Need business advice

The Coffee Shop
1

hi all, I’m in process of having a label developed for my own (fashion) designs. these designs are hand knit, exclusive, and original (modern and chic).

right now i’m in the process of getting the identity for the label created and have a well skilled/experienced artist working on this.

originally i was thinking of trying to get an upscale boutique to represent my line. however, my reluctance is that i will get jabbed on price, meanwhile the boutique will do their regular mark up and make all the money.

so, i was thinking of doing online sales but need to “reach out” to drive business, this has led me to a specific magazine in town that is the target market i desire.

the problem is the price. some of the add space is upwards of 5K (upwards of 8K actually); but there is “small” space for 700.00-900.00 a month. i still feel that this is risky, as the adds will be small, and i’m not sure if that will generate the attention.

in considering the cost of my materials, these pieces i’m producing are expensive, but i know there is a market. yet, i don’t want to dump money into advertising that isn’t going to be productive, especially when i could probably leverage boutiques (assuming i can get representation).

the magazine has 40,000 paid subscribers, and 250,000 readers according to their numbers…

Also, there is an edition going out in winter sometime that is all about crafting; and hand knits are a part of that. so i def want to advertise at least a small space at that time.

The sales girl told me to call the Editor and tell him about my start up, maybe that could generate some editorial (i feel that is lucky thinking, but will try anyway, as who knows maybe he would dig it…just not counting on that).

anyway, what do you think? advertisde, boutiques, what?

thanks, it is much appreciated,
kitty

2

What value to you place on your time? If you go the boutique route, all you have to do is deliver the finished product and they do the rest (sic). That’s why their markup (or margin) is so large. They have to pay the rent, power bill, staff, their own advertising to get clients in the door, etc. If they are purchasing your product outright, versus consignment, they also have flooring costs, risk, tied up capital (opportunity cost), etc.

If you go the online route, you are going to be putting in a lot of your own leg work to get your product name in front of potential customers. You keep more margin, but you do more work.

If it were me, I would go the boutique route because I like to keep it simple (well, as simple as the vendor/retailer relationship can get).

Brett

3

Gotta agree with Brett for now. Until you know what the market is for your product, you can’t do any meaningful ROI analysis. Use the boutique (assuming it reaches your customer demographic) to gain some exposure and once you determine what the market will/will not support you’ll be able to decide whether it makes sense to assume some of the advertising cost (and how much) on your own.

4

thanks guys, i think you’re right. when considering i’m not only designing these pieces, but also producing them, buying materials, etc, i have to leverage time as best as possible.

also you’ve helped me to understand the mark up–i didn’t appreciate the reason for markup until these things were spelled out the way you’ve done…and i do value those retailers carrying those expenses, i could not do that myself right now.

also i’m still running my executive recruiting practice! time is valuable–it is the only thing i cannot “get back”.

so, i’m going to make the boutiques the primary focus; possibly go direct down the road (if it makes sense, etc). and will research/consider putting a small add in for the edition that is “artisan focused”; also will call the Editor, you never know they might like my story. it’s worth a shot to get some press (for free!). wish me success!

much appreciation you guys; your insights really helped me here. please let me know if i can do the same for you sometime down the line.

take care,
joanne

5

Hey Cat,

I’m the CFO of a niche market/woman-owned clothing company and can tell you that the Internet is less costly than any other sales channel; selling to a third party boutique is probably going to be your most expensive bet. It sounds like to you need to start out with a full blown business plan. You talk about advertising costing but $5k but marketing is only part of the equation. If your idea is truly feasible, you should be able to put some numbers together to sell it the SBA or bank. Once you have the capital, you’ll definately want to look overseas for materials and possibly labor. On a small scale, outsourcing might not make sense but you’ll probably find it much cheaper than the US (even when you factor in freight and customs). I have some contacts if you’re interested in exploring further.

It is difficult to offer advice without more specific information but I would definately recommend putting together a business plan. Even though the margins on Internet sale are great, you’ll need to first invest in a professional looking storefront, advertising, and a system for tracking information including sales tax (which can be extremely complex).

Let me know if you need more detailed advice.

SB

6

Cat…re the add(s): unless you are willing to sign up for multiple issues over a 12 month span or so, I’d say forget the adds. In a previous life I ran marketing for a software company and became well aware that one time shots for adds (or even 2 or 3) never, ever, work and are simply not worth it.

7

thanks, i appreciate your insights. these items are to remain hand crafted and locally produced, and i’m not open to venture capital… so i’m trying to do this on my own with more of a quality driven focus, rather than quantity, yet still reap profit. this is much smaller scale then you’re probably thinking–more of an artisan concept, rather than mass production. also the concept includes other materials besides knitted goods. i love the idea of a storefront, but that is not on my immediate agenda, but something to have that down the road…and a different concept for a “store”, but i won’t go into those details now. for where things are now, i do have a plan for the concept, although some things still tossed around. i appreciate your help!

8

Cat…re the add(s): unless you are willing to sign up for multiple issues over a 12 month span or so, I’d say forget the adds. In a previous life I ran marketing for a software company and became well aware that one time shots for adds (or even 2 or 3) never, ever, work and are simply not worth it.
zing!–that’s what i was looking for, and is exactly what my own experience has taught me. THANKS SO MUCH!

9

Kittycat - sounds like you’re headed down the boutique route and I just want to add that once in a boutique it can be easier then drumming up customers on your own - but it’s still a heck of a lot of work to build and keep that relationship with the boutique. I run a small company that sounds similar to yours (different industry but all handmade goods, small production line, etc) and I have been surprised with how much time and energy goes into following up with boutiques. Sadly, the beauty (I’m realizing) with larger stores is that they have an inventory program in place that tells them when they are running low on Kittycat Products and need to reorder. Small boutiques however, unless you’re selling like hotcakes and are a name from day one, need to be called up frequently to see how sales are going and see if they need to reorder.

Not saying any of this to dissaude you as I agree with others that relationships with boutiques will most likely take you further than advertising but I didn’t necessariy realize going into this how much work it takes to maintain a relationship with boutiques.

I’m just at the point where we’re adding an online store (after being in business a year) and are doing a pretty big PR campaign (big for our budget) that will target national lifestyle magazines and direct people to the website where they can either find a local store or buy online. Obviously I’m hoping some folks buy online as it means my margins are double but at the same time I need to keep my retailers happy.

If you’re ever interested, I started a blog called The Rollarcoaster of Entrepreneurship (http://enrepreneurrollercoaster.blogspot.com/) where I chat about the ups and downs of running a small business. I never actually mention what my product/industry is nor have I linked to my store as my hope is to make it more of a community site then a place to market my product. Besides, I don’t necessarily want someone identifying my freakouts with my brand. :slight_smile: Anyway, would love to have you check it out and contribute if you’re so inclined.

Best of luck to you - it’s a frustrating and thrilling ride all at the same time. Feel free to PM me if you want to chat as I always love to talk to other female entrepreneurs.

10

thank you so much both for the insights, and also the invitation! i would be thrilled to join your community and can see how that would be an enriching one to participate in.

Also congrats on your first year, and now going national with advertising, etc. that is really thrilling!

appreciate the connection! will PM you. :slight_smile: