The Bigger, the Better If you need quick cash flow to stay in business—and who doesn't?—skip the small retailers and go straight for companies that buy in bulk.
By Don Debelak
Opinions expressed by Entrepreneur contributors are their own.
Let's say you design a new clothing product. Theconventional approach taken by many underfinanced inventors is tostart by selling to small, local customers. The goal is to slowlyand steadily build a market for their products. Problem is, thisapproach isn't likely to generate the kind of revenue yourbusiness needs to survive.
Here's a better approach: Go after the biggest customers youcan find. After all, it often requires the same amount of work toland a small sale as it does a big one. And the benefit is, whenyou do finally make a sale, it will generate revenue to grow yourbusiness. This was the approach taken by 33-year-old SharonThomas-Ray when she launched her Chicago business, Y-TieNeckwear.
Slow Going
Thomas-Ray's idea originated in 1995 when she took amarketing class at National Lewis University in Chicago. One of theassignments was to develop a product and create an introductionplan. While working at a fashion show, she noticed how long it tookmodels to tie their ties to the right length. Thomas-Ray decidedthat an adjustable tie with a zipper would solve the problem, aswell as make a good project for her class. Once the schoolassignment was completed, she practically had her business inplace. "Lots of people told me they liked how easy it was toadjust the Y-Tie, so I decided to try to introduce it," saysThomas-Ray. In 1998, she got a patent on her invention and wasready to go.
Thomas-Ray's first efforts were spent targeting the localChicago retail market. She made some sales, but progress was slow.Then she got her big break: Publicity in the Chicago SunTimes and on the WGN Morning News led to an $8,000purchase from The Salvation Army. Landing that deal gave Thomas-Raythe idea that maybe she was wasting her time chasing after smallretail orders when she could be pursuing bigger ones.
| SharonThomas-Ray's experience of developing a product as a schoolproject isn't new. It's part of a lot of colleges'curriculums. But how does that help you? Well, many college students don'thave a product to promote. So if you don't have the time towork on your invention yourself, you might find a college studentwho will agree to use your product as a school project. Evenbetter: If you make the student a partner in the project, he or sheis eligible for prototype assistance and other resources, as wellas outright grants, from the National Collegiate Inventors andInnovators Alliance (NCIIA). For more information on the program andsome of its past successes, go to www.nciia.org orcall (413) 587-2172. |
Branching Out
Thomas-Ray decided to approach the Chicago Police Department andthe local Pace Bus Service in an effort to learn more about how theuniform market worked. She discovered an entire network of uniformshops existed nationwide. "In Chicago, the important storeserving the market was Kale Uniforms, which is a part of the FlyingCross by Fechheimer, a major uniform distributor," saysThomas-Ray. With the help of Kale Uniforms, Thomas-Ray added theChicago Transit Authority and the Chicago-Area Suburban (Pace BusService) to her list of customers in 1999 and 2000.
Thomas-Ray also discovered the restaurant uniform market throughChef Direct, a Chicago-area restaurant distributor. Attending the2000 and 2001 National Restaurant Association Shows led to businesswith chains such as Pizzeria Uno. Thomas-Ray also exhibited at theNational Association of Uniform Manufacturers and Distributors,where she signed on 15 independent sales agents.
And the business continues to add customers as major distributorFechheimer added the Y-Tie to its catalog for the first time thisyear. "Being in the catalog gives buyers nationwide a chanceto see and stock the Y-Tie," Thomas-Ray says.
Retailing for $12.95 (polyester) and $24.95 (silk), the ties arealso sold on the company's Web site and advertised in Made toMeasure, a uniform trade magazine. The ads have led Thomas-Rayinto yet another new market: "I've been getting ordersfrom tuxedo shops, which is why I introduced the silktie."
Soon Thomas-Ray was seeing potential markets everywhere. Shewondered: What about the military or even the Post Office? Landingeven one branch of the military would be a major coup, butThomas-Ray didn't know how to go about it. Then she attended afund-raiser for her congressman, Jesse Jackson Jr.
"I took a Y-Tie necktie to give to him," Thomas-Raysays. "He thought it was a great idea, and he started toarrange meetings with the appropriate purchasing people. I met withArmy, Air Force, Marines and Navy people, and I was flying out toWashington about every other week in the summer of 2001."Unfortunately, 9/11 interrupted that activity, but Thomas-Ray hasbeen able to reconnect with her contacts and hopes to land somegovernment business in 2003.
Steps to Success
Don't be intimidated. Big buyers are often easier to dealwith than smaller customers with limited budgets. Read industrytrade magazines for stories on big buyers in your market. You canfind lists of trade magazines at the library in the Gale Directory of Publications and BroadcastMedia (Gale Publishing). Check the magazines for listingsof contacts in your area. They can recommend trade shows for you toattend.
Don't be afraid to use sales agents, other manufacturers,contacts at association meetings or even your local congresspersonto get your foot in the door. And follow up many times. It'snot unusual to make seven to 10 calls before landing a bigaccount.
Thomas-Ray projects 2002 sales of $750,000, and there's notelling just how big Y-Tie Neckware will become now that thecompany has a nationwide sales network and contacts at biginstitutional customers. Thomas-Ray's strategies can work forany inventor: Find out who your major customers might be, and chasethem first. Not only will it give you a jump-start in sales, butyou'll also get the cash flow you need to grow yourbusiness.
| In a unanimousdecision, the U.S. Supreme Court recently boosted inventors'odds of having a more meaningful patent. In the case of Festo Corp.vs. SMC Corp., two makers of air cylinders for industrialequipment, the Supreme Court overturned a lower court'sdecision that placed restrictions on patents with amendments. Hadit not been overturned, the decision would have limited the scopeof a patent's claims. For more than a century, according toDon Kelly, ex-director of the Independent Inventor Office of theU.S. Patent Office, courts have held that inventors could challengeinfringers who had similar, though not exact, replicas of theirinventions. The overturned decision, which impacted patentapplications for several years, prevented inventors fromchallenging inventors with such similar, though not exact,products. |
Don Debelak is anew-business marketing consultant and author of Think Big: Make Millions From Your Ideas.
