Challenges, problems, and triumphs
-- from a manufacturer's perspective.
The Trials of a Small Company, Pt. II
Expensive advertising, false promises, and
by Anonymous (March, 2004)
(Editor's note: As we suspected, "The Trials of a
Small Company" drew a large response. That column is still
accessible by clicking on the title in the right-hand column. Here
is an example of the responses, this one from yet another very small
Wow! It was so refreshing to see this column today. It echoed
much of what I've been thinking/feeling for 18 months now. While we
are fortunate to have our products in a large number of stores
already (thanks in much part to exhibiting at HIA, ACCI and Memory
Trends in 2003 and HIA in 2004, all of which take a big chunk of
$$$), advertising has been a big frustration for us.
We chose a trade magazine before consumer publications because we
thought that educating the store owners/buyers first would be
beneficial. (Plus, the magazine gave us a great rate!) Advertising
in this trade publication has been extremely beneficial. We are
developing brand-awareness with the store owners/buyers so that when
they see us at the trade shows, they recognize our name and product.
We have never lost money by advertising in the magazine – we
always gain enough new stores and sales from each ad to easily cover
the cost of the ad.
However, there has to be a balance between stores telling the
consumer they "need" a certain product and the consumer
requesting said product from the store for us to increase our sales.
Because of this, we are looking to advertise more extensively in
Oh my gosh! Talk about sticker shock! Even a quarter-page ad is
sky-high and 1/12 page just doesn't do justice to our product. We
have been fortunate, however, that five of the magazines devoted
some editorial to us in 2003-4. This is coverage that money cannot
buy and is so valuable to us as a relatively new company.
That said, however, it's very difficult to break into this market
without a big name behind us. Stores talk about wanting
"unique" products in their stores to differentiate
themselves from the chains, yet are sometimes unwilling to promote
the products with classes, demos, etc. (Those who do have tremendous
sales and tell us that our products "fly off the shelves"
and they have the re-orders to back that up.) They can also be
reluctant to take a chance on new manufacturers for various (and
sometimes valid) reasons.
When we started in this business, I was hopeful that HIA and ACCI
would provide some educational assistance. However, most of the
workshops at the trade shows are geared specifically toward the
retailers. There is very little available for the small
manufacturer, with the exception of a few chapters in Sue DiFranco's
books. (Editor's note: DiFranco's books are published by Fun
Facts Publishing – www.funfactspublishing.com.)
Our first HIA experience (also in 2003, same as your anonymous
columnist) was very exciting. We were brand new, with dreams and
hopes of making a living doing what we love. We were bombarded with
advertising requests (similar to your columnist), but were also
approached by a prospective buyer (a major company whose name you
would know). To satisfy his requests, we applied for patent
protection on our product, signed a confidentiality agreement,
provided names of suppliers, financial info, etc.
Where has this gotten us? Nowhere. He must have lost interest in
us, but we don't
really know because he won't even give us the courtesy of telling
us that he's no longer interested.
We spent much of 2003 in limbo, anticipating a buyout and
therefore not knowing how much to plan ahead in terms of trade
shows, advertising, etc. Finally we just decided to forget about
that and forge ahead with our own plans.
In the meantime, yet another company (a medium-size company in
our market) has knocked off our product and continues to sell it
even after being sent a cease & desist letter. However, until
our patent is finalized (probably fall of 2004), there's not much we
can do to protect ourselves (and even when we do have full patent
protection, it will cost a considerable amount of money to enforce
So I echo your columnist's feeling of frustration and wondering
"where do we go from here?" It is not enough to have a
good idea or product. There has to be money behind it to enable
growth. The old saying "you have to have money to make
money" is very true in this industry.
It is my hope that the newly-formed CHA will address our concerns
and needs in ways that HIA and ACCI have not.
(Note: to read previous articles in this section, click on
the titles in the right-hand column. To comment, email Mike Hartnett