Growing Pains

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

of Technology’s Economic Development Institute,” she says. “The engineers there looked at the machinery, they looked at the facility I planned to use, and they looked at my process. They advised me not to bring manufacturing in-house. By slowing me down, they saved me from doing something I would have regretted.”

However, Hill had been too slow to act in another area: gauging the size and scope of her potential market. “We did a survey [where we offered] a free bib and found there was a much larger demand than we had anticipated. By then, a major company had moved into our retail business so we got bumped from our shelf space. Next, the competition went after institutional customers, sending out free samples to our childcare center clients.” After an encouraging beginning, Hill folded her baby bib business in 2002 with only $50,000 in revenues, grateful that she hadn’t invested huge amounts in equipment. The experience brought home to Hill the importance of logistics in a manufacturing business and the opportunities in international trade, and thus led to her next venture, importing petroleum by-products from Trinidad.

How can a growing business avoid such pitfalls? “There are two main issues to contend with,” says Tommy Longest, 40, owner of Integrated Supply Management, a Detroit-based distributor of electrical and industrial equipment. “Financing is always a problem for a growing business. In addition, you have to look at each opportunity as it comes up to see if it fits into your growth plan.” Following that principal, Longest’s business has experienced positive, controlled growth over the last five years. “When I started my business,” says Longest, “I concentrated on customers who paid their bills on time. From my experience in this industry, if customers pay bills promptly, you can finance a lot of your growth yourself.”

Longest says that as his company got off the ground, his first growth-oriented decisions involved identifying the type of people he should bring in to help. “I decided to hire someone who could provide administrative support,” he explains, “leaving me to spend time working with customers. Since then, I’ve added some sales and marketing employees, but I still go out and see people. That’s the key to this business.”

Personnel decisions also led to Longest creatng a second company, ISM Electric. “Our original company provides services to utilities and local governments and property management companies,” he says. “We saw an additional opportunity to work with contractors doing large projects. You need different expertise there, however, so I hired some people who had experience dealing with contractors.”

Indeed, entrepreneurs who have learned the perils of branching out too rapidly may be more careful to grow at a more measured pace the next time around. “I’m now working with Trinidad & Tobago National Petroleum Marketing Co. Ltd., which has been exporting petroleum products for over 100 years,” says Hill. “The people there will supply the technology and do the blending while I do the marketing for lubricant sales to the U.S. auto industry. In

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