Thursday, February 28, 2008

Growing Pains

As you know, my husband and I started a promotional products company last year to help us overcome our real estate losses. We have been overwhelmed by the sheer amount of opportunity available to us. It's just a bit too much.

To get our feet wet, we took on many very small accounts here in Temecula. It's great to get to know these customers and work closely with them (that's my husband's job), but the profits from these have been small. Minuscule, to be exact. The work involved, on the other hand, in the development of the design and graphics, and the completion of the project, takes many hours. This has distracted us from the bigger accounts.

In two of the other areas that we've branched into, we have very large customers. However, they haven't been serviced by us in a timely manner because of all the work involved with the many small businesses clients. Now that most of the less profitable initial orders have been fulfilled (reorders are much easier), we've decided to pursue only large accounts and service fewer of them. For example, we can have 200 smaller customers or 25 big ones, which would net us about the same profit. Besides volume, of course, this is due to the fact that the products we order have steep discounts at higher quantities. Some of these big businesses order 1,000 or more of the same item with the same graphic, while our smaller clients may make 24-72 piece orders. The work is identical, the profit is more.

Our challenge now, as we suffer these growing pains, is to show our customers at the large accounts that the turn around time is much faster than previously estimated, and to start pumping out the products (there are numerous steps prior to the completion of one new order). By developing a good reputation in a close-nit industry or two, our business will grow by word of mouth and personal customer service. It has already, but with the less profitable companies. So we may have to turn down some new clients, who don't have the volume to satisfy our desired profit margin (unless they can combine orders with other business owners, which has happened in the past).

We're consulting with advisers and mentors about forming a strong foundation in order to start hiring contract employees. Without the proper internal structure to handle the training, management, payroll, and order fulfillment of a single employee (or more), our business would not be on solid ground. We would lose customers by having too many orders and either not being able to fulfill them, or completing them in an unsatisfactory manner.

So, I must be patient, as my ever-so-wise husband reminds me--on a daily (or sometimes hourly) basis. If I get too eager, I think I'll just blog about it instead of bugging him.