Successful Firm Needs Safety Net of Relationships
When public relations agent Teresa Taylor broke her foot a few years ago, she didn’t expect it to change her life. But she got so many requests for the fashionable cast cover she designed that she decided to start making and selling designer arm slings, walker grip covers, crutch covers and sports slings to pharmacies, medical supply stores, orthopedic physicians and hospitals nationwide. In January, her company attracted a private investor. But Taylor learned that putting all the money into expansion, without getting some good advice first, was not the way to go. She was interviewed by freelance writer Karen E. Klein.
Last January, I sent my business plan to a private investor, and he invested $30,000 in my company without even meeting me. At that point, I had two salespeople, so I used the money to expand my inventory and bring on some new independent sales reps. I didn’t have a professional advisor on staff who could show me how best to allocate those funds, splitting them up so we put a percentage here and a percentage there. I was lacking a strategy.
Instead of setting up a strategy, I used the money to grow the business. I was courting some large companies at the time who loved our product line, and I was so optimistic that I thought for sure we had some big sales all lined up.
Like a lot of entrepreneurs, I thought I could conquer the world. I didn’t spend any of the investment money on bringing in new orders or advertising. When those deals I thought were sure to come through took longer than expected, my bubble burst quickly.
All of a sudden, our receivables were really slow coming in. Then a very large, wealthy company placed a large, large order with no cash upfront--on a handshake basis. We delivered the product, plus some new-product development they’d requested, and they just refused to pay us. It turned out that the gentleman who was the head of purchasing really didn’t have the authority to make such a large order.
We got our products back, but we were out so much money in meeting that order I thought it was all over for us. I had to really think fast to come up with a strategy for getting cash flow going again. I looked through my customer lists very carefully and went to some of my best long-term customers--people who actually care about my business--and asked them to purchase from me even though I knew they didn’t really need any product.
It’s amazing how much your communication skills come into play in business. I just showed up at some of these customers’ locations because I felt it was important to talk to them in person. I found that people appreciate honesty. I told them that some receivables were not coming in and we had a cash flow problem that month. Then I offered them a discount on a purchase, telling them I would waive shipping costs and do everything I could to provide them with great service.
Most of them were wonderful. I’ve built up great relationships with my clients and they trust me, so they helped me dig out of that hole.
But if I had gotten some advice before I spent that investment money, we would not have wound up getting into trouble.
I learned that I really have to network, which I now do, and consult with people who have been there and done this kind of thing, so when I face another critical decision, I’ll have someone who can review it with me.
I also learned that I have to trust other people and their instincts along with my own. I can’t be afraid to listen to other people. And when you’ve got a group of people who know you and your business, you have somebody to help you through things, mentally, when you feel like you’re losing everything--fast.
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At a Glance
Company: Teresa Taylor Medical Design Co
Owner: Teresa Taylor
Nature of business: Manufactures and produces medical accessories
Location: 1954 Hillhurst Ave., Los Angeles Times
Web site: https://www.ttproductsinc.com
Year Founded: 1992
Number of Employees: 0
Annual revenue: $300,000
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia 91016 or send e-mail to Kklein6349@aol.com. Include your name, address and telephone number.
