Workshop
The theory
Jeffrey Robinson is associate professor and academic director of The Center for Urban Entrepreneurship & Economic Development at Rutgers Business School. Here he outlines the five Ms founders have to think about.
Marketing
‘After hyper growth, it’s no longer about selling your product or service one at a time. Instead, it becomes about how you’re interacting with wholesalers or large-scale distributors – all relationships that come with intermediaries. If you’re dealing directly with consumers, how do you maintain the customer feedback loop? Having customer relationship management is not something that solo business owners are usually prepared to do. If your strength isn't in marketing, then who are you partnering with to do it internally and externally?’
Money
‘You need money to grow – after all, you need to create more products before you sell them and you need a chunk of money to remain innovative. Sources of that money are a big issue to deal with because most sources involve people (angel investors, friends and family and venture capitalists). There’s a cycle to process that and convince people to actually give you money.’
Management
‘The biggest problem in growth, especially when you’re small, is that you’ve done things a certain way that works for a smaller-scale company. That’s usually founder-centric – it’s about how you like it. But when you have to delegate, you need to have a system and a process for it. You pull creativity out of it and that’s not so good. At the same time, you can’t miss orders, you can’t miss calls. There are things that need to be done in proper ways. There’s a whole set of management tools and technology to do some of it, but somebody needs to be behind the technology.’
Mentoring
‘You need somebody who’s giving you some wisdom along the way. There are all kinds of issues around navigating as an entrepreneur that you don’t know. It’s having somebody who’s been there before to say, “Hey, yeah, I remember that and here’s what we did for it” – whether it’s peers or regular meetings with a brains trust of people.’
Mergers
‘As you grow, you find out the limits of what you and the company can handle. Sure, you’ve figured out how to grow the company to a certain extent, but at some point you’ll reach a plateau. When you realise there are other capabilities that you need, do you come up with the capability to do whatever you need in house, hiring more people, bringing on new talent? Or do you go outside the company to get those other capabilities?’
The Reality
Maria Hatzistefanis had been working from her London home for three years when her beauty brand Rodial caught international attention with its first skincare product, Snake Serum – and sales skyrocketed from 50 to 10,000 units per month. In Canada, Toronto-based Salima Visram still operates her accessories label Samara with a small team of four despite seeing revenues hit $2.5 million. The two founders open up about the stuff nobody prepares you for when your business sees rapid growth.
Maria Hatzistefanis
founder of Rodial
Anticipate the comedown
‘When Snake Serum launched, I started getting orders from all over the world as distributors wanted to take on Rodial. I felt exhilarated, but it didn’t last long because reality hit and I had to face the logistical issues. I had to immediately take a view over the next 12 months and understand whether this was a one-off or whether it was going to be replicated monthly. I wanted to make sure we had enough stock to fulfil the high demand, but a little less for when the product went down on its life cycle. It was a bit of science and a bit of guesswork – you can’t assume that for the next 364 days you’re going to be selling 1,000 products a day.’
Come up with the next hit
‘I knew that one bestseller wasn't going to sustain my business forever, so I had to come up with another one. So now I’m onto the next product before we launch the current one, meaning there’s a continuous stream of new product development. We get ideas from customer feedback, from our call centre, online chats and from the skincare consultations we’re offering.’
Don’t always outsource product education
‘Business owners have a passion about what they do, and a certain way of explaining their products and vision that’s very relatable to the consumer. On the other hand, I’ve found that when you use influencers, the message can sometimes get lost. Also, it’s not financially viable to have an influencer [promote your products] every single day of the week – budgets are limited and you need to have that constant stream of content.’
Invest in people early
‘In the early days, it was just me, a couple of freelancers and a part-time accountant. I always thought that having experienced operations or sales managers would be great, but that the business couldn’t afford it – I hired my first sales manager in year three. But I now know that if I had hired the right person from year one, I would have probably been three years ahead.’
Salima Visram
founder of Samara Bags
Stay close to the customer
‘We started by testing out products in small batches to gauge customers’ interest, before we went all in with production. It takes time to find product-market fit, but if you start small and stay scrappy in those early days, you get there. Being surrounded by companies raising $50 million in early-stage funding, I’d always think: how are we ever going to grow at that level? But those companies might just have to grow at all costs, which sometimes means not staying as close to your customer or staying as nimble in finding that product-market fit.’
Outsource fulfilment
‘I saw so many brands doing their fulfilment in-house, but that’s another entire business to build from the ground up. My business was entirely self-funded – I couldn’t even pay myself for the first year and a half, so I opted out of bringing fulfilment in-house. Now, I’ve scaled to three fulfilment centres in three countries. I’m giving the experts the ability to handle that for us and I have time to focus on other things that matter.’
Stay true to your values
‘When the company took off, we could have gotten away with a price increase – but why price an item at $500 just because we can? I chose to keep my own values at the forefront: I’m still young, I still don’t have a lot of money in the bank and a lot of young people relate to that. It translated into loyalty and repeat purchases.’
Prepare to go back to square one
‘It’s one thing to take a business from $0 to $500,000; then from $500,000 to $2 million, which is where we are now; and this year, to take it from $2 million to $10 million. That first stage was scary because I had to relearn everything about production, operations and customer service. We definitely oversold products, ran out of stock and had to put items on pre-order. The entire process had to scale 10 times as the business took off. Now this is something that’s always in my mind, and leading up to every new growth stage, I am always rethinking our entire ecosystem to be ready for that.’
This article was first published in Courier issue 41, June/July 2021. To purchase the issue or become a subscriber, head to our webshop.
