Pentech provided many key benefits to Penta when she started out. One was that the company knew how to package inexpensive products so they would sell easily in the mass market. All Penta's products were sold in display cases that typically sat on store countertops. A second benefit was that Pentech devoted a portion of its trade booth at major mass-merchandising trade shows to Penta's cosmetics line.
Small inventor companies often can't afford the $20,000 to $30,000 total cost (including a display booth) of attending a trade show, nor can they afford to finance new products, build displays and call on enough retailers. Being under the Pentech umbrella offered credibility to Penta's line and helped encourage more buyers to stop by and talk to her. Pentech originally launched the product line with its established sales representatives, a network Penta could never have afforded to set up on her own.
One drawback to big companies is that they are slow to make decisions. As Penta says, "I developed the line because there was nothing for teenage girls that was both trendy and affordable. I wanted to come out quickly with new products for every season and every trend. Pentech's decision-making [process] made it difficult to move fast enough." Big companies can also tend to be too conservative: "I know Pentech never would've approved some of the products I've introduced at Fun Cosmetics because the products were just too radical."
Small companies, on the other hand, are not a panacea either. "The great thing about Pentech was that when you had a big task, such as sending out a mailing or sending samples to buyers, there were a lot of people to help," says Penta. "Once we left Pentech, there were just four of us to do everything."
There are other problems, too: "All promotional products are sold on guaranteed sales," says Penta, meaning Fun Cosmetics has to agree to take back any products that don't sell. "Until we came out with products for two or three seasons, people wouldn't pay us for several months until they knew how much product they'd actually sold."
Most inventors who decide to launch businesses find the initial start-up phase more than a little difficult. They don't always know all the pricing, packaging, and distribution tactics they need to penetrate a market, and they often don't have the funds for introducing a product through trade shows and individual sales calls. Unfortunately, many inventors can't overcome these hurdles and end up failing with their new ventures. Working with a large company hinders an inventor's independence, but it can also help in developing the buyer contacts they need to succeed on their own. Penta's strategy of going with a big company was shrewd for a 22-year-old who was fresh out of college.
She may not own all of her company now, but she has a major share, and she has what she wants most: creative control of a major cosmetic line.