Float, Sink or Swim

A couple of weeks ago I attended a small cocktail party for my local merchants’ association.  People invariably asked one another how they were doing in the deflating economy, and everyone there responded in one of three ways.  Some, like the owner of a hair salon, said, “I’m doing fine. My business is recession-proof.  People still need to get their hair cut and dyed so I’m not worried.”  Others, like the owner of a high-end clothing boutique said, “I don’t know what we’re going to do.  People just aren’t buying like they used to.”  Still others, like owner of a new gallery said, “I’m doing great. I was trying out new promotion ideas, and one of them worked out so well I’m doing better than before the recession hit!”

These three business owners are examples of what my dad would call “floaters,” “sinkers” and “swimmers.”*  When a bad economy hits (and it always does, sooner or later), some businesses are largely unaffected.  People in the medical industry, for example, will still see about the same number of sick and injured people no matter what.  They don’t have to make any changes to their business model to stay above water.  They are natural floaters.

Every other business has a tendency to sink during a recession.  If they do nothing, eventually they will hit bottom.  With a little effort and direction, however, you can stay above the surface.  And if you manage to keep yourself above water long enough to ride out the wave, you’ll find that your trip back in is even easier than when you started, because some of your competitors will have been “wiped out.”

I haven’t heard any predictions that the recession will last beyond 2009, so if you can make it another year, you should be good to go.  But how to get there?  That’s up to you.  Many businesses seem to be relying on the promotional discount this season.  I say, get creative!  Look around you for things you can use to your advantage. That gallery owner I mentioned above is taking advantage of the private school down the street. She’s offering free weekly classes to parents during the hour before school gets out.  It’s a brilliant idea.  She gets wealthy people in her gallery on a regular basis, where she teaches them how to appreciate what she sells — art. She’s literally taking people off the street and turning them into customers.  She’s never sold so much art in her life!

My approach recently has just been to put myself out there — everywhere.  I’m contributing to things right and left.  I’ve got pieces in art shows and silent auctions.  I’m selling at loads of holiday events — even ones that didn’t ask for vendors.  I contributed a recipe to an event program, a tutorial for a craft book, 500 buttons for a magazine party, and 350 items for goodie bags.  I’m doing an in-store in Brooklyn when I’m home for the holidays and a workshop at a local art college in the spring. I’m even collecting donations on behalf of the San Francisco Food Bank.  In return they add my events to their calendar.

All of my contributions have been narrowly targeted, but they’re low-cost and have often lead to bigger and better things.  For example, the buttons I donated to the magazine party say “I love you more than bacon” on them, and it’s a magazine all about meat.  But those buttons were ultimately responsible for my appearance in the Weekly Yelp.  They even got a mention on KQED radioSweet Meats are even supposed to be in the New York Times later this week.  I’m not sure what was ultimately responsible for that piece of PR, but the point is, you have to get your name out there so that people can find you.

So ladies, put on your brainstorming caps and start saying yes to everything that doesn’t cost you money.  The water level is rising and it’s time to start kicking!

*I don’t think my dad made up the whole “sinkers, floaters, swimmers” thing, but I can’t find the original source.  If you know it, please post it in the comments.  Thanks!

And what have we learned?

In case you haven’t been paying attention to the news this week, the economy has been on some kind of bizarre roller coaster ride. The stock market has made huge gains and losses from day to day, the Fed cut their short-term interest rate by a staggering 0.75%, one of Europe’s largest banks was defrauded out of billions of dollars, and the President and the House have settled on a bipartisan “economic stimulus package.” All this comes on the heels of rising unemployment and the sub-prime mortgage crisis, not to mention during the World Economic Forum in Switzerland.

So what does all this economic craziness translate to? In short, making things hard for the small wholesaler like me. I’ll go into the details of my recent sales experiences in a minute, but let me just put some general advice out there first. If you are thinking of releasing a line of design goods for wholesale:

  • Make sure you have a back-up source of income.
  • Take a bookkeeping class and price exactly how much your line will cost to produce, ship, store and market, so that you know exactly how much money you will need to raise, save or borrow to pay for your entire first shipment.
  • Start with something small. Smaller, less expensive items are easier and cheaper to ship, to store, and to find buyers for, because it means less investment in cost of goods and store space for owners.
  • Start early in the year. The whole process, from pricing manufacturers to receiving your first shipment can easily take six months and stores begin buying for the holidays in July and August. You will definitely want to ride that wave your first time around.
  • Set up a website where you can sell your goods retail, in addition to wholesaling them. You may sell fewer items at a time this way, but you’ll make a much higher profit off of each one.

These pieces of advice are ones I wish I had received before starting out on my Sweet Meats venture. It turns out that releasing a line of plush toys is a royal pain in the ass. Not that I regret doing it, or that I will give up anytime soon, but it is an expensive way to learn through trial and error.

Last week I exhibited at the California Gift Show in Los Angeles. The show ran from the 18th-21st, and while many people expressed interest in my products, none were really buying. I got the same response from everyone when asked if they would like to place an order: “Let me talk to my sister/wife/partner/boss about it and we’ll let you know.” This is exactly what buyers say here, too, when I visit their stores. I find this especially frustrating with buyers who already know my products. A few have mentioned seeing them sell out at craft fairs and one even owns a Sweet Meat already. What gives?

I have a few theories about the lack of sales to store buyers — all of them, I think, equally likely and valid:

  1. It’s after the holidays. Business is slow, and the last thing store owners want to do is buy more items that will just end up sitting around.
  2. The economy is not great and people are much more cautious in their spending in general, but specifically don’t want to invest in anything new and untested.
  3. I’m not a good salesperson yet.
  4. My price points are wrong.
  5. I’m waiting until March (when I can sell these retail, as well) to send out press releases.

I’m going to give door-to-door visits a couple of more weeks to work out. At least this way, if people don’t order from me, I can ask them why, face-to-face. Then hopefully I can fix whatever I’m doing wrong and get back on track. Either way it works out, I’ll keep you posted.