Harold Robison wasn't planning to completely pivot his business, even after customers started asking if his private-label sock startup Pacific Manufacturing could start making face masks in early March.
Robison had spent six years building the San Diego-based company and wasn't thrilled by the prospect of developing a new product and customer base. Plus, with factories worldwide pumping out huge numbers of medical-grade masks for the coronavirus pandemic, he was concerned about quality control and global price wars. And he had a few months of runway before he'd have to cut his 18 employees' pay.
Still, Pacific Manufacturing was looking at an 80 percent drop in revenue for the foreseeable future. Robison had applied for a $90,000 Paycheck Protection Program loan, but didn't know when, or whether, the company would receive those funds. (They finally came through in early May.) Clearly, he thought, he needed to try something new.
As March progressed, Robison kept coming back to the idea of using his relationships with Chinese factories to produce non-medical masks, which are cheaper than medical-grade masks with fewer regulatory requirements, and still essential for non-medical workers. After a couple of weeks, he pulled the trigger: For at least the next few months, Pacific Manufacturing would make more masks than socks.
Wary of competition from larger companies, he pushed his team to execute the pivot, which included building an all-new sales pipeline, in less than a week. "We had a really small window to get into this new market," Robison says. "If we could do it really quickly and seize that opportunity, we could turn that into a long-term revenue stream."
How they did it
The company already had six full-time staffers in Haining, China, to monitor production. Most of the rest of the employees, regardless of their usual responsibilities, quickly became salespeople.
Over the first weekend of April, Pacific Manufacturing executed a soft launch, marketing to grocery stores, farmers, and San Diego businesses that needed to keep their warehouses or machine shops running. Robison drew on his personal connections, from a construction company in New Jersey to a food-processing plant in St. Louis. "The original market research was like four phone calls," he says. "And then we just jumped at it."
The initial benchmark for success: $250,000 to $350,000 in monthly revenue, selling masks at roughly half of the company's usual profit margins, which would keep it near breakeven status. A month later, Pacific has sold more than 415,000 masks for a total of $550,000 in revenue--approximately 75 percent of its average monthly sock revenue last year--with most of its 40 customers expressing interest in repeat orders.
Robison is now shifting to longer-term plans, prioritizing customers likely to need masks for at least the next six months. The company recently bought $600,000 of product--950,000 masks--that Robison is aiming to sell within the next six to seven weeks, following an official launch later this week. That, he says, would put the company on track to surpass its 2019 revenue figures by at least 10 percent.
Socks are still responsible for 5 percent of Pacific Manufacturing's current business, Robison says--showing that there's middle ground between staying the course and completely scrapping your business model. Finding it could be crucial for financial survival during the coronavirus crisis and beyond.
And it might create an unexpected benefit: Robison says Pacific Manufacturing's employee morale has skyrocketed since he announced the pivot, even knowing that the initial financial goal was merely to break even.
"I didn't know how they would take it, but everyone was really excited--it was like they had more of a direct purpose," Robison says. "Sometimes, I feel like I'm in over my head. But the team in the U.S. and the team in China have really risen to the challenge. It's a really good feeling."