Growing Pains

We'll show you how to deal with a sudden expansion or an unforeseen slowdown in your business

Economic recession and world events led to the downfall of Brown’s thriving firm.

Kevin Brown remembers the heady days of 1995 all too well. “I had just started my own marketing communications firm,” says Brown, now 40. “A significant portion of the business was coming from dot-com companies [and] we also had some major banks and insurance companies as clients.” Confident about the future growth of his former company, Strategic Marketing Resources, Brown bought land and built an $8 million plant in Alameda, California, near San Francisco and Oakland. “Besides the creative work,” he says, “we wanted to do our own printing and mailing, without outsourcing. That’s what differentiated our company from the competition. We had $6.5 million in annual sales and over 200 employees at the peak [of the business], as well as a state-of-the-art data security system to protect our customers’ privacy.”

Then the tech-stock bubble burst in 2000, dragging down the entire stock market and sending the economy into a recession. And after the 9-11 attacks in 2001 came the anthrax scare. “Direct mail was hit hard,” says Brown. “We lost millions of dollars worth of orders we had booked. And we didn’t have the reserves to keep paying all the overhead.” Eventually, the plant was sold and Brown “got hammered,” as he puts it. “In hindsight, the growth should have been projected out better.”

Brown’s experience is one of many good news-bad news dilemmas facing many entrepreneurs. Yes, you want your business to grow to enjoy future prosperity, but growing at a just-right pace is not easy. If you expand too rapidly, you may have to cope with unnecessary expenses. If you don’t expand when you should, it can cost you valuable opportunities.

“I’ve learned how difficult it can be to fine-tune your growth,” says Anita J. Hill, president and CEO of B&H International, an importer of lubricants in College Park, Georgia. “Not only can’t you move too fast but if you move too slowly, your competition will find out what you’re doing and take advantage.”

Hill launched KDI Inc. in the 1990s to produce disposable baby bibs. “I started by outsourcing

BLACK ENTERPRISE : blackenterprise.com : MARCH 2005

Yes, you want your business to grow in order to enjoy future prosperity, but growing at a just-right pace is not easy. If you expand too rapidly, you may have to cope with unnecessary expenses. If you don’t expand when you should, it can cost you valuable opportunities.

After her first business was outmuscled by the competition, Hill found a new venture.

manufacturing to Mexico to cut costs,” she explains, “and then switched to a company in North Carolina so the bibs could be made in America. At that point, we were selling to Kroger and Wal-Mart, and I thought things were going fine.”

Unfortunately, the plant in North Carolina couldn’t conform to the production schedule Hill needed. “I was set to buy machinery and retool it to fit my process, but I wasn’t sure if that was the right move, so I went to the Georgia Institute

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