of variety the pricing makes sense.

Ties are also one of the few things that are pretty much interchangeable. This let them launch their business without needing a huge inventory to start with. I can wear the same tie as 98% of the other men in the world. But pretty much every suit jacket I have has been altered in someway to make it fit better. Ties are unique in their interchangeability and allows this company to launch their business without requiring a huge investment of capital in nearly duplicate inventory.

Ties, pocket squares and cuff links also are easy and inexpensive to ship back and forth using the postal service. And ties don’t take up much space. They don’t need a huge warehouse to house there inventory.

So back to the idea of starting your own business, if you are looking for an example of a small business with a lot of creativity behind it, take a look at Tie Society. If you want to start your own business, don’t try to copy their business idea, but by all means pay attention to the way they creatively came up with a business that has a good chance of success without requiring a huge amount of startup capital.