Costs Versus Risks
Timing is everything, but whatever the industry, you should constantly be in a new product developing stage, says Greenhalgh. While you’re profitable now, you need to be investing in what’s going to be profitable tomorrow.â€
A good rule of thumb for small business owners–and what Wildchild has done well–is to choose a venture aligned with the company’s core skill-set. This keeps costs down while minimizing risks. This doesn’t mean you shouldn’t venture into the unknown. But know that all products and services have a life cycle, making cash flow management imperative. In developing a strategic plan for increasing business volume, it’s best to launch new products and services based on customer needs and a company’s ability to penetrate the market in staggered succession.
The Quest for Capital
No expansion can take place without adequate funding. In September, Wildchild secured a low-interest $35,000 loan from Seedco (www.seedco.org), a New York City-based nonprofit that provides financing to small businesses. The money went toward inventory and was a huge help, but the company still seeks $1 million to $2 million in funding. “We’ve got the potential to grow to mass market,â€ says Copeland. “But just getting over that hurdle takes serious financial backing and capital.
To secure additional funds, Edmondson recommends calculating a specific amount rather than a range. “You should be able to look at your financials and say, ‘I need $1,327,000 to grow my business,’â€ he asserts. “Know down to the penny.â€ To maximize the chances of getting a loan, Edmondson recommends identifying financial institutions that lend to similar businesses.
He also urges entrepreneurs to leverage their business relationships. When speaking to lenders, “outline these entities and include a financial profile of what you have monetarily done with each and what more you could do if you had the capital injection.â€ Estimate the value of successful partnerships–even if they aren’t a direct revenue generator–to prove to potential lenders or investors that your business could add value to their portfolio as well.
The Open Wild
While it’s too soon to say whether the launch of Threader will ultimately pay off for Wildchild, its core business–the clothing lines–continues to make strides. Their marketing efforts are also on the right track, says Walker of Message Medium, and they are currently working to develop an advisory board.
“It always starts with the customer and satisfying their needs,â€ says Greenhalgh. “You don’t just grow for the sake of growing. You grow because there’s a revenue stream to be captured, which means there’s customers out there whose needs you can satisfy that will do business with you to feed this enterprise. It starts with that, and the rest is making it happen.â€
This article originally appeared in the November 2009 issue of Black Enterprise magazine.