New Year's Resolutions

How three companies came up with their 2008 growth strategies.

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Predicting the future is no small feat, but that's what business owners have to do when they sit down to figure out their sales forecasts for the coming year. And that one number can have a profound effect on a company. All manner of decisions, from staffing to sales quotas to expanding capacity, flow from it. And whether or not you make your goal depends on a variety of factors, including the strength of new markets, the resiliency of old ones, the skills of your sales team, and the health of the overall economy. The following three companies are growing, and all of them plan to pursue big new opportunities in the coming year. But their forecasts vary: One's cautious, one's moderate, and one's ambitious. Here, the entrepreneurs tell us what they glimpsed in their crystal balls and how they ultimately set their sales quotas for the year.

A Cautious Forecast

2007 Sales: $60 million
2008 Forecast: $69 million
Projected Increase: 15 percent
The Growth Strategy: Introducing a new line of aromatic products

With annual sales of $60 million and retail distribution in Kohl's (NYSE:KSS), Target, and Pier 1 Imports, Pacific Trade is a pretty big player in the candle business. "The nesting trend in the '90s made people want to entertain at home and surround themselves with things that make them feel good," says founder Mei Xu. "We were very lucky to be riding that wave."

Now, however, the wave appears to have crested, and growth in the consumer candle market is flattening. To keep Pacific Trade on an upward trajectory in 2008 and beyond, Xu decided to focus on the next burgeoning trend: home fragrance items in the form of potpourri, aromatic knickknacks, and plug-in scent diffusers. The market for home-fragrance products is estimated to grow as much as 8 percent annually, compared with only 2 percent for candles. But interestingly, although Xu's line extension will hit the market in April, and although she is projecting that Pacific Trade's sales will increase $9 million, or 15 percent, in 2008, she completely excluded revenue from the new plug-in line from her forecast.

Why play it safe? Xu believes the category has great potential, especially plug-ins. But she also thinks it's too new to bank on. Because the bulk of Pacific Trade's business comes from sales through big retailers, its 15-person sales team needs to persuade retail buyers to stock the additional merchandise. Xu knows that process will take time. And launching the product isn't only a matter of pushing product through the retail pipeline. There's also red tape to worry about. Like all flammable products, Pacific Trade's must undergo third-party safety testing, and the plug-in scent diffusers have to be certified by Underwriters Laboratories. Xu has started these processes, but there could always be a snafu.

Finally, there's the overall economy. The 2007 holiday season got a late start because of an unusually warm autumn, meaning that retailers could have excess inventory through the first quarter, which may make them reluctant to devote shelf space to new, unproven products. "Restocking has always been a big challenge," says Xu. "With a later shopping season, we face the biggest challenge of retailers not taking enough inventory out." If the plug-ins post strong sales in the spring, she figures, she can always revise her numbers up for the later quarters of 2008.

A Moderate Forecast

2007 Sales: $11.3 million
2008 Forecast: $15.5 million
Projected Increase: 37 percent
The Growth Strategy: Adding small businesses to an account list made up of blue-chip companies

Smartreply creates voice mail and mobile phone marketing campaigns for big retailers like Kohl's, Lane Bryant, the Sports Authority, and Blockbuster (NYSE:BBI). With companies spending an estimated $3 billion on mobile phone marketing campaigns in 2007, business is booming. And retail is a great market. Big chains can spend hundreds of thousands of dollars on individual campaigns. Problem is, the projects are laborious and can take two years or more to complete. A lot of handholding is involved.

So, in addition to going after big accounts in 2008, president Eric Holmen is promoting a feature on SmartReply's website that lets customers create one-time-only voice mail campaigns for around $250. It's designed to be attractive to small businesses. "Our objective," Holmen says, "is to spend less time selling and more time marketing by letting clients self-close online."

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