Know-How Exchange : Strategy

Mgoodman, thanks for your response. I think my objective has a little bit of everything you pointed out. Making jewelry and clothing on an individual, commissioned basis simply isn't for me any longer at this point. I have been designing and creating these pieces for years and I think it's time to step it up.

I am confident that I bring a different aesthetic to the market and I already know what consumer base I am targeting with my style. In fact, I think I'd be more comfortable selling my products directly to the consumer, as I've been marketing and representing myself to the consumer for years and it's something I am comfortable with. I'm looking into wholesaling only to keep my options open during these initial steps.

Mainly, what I'm looking to do is expand while still keeping my product limited enough to make demand. From the research I have done, to me that means moving on from making things by hand on a small scale, and letting a manufacturer handle that for me. And again, this implies to me that offering more means involving the issues of inventory and distribution.

But basically, I'd like to focus more on my designs and hand over creation of my product to another. And in doing so, I'd like to expand in the process.

CarolBlaha, thanks for your response. If I understand you correctly, going overseas doesn't seem like the best bet for me then? I am protective of my designs and want them to remain my own. And I'm not sure how much US law can protect me when it comes to my intellectual property and such.

Also, I assumed that I would be getting factory samples of my product before they were actually made available for sale. Perhaps I was assuming too much there.

PhilGrisolia=Results, thanks for your response.

Currently, my consumer base is worldwide and I'm not sure the origin of my products matters as much to my consumers as the design and originality they offer.

The main reason I was looking to stay in the US was simply because I thought it would be easier to communicate directly with my manufacturer. And also because I feel my ideas would be more protected within the US.

I also do not want to deal with inventory and distribution whatsoever (as the shipping aspect of my products in the past gave me the worst stress headache).

While I DID have a business plan, those figures were based on my business practices in the past, where I took on commissions of my designs on an individual basis. I'd like to keep the prices of my products similar, if not a bit less, than what I was charging before. But this is difficult given that I am currently unsure which route of manufacturing I want to take, the respective costs, and how these costs will affect my profit margin. Obviously, the route I'm expecting to take will be a decrease of my profit margin with my overall income and available personal time increasing given the greater amount of products I intend to sell.

You ducked the question of how much you're prepared to invest in this expanded business concept, or how much money you expect the business to generate over the next 5-10 years.

That's important because the largest financial impact of what you're doing is likely to be marketing. And if you aren't prepared to invest a lot of money in marketing, it's not likely you'll ever generate enough revenue to make the whole effort worth your while.

You need a revised business plan for the business you describe. An old business plan (for another business, essentially) is not going to help you with the decisions you'll have to make as you move forward.

Mgoodman, understanding that this is a network of marketing professionals, I'm still going to say that I feel marketing to have the smallest financial burden on my plans.

Perhaps this would be different if I chose to market my products on a wholesale level? But if I choose the direct route to the consumer, then I don't think I need to invest much money or time into that area. I say this only because I do have a loyal costumer base at the moment, and I do think it will grow steadily as I grow.

I am a bit presumptuous.

I understand that I need to revise my business plan to reflect my new goals, but as I said before, this is difficult given that I do not know the costs involved for the routes I am considering. Hence the point of my dilemma:

I'd like to map out the necessary steps for me to take that are the most economical and the least risky, of course. And in that way, I can formulate a new business plan that reflects my decided course of action and the costs involved. The type of manufacturer, distributor or not, etc. Following this, I will then be able to assess how much my new products will be cost and how much I will need to produce to make my efforts worthwhile.

In my experience, these factories are built for volume and I think you'll find your quantity too small for their model and the logistics too cumbersome.

As far as protecting your designs? Forget it. If what you are doing is good enough someone will knock you off. Plan for it.

It's actually scary how quickly it can be done. I was working with a company with Taiwan manufacturing (buyig container load) and we had to "match" a competing product to get a job.

We sent over the competing sample. In THREE days, we had the "match" in our hands. That includes the shipping time from Taiwan. We got the job and things were fine, till we had to reduce price to retain the customer. So, we switched factories-- and again -- in a NY minute, another factory was producing the exact product for us, a few cents cheaper.

But again, talk to an exporter/broker. There may be factories that are built for smaller quantities. In my experience, I have only worked with companies bringing product in container load. And when you talk to them, ask them about the export process itself so you are prepared for the uncertainties.

Without knowing any of the details, I think you're mistaken if you think you can grow your business by orders of magnitude without a substantial investment in marketing. Just growing by WOM from current customers isn't going to deliver the kind of growth you want/need. And the marketing cost is likely to be GREATER than whatever you might hope to save by finding inexpensive offshore manufacturing ( ... even if it materializes).

I certainly wish you success, but your questions and comments so far indicate that you really need to do some serious business planning before you invest more of your energy and resources in the production or operations side of the business. Make some assumptions and see how they play out financially. If you don't like the initial assumptions, make some alternate assumptions. Create best-case and worst-case scenarios.

The more of this you can do on paper (or electronic spreadsheet) before you spend time and money researching, the more focused you'll become on the things that count. For example, you might find that even with the least expensive manufacturing option, you don't make enough to payout the marketing investment required. Or that with the least expensive marketing plan you still need to get the manufacturing costs down. Or that your pricing strategy is not going to work at the volume levels you're assuming. Etc. Etc.

We are not trying to be negative or insensitive to your question and your needs. We're trying to share our experience gained with folks who were in your position a few years ago, decided to plow ahead and now have lost a lot of time and money because they didn't plan carefully up-front. It's a common phenomenon, unfortunately, and we hate to see it happen to the next person.

I just re-read your most recent post. The very first step you need to take is this:

Develop a business plan that makes reasonable assumptions about the costs, marketing investment required, volume and pricing. Then, using that as a base case, see what happens when you make best-case and worst-case assumptions.

Step two:

Based on the results of your preliminary business plan and sensitivity analysis, identify the critical success factors (i.e., the assumptions that have the greatest impact on your success/failure) and focus your energy on those items. Research them thoroughly.

Until you do these two steps, everything else is a distraction.

She probably wasn't ready to hear the answers we gave.

I apologize for forgetting to accept appropriate responses. That was my first post here on a one day old account at the time, so forgive me if I am "new" at this.