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Small Business Success Story: Great Lakes’ Successful Kickstarter Campaign

Jan. 27, 2015
Small Business
David Burke and Spencer Barrett
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For Minnesotans like David Burke and Spencer Barrett, heading “up north” to spend summers at family lake cabins is the reward for enduring the state’s punishing winters. Thanks to days spent water-skiing, fishing or simply enjoying the region’s peace and quiet, these trips played an instrumental role in both men’s upbringing. So much so, in fact, that Burke and Barrett drew on them for inspiration in launching a new clothing company.

“In the apparel industry, there aren’t many companies that represent the Midwestern lifestyle,” says Burke, a 2013 graduate of the University of St. Thomas in Saint Paul. “We saw that opportunity in the market and ran with it.”

Upon graduating, he and childhood friend Barrett, a 2013 graduate of the University of Minnesota’s Carlson School of Management, created an apparel line that reflected the spirit and values of their home state. They chose the loon, Minnesota’s state bird, as their company’s logo. Coming up with a name wasn’t tough either: Great Lakes Clothing Co., or Great Lakes for short.

Selling T-shirts out of their cars

Burke and Barrett quickly developed several T-shirt designs and, thanks to a cash injection of about $20,000 from their families, worked with a manufacturer to get the shirts produced before selling the gear out of the trunks of their cars.

“When we began, we just ordered wholesale shirts from American Apparel and decorated it with our designs/logos,” Barrett writes in an email. “Once we realized you have to make your own product to really distinguish yourself, we moved our manufacturing to North Carolina in early 2014.”

Encouraged by strong sales before moving production out of state, the team knew they’d need additional financing to keep the momentum going.

As they surveyed their options, they agreed that they didn’t want to give up ownership in exchange for investment. Doing so would have compromised their goal of expanding Great Lakes on their own terms, so they decided to “keep the bootstrapping strategy alive and well,” as Burke puts it.

In the summer of 2013, Burke and Barrett turned to Kickstarter, a popular reward-based crowdfunding platform. Unlike equity-based platforms, where investors receive a stake in whatever company they contribute to, Kickstarter features a tiered reward system. The more a person donates to a campaign, the better the reward he or she receives from the company behind the campaign.

Why Kickstarter?

Wary of small businesses defaulting on their loans, banks and credit unions cut back on the number of loans they extended after the 2008-09 recession. Because entrepreneurs remained hungry for financing, crowdfunding platforms like Kickstarter began filling the void.

Every campaign — or “project,” as Kickstarter calls them — gets its own page on the platform’s website to post a short video describing the venture, its funding goals and the rewards being offered. Potential donors can look through these projects to determine whether they’d like to back any of them.

“If you’re thinking of launching a project, take your time and really outline clearly what your story is,” advises Justin Kazmark, a Kickstarter spokesman.

Since Kickstarter began in 2009, about 40% of projects have reached their funding goals. The crowdfunding platform takes a fee of 5% of the total funds collected for successful campaigns (0% for campaigns that fail to meet their goal).

“Kickstarter was a great platform on which to tell our story,” Barrett says. “You can really use it as a marketing tactic.”

Though Burke and Barrett had to educate friends, family, and other potential backers about how Kickstarter worked, they say it helped that they were able to point to the many businesses that had already used the platform successfully.

Thanks to their efforts, Great Lakes surpassed its target goal of $20,000, raising $24,392 from 346 backers over the course of one month — an average of about $70 per donor. The majority of the money went toward purchasing raw materials, including fabric for new polos and leather for a new line of belts. The remaining funds were used for manufacturing costs.

As well as helping Great Lakes expand its line of products, the Kickstarter campaign also provided Burke and Barrett with a welcome boost of confidence.

“If you run a successful Kickstarter campaign, it’s an added bonus and validator that people actually want the idea to happen,” Burke says.

What’s in store for 2015

After an encouraging first two years in business, Burke and Barrett foresee continued expansion. Sales increased by 250% from 2013 to 2014, Barrett says.

“At the moment, we’re crunching the numbers to figure out how to blow this up and turn it into something bigger,” he says.

The founders will offer new, seasonally appropriate items as the year unfolds, such as a women’s tote bag and a men’s oxford button-down. A two-man operation up to now, Great Lakes also hopes to hire a designer to help expand the range of products.

Though still early in the process, Burke and Barrett are toying with the idea of opening their own flagship store in the Chain of Lakes district in western Minneapolis, a popular area among recent college graduates. Until then, they plan on opening a pop-up store this summer to help complement their online sales.

Tips for small business owners

In their Kickstarter campaign, Burke and Barrett offered 11 rewards ranging from a koozie for donating $5 to exclusive access to new gear for anyone that contributed $1,500 or more.

“Always have a minimum reward that anyone can hit,” Barrett says. “It’s always good to have a number where people can just show their support. Also, have one sort of outlandish reward. We woke up one morning and saw a notification saying someone chose our $1,500 pledge option.”

“You never know who’s going to watch your video,” he says.

Meanwhile, Kazmark recommends that entrepreneurs become first become backers of someone else’s campaign before launching their own. “Get a sense of what it means to be a backer because soon you’re going to be on the other side of the coin,” he says.

More broadly, Burke and Barrett say a new business should be based on something an entrepreneur is passionate about. “It has to be something that doesn’t really feel like work,” Barrett says. “For us, that was a no-brainer, since the Midwestern, outdoor lifestyle was important to both of us and something that resonates with people in the area. We wanted to incorporate that into our brand.”

Though they haven’t had to recover from any major missteps, Burke also stresses the importance of learning from mistakes.

“Don’t be afraid to fail,” he says. “Fail fast, learn from it, and tweak and pivot your strategy.”

Image courtesy Great Lakes Clothing Co.