Melissa Sherwood is a mother, wife and a dam-good businesswoman. Hailing from Massachusetts, Melissa owns a quickly growing women’s fitness apparel company. She founded this company after a long and successful career in an unrelated industry, was snatched from beneath her. To move on she had to find new ground to stand on. We all have had those moments when everything you have ever known was removed unexpectedly and in order to maintain, you had to find something to fill that void. In Melissa’s case she filled it with a passion project that developed into a self-sustaining business.
Melissa describes growing up in Massachusetts as a great experience, surrounded by a great community, “I’ve lived in California, I’ve lived in New Hampshire and there’s nothing like living here, I jus love it.” When she was 11 years old her parents went through a divorce, which you can only imagine had a great impact on her and her two siblings. When you are a kid your world is so small, the group of people you consider a part of that world is too, small. So when two people of that small world, who were previously a centerpiece of it, decide to change your small world for reasons you can’t understand. It can be a lot to cope with. The splitting of her parents taught her a lot about life, early on. She attributes this experience for not only leading her to embrace independence earlier than most children, but also showed her the importance of earning her own money. From the moment she could, Melissa has had a job, which started with scooping ice cream at 14.
Though she had a great childhood despite the split, Melissa immersed herself into athletics at this period of time more than ever. Through athletics Melissa experienced her first leadership roles as team captain of the track team. Which helped her gain a lot of people skills that she still holds today. Through the experience of earning her own money as a youth, which was the primary source for things she wanted, she learned the value of a dollar. “You quickly learn the value of a dollar and whether I want to spend my money on that. It’s very easy to spend somebody else’s money. I try to teach my kids that and they already are picking up on it. Like, ‘yeah ok you want that, you want me to buy that but if you were buying it would you spend your money on it?’ and usually the answer is ‘no’”. Which we agreed is something a lot of investors should ask people that they invest in. It’s easy to spend someone else’s money on something, but what about your own?
“I think investors should pay more attention to really what is behind the entrepreneur in terms of that mindset.”
In college Melissa studied psychology. After college her first job role was in copier and fax machine sales, which she hated. “It was as entry level as you can get. It was sales 101, lots of doors slammed in your face.” The job was difficult, not fun and paid poorly. After a couple of years out of school Melissa started dating a man, who is now her husband. While they were dating he had an opportunity to take a job in Northern California and she decided to move with him. While in California, “I really began to hit my stride” Melissa took a job as a technical recruiter in the heart of a booming Silicon Valley; San Jose, California. It was a great niche for Melissa, a lover of people and skilled in sales, she really excelled in this industry. Shortly after starting she began to generate a great income and create the career that she had always wanted. After some years in California she and her husband returned to Massachusetts to be closer to family and fortunately for both for them, they were able to keep their jobs.
When she returned to Massachusetts, Melissa decided to get into a different role in recruiting. She changed companies and began working at a startup, which gave her a whole new experience with business than she had been exposed to previously. Now she was talking about company growth, fundraising rounds and her peers were entrepreneurs. After the attacks on September 11th, 2001 to the World Trade Center in New York City, the economy in The United States took a great downturn. Due to the downturn in the economy, Melissa’s company had to go through a period of layoffs and she was let go. This period of time was difficult for her, not only was she pregnant with her first child but her job meant a lot to her. “I had no idea that so much of my identity was wrapped up in my career.”
After being a stay at home mom for a period of time, she realized that there were more important things than making a 6-figure income. Though she never wanted to leave her little girl everyday to go to work, she decided that she also didn’t want to only be a mom.
“I don’t need to make six figures a year to make a paycheck, it can be a small paycheck but I just wanted a paycheck.”
While staying at home now more than ever, Melissa started getting back into her lifestyle of fitness and went to the gym daily. One day at the gym one of the owners suggested that she get certified as an instructor for spin (Stationary Bicycle) classes. So the very next weekend Melissa took her advice; got certified in spin and became an instructor. While working full time as an instructor Melissa continued to get certified in other areas of fitness and started building her brand as a fitness instructor. One day after some scrutiny and discipline from her boss about her very popular and sought after teaching style she decided it was time to embark out on her own. Personally, I think her boss was just a hater.
While reading the newspaper one day her husband read an article about a guy that had opened up the first boutique gym in their area. He suggested that she should go talk to him about using his space to teach classes. She did and they made one of the best deals that you’d ever hope for when starting a new company. Instead of charging her to use the space they agreed on a shared profit structure, so he only made money if she did. So naturally he was very interested in her success and gave her all the resources she needed. She brought her following of people who loved her teaching style and he provided the space, truly a great situation.
One of the people who was part of this following was a very successful businesswoman who requested to advise Melissa on how she could grow her revenue. The advice was to create an additional revenue stream by selling merchandise. Melissa started to sell a woman’s athletic clothing line and in months saw her revenues grow exponentially. In fact she was so successful that she gained the attention of the owner. He was so impressed by her approach to selling that he brought her on as a consultant for their marketing and sales. While working there she developed their direct sales team and quickly created a sales team of ten direct sales people across the country. Melissa’s growth as a retailer was limited to one factor and that was the inability to sell directly online. Anytime she had a client who wanted to purchase more, unless they bought directly from her in person she received no credit for the sale, which meant no money. After sometime and frustration she decided to embark out on her own again this time to start her own clothing line.
Initially the owner of the company she was working with wanted to go into business with her, at a 25/75 split in his favor. He’d handle the manufacturing and she would handle the sales and marketing. He felt that his manufacturing resources warranted him a larger portion of equity. Melissa knew her worth and didn't want to settle for anything less than an equal share. They couldn’t come to an agreement and shortly afterwards, parted ways. This was the moment that lead to the birth of Klara Kelly.
In life it is important to know when to walk away from a relationship. Business relationships are no different. In business everyone feels that the skill that they bring to the table is highly important, which is a good thing. But like with most pros comes a con. With this self importance, it can lead one to think the skills and values that others bring are not as valuable as their own. In business it is important to identify these instances early on and “nip it in the bud”. If there is no improvement after discussing, it is important to move on and quickly. No hard feelings, this is business.
Melissa started Klara Kelly with a large customer base to sell to. There wasn’t much time needed to ramp up her sales because she was still teaching spin classes and was still selling directly to her customers. One day it was one product, the next day it was her own. She sold all kind of styles of clothing under her brand but one item in particular really took off and that was a style of headband that she designed for herself. She started by selling directly to high-end spin classes, because she knew from her experience the benefit of having additional streams of revenue like retail items with good profit margins. Initially she started with a local manufacturer in Massachusetts. After her production needs reached a certain point she had to find new a manufacturer that could handle her production needs and with a certain level of quality. Melissa contacted a friend who owned a 35,000 square foot manufacturing plant in California, who was able to fulfill her orders. This was a relationship she had cultivated over the years and is a prime example that maintaining good relationships is not only good rule of thumb for life, but for business. Melissa now, not only does business with an old friend but her quality has skyrocketed and she is able to keep her product American made.
“I feel like when it’s over it’s over, but this is business. It took a lot of personal growth to step outside of that and say ‘you know what, this is not about ego, this is not about – this is about business’.”
Melissa’s plans for Klara Kelly is to scale the business. Essentially, selling a massive amount of units to other retailers. To achieve “scale” the volume of sales will have to be high and the revenue per item will be low, lower than they are now. The volume of sales will be so high that though the revenue per unit is lower, so will her fixed costs that would be there no matter how much she sells and in the end her profits will be much larger. In addition, she has plans for adding new products to the lineup.
What does Melissa advise for new and up coming entrepreneurs?
“The thing that has helped me the most is the ability to be aware of the opportunities that surround you. Because I believe that your destiny is around you, you just have to pick up on it….I always say, ‘Go where it’s flowing’ don’t try to paddle upstream and go where it’s tough. It doesn’t mean that you don’t have to work hard at something that is flowing. For example our sales for the headbands are flowing, people are ordering on the website and stores are reordering….I think that sometimes – especially entrepreneurs, try to make some things happen that aren’t meant to be. It doesn’t mean that you can’t be an entrepreneur, it just means that maybe that’s not the door that you should be trying to get through….who knew that I’d be selling headbands? I didn’t. You need to do something every day to grow your business, no matter how little it is. Even if it’s changing the copy on your hangtag that makes your products more sellable. As entrepreneurs we want things to happen right away and maybe you are not ready for ‘that’. Maybe I wasn’t prepared for a big box retailer to come to me six months ago and say, ‘we need ten thousand pieces. How, how could I do that? Now I can do that, but six months ago I didn’t have the capabilities to do that.”