Friday, February 16, 2007

RAKS...

ok i will pick the winner of the RAK later today but before i do, i want people to understand that this business is NOT EASY.

i have literally over 100 requests a week for donations for a crop, an event, etc. and honestly, as much as we would love to be able to fill all those requests, we cannot. that is the reality. we can't afford to.

now some might say "well how can you not, MR is so successful?" well i will let you in on a secret, this is the REALITY of this business as a small fish.

let's start with a hypothetical situation. let's say Maya Road had an excellent trade show and we sold a $100,000 worth of stuff at a show (now before you read anything into that this is a hypothetical and what maya road makes in a show is something that i am in reality not going to share with you).

so $100,000 - wow a great number! sounds like a lot of money right? well let's see what is left after:

1. $50,000 - cost of the actual product (what it cost us to have the items made)
2. $10,000 - cost of a trade show (that includes like a booth, chairs, drayage, shipping, airline tix, hotels, food, minivan)
3. $5,000 - cost of catalogs and mailings out for the trade show (orer forms, catalog requests, giveaways, promotional materials)
4. $20,000 - other costs (cost for DT payments, 1-800 phone line, 1-800 fax line, internet, computers, website, electricity, warehousing, shipping, boxes, bubble wrap)

ok so what does that leave?

$17,000 - wow a whole $17,000 and guess where this goes? to the next set of products. so here is the conundrum, $17,000 is what is left after all of that but the next set of products but if you are trying to hit a $100,000 show, you need to spend at LEAST $50,000 to make the products (probably more b/c not all of it will sell and you will have stuff sitting in inventory).

so where then does that leave us? close to zero. this is the reality of a small business. we go through it. others like us go through it (unless they have investors or venture capitalists go through it). this reality is magnified as you grow b/c then you release more stuff and you need to have the turn in inventory to make enough money to support the next show.

and we are not the only ones who go through this - your LSS has to worry about this too on a different scale.

i am writing this b/c i want people to understand. there are reasons we cannot support all the requests that come to us for donations. in the end, MR is a business and it has to make sound financial sense for us to. if i donated to everyone who requested something, well then we might as well pack up shop and go home.

i think about all the people that have come up to me and said "wow you had a good show" and i want them to see this and realize that even with good numbers - you need to THINK about all the costs behind it.

i hope this will help people understand a bit more about the nature of this business.

a RAK winner later today!

10 Comments:

At 2/16/2007 06:01:00 PM, Blogger Laura Vigliarolo said...

Some people don't understand you do it for the love of the buisness not for the money.

 
At 2/16/2007 06:49:00 PM, Blogger Amy Alvis said...

Wow, very enlightening!!

 
At 2/16/2007 06:52:00 PM, Blogger Life's insanities by angela1044 said...

You explained it so well. I work in the clothing industry and see this time and time again. Great job.

It sure is a good thing that you love what you do so much.

 
At 2/16/2007 07:19:00 PM, Blogger Shirley said...

Gee, I knew that it was slim but didn't realize it was that slim. Good thing you guys make product that we LOVE! :)

 
At 2/16/2007 10:21:00 PM, Blogger julieO. said...

Thanks for sharing your heart for those that don't understand! I'm sure it's gotta be stressful! Thanks for sticking it out! I know that you are very generous and give what and when you can. Your business will be blessed!

 
At 2/17/2007 12:27:00 AM, Blogger Anam_Kihaku said...

i love your products and am always just pleased you and Maya road are HONEST with their customers. I appreicate that you take TIME with us and give advice and try to always be the best you can. for that i am grateful.

 
At 2/21/2007 06:00:00 PM, Blogger Philippa said...

Great post Caroline. I have had a few businesses over the past 12 years and they are all like that, but people don't know the reality until they have their own.
Yep it's definitely a do it for love thing :)

 
At 2/23/2007 02:29:00 PM, Anonymous Bisous said...

Wow...thank heavens someone out there understands! I've just posted regarding other issues we deal with as a small manufacturer in this industry on my blog...as transparent as we try to be, unfortunately some people take it as "lecturing". I've always been a strong believer in knowledge is power...let's hope other people,clubs, charities, designers etc. but mostly the consumer out there starts to comprehend the facts of survival as a small business in this competitive market.

 
At 2/23/2007 07:04:00 PM, Anonymous Carolyn Peeler said...

what a fabulous post Caroline. we too struggle with wanting to make everyone happy, but realizing that it just doesn't make financial sense.
sorry we missed you at CHA, we were so busy that i hardly got out of the booth.

 
At 2/23/2007 08:35:00 PM, Anonymous Anonymous said...

That is the most honest and accurate description of the dilemna of the small manufacturer I have ever read--and I am a National Sales Manager myself--I know of where you speak. Kudos to you for your honesty.

 

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