As a big fan of the holidays, I get childishly excited when festive decorations start rolling out in stores. As an entrepreneur, I get anxious.
My company, Wild Creations, operates in the toy and game industry, and like most retail product companies, we derive a large part of our yearly revenue during the holiday season. Although we have steady sales throughout the year, the difference between a decent year and a fantastic year depends greatly on our ability to ride the retail wave at Christmas.
Because of this, we have, on occasion and against my better judgment, engaged in wildly outlandish strategies to maximize our holiday business.
A few years back, we started producing the Frog-O-Sphere, a product modeled after our successful EcoAquarium ecosystem habitat with aquatic frogs, for Brookstone. Although we were still relatively small and had limited capacity, we reached an agreement early in the year and excitedly set out to meet the challenge.
As the end of the year approached, we did our own holiday sales projections for Brookstone. What we knew from past years was that our retail partners sold an exceptionally disproportionate number of ecosystem habitats the week leading up to Christmas. The reason: It's a fantastic gift, but because it is sold with aquatic frogs, nobody wanted to keep it for three or four weeks prior to gifting it.
What became clear to us was that Brookstone was grossly UNDERestimating its store demand for the upcoming holiday. Sure, our projections were ambitious and reeked of entrepreneurial enthusiasm, but we had data to back it up. Our attempts at persuading Brookstone to stock more were unsuccessful, though its objection was not necessarily our lofty projections but the limited amount of space in the stores.
So, to ensure we didn't miss out on any holiday sales, we set out on one of our many wildly outlandish strategies.
We rented a couple of temperature-controlled storage units to comfortably stock additional Frog-O-Spheres, with frogs, in and around the Northeast, where the highest concentration of Brookstone stores was located. We hired and trained delivery drivers to take care of the frogs and be on call for two months, especially for the week prior to Christmas, in order to deliver product directly to stores. Our plan (more of a prayer) was for Brookstone to run out of stock, be unable to stock stores from its distribution center in time, and call us in a panic to fill its empty shelves. Then we waited.
Brookstone did call, and we delivered.
Then I exhaled for the first time in two months.
That season was a big success for us, but it came at a huge cost: storage units, employee per diems, lodging, fuel, etc. Not to mention the stress. Sure, we should have used some minimum ROI calculation to determine if the project was worthy of pursuing, but because we were a fledgling company, without the comfort of a war chest of cash on hand to support us, we did what we needed to do. We had a good year that year, but more important, we established our reputation as a company that was willing to go to great extremes (understatement) to ensure our partners had what they needed. That long-term intangible payoff can't be accurately calculated in a cash-flow projection.
What were our takeaways from this experience? Good question. As with most wildly outlandish strategies, this one didn't have a clear set of deliverables. Looking back, I'd say this is what I learned:
1. Take Chances
I had doubts about the plan, given the costs and risks associated with it. My business partner was very persuasive, however, and he hammered home the conviction, "no risk, no reward." In the end, he was right.
2. Put the Customer First
At the forefront of our plan was appeasing our biggest client at the time. It was the first national retail agreement we had signed, and we knew we had a rare opportunity to set a precedent for ourselves. As they say...there are no second first impressions!
3. Think Long Term
Like any loss-leading strategy, ours had a goal to establish a reputation for the future. Fortunately, we did have a small margin built into the product, and the volume made the whole endeavor prosperous. This was just a lucky byproduct of our long-term goal.
4. Mediocrity Sucks
In the end, it came down to doing what we needed to do to build our business. We set out in business not to simply make a living but to build a business we could be proud of. This doesn't happen if you sit around and wait for it to come to you.
5. Pepto-Bismol Rocks
I reiterate...it was not a stress-free holiday season.
Yeah, this is a pretty standard set of takeaways, I understand. Sometimes, however, I find the most rewarding blogs and newsletters to be those that validate something I'm doing. Fellow entrepreneurs who assure me that I am not alone in my insanity. There are numerous articles that will help you estimate sales, manage inventory, or hire the proper help for the holiday. What I hope to do is reach a few entrepreneurs this holiday season who might be considering a wildly outlandish idea but have doubts. To them, I say, simply: Go for it!