Goose Island Beer Co., a Chicago brewpub and regional brewery, had its work cut out for it three years ago when it decided to sell beer to wholesalers and retailers in other Midwestern states. The market for specialty beers, while flourishing in the Pacific region, had floundered in the Midwest, and many beer companies had gone out of business trying to break into the market. But in its first full year of business, Goose Island sold more than 20,000 barrels of beer, an achievement almost unheard of in the industry.
"Goose Island Beer Co. is the only Midwestern microbrewer to have grown into a regional producer in its first calendar year in business," says David Edgar, director of the Boulder, Colorado-based Institute for Brewing Studies, a division of the Association of Brewers. "You just don't grow that big that fast."
What did Goose Island do that other brewers trying to edge into the Midwestern market did not? Goose Island president and founder John Hall attributes much of his company's success to good marketing-not to consumers, but to wholesale and retail buyers. "A product only makes sense if it makes sense to the buyer," says Hall. "To sell a product, you have to understand what the buyer wants."
Many tips for selling to buyers are industry-specific. For example, catalog companies such as Lillian Vernon Corp. in Rye, New York, need shippable products, so the company requires prospective suppliers to prove they can package their products well. But other companies, such as retail stores that display products on the shelf and "gourmet of the month" clubs that repackage products themselves, care more about the label than the box.
Some tips span industries, however, so we asked successful manufacturers and buyers who work with small businesses what it takes to get a product on the shelf. Here are their 8 steps to success:
1. Develop a Quality Product
This step may sound like a given, but many manufacturers underestimate the importance of the quality of the product they're selling.
In some industries, such as software, a quality product with great market potential will virtually sell itself. "The most important thing is to have a good idea that you can execute well and that someone with the ability to distribute and market sees an audience for," says Harry Gottlieb, president of Jellyvision Inc., a software developer in Chicago. "People doing full-blown software demos are rare, so publishers tend to be fairly willing to look at people's material."
Some manufacturers argue that it's more difficult to get a product to buyers in other industries. QVC Inc., a West Chester, Pennsylvania-based TV shopping channel, looks at 80,000 sample products per year but puts only 12,000 to 15,000 on the air. Many of the products that don't make it are good products. Even in the most competitive industries, however, ingenuity and quality can go a long way.
"Never underestimate the importance of a good product and word-of-mouth," says Bert Suarez, founder and president of Diesel Radiator Inc., a Melrose Park, Illinois, manufacturer of heavy equipment radiators. "About 25 percent of our new customers are referred to us by other customers."
2. Understand the Market
According to Hall, one reason for Goose Island's instant success was its complete understanding of the industry. "We asked ourselves why what was happening in the other regions didn't happen here," Hall says. "That showed us what others did right and wrong, and gave us a big advantage. If other companies had looked around like we did, they would have seen and done the same thing."
It may also be a good idea to start small. Before approaching buyers at large companies, entrepreneurs should try selling to a local store. According to Judith Barker, president of American Traditional Stencils, a Northwood, New Hampshire, stencil manufacturer, this creates awareness among larger buyers. "We spent years selling to individual stores that were part of chains," says Barker. "It was only recently that we contracted with the corporate headquarters of those chains. Selling to the smaller stores probably played a part in getting the corporate contracts."
"Find any store in your area-not more than one in an area if you're in the gift industry-and sell something as a brand-new product," says Mary Anne Johnson, co-owner of The Chandlery, a Roswell, Georgia, gift shop. "Develop some accounts that give you enough capital to figure out what really sells. After you know your product is salable at the retail level, and after you have the capacity and efficiency to fill orders, then you can approach buyers on a grander scale, such as at trade shows."
3. Create a Marketing Plan
Retail and wholesale buyers don't exist in a vacuum-they know the market and usually recognize products that have potential. But small businesses without track records have no credibility. That's why they need a marketing plan.
Case in point: Goose Island. Before approaching buyers, the company crafted a marketing plan that left no question in buyers' minds about the potential success of its brews. In addition to solid research showing the profits that could be gained in the fledgling Midwestern specialty beer business, Goose Island's plan showed buyers the microbrewer would follow through. "We made sure buyers were aware that the category was growing and that there were good margins for buyers in it," says Hall. "Then we showed them how we envisioned taking the product to market."
Hall advises entrepreneurs to develop a plan that works for everyone in the supply chain. "Your plan has to work for distributors, because they have to feel confident that retailers are going to order your product, and it has to work for retailers, because they have to feel confident that consumers are going to buy it," says Hall. "Our plan worked because it supported the entire distribution chain, from packaging to advertising."
4. Develop Collateral
According to Pam Marker, a Greenwich, Connecticut, marketing and design consultant and former small-business owner, one of the best ways to grab and keep a buyer's attention is to put together a catalog to display your products. "[A catalog] is your best salesperson," says Marker. "Hundreds of your competitors are contacting the same buyers you contact. You want to give buyers something they can keep so they'll remember you."
Catalogs and other materials, such as presentation kits and price sheets, don't have to be glossy, expensive brochures. The key is to look organized, says Johnson, who is impressed when her suppliers have product specification sheets, price lists, order forms and invoices.