Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
Christina Platt has a problem that most entrepreneurs would envy. Every Friday, her Vancouver Island-based Bamboletta Dolls Ltd. puts its locally handcrafted dolls up for sale on the company website. More than three-quarters of the dolls, which retail for between $130 and $250, are snapped up within 20 minutes.
"Sold out," the company's website indicates for nearly all of Ms. Platt's inventory. Although Bamboletta makes five basic models, each doll is unique, with its own name and birth certificate.
About 90 per cent of them are sold outside Canada, mostly in the United States. The dolls are so coveted that people have flipped them on eBay for as much as $1,000 each, Ms. Platt says. Although she hates to disappoint her customers, there's no easy way to ramp up production to meet demand. For marketing, the company relies solely on social media and word of mouth.
Ms. Platt, who started out 12 years ago by making her first doll for a niece, runs a studio in tiny Cobble Hill near the city of Duncan. In addition to eight people at the studio, Bamboletta employs 30 women who work from home. Ms. Platt and her husband John help make the dolls – she's in charge of faces; his task is heads – which are constructed from wool and other natural materials.
A true cottage industry, Bamboletta turns out about 80 dolls a week. The company also sells clothing items and offers some customization. Each doll takes between six and 12 hours to fashion, and the parts are made from scratch; workers even dye yarn for the hand-stitched hair, Ms. Platt explains.
Bringing new employees up to speed is a slow process: "It can take upward of six months for someone to get trained well enough to make a doll that we can sell," she says.
Last summer and fall, Bamboletta boosted production to 100 dolls a week, but Ms. Platt wasn't happy with the results. Apparently customers weren't either. "It started to feel like it was a product that we were just pumping out," Ms. Platt recalls. "And then all of a sudden, instead of selling out like that, we would have dolls left on the site. That had never happened before."
In appeasing her clients, Ms. Platt doesn't want to lose what attracted them in the first place. "Something that customers again and again are drawn to is our process," she says. "They get to see the women who sew their dolls."
The Challenge: How can Bamboletta satisfy customer demand without sacrificing quality?
THE EXPERTS WEIGH IN
Leslie Roberts, president and founder of the small business consultancy GoForth Institute, Calgary
She's in a difficult business to scale, and that is a common problem for a lot of cottage-based industries. She's in a situation where demand obviously exceeds supply.
She could lower the quality of the product and make it cheaper to increase supply. Or she could increase prices to temporarily stem the demand. She could make the brand even more premium by charging $300 instead of $200. She can use that additional temporary profit to fund manufacturing and training. So if I'm looking at a six-month timeline, I would increase prices to about $300, take the additional profit and created a fund for expansion capital.
My overarching comment, though, is that she's in this situation because she simply doesn't have a proper strategic plan for her business. What is her vision? Is it to remain a cottage industry that is basically a replacement income for her, or is this a business that she wants to grow into a 50-year company and create a legacy for herself and her family?
She could also be acquired. She could work with an intellectual property lawyer, build a brand, build momentum around the brand and all the trademark aspects of what she's producing, and get under the skin of the likely company that could purchase her.
Nigel Southway, president, Nexus Consulting, Oakville, Ont.
Breaking that cottage-industry model would be dangerous. A prime strategy would be not to lose what's working but to enhance it. The trick is to stay custom and specialty, and offer broader product ranges with the skill set you've already got.
Charge a bit more for the dolls, because it doesn't look like customers are particularly price-sensitive. If they are not price-sensitive, then you say, "Well, look, for $500 you can have the colours you want and a different hat." A clever website could make it work really nicely.
It's like buying a Dell computer: You never buy the cheapest one. Market it more with an effective website with all kinds of tools. A 360-degree view of the doll where you can change the colours – that's what I'd do. They'd need a Web designer and somebody who knows how to push the Web-based marketing side.
Ben Gerwing, vice-president, Alberta Boot Co., maker of as many as 4,000 pairs of handmade boots annually, Calgary
It sounded like when they boosted production, they didn't really notice any increase in sales. I think the main reason is simple economics: The more supply you have, the less demand there's going to be. You want to have people competing over that product you're making.
Seeing as how there's so much demand, a possible option is to add a little bit of price to the cost of the dolls. If they're selling for $200, make it $225.
There are ways to make everything more efficient. One thing they could do is keep the same number of people and figure out a better way to work together – maybe more of an assembly-line-type process.
Even if things do become more streamlined and they like making 80 dolls a week, maybe they could look at taking a few people off the line and see if they could still hit that target.
THREE THINGS THE COMPANY COULD DO NOW
Develop a strategic plan
Having a clear picture of where you want to take the company will make decisions easier.
By charging more, you can build a pool of expansion capital.
Offer more and easier customization
Customers will pay a premium to personalize their dolls.
Interviews have been edited and condensed.