Last year, Necole Kane left a hole in the Black blogosphere when she announced that she was stepping away from the brand that made her famous and well, rich. NecoleBitchie.com, a site fueled by celebrity gossip, was revered by readers as one of the more dignified guilty pleasures despite the salacious nature of the content. Necole, however, was ready for a change and rebranded her site as NecoleXO.com, a digital hub dedicated to inspiring women of color to live their best lives, one post at a time. Last week, however, Necole confessed via her Youtube channel that the road to hell is paved in good intentions, as evidenced by her current dire financial state. Here are some of the biggest lessons a creative entrepreneur could learn from Kane’s situation.
1. Lack of differentiating business accounts from personal accounts
“I paid my staff out of my own pocket.”
Over the course of nearly a decade, Necole’s digital presence grew from just a blog ran by a team of one to a full fledged business with a staff and rotating business expenditures. In the video, Necole admitted that the amount of upkeep far outweighed what the brand was pulling in, leaving her to drain her business accounts and pay her staff with personal money. An Intuit-Quick Books blog post strongly advises against this:
If your business is a corporation, you must keep business finances separate because the business is considered a separate legal entity. If you have structured your business as a sole proprietorship, it’s considered an unincorporated business with no legal distinction between it and you, its only owner. Through the sole proprietorship, all profits, losses and liabilities are tied to you personally. Because of this, it’s even more imperative for a sole proprietor to keep business and personal finances separate in case of an IRS audit.
She later mentioned that looking back, she realized that once she reached that point, she should’ve restructured her business, renegotiated staff salaries and created a stringent budget in an effort to keep her finances separate.
2. No investors
“Sometimes you have to invest in yourself before others will, so I spent every dime I had to make sure the site was successful.”
Necole said she thought the substantial savings she carried over from her NecoleBitchie success would be enough to sustain her new brand while it built itself, so she avoided taking on any partners.
“I didn’t work with any investors because I never thought I would need one,” she said.
Karl Stark and Bill Stewart, founders of Avondale Strategic Partners said in times of uncertainty, investors aren’t always a bad idea. “When bootstrapping growth is no longer viable should you begin looking for outside investors,” they said. Just be sure to be completely transparent with he investors and come up with a strategy that works for both parties involved.
3. Accumulating bad debt without a sound repayment plan
“I borrowed money without the money to pay it back.”
After exhausting her savings, Necole sought financial reprieve through a loans, which kept her business afloat for a short while.
“I borrowed some money, which I burned through pretty quickly, so I turned and found myself broke and in debt,” she said.
Joseph Benoit of Entrepreneur Magazine said identifying areas where you can reduce costs and increase revenue are essential to small business survival, regardless of how deeply indebted they are.
“Reviewing interest rates, negotiating with suppliers and connecting with customers to figure out which services aren’t necessary” are great ways to begin managing debt more efficiently and revive your business’s cash flow.
4. Competing with prior successes without putting the time behind it
“I was comparing the eight year successful run of a brand to that of a six month old site with a completely new concept–big mistake.”
Necole said that she was often disappointed with reception of her new site because she subconsciously compared it to her NecoleBitchie.com’s epic following.
“I would look at low click rates or think about how advertisers weren’t knocking down my door to work with NecoleXO like they once did with NecoleBitchie.com.”
5. Living beyond one’s means
“I knew that everyone already knew my name, so I was extremely concerned with faking the funk no matter how damaging it was.”
Necole made a name for herself as the first gossip blogger that hired a publicist to take her down red carpets and ultimately help foster relationships with some of the most famed celebrities in entertainment. However, that popularity, she said, is the very thing helped dig herself further and further into financial ruin.
“I was living like I was the owner of Radio One or something, eating at fancy places and doing things I wasn’t prepared financially for,” she said, later realizing the importance of being your authentic self regardless of what others think.
Although she primarily discussed overextending herself financially in the video, she also touched on stretching herself too thin in her professional duties as well.
“You have to decide if you want to be a blogger, a brand or a businesswoman but you can’t successfully do it all just because people think that you should live up to that superhuman standard,” she said. “If you want to be the face of your brand, you have to find someone to run your business for you.”
6. Being afraid to start over
Necole fought back tears when recounting one of the lowest parts of her journey, a conversation with her aunt back in 2016.
“It got to the point where I felt like I had nothing,” she said. “So I called my aunt that I lived with over eight years ago when I first started my blog and told her ‘if I need to come live with you again, would you allow me?’ ” She said she would.
Necole said once she received confirmation that she was allowed to have a new beginning with the support of her family behind her, she vowed to herself that she would pursue success once again, from scratch.
“Never be afraid to set the reset button on your life as many times as you need to.”
MADE by Jasmine Browley