I found a really great example of niche manufacturing. The company is called Beau Ties Ltd. of Vermont and it was started by Bill Kenerson and his wife Deb Venman.
I like their story for a lot of reasons, Bill and Deb were older when they started their company back in 1992 (Bill is 75 now) so this is just further proof that you don’t have to be young and just out of design school to make a go of this.
I keep saying to anyone who will listen that most of the successful entrepreneurs I’ve run into are in their late 30’s to early 50’s. Even so, the youngest DE I’ve known was 12. Anyway, Bill and Deb have a lot of strengths. Some of these strengths are that their product is definitely a niche market, they’re bringing some related experience to the venture, their cycle time is short so they manufacture in the US , they retail their own products, they’ve made working productively with suppliers a major priority and their customer service is pivotal.
My faith is reaffirmed when I hear about companies like this. It reinforces what I know to be true. Not that I had a hand in their venture but it reaffirms the idea that you can still manufacture in this country, be nice to people and still make money. To be sure, Bill and Deb were bringing a lot to the table -Bill had been working in economic development and Deb was an established attorney- but they’re quick to credit their success to productive working relationships with suppliers. Suppliers (like contractors and pattern makers) are often called on as ad-hoc consultants. Bill and Deb sell their bow ties mostly by catalog (catalog 57%; Web 38%; retail 5%) so with 9 catalogs a year and 30 new fabric choices in each one, I’d imagine you’d get really good at managing small lots. There is no way you can have this kind of cycle time if you’re sending work off shore. They’ve got 30 employees, not bad if you’re bringing in over 2 million in sales a year. I think that’s something to be proud of. Also, if you go to their factory during the work week you can watch the ties being made. I think that’d be really cool. I wish I had the money so I could just go jog off to visit these companies when I found them.
Another advantage they have is their retail model (they obviously aren’t a push manufacturer). Bill realized early in the business’s history that dealing with department stores was a cost they wouldn’t assume. The major costs associated with selling to retailers amount to the costs of having sales reps, showing at markets and related expenses. Above and beyond that are the costs associated with selling to department stores. Selling to major retailers usually means having to accept unsold merchandise at the end of a season. Again, if stores are doing what amounts to buying on spec -as is typically done with push manufacturing- with the expectation they can return what they can’t sell, this subverts the whole market process. I wouldn’t recommend that any DE to sell to department stores unless the store has preferential agreements for new producers of specialty products barring returns. I think Nordstrom’s and Bendel’s do some of this. As it is, Bill and Deb have picked up some wholesale accounts who will buy from the catalog rather than expecting a sales rep to visit.
Anyway, if you want to learn more about the company, other than visiting their website, you can read this article (pdf) about the company. As I keep saying, there’s still lots of opportunity in this business.