Crossing the Chasm from Small Business to National Brand

When interviewing business owners it’s rare that I meet business owners who don’t want to grow into a national brand. For those who aspire for this status, expanded distribution is key. A company can grow one of two ways: by getting new people to buy its products or getting current customers to buy more. Ideally, a company will attempt to achieve both of these objectives. Choosing to grow by extending the customer base is always a viable strategy, regardless of what one sells. If you seek national brand status for your business, it is achievable. Deciding which path to take as you work to obtain this objective depends on your preferences and available resources.

Planning for National Status by Growing Your Base - Options & Considerations

Saturate the Boutique Market
There are roughly 13,000 children’s boutiques throughout the United States. Most are owner operated and not affiliated with a chain or franchise. If this is your chosen path, be prepared to regularly attend trade shows, advertise in trade publications and have a solid sales force in place. It will take persistence to reach and retain so many unique stores. Certainly, boutiques are a great market and good way to establish your business, but they have their limitations, such as high churn levels and the logistics of servicing so many individual customers.

Growing Internationally
It’s impressive to say a company’s products are sold in a dozen or more countries around the world. With the advent of technology, it’s now easier than ever to make your business known throughout the world. International business transactions have their own issues that should be investigated when pursuing this growth avenue.

From an operational standpoint, multiple currencies, exchange rates and shipping fees/times all need to be considered. From a brand building/marketing standpoint, companies need be mindful of the varying cultures and languages. What is seemingly innocent or appropriate in the United States could very well be offensive somewhere else.

Growing via National Chains
National chains are an efficient means to grow quickly. Some retail chains boast over 1,000 stores. The challenge here is deciding which stores are the right fit for your business. I’ve found that many specialty children’s brands identify with the premium retailers such as Saks, Niemen Marcus or Nordstrom’s. The quality positioning of these retailers is very attractive to many business owners looking to maintain higher price points and/or margins for their goods.

When pursuing these retailers, be mindful that these three chains combined have a total of approximately 220 stores. Sounds like a lot, but pales in comparison to chains to like Macy’s with 800 stores, JC Penney with 1,100 stores and Target with 1,700; where a trade off in margin could ultimately result in higher overall revenues and profits. Ultimately, it all boils down to your vision, your timelines for growth and your brand fit with the retailer.

Growing Electronically (aka via a Company Website)
Website sales are lucrative to a business. By selling directly to the consumer margins are maximized. Efforts to grow this channel seem like an obvious choice. However, some businesses don’t want to take away sales from their retailers. Others want to provide their products to those living in areas where products are not easily available.

A consideration when growing Web sales is the operational impact of hand picking individual orders. Doing so can task resources and potentially compromise service to retailers. It’s a strategic choice and one that needs to make sense for a business.

The Costs of Growth

This old adage has its merits: “It takes money to make money.” Starting off slowly with individual boutiques is a manageable challenge for most small businesses. Taking the leap from boutique business to national brand requires monetary investments.

First steps for growth are to communicate your existence and value proposition to the market at large. Whether you choose to do this by attending multiple trade shows, employing an army of sales representatives or advertising in trade and consumer publications or any combination thereof, it will cost you. These costs must be budgeted and planned for in order to effectively meet the growth goals.

Another budgetary consideration is the overall cost associated with the fulfillment of large retailer orders. Making available the capital needed to produce the inventory necessary, such that your business can deliver large quantity orders on time and in full, is a requirement when pursuing growth strategies. If national growth is a goal, especially via national chains, it would be wise to create a contingency plan for obtaining the finances necessary to successfully service new customers.

Other Considerations

Also important to note is the value of having a reliable factory that can withstand the added capacity and will be able to accommodate the particular requirements of national chains.

Another consideration is ensuring there are bar codes with SKU’s on your products so that larger retailers can add your products to their systems and track the sales. Further to this point: Can you ship by the pallet? Are you familiar with EDI (electron data interchange)? Do you have the staff in place to handle all these changes? These are questions you need to consider as you develop and pursue your growth plan.

Making the Leap

If your vision is to see your business grow and cross the chasm from small business to national brand, then you need to be prepared to make some important decisions. Which channel(s) will you employ to fuel the growth? Are you ready and able to invest in strategic spending? Are you operationally capable?

If you answer “yes” to the above, then you are poised to make the proverbial leap. If not, then you need to look at your business and decide what element is holding you back and determine what your options are for overcoming that challenge. You can do it, provided of course, you plan accordingly.

About Insights Discovered
Penny Redlin is a regular contributor to the “Business Sense” feature on The Giggle Guide, sharing insights about business planning, effective communications and marketing strategies. To read more articles by Penny Redlin, see http://thegiggleguide.com/biz/features/business-sense

Based in Las Vegas, Nevada, Insights Discovered was founded by Penny Redlin in an effort to share her professional expertise within the children’s product category. The company’s mission is to give every mompreneur an opportunity for success. Insights Discovered exclusively services children’s products brands. The specific industry focus demonstrates a strong dedication to the unique needs of children’s products companies. Insights Discovered offers strategic planning, market research and traditional marketing services.

For more information, visit www.insightsdiscovered.com or call 702.218.5707.