Ask experts, then listen to them

score Question:
Can outside advisors provide our companies missing expertise?

Answer:
One of the biggest failings of many small businesses is that they try to do everything themselves.

But that's certainly not the case for Oregon Chai, a company that has introduced a tea-based beverage to the rapidly growing specialty coffee market.

Since the firm began in October 1994, revenues have increased sharply. In 1995 it took in $190,000, and 1996 revenues were just short of $1 million. In October 1997, Oregon Chai grossed $2.8 millions and had pretax profits of more than $200,000. Estimates for 1998 are $6.8 million in revenue with a pretax profit of almost $600,000.

In a market where there are plenty of look-alike products, it can be very difficult to differentiate yourself.

However, Oregon Chai has been able to do so for one very good reason: It has assembled an advisory board that firms of much larger size would envy. These individuals were brought on board because of their expertise, and they quickly showed the company how to take advantage of market opportunities.

Investor Dwight Sinclair put his extensive food-service background to work for the firm. Sinclair taught Oregon Chai the benefits of using contact-management software, and he schooled them in distribution practices.

Before he joined the board of advisors, the company's founders had no idea about these things. Since his arrival, the firm's distribution list has catapulted from six to 130, and the company is picking up new accounts every day. Sinclair offered his expertise and advice - and the management listened.

The same is true for Joel Lewis, another advisory board member, who was the advertising executive responsible for putting Lipton Iced tea into a can [they also can Nestle and Carnation.]

Lewis helped Oregon Chai polish its marketing and point-of-purchase material. He has done such a good job that many distributors admit that Oregon Chai is far more professional in its approach than the competition.

The company listened and learned important information from the board, from its competition and from its distributors. For example, one distributor suggested that Oregon show up in the morning with some chai before the drivers headed out for the day's run. This meant coming to the distributor's place of business between 1 and 5a.m.

The company did, setting up a sample table and passing out chai to the truckers. Now when accounts ask the drivers about the product, they have a firsthand knowledge.

In another case, a distributor said the company's pricing strategy needed to be changed. The company was charging $2.50 a quart for chai. However, the distributor said there wasn't enough profit in carrying the product at that price because the distributors typically market up the product by 25 to 30 percent.

Result: The firm set the price at $3 a quart and moves 90 percent of its product through distributors.

The lesson is simple: If you want to grow a small business, you have to be willing to listen to outsiders who have experience in the area. They can be a major factor in increased revenues and profits.

Bill Bryan is a counselor with the Service Corps of Retired Executives. SCORE offers counseling, workshops and seminars on small business operations. You can reach Bryan through SCORE, 515 N Court St. 815-962-0122, for information and appointments.


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