EXCESS INVENTORY

The following verarticle was published in the New York Times on June

 6, 2012 by Adrina Gardella.

Comparing Notes on Excess Inventory (and Other Small-Business

Problems)

By ADRIANA GARDELLA

From left, Susan Parker, Deirdre Lord, Alexandra Mayzler Jessica Johnson and Beth Shaw.Suzanne DeChillo/The New York TimesFrom left, Susan Parker, Deirdre Lord, Alexandra Mayzler Jessica Johnson and Beth Shaw.
She Owns It

Portraits of women entrepreneurs.

 

During the last meeting of the She Owns It business group we introduced Deirdre Lord, an owner of The Megawatt Hour, and Beth Shaw, who owns YogaFit. Ms. Lord talked about a marketing opportunity that her company was scrambling to maximize, and Ms. Shaw shared her desire to get out of the apparel business and focus on education, her company’s core competency. Ideally, she would like to license the apparel side of her business. We also caught up with the other members of the group.

YogaFit’s unsuccessful foray into the sale of nonbranded clothing has left it with $500,000 worth of unsold merchandise to unload. Susan Parker, who owns Bari Jay, said she could relate to that. With prom season ending she is also looking to get rid of inventory. “Next year, these prom dresses will be worth less than they are right now,” she said.

“Is there a certain look that goes from prom season to prom season?” Ms. Shaw asked.

Ms. Parker said that while some styles carry over, those are not the ones that concern her because Bari Jay will continue to manufacture them. “But if something is a dog this season, it’s going to be a dog next season,” she said.

“How do you get rid of dresses?” Ms. Shaw asked.

“I’m trying to offer steep discounts to my prom stores because the Northeast is still having proms,” she said. She might catch last-minute bargain hunters or girls shopping for fall homecoming dresses.

“That’s a separate dress?” asked Alexandra Mayzler, who owns Thinking Caps Tutoring.

It is, said Ms. Parker, who got out of the homecoming dress business after one season.

“I didn’t wear a dress for homecoming,” Ms. Shaw said.

“It’s becoming more of a jeans-type business,” Ms. Parker said.

She is also looking into whether her Australian distributor will take some of the dresses off her hands at a discount. “They don’t really have a prom season, but their formal-dress season is much later,” she said.

“Doesn’t it hurt you when you discount repeatedly to your customers?” Ms. Shaw asked. “I’ve had that problem.”

“No, because it’s standard across the prom industry,” Ms. Parker said. “Once you get to April and May, stores start saying, ‘What are you going to give me off for this?’”

Ms. Parker would rather have the cash. “As my accountant says, ‘Dresses aren’t like wine — they’re not going to get finer with age.’”

“Couldn’t you donate them?” Ms. Mayzler asked.

Ms. Parker said she donated about 100 dresses annually. But she doesn’t do it systematically. “Believe it or not,” she said, “it’s actually hard to find somewhere to give the dresses.”

Ms. Mayzler said Thinking Caps commits to offering a certain percentage of its services on a sliding scale every year. “Not pro bono, but almost,” she said. In addition to doing good and earning a tax write-off, she said, such efforts can generate positive publicity — although she doesn’t think her company has sufficiently explored that angle.

Coming up with a new Thinking Caps logo and tag line is a more pressing concern for her. “Our current tag line is, ‘Students teaching students,’ which has a nice ring to it,” Ms. Mayzler said. “I don’t even know how I came up with it because now I can’t come up with anything — so if anyone has a good tag line. …”

Ms. Lord asked why Thinking Caps wanted to make the change.

The company has grown since the days when its tutors were primarily students, Ms. Mayzler said — although part of what distinguishes Thinking Caps from its competitors is still the ability of its tutors, who are not much older than the students, to relate to them.

Ms. Mayzler said the alternative tag lines they had come up with so far sounded good enough but could apply to any other tutoring company. Part of the problem, she said, may be that she is brainstorming with just two staff members. She said she would think about bringing her tutors into the conversation.

You could ask them to describe what differentiates Thinking Caps, said Jessica Johnson, owner of Johnson Security Bureau. Ms. Mayzler thought that sounded like a reasonable idea.

As it happens, Ms. Johnson has been focused on differentiation as her company begins work for a major new client. The client is an established security company that is using Johnson Security as a subcontractor on a significant project with a statewide agency (Ms. Johnson is contractually barred from disclosing the identity of the prime contractor or the agency). “The further we go in the cycle, the more we learn,” she said. The job, which started in late May, requires Johnson Security to make changes that will set it apart from other companies its size.

“Every time I feel like we’re in a comfortable position, something happens and we have to stretch even more,” she said. To be considered by this particular client, Johnson Security had to examine every aspect of its operation, including the form of its invoices, and the way it dealt with its employees.

For example, the client has site-specific collective bargaining agreements, which Johnson Security must sign as well. Johnson Security’s guards on some of the contract’s jobs include members of the prime contractor’s staff who are covered by these agreements. Ms. Johnson said this was the first time she had had to “sit at the table” with a union, a prospect she considered in a previous post. While she has found the discussions collegial, she feels she has no real choice in the matter — current union employees can receive no less than they now receive in pay and benefits. This means Johnson Security must move to a weekly payroll, from biweekly, so that the union employees do not have to make adjustments.

“Is it worth it?” Ms. Lord asked.

It is, Ms. Johnson said. “It allows us to stretch and build our capacity with less risk,” she said. She explained that her company could not have pursued a job of this size as a prime contractor. The upfront expenses — for items including additional insurance, uniforms and equipment — would have been far too high.

In future posts, we’ll see how Johnson Security is managing and check in with the other owners. In the meantime, please let us know if you have suggestions for any of them.

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