Find a niche and let the game plan begin
G.T. Dave’s company began in his mother’s kitchen. His family had been drinking kombucha, a little known Asian elixir, for years believing it increased energy and cleansed the body of harmful toxins.
Convinced the sweetened tea had helped his mother beat back advanced breast cancer, Dave thought he could sell the drink, which is made by combining a yeast and bacteria culture with a mixture of black tea and sugar, as a health supplement.
No clinical studies have demonstrated any specific health benefits of kombucha, and Dave quickly found that deciding to sell a product is very different from actually selling it.
Although Dave spent long hours handing out samples and persuading local health food stores to carry the product, the business didn’t hit full stride until years later.
After toiling for years, Dave scored a big break by landing a distributor for Whole Foods Markets Inc. as a client. Today, Dave’s Beverly Hills-based Millennium Products sells more than a million bottles of GT’s Organic and Raw Kombucha in more than 1,000 stores.
Learning to sell is as important to the lemonade stand as it is to a red-hot start-up. It’s an age-old but elusive skill that takes creativity, courage and plenty of persistence.
The No. 1 rule for a small business is to find a niche free of larger rivals and then relentlessly convince customers that your product is distinct from what’s currently on the market, said Robert Foster, an adjunct professor at UCLA’s Anderson School of Management.
It also pays to have a good game plan, Foster said.
Most successful businesses start off using every sales trick in the book to pitch their wares, including cold-calling potential clients or pounding the pavement. As sales build, it’s important to assess what’s working and what’s not and then shift time and resources.
“You have to be smart about building relationships you hope will pay off,” Foster said.
Because most small businesses don’t have money to spare, it’s also essential for them to find ways of getting their name and product out cheaply.
One idea: word-of-mouth marketing. Research shows that loyal customers are often a small business’ most powerful ally. Some increasingly popular techniques include giving customers discounts on future purchases or commissions for sales leads.
Gregory Rosa, vice president of Electro-Tech Machining, a 70-year-old graphite machine company in Long Beach, said most of its customers came from recommendations from other clients.
The company makes basic tools for the automotive industry and the military and has sales of more than $10 million a year.
In recent years, Electro-Tech has considered expanding its product line into the lucrative aerospace industry. But that would require spending capital to expand its manufacturing plant -- a risky proposition if larger sales didn’t materialize. So executives were proactive: They approached companies such as Lockheed Martin Corp. and Northrop Grumman Corp. to see whether they were interested first. The response was positive.
This summer, Electro-Tech invested $500,000 for new equipment to make parts that would be used in aerospace satellites and expects to begin shipping them early next year.
“We have a solid reputation and that helped us build their confidence,” Rosa said.
Arianne Zucker has just started riding the sales wave. This year, the actress left a longtime role on the soap “Days of Our Lives” to work full time on a jewelry line called LowdSuga’ that she started with a friend two years ago.
The pair understand how crowded the jewelry business is and are trying to learn day by day how to make that big sale.
In the beginning, Zucker and business partner Heidi Mages held jewelry parties around Los Angeles and invited dozens of women to look at the handmade jewelry, most of which sells for less than $500 each.
After early success, they began approaching retail stores and are now in several across California. They hope eventually to get into larger chain stores. They started a website and last month hired a publicist to try to drive online sales.
Zucker said reaching out to other small businesses for advice had been essential. She recently attended a workshop by Ladies Who Launch, a national organization that offers women advice about starting businesses, where they gave strategies for women who may not be initially comfortable as salespeople.
“The way women approach business is different and it’s important to realize the pluses and minuses of that,” Zucker said.
Foster, of UCLA, says once a small business has some initial success, it often makes a crucial mistake: wanting to grow too fast. Although there are occasional exceptions, slow and steady often wins the race.
“A good small business can often grow for five or 10 years at the same pace without having to alter its business model too much if they do just a few of these things right,” Foster said.
Dave, of Millennium Products, says he continually hears from people who have ideas about products he should create or new markets to explore. For the time being, he’s sticking with his focus on organic drinks and foods that he can sell in health food stores and supermarkets.
“I didn’t start this because I wanted to be a millionaire or had my eyes on conquering the world,” Dave said. “I like building and growing this business more than anything I have ever done.”
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