Small companies endure challenges with big orders
It's difficult for small companies to get a deal with a big retailer.
RALEIGH NEWS & amp; OBSERVER
DURHAM, N.C. -- Last December, SnapTotes was a three-man operation, with all three taking orders, helping customers, making handbags and shipping them out.
"We had the press in the basement, and it was freezing," said Chris Ng Cashin, one of three partners in the 2-year-old Durham company. "We'd all be on our cell phones and people would be asking, 'Is my bag getting here by Christmas?'"
Then in April, Cashin and his partners did what most startups dream of doing. They struck a deal to get the company's products into 600 Best Buy stores this Christmas.
This holiday season is more hectic.
Of course, it's great people nationwide can pay 99.99 for a SnapTotes box, which includes instructions for sending in a photo of your choice and a gift card entitling the bearer to one custom-made photo handbag. But Best Buy's order meant that 15,000 boxes had to be in stores by mid-October.
Moving from that unheated basement to a full-scale operation in less than a year has meant a lot of change: a bigger office, 11 employees, a manufacturing operation in China and a more sophisticated order-filling process.
"Small problems become big problems quickly," Cashin said. "This bag has 40 individual components. We had to figure out how to streamline."
That's the challenge that faces every small business lucky enough to strike a deal with a major retailer.
The concerns pile on, from financing to insurance to distribution. Just ask Shay Williamson, a Cary, N.C., resident and proprietor of Williamson House Sauce, a line of gourmet barbecue sauces and rubs. She started bottling her family recipe as a hobby and has convinced Harris Teeter to test her sauce in a Cary store. If it's successful, it will go to more stores next year and possibly chainwide in 2008.
Though she's delighted with the growth of her small business, Williamson said paying for it has been hard. In order to get into Harris Teeter stores, she had to buy a 2 million liability insurance policy.
"I was closer to making a profit my first year," she said. "I was within 2,000. This year I lost my shirt because of that insurance. But it's an investment that's paid off."
Making the leap takes considerable bravery, said Sandi Ford, whose family owns and operates Raleigh, N.C.-based Ford's Foods and produces Bone Suckin' Sauce. The now-renowned sauce was introduced in 1992, when the first production order wasn't completely filled.
"When Lynn, my husband, gave the order for the first 100 cases, our bottler only sent us 17 because he just thought we were in way over our heads," she said.
But the rewards can be huge. Last year, the company sold more than 1 million jars of the sauce, in all 50 states and 26 countries.
Hard to get deal
As sales of gourmet food and personalized gifts grow, it's even harder to break in and get a deal.
A Southern Season in Chapel Hill, N.C., prides itself on offering gourmet items made in the state, said spokeswoman Deborah Miller. The store is sent about 400 products a year for consideration, and it might buy a third of them, she said.
"It has to be good, it has to stand out," she said. "Sometimes, it's not even the quality of the product but just that we already sell something similar. Do you know how many cheese straws there are in the world?"
Most small companies that run into trouble with big national deals don't do their research or are undercapitalized, said Dan Butler, vice president of retail operations for the National Retail Federation.
Many retailers have Web sites where they spell out everything expected of the company, including delivery dates, materials and even the type of hangers that are expected.
Food-related businesses also need to check on federal, state and local agricultural laws, Butler said.
"You have to learn what's required," Butler said. "You have to make it your business to know."