Go big or stay small?
An entrepreneur wonders how to expand without growing too fast.
(FORTUNE Small Business) -- Dear FSB: I own and operate a custom glass terrarium company that designs enclosures for reptiles, amphibians and insects. Our units are designed with specific animals in mind, offering the micro-climate designs required by our lovely creepy crawlies, which are not readily available in today's market. The custom caging industry is small, but growing quickly. Our prices are relatively competitive.
I have always been a firm believer in print advertising, but it's too expensive. Yearly advertising on certain Internet portals is half the price, and yields thousands of website clicks a month. But if we advertise on the Internet, I am concerned I'll have orders flying in at insane rates and that my employee and I will not be able to manufacture enough units to keep up with the demand.
Currently, I manufacture between 100-150 units per month but would like to boost that number to 100-150 per week. At the moment, all my free time is dedicated to this business as I have not had enough sales to drop my day job.
- Jason Perillo, Protean Terrarium Design, Los Angeles, Calif.
Dear Jason: Whoa! Slow down and take a deep breath. Marketing can make or break a business but it seems that the root of your problem is growth. If you want to make 100-150 units a week, you'll need to build up slowly, and that means pacing your marketing accordingly. "You need a marketing plan," says Lois Geller of Mason & Geller Direct Marketing in Hollywood, Fla. "This should include how many you can feasibly make in a year without sacrificing quality and customer service."
Geller believes that ad space is not worth the price for your current goals and recommends starting on a grassroots level to build a customer base. "Contact companies that sell pets and ask them to pass on your terrarium designs to their largest customers," she says. "If you get too many orders to handle, create a wait list. Once the project is under way, send updates on the progress of the enclosure, with a projected completion date." As you build a customer base, you can make a marketing plan for the following year, using newly-earned profits to expand marketing efforts.
Andy Sernovitz, author of Word of Mouth Marketing: How Smart Companies Get People Talking and CEO of Chicago-based GasPedal, a marketing consulting company, notes that an easy way to keep orders at bay is by raising your prices. "If you have so many customers willing to pay for these hand-crafted terrariums, they might be thinking you're a steal. Create a balance: if you can't afford more employees, double your prices and make half as many."
It also seems that you are struggling with the decision of quitting your day job to pursue this full time, a dilemma that many young entrepreneurs face. "You need to make a lifestyle choice," Sernovitz says. "Either remain as a small boutique with high prices and few customers, or build a big business with many employees to manufacture the products." But be prepared to take on a different role if you do the latter. "Instead of being a craftsman, you will be managing the people doing the work," Sernovitz explains.
For more guidance on deciding whether to grow or stay small, Sernovitz suggests reading Michael Gerber's The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. Best of luck, Jason!