According to the Small Business Association (SBA) of the United States Government 75% of all small business's fail within the first 3 years of opening.
The 3 main reasons they fail are the following:
1)Lack of capital (money)
2)Poor choice of location
3)Lack of business experience both general and/or specific to their market.
A new term acronym has been coined in the business world; SOHO (Small Office/Home Office). This is important because most if not all custom knife makers, suppliers and dealers would fit into this category.
I was asked in my forum could I give some advice as to how to "expedite" a maker gaining attention for his work.
What Im going to write next is for those makers who truly want to excell. This is not the only way to become successful, however, it will make it happen a lot quicker.
You need to have a business plan. This will basiscally identify the following.
Mission Statement (what your business is about). Also the other main points are:
Where you are at
Where you want to go
How you are going to get there.
Having it in your head is not the same as taking the time to think it out and put it on paper where it is staring you in the face on a daily basis.
Part of your Business Plan will include (or it can be done seperatly), is the Marketing Plan. This will help you identify your market, your position in that market and how to gain a better position in that market.
Question: To you knife makers who read this. How many makers currently live in a 5 state area? How many make the same type of knives that you do? What is their prices for these knives? What it the quality/versus price for these knives.
If you don't know the answer to this, chances are every dollar you spend will be wasted as you have no idea what position you have in your market and even worse do not know where you stand with your competiton.
Doing a marketing plan will help you get answers to all of the questions I just asked.
As it will allow you to identify your target market and in time will allow you to gain a "permission market" which simply means potential customers have given you permission to contact them about a product you have for sale.
To increase your postition in the custom knife market you need three things and shoudl consider a 4th:
1)Print advertising (not necessarily in knife magazines) Harris TK), Krause(Blade) and Yee (Knives Illustrated)Publishing all have several other magazines you can talk with them about advertising in. Think TARGET MARKET.
2)Shows, an absolute must. Interfacing with the consumer is the most important of the three. However, again think TARGET MARKET.
The next term you need to become familiar with is ROI (return on investment).
Example: New York Custom Knife Show in November in New York.
Expenses:
Table: $600
Hotel Room at the Sheraton where the show is:
$265.00 per night (with tax) 3 nights = $795
Airfare (average) $250.00
Food $150 (that is on the low end)
Cabs to and from airport $50.00
So far the total is: $1845.00
Now deduct time lost in the shop (at least 4 days) Some makers forget that this adds to the cost of attending a show.
If you work on a 25% profit margin (if you don't know exactly what your profit margin is per knife, FIGURE IT OUT)! If you sell $5,000 at a show, you did not make $5,000.
Ok, if your expenses are $1845 to attend this show and you work at a 25% profit margin. How many thousands of dollars worth of knives do you have to seel to break even (again this does not take into account your time at the show). The answer approximately $7,350.00.
Obviously, many of the shows you attend will not be as expensive as this one. However, it will not be as well attended as well.
Take for instance the just past Guild Show.
Table and dues: $500
Room (with tax) $165 per night x 3=$495.00
Air Fare: $250
Food: $75
Cabs: $50
Total: $1,370.00
Working on a 25% profit margin Total sales to break even $5,500. At that rate you made not a single dime of profit. Im here to tell you , most people in that room did not sell $5,500 worth of knives. For most table holders that show was a losing propsition.
The point to this is, while shows are necessary, identify your target market, what your competiton is going to be at the show and look very closely at your pricing structure...are you to high, to low or just right? This will help you to pick the right shows for you and your market.
3)The internet. Boys and girls if you dont have a site or are not working on a site your wrong! It amazes me how many knife makers on Blade Forums that do not have a web site. What are you waiting for????
For my part my sales at shows have been steadily decling at shows for the last two years. This is due in large part to two things.
First, Internet sales are increasing every year from those who do not have the time or money to attend a show that is not close.
This first reason leads directly to the second. Becuase internet sales have increased I can no longer bring as many knives as I used to in previous years to the shows I attend. While I still do much better than break even, the time is coming when I will not.
Lastly, the dealers! If you are lucky enough to work with a dealer long term (thats right, lucky because there are about 4000 knife makers for dealers to choose from). Also fortunate as dealers, for the most part have a better idea of what the trends really are. Also, we have web sites that bring thousands of potential customers a day to look at the knives on them.
Knifeart.com, Arizona Custom Knives, Gary Levine, Miami Nice Knives and Roberton's Custom Cutlery allow hundreds of thousands of potential customers to look at your knives on a yearly basis. Knife stores in malls dont get that many customers a year walk in.
Im sure as with me, Larry, Jay, Gary and David have a world wide customer base.
This is not to say that you need or should work with dealers. But they should be considered as an option in your business plan.
To this end, I just received (as Im sure the individuals I previously mentioned did as well) a email from Bud Lang with questions as to the state of the custom knife market and the good and bad about a maker working with a dealer.
Blade has been interviewing custom knife dealers as well as the factory dealers for years.
Gary Levine has also started a Custom Knife Dealers association. I was not asked to join, but Im sure it is still a good organization <G>.
So makers it is up to you. You are the master of your own domain. A business plan and marketing plan are just but two of the tools you can employ. Yes, they are time consuiming and difficult to do. There is software and books available.
Remember three things:
1) If it was easy everyone would do it. Gee there are 4,000 custom knife makers and only about 15 custom knife dealers (what does that tell you).
2)People don't plan to fail... they just fail to plan.
3) Advise is worth what you pay for it!
In this case, it may be worth just a little more than that.
------------------
Les Robertson
www.robertsoncustomcutlery.com
"If you are out to describe the truth, leave elegance to the tailor"
Albert Einstein
[This message has been edited by Les Robertson (edited 08-05-2000).]
