Creative Leisure News - "Vinny da Vendor"

Challenges, problems, and triumphs -- from a manufacturer's perspective.

The Trials of a Small Company, Pt. II

Expensive advertising, false promises, and little education.

by Anonymous (March, 2004)

(Editor's note: As we suspected, "The Trials of a Small Company" drew a large response. That column is still accessible by clicking on the title in the right-hand column. Here is an example of the responses, this one from yet another very small business owner.)

Wow! It was so refreshing to see this column today. It echoed much of what I've been thinking/feeling for 18 months now. While we are fortunate to have our products in a large number of stores already (thanks in much part to exhibiting at HIA, ACCI and Memory Trends in 2003 and HIA in 2004, all of which take a big chunk of $$$), advertising has been a big frustration for us.

We chose a trade magazine before consumer publications because we thought that educating the store owners/buyers first would be beneficial. (Plus, the magazine gave us a great rate!) Advertising in this trade publication has been extremely beneficial. We are developing brand-awareness with the store owners/buyers so that when they see us at the trade shows, they recognize our name and product. We have never lost money by advertising in the magazine � we always gain enough new stores and sales from each ad to easily cover the cost of the ad.

However, there has to be a balance between stores telling the consumer they "need" a certain product and the consumer requesting said product from the store for us to increase our sales. Because of this, we are looking to advertise more extensively in consumer publications.

Oh my gosh! Talk about sticker shock! Even a quarter-page ad is sky-high and 1/12 page just doesn't do justice to our product. We have been fortunate, however, that five of the magazines devoted some editorial to us in 2003-4. This is coverage that money cannot buy and is so valuable to us as a relatively new company.

That said, however, it's very difficult to break into this market without a big name behind us. Stores talk about wanting "unique" products in their stores to differentiate themselves from the chains, yet are sometimes unwilling to promote the products with classes, demos, etc. (Those who do have tremendous sales and tell us that our products "fly off the shelves" and they have the re-orders to back that up.) They can also be reluctant to take a chance on new manufacturers for various (and sometimes valid) reasons.

Education?

When we started in this business, I was hopeful that HIA and ACCI would provide some educational assistance. However, most of the workshops at the trade shows are geared specifically toward the retailers. There is very little available for the small manufacturer, with the exception of a few chapters in Sue DiFranco's books. (Editor's note: DiFranco's books are published by Fun Facts Publishing � www.funfactspublishing.com.)

Investors?

Our first HIA experience (also in 2003, same as your anonymous columnist) was very exciting. We were brand new, with dreams and hopes of making a living doing what we love. We were bombarded with advertising requests (similar to your columnist), but were also approached by a prospective buyer (a major company whose name you would know). To satisfy his requests, we applied for patent protection on our product, signed a confidentiality agreement, provided names of suppliers, financial info, etc.

Where has this gotten us? Nowhere. He must have lost interest in us, but we don't

really know because he won't even give us the courtesy of telling us that he's no longer interested.

We spent much of 2003 in limbo, anticipating a buyout and therefore not knowing how much to plan ahead in terms of trade shows, advertising, etc. Finally we just decided to forget about that and forge ahead with our own plans.

In the meantime, yet another company (a medium-size company in our market) has knocked off our product and continues to sell it even after being sent a cease & desist letter. However, until our patent is finalized (probably fall of 2004), there's not much we can do to protect ourselves (and even when we do have full patent protection, it will cost a considerable amount of money to enforce it).

So I echo your columnist's feeling of frustration and wondering "where do we go from here?" It is not enough to have a good idea or product. There has to be money behind it to enable growth. The old saying "you have to have money to make money" is very true in this industry.

It is my hope that the newly-formed CHA will address our concerns and needs in ways that HIA and ACCI have not.

(Note: to read previous articles in this section, click on the titles in the right-hand column. To comment, email Mike Hartnett at mike@clnonline.com.)

xxx