The Plight of the Small Business Owner
Posted April 16, 2011on:
As a relatively new small business owner, I have come to realize and appreciate the camaraderie that I now share with other fellow small business owners. Over these past few months I have met many and we always share our stories, the highs and the lows, and come to appreciate each other’s hard work and business concepts. It can be very inspiring and also very humbling to meet people who just have this powerful drive to operate a successful business and it just pushes me to make the most of my opportunity here at Yoba as well.
Now, I have realized that during our conversations that we always talk about how hard it is to compete with larger more established competitors. Now please before I go any further, don’t assume I’m against big business and that buying local is the only way to go. I feel competition in the market is what makes the United States such a great place as it is. Should I buy an Amazon Kindle or a Barnes & Noble Nook, what is better value for my hard earned money? Do I want some Starbucks today, or maybe a McDonald’s coffee will satisfy my caffeine cravings for the day. I believe that the more choices available to the consumer, the better the economy can function.
Saying that, I also can now understand how difficult it is for a small business owner to compete in these scenarios too. You might all be wondering now why I’m even writing about this in my blog so let me explain.
Recently on a fashion blog called Commerce with a Conscience (which highlights clothes that are made environmentally friendly), the blogger introduced a new line of men’s chinos and shirts from Unis, a small, young company specializing in men’s wear by up and coming designer Eunice Lee. To highlight how small this design firm is, they only have one retail store in NYC while wholesaling some of their products to about 25 other retail establishments. Now to highlight how expensive her products are, a pair of her chinos costs around $228, while her shirts can cost upwards to $100.
What become suddenly interesting on this blog however was when a reader named Jason, commented on the post asking why her chinos cost so much? He said that although he understood that the pants are hand-sewn in New York, he doesn’t understand why they cost so much more than a pair of Dockers or Bill’s Khakis. His argument summed up to why the average consumer should buy this particular product over any other’s that are offered especially when it seems that $228 could do more spent another way.
Well lo and behold, Eunice Lee herself decided to respond to the commenter just a few hours later on the blog and what she had to say I believe made me understand the plight of small business owners everywhere much better. She begins by explaining how small her company is with just one retail location while wholesaling to 25 boutiques around the nation. Comparably Bill’s Khakis has over 500 store locations across the United States. Just looking at it from a 3rd party perspective, I think you can understand the immediate disadvantage she is operating at.
Secondly, she begins to describe the manufacturing industry here in the United States which is almost non-existent. Our minimum wage here in the US is one of the highest in the world (not saying that’s bad thing) and there are so few manufacturing facilities left to use. Even if she mass produced 5000 pairs of pants, the cost is the cost and there won’t be much of a discount because of it. She even had to move some of her production out to LA, because manufacturing in NYC has just become too expensive.
Why did this all happen? Well it’s easy; it’s you, the customer that made this all happen. We have all decided to buy cheaper and all the companies have listened. There’s a reason why Forever 21, H&M, and all of the other stylish low-cost retailers have been successful, everyone has chosen to buy cheaper, thus all of the production has been moved overseas to cut costs. This leaves so few manufacturing facilities In the US, which makes it extremely difficult for independent designers to negotiate their prices. She even states that it would much cheaper for her to manufacture in say China for the same type of quality you would get here in the US. This however defeats the purpose of her goal to have her clothes designed and made in America. She is extremely strong advocate in promoting local business growth and to bringing manufacturing back in to the states.
Eunice goes on to ask how much the actual cost for a pair of $60 chinos would be at a store such as J. Crew or Gap. Very likely it landed in the US and shipped to store for just $13, that’s fabric, trim, wash, dye, cut, and sew. Her chinos on the other hand are all made with top quality fabric from Italy, designed by a very small staff, with the general overhead of operating a small business is the reason why her Chinos can cost $228. She didn’t specify this, but I’m assuming her profit margins at $228 are very similar to the profit margins at J. Crew which really it just astounding if you really think about it. She went on to thank Jason for his comments and gifted him a free pair of her $228 chinos. I have a newfound respect for Unis, and one day if I can, plan on spending some of my hard earned money on her products.
I just found this to be an extremely interesting conversation between a customer and the retailer that you won’t be able to find anywhere else. This comes full circle to all small business owners across the country including me here at Yoba Frozen Yogurt. We are an extremely small company (if you can even say company) with just me and a handful of employees trying our best to serve a quality product. It is also very hard for me to compete with more well-known and established competitors. Like I said in my previous post, buying our ingredients can be more expensive because I can’t rely on food service companies for many of my products. They require me to buy in such large bulk that it’s just not realistic for me to fulfill the purchasing commitments. These little things all add up to my overall overhead and reduce my profit margins.
I have always looked up to companies such as Starbucks, Chipotle, and various other fast-casual restaurant concepts because it just amazes me how efficient their business model is across the board. My goal here in Yoba in the next coming months is to try to emulate and achieve that efficiency as best I can. Wish me luck :)
Also a very exciting development to show off as well. A friend of mine, Nishan, who works for WHIO-TV and also owns Digi Pics, designed and filmed a promotional video for me as well. He did an absolutely amazing job and I can not thank him enough for all the work that he did. Unfortunately I can’t upload the video to this blog for some reason, but will try to do so later. In the mean time you can check the video out on our Facebook Page at http://www.facebook.com/YobaFrozenYogurt.
That’s all for this post, I actually had this one finished late last week but we’re having some internet issues at the store and I just haven’t got around uploading this post until now. If you’re out and about The Greene this weekend and haven’t been to the store yet, come in and check us out! Free sample are always available to try as well. Also read our reviews on Yelp at http://www.yelp.com/biz/yoba-frozen-yogurt-dayton.
Thanks for reading,
Yoba Frozen Yogurt
On my Agenda:
- You can check out the whole conversation between Eunice Lee and the commenter here on this link: http://commercewithaconscience.info/2011/03/23/unis-felix-shirts/
- Also a link to Digi Pics Facebook page. Again Nishan does some really fantastic work. http://www.facebook.com/pages/Digi-Pics/151275751552717
- I will update this more a little later. Just want to get this post published. Thanks!