Being a successful entrepreneur requires a unique blend of tenacity, grit, and fearlessness. In virtually every sector, small business owners must face down bigger, better-funded competitors.
To kick off a summer-long celebration of business owners, Capital One Spark Business and Inc. hosted “Competing with Giants: How Small Businesses Solve Big Business Challenges,” a panel discussion held at Inc.’s Fast Growth Tour in Chicago on May 21, 2019. Moderated by Khary Scott, vice president, Small Business Card, Capital One, three business owners shared their personal stories of facing down enormous competitors and building thriving businesses.
Manage growth wisely
When Christina Stembel, founder and CEO of San Francisco-based Farmgirl Flowers, No. 738 on the 2018 Inc. 5000 list, first launched her business in 2010 with $49,000 in savings, she thought fast growth was the key to success. “I really thought I’d be able to get capital if I showed 100 percent year-over-year growth,” she says. Investors didn’t see it the same way. “I’ve been turned down 101 times,” she says with a laugh.
But bootstrapping her way to what is now a $23 million business lets her call the shots, she says. Over the past year, she made a strategic decision to slow Farmgirl Flowers’ growth and focus on profitability. The goal is to accumulate cash for a new distribution center that will help lower shipping costs and contribute to better financial returns in the long run.
Plan for seasonality
It might not seem like a quick service food business or a pet food manufacturer are particularly seasonal-driven companies. However, both Happy Howie’s, a Detroit-based manufacturer of all-natural dog treats--No. 2352 on the 2018 Inc. 5000 list--and TaKorean, a chain of Korean taco grills based in Washington, DC, have business ebbs and flows throughout the year.
Happy Howie’s Co-Owner and President David Collado sees a spike in business before the December holidays when retailers are stocking up on product, then a quiet period in December and January. “That’s our opportunity to do training with our team members for the new year and more detailed equipment maintenance,” he says.
Find creative solutions
Since opening his first TaKorean food truck with $39,000 he borrowed from his parents, founder and CEO Mike Lenard has grown to four fixed locations in the mid-Atlantic. With virtually all of his profit reinvested into his business, there isn’t a lot of room for lavish spending on a typical chef’s research trip. Instead, Lenard used his Capital One Spark Business reward miles, traveling to Mexico and South Korea, “to bring back the flavors and architectural aesthetic,” he says. During one of his trips to Mexico he noticed beautiful patterns made with simple concrete blocks, which he integrated into his two most recent store builds, he says.
Always be marketing
Stembel usually cuts off marketing during her “summer slump” when cash is tight because customers aren’t buying as many flowers. But, last year, she used her Capital One Spark Business cash back rewards to spend $115,000 on digital marketing. Two years ago, cash was so tight in June through September that she almost had to lay off team members. However, as a result of the investment, in 2018, she enjoyed 69 percent growth year-over-year in the summer months.
There aren’t any silver bullets for growth, but there are “silver pellets,” Collado says. His company’s products being sold in more than 4,000 stores nationwide. But, he has also looked for opportunities in non-traditional channels. Happy Howie’s has partnered with BarkBox, a monthly dog food and supply subscription service, since 2013. The company also began producing private label products for pet supply stores. Such creative initiatives grew the company to $4.2 million in 2017 revenue.
Check your ego at the door
Just as a strong vision and desire for success can sustain business owners through tough times, that same commitment to success can create its own challenges. Stembel had originally publicized her commitment to sourcing local flowers, but she ultimately found that she couldn’t get enough of them to grow past $10 million in annual revenue. If she was able to go back and give herself startup advice, she would have switched to international flower sourcing and slowed growth sooner, she says. “Doing what’s right for the company [means] you have to get out of your own way a little bit,” she says.
Operating in heavily saturated industries and competing against much larger companies hasn’t always been easy for the panelists, but each has a fierce commitment to their vision and values. The sense of being part of something larger than themselves keeps them going--regardless of the challenges they face.
Capital One invites business owners to share their own stories of competing with giants at www.celebratesmallbiz.com/shareyourstory.