Growing Pains: How Expansion Causes Startups to Lose Customers
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
Last week, my company S.W. Basics -- a natural and simple to use skincare company -- lost one our retail accounts. This has actually been happening regularly lately. Sounds really stressful, right? I know. It kind of is. But the reason we are losing retailers is positive, and it's mostly out of our control: We continue to pick up other accounts.
Let me explain. In consumer products, there is a tricky aspect to growing your distribution. If you do it too quickly, the demand won't be there because not enough people will know about you yet. But if you do it too slowly, you cannot sustain your company. There isn't enough cash to hire employees, buy inventory and make general improvements to your product line. Somewhere in the middle is where we are. We are growing at a steady, reasonable pace.
Or at least, that's how we feel about it. Some of our retailers disagree. We've had retailers who don't want us selling anywhere in the same town as them, ecommerce sites that want no competition from similar websites and larger retailers that want us to stay completely away from other large retailers. Sometimes it's about competition, but other times it's about wanting our brand to seem underground, exclusive and special.
While we understand that, it's just not aligned with our global domination goals. I'm kidding -- sort of. We want to expand slightly faster than they'd like us too.
Here's how we've learned to deal:
1. Cope gracefully. I used to personally argue with store owners that disagreed with our expansion. Now I empathize. I totally understand why they want their assortment not to cross over with other stores, especially if they see them as competitors for the same audience. Sometimes I check if there's anything else we can do to change their minds. Other times I just tell them how lovely it's been to work with them and how instrumental they were in helping us get to where we are.
2. Remain a good listener. You can't ignore everyone, or they'll all stop buying and you'll just stop growing. We've been lucky not to have too many stores get upset, but each one that contacts us with a concern matters. We never ignore what they're bringing up, and even though it may not change what we do in the short term, it does get filed away as information that we need to pay attention to.
3. Remeber things will get better. This is a down turn before an upturn -- hopefully. It's sort of like a cost for a greater reward. While we've loved the phase of the business where we are special and small, we're ready for the next stage. We're learning to accept that this is partly what it takes to get there.
When you design a business plan for your idea, it's easy to dream up the growth part. You follow the logical steps down a path that leads to explosive success. There's no room in that business plan for little marks where you point out that along the way you will lose some business or you shift your goals. But this is part of pursuing that business plan all the way through. It's how a small handmade line becomes Burt's Bees or Carol's Daughter. Who knows if we'll ever get that far, but we're definitely going to try. I can only hope our partners along the way can understand that.