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Weigh in: Should Steeped Tea push for rapid expansion? Or get their online strategy worked out first? Check out the videos and story below and give us your take.

The Company

Steeped Tea (Steeped, Fine Loose Teas & Accessories Inc.) is a direct sales company selling all things related to tea through its local consultants. Their products include loose-leaf tea, tea pots and other tea related items, which are sold solely through tea parties hosted by consultants. Currently, Steeped Tea has 18 consultants and collectively has thrown hundreds of tea parties in Southwestern Ontario.

How it all started:

The idea of selling high-end loose leaf tea brewed when Hatem and Tonia Jahshan went on a trip to Nova Scotia where they tasted the perfect cup of tea at a B&B. Tonia began with a small inventory of teas and products in November 2006 and attempted to sell product via open houses. That didn't prove successful until Tonia's very first tea party. Initially the couple tried to make their own catalogue at home at little cost. They quickly learned that a professional catalogue/brochure is the strongest selling tool in direct sales. The couple leveraged the equity in their home and used that money to create a professional catalogue and all the tools they need to get consultants on board. They have been incorporated since 2007

Their Goal:

They hope to double the number of consultants in the next 6 months. They are looking into recruiting consultants in Toronto and Ottawa to achieve this goal. To support the growing business, they are looking into finding an appropriate warehouse within the next 6 months. They also have hopes to automate the warehouse with appropriate software and inventory control mechanisms within the next year. Steeped Tea is looking at expanding internationally and entering the U.S. market within 3 years.

The Market:

Steeped Tea is currently the only direct sales company selling high-end tea products in the market. Tonia and Hatem are aware that competition in the future is inevitable and hopes to achieve market dominance before competitors step in.

The Numbers

There is no store for their products. The couple currently works out of their home, and restaurants. Monthly Costs are minimal.

Start-up costs:

• Catalogue: $7,000
• Forms, contracts, lawyer fees: $5,000
• Shelving, renovation: $3,000
• Initial Inventory: $3,000

Main Challenges in their own words:

Warehousing:

We are running out of space! We currently occupy our garage, basement, backrooms in our restaurant, and our extended family's garage. Our inventory is moving quickly and we constantly order skids of product to our home. We hope we can establish a warehouse that can house everything but are worried about signing a lease this early in the game. Our strategy is to create a system were consultants put their orders in online and the warehouse automatically ships products out while maintaining inventory levels.

Marketing:

We need to add approximately 20 to 30 new products to our 2009 catalogue. Since hostesses and consultants get a lot of perks and bonuses from our catalogue, it is important not to bore them with the same old products. We also need to keep coming up with new hostess specials to convince more people in throwing tea parties — even if it's for a small gathering.

Finance:

The new catalogue and the barriers of getting into a warehouse are definitely adding to our financial stress. We may need to borrow money in the near future to establish the warehouse and the banks are unlikely to help us at such an early stage in our development.

Tech:

Where do we find software to manage our inventory/warehouse/ordering/consultant hierarchy? We may have to put this together ourselves. Our goal is to have consultants put in all orders online which are then shipped out by the warehouse. The warehouse would regulate its own inventory levels. The consultants' orders would also enter the database and register their commission for the sales.

Management:

Tonia (President) and Hatem Jahshan (V.P.)

Tonia Jahshan owned and operated TB Sales and Marketing for 5 years prior to establishing Steeped Tea. It was a marketing and sales agency that sold electrical components and tools to distributors throughout south-western Ontario. She had been a consultant with Partylite Candles for the last 8 years.

Tonia is currently managing its day-to-day operations including shipping, managing consultants, and maintaining inventory levels. Hatem manages the finances, and business development.

Hatem Jahshan is a Chemical Engineer by education but has been in the Fast Food industry for the last 7 years as and owner/operator of 2 Subway restaurant franchises. He is currently attending the University of Toronto to complete his MBA.

Hatem eats at least three 6-inch subs every day. They are expecting their first baby in January 2008.