Thursday, October 4, 2007

A potential new Micro Multi-National

I got an e-mail from Celia Love, who is managing the PR campaigns for Heaven Fresh in Canada, asking me about the company that was distributing Heaven Fresh products in the UK. She was wondering if one of her other client, Colour Revolution, could also use the same distributor to expand in to the UK.

So, out of curiosity, I spent a few minutes browsing their web site http://www.colour-revolution.com.  Apparently, Colour Revolution is a young Canadian company that is trying to make its mark in the North American market. It is natural for them to think about expanding into the UK to broaden their market reach.  By looking at their web site, I can tell that Colour-Revolution is trying to do EXACTLY what we are doing for Heaven Fresh. The only difference is that the products of the two companies are different. Also, probably our approach is somewhat different from them but the end goal is the same.

Although I have never met the two ladies who started Colour Revolution (http://www.colour-revolution.com/about-us.php) , but having been through the Heaven Fresh experience, I can guess to a very high degree that what they are going through to expand the business and also their thoughts behind finding a distributor instead of opening their own office in the UK.  Here is my quick hypothetical analysis of their business based on my 15 minutes review of their web site:

  • The products are really good and they are passionate about their products and their baby - the business.
  • They are getting a very positive response about the products from the consumers and other retailers.
  • They are up to their neck with the routine work just running the North American operation. 
  • Sales are not coming in as fast as they would like.
  • Cash flow is very tight so they have to cut down on expenses and prioritize where to spend the limited cash.
  •  Attracting more capital is difficult because the financiers (banks, angels etc.) want to know the sales figures.
  • Retailers are taking too long to make a decision to place orders and also have too many demands.
  • Service providers such as web site developer, book keeper, online marketing expert etc. do not want to stick around for long without getting paid "market compensation".
  • They are wishing that they knew how to do all these things by themselves and that there were 48 hours in a day.
  • They are hoping to find a magic wand that can be waved in front of potential customer to get them to move their @$$ for buying the product on the spot.
  • It feels like catch 22. Whether to increase the sales first to be able to get some financing or get the financing first to help increase the sales.

Well, getting financing first is probably the obvious choice but the investors' response is forcing them to go for sales first. This is the exact spot in the business cycle where an entrepreneur's creative juices start flowing.  So, exploring the UK market is a natural call induced by the "creative juices" :). But guess what, setting up an office there is going to cost quite a bit of the money that they do not have. So finding a distributor seems like an obvious choice. However they are going to find it the hard way that a distributor cares less about Colour Revolution.  I am not an expert in fashion industry but my guess is that this is not the only such product on the market.  It's not the product that makes a business successful but rather the PASSION of the entrepreneurs for that product moves the business forward. Miracles do happen in life but my bet is that they are not going to find a distributor in the UK with their level of enthusiasm for Colour Revolution. Hence, the UK sales will be proportional to that level.

If anyone in this situation was seeking my FREE and sincere advice then I would tell them to put their web site to a better use. Connect with the consumer directly. Make more believers. Keep small but constantly revenues  coming in. Start the business in the UK by themselves instead of looking for a distributor. Perform the main functions of the business on their own and  outsource only what they cannot handle by themselves.

Perhaps I should not give any more free advice because "free" does not have much value. Probably I should charge my "market  consulting fee" for "developing a plan" to expand Colour Revolution into the UK market.  And this how the Micro-Multinationals are born.

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