If you want your small business to succeed, you need to know where you are, where you want to go and how to get there.
Maria Brady was ready to make a career change. It was 1996, and the Pittsburgh-area working mom realized she wanted to spend more time with her growing family. She worked in marketing for area banks, traditionally a male-dominated industry that didn’t offer much in the way of flexibility.
So she ventured out on her own. Using her marketing expertise, she established a home-based agency called The Marketing Edge, which included branded merchandise. Three years later, the company became Marakae Marketing (asi/260725), named in honor of her and her two daughters, Rachael and Kailey. (The company’s name is pronounced mah-RAY-kay.) Her career change and home-based business were even featured in a local paper at the time, which called her efforts an example of “momtrepreneurship.”
“I wanted flexibility, and I wanted to make my own fate,” she says. “The best advice I ever received was always to make sure your job aligns with your values, which creates internal balance.”
Brady’s reasons were not unlike those of the entrepreneurs who run 30.2 million small businesses in the U.S., according to the Small Business Administration. Those millions of owners share a common goal: They want to see their businesses thrive.
To accomplish that, they have to know their company inside out: their value proposition, financial standing and why they went into business in the first place. They need to peer into the future and see the road ahead. They need to have a plan.
“Owners have to take inventory of their vision,” says Rick Cottrell, the St. Louis-based CEO and owner of BizResults.com. “They need to understand where they are and where they want to go.”
Even if owners have big dreams, they often sacrifice them for the day-to-day grind or habitually put them off. Don’t be afraid to see the whole picture, says Renee Dutia, Chief Planning Officer at Regali Inc. (asi/306112) in Richardson, TX.
“Have the courage to understand what’s going on around you, in your company, the industry and the larger economy,” she says. “When you fear failing, you can’t scale. When you panic, you can’t think. Do the right things and the money will follow.”
By taking smart, actionable steps, distributors can make good on the promise of their business. These tips will help lead the way.
In a crowded, commoditized industry like promo products, it’s important for companies to differentiate themselves. A distributor’s messaging should consistently point to the value it offers clients, and prospects won’t want to turn anywhere else.
Brady says she leaned on her marketing expertise gleaned during her time in the banking industry to establish her business and expand her menu of offerings. But sometimes, attendees at networking events cast doubt on her value, telling her in essence that companies like hers are a dime a dozen. She has a ready answer.
“I tell them, ‘With all due respect, I completely disagree. I’ll show you what we do and the results – I just need 15 minutes of your time,’” she says. “Own who you are and know what you can deliver. Don’t let anyone dismiss you, because they will. Your elevator pitch should be succinct and show how you’ve delivered proven results.”
Strengthen a value proposition by deep-diving into one industry and become an expert on their unique needs. Maria Healy, president of Kreative Marketing Inc. (asi/245820) in Neptune Beach, FL, has built on her experience with financial institutions to grow her industry base locally, nationally and internationally. Her independent sales rep has done the same for veterinarian and eye clinics. “Pursuing a niche was the best advice I received early on,” she says. “I started going to financial industry events and meeting people and now I work with a lot of them. When they find out you work with their competition, they want to work with you too.”
Monitor the physical space your company takes up, particularly how it impacts customer service and operations. To continue serving her clients at a high level through increased staffing and warehousing inventory, Healy recently took over the neighboring suite in her office building. If another one opened up, she says, she’d take that too.
Robert Rosenthal, owner of JP Promotional Products Inc. (asi/232668) of Ossining, NY, recommends occupying office space rather than a home office, if possible. “We’ve always positioned ourselves as a national distributor,” he says of his lean team of five. “Spend the money on a small office space so people know you have a business.”
Meanwhile, business is going so well for Regali – including double-digit growth over the past three years – that Dutia is considering buying a larger facility. “My one regret is that I didn’t buy real estate sooner,” she says. “Paying rent is money with no return. Buy what you can afford and it becomes part of the company. You’re growing your cash and credit, and it’s an investment.”
Knowing where your business is in terms of its size, potential and readiness for growth requires a long look at hard numbers. As a rule of thumb, be fiscally conservative with the business, says Dutia, and scale at a reasonable pace. “That’s how I’ve been successful,” she explains. “Your eyes have to be on the numbers: payables, receivables, cash flow, costs and expenses. Stay in your lane, but if you decide to change lanes, know how it will impact your bottom line.”
While a large dollar amount on an order may look appealing, all that glitters isn’t gold. Make sure you’re profitable in your transactions, says Brady. “Profitability is key to growth,” she says. “It might be a $1 million order but your margin is only 15%. Is that profitable? You also have to manage your cashflow by knowing what your receivables and payables are.”
Take a look at the entire picture of where your finances currently stand, not just at the amount of money coming in, and make strategic plans for it, says Jamie Watson, senior financial analyst at Certified Marketing Consultants, which offers business planning and financial advising services to promotional products firms. “Cash flow isn’t just about being profitable,” she explains. “It’s about cash management, which includes collection of accounts receivable, inventory, customer deposits, investment in capital expenditures, etc. We encourage our clients to create a projection of cash flow that helps forecast it beyond just profitability. At the end of the day, the sale isn’t over until the cash is in the bank.”
Be cautious of spending before you’re bringing in money, which can result in debt that can set your growth back and, in a worst-case scenario, put the company’s entire future in serious jeopardy. “Owners spend money on things before they’re profitable, like fancy logos and branding,” says Rosenthal. “Get the sales first, then spend the money.” He also recommends regulating overhead expenses, such as employee compensation, equipment, rent and travel costs, which can quickly balloon out of control.
“With a larger company, there’s tons of overhead. Now, I have more control,” says Rosenthal, who sold his large distributorship 17 years ago, which had 175 employees at its peak, and now works with his daughter Shari Pulver. “Our overhead is a fraction of what it was and we can set our own destiny. We decide how to spend money and when.”
When owners get too ambitious and overspend as a result, it can significantly impact the bottom line. “Take growth step by step,” says Allie Maloney-Peters, co-owner of Stitchery and More (asi/337025) in Nisku, AB. “Get to know your clients and buy one piece of equipment at a time. You don’t want to make promises you can’t keep.”
Minneapolis-based Liquid Screen Design LLC (asi/254663), which saw 900% growth between 2017 and 2019, just welcomed three additional full-time employees earlier this year, though all 14 people work remotely to keep overhead low. Owner Bryan Goltzman started hiring new employees beginning with the back end, in order to service the orders he and his business partner were bringing in. It’s only now that they’re starting to hire inside and outside sales reps. “We wanted to grow without overpromising,” says Goltzman. “And now we have the staff address issues directly so it doesn’t bog us down.”
Healy has found herself in an interesting – and, for many distributors, envious – situation: her largest client is growing at such a rapid pace that she’s had to grow her business right alongside it. Healy knows it’s an opportunity she can’t forego, and has spent time building strong relationships within the company in virtually every department, from collections, lending and HR, to education and training and the call center.
“You have to have a team in place before taking on the work,” Healy warns. “You can’t not deliver, and you can’t get complacent with loyal clients.”
For MacKinnon Printing (asi/258926) in Acton, MA, a growing clientele has been customers with upcoming trade shows. While owner John MacKinnon can take care of their printed brochures for their booths, he also makes sure to mention tablecloths, banners and giveaways. And if clients have an annual show or several shows a year, it’s solid repeat business.
“To grow, you need a good base of repeat customers and you have to maintain your levels of customer service,” he says. “My clients like working with someone one-on-one.”
Kathryn Kaufman, owner of Birmingham, AL-based Authentic Creations (asi/127618), has kept her company very small – just herself – she never lets that become an excuse for not serving clients. She’s happy to take care of every step of the process for them, even though it’s all on her. “You can’t take your foot off the gas, even if you’re small,” she says. “Clients pick up on complacency. You have to continue calling them with something new.”
Other companies have had to pivot to continue building relationships with clients. When the demand for print business dropped off significantly at MacKinnon Printing, owner John MacKinnon decided to increase focus on promo products.
“It was always in my head that I needed something that would have value in the future,” he says. “We just needed to keep moving by adding services more timeless than printing. Promo is a good growth area and the margins are healthy. At first it was just another revenue source for me, but we’ve really been focusing on it.”
To put a company on a growth trajectory for the future, proactive pivoting to keep serving clients may be in order. “The secret to scaling is staying ahead of client expectations,” says Dutia. “Today, clients have fewer staff, lower budgets and less time. Distributors must become an extension of the client’s back office. It’s not an easy journey, but if you want to be a distributor you have to be in it 100%.”
Sara Lavenduski is the senior editor for Advantages. Tweet: @SaraLav_ASI. Contact: email@example.com