September 26th, 2008 15:23 EST
Conclusion Story: The Amazing Success of the Thinset Tile Lock Company
Case Story: The Amazing Success of the Thinset Tile Lock Company (Conclusion)
Earlier this week, I posted the first part of a special case story that I want to share with you. If you didn`t see that yet or if you just want to refresh your memory, you can see Part 1 here: http://is.gd/35Zu
And now, let`s jump right into Part 2 of the case story of the Thinset Tile Lock Company (TTLC) and its president and inventor, Scott Gerling (http://www.thinsettilespacer.com/).
My primary question was: Does the world need this invention?
Since it saved installers time and therefore money, and since the product is good for the environment, and since it would be easier for "do it yourselfers" to use, I quickly concluded that these simple little spacers are a valuable invention that can be monetized.
Since the company was unable to raise capital, and they didn`t have any friends or family that they could go to, I recommended that they take a revenue strategy. That means that they needed to try to sell themselves out of the hole. Rather than raising capital, they needed to go make a sale that would be big enough that they could generate all of the capital that they need from their own sales.
That accomplishes two outcomes. One, it gets them the capital that they need, and two, it does not require them to sell any part of their company, thus leaving them with less ownership in the future.
We worked on the strategy. We worked on the pitch. We worked on honing our skills, and packaging the material in an attractive way. And when we were ready, we went to a trade show in Las Vegas where all of the tile manufacturers would be. We met with all of the big companies including Custom Building Products, Barwalt, QEP, and Mapei ("Materiali Ausiliari Per l`Edilizia e l`Industria"). Our goal in meeting with these large companies was to sell our vision for the company and then to get just one of them to raise their hand and indicate that they were interested in talking with us further about purchasing our leave-in tile spacers.
Sure enough, one of those companies did raise their hand, and it turns out that it was the largest of the five big distributors. Mapei connected with our vision and indicated that they would be very interested in taking a hard look at our product. During the weeks that followed the trade show, we worked with Mapei. We got them to understand exactly why their customers would benefit from this product, and how it could be used to supplement or replace the current plastic tile spacers that they were using at the time.
Even though the thinset tile spacers are a little more expensive, in the end, they are much less expensive to use because they don`t crack or break the newly installed tiles. They don`t require laborers to go in and remove them, and they might even save insurance costs " all the while protecting the environment.
The strategy worked. Mapei placed a very large order from this early stage company. In fact, Mapei exceeded the goal that we had established for our first order.
After the initial elation of receiving the purchase order, the president of our tiny company realized that he did not have the capital to go out and build the product that had been ordered by Mapei. But here is the lesson for entrepreneurs: once you have a sale in hand, money always follows. With that purchase order, we were able to secure hundreds of thousands of dollars in financing that would enable TTLC to produce and deliver a finished product to Mapei " who then would pay us. That cycle went very, very smoothly. We procured the capital, manufactured the product, and delivered it as promised.
The future looks bright for TTLC. We are preparing to expand the offering of spacers (which currently come in three-sixteenths (3/16") size) to include additional sizes. We are adding a line of sealants and after-care products, and we are increasing the number of customers that we supply to, which is also supported by our upcoming internet marketing campaign.
It`s important for entrepreneurs who are starting out to remember several factors: first, there are several places where money comes from. Beside raising capital or borrowing money, you can always go make a sale. Personally, I love to go make a sale, but if you`re going to make a sale, make sure it`s a big sale. Secondly, make sure that you`re able to produce the product and to deliver exactly what you promised. The money will become available to you if you make a big sale, but if you`re not able to deliver the product as promised, everything will start to unravel. And to TTLC`s credit, they produced the product precisely as promised.
So, as you are working hard every day to build your company, or as you`re building your career, make sure that you`re following the lead of successful companies that are already doing it. Make sure that you`re thinking about all of the different places where capital comes from. Make sure you`re thinking carefully about your strategy. Make sure you`re thinking carefully about how you`re going to position your product. Make sure that you are asking the right questions so that you get the right answers. You only get once chance at the golden ring, so make the most of it.
About Joel G. Block, President of Growth-Logic, Inc.
Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker and advisor. To bring Joel into your company, please visit www.joelblock.com or www.growth-logic.com. Also, be sure to check out our newest project: a blog to organize the blogs that cover entrepreneurship - http://www.entrepreneur-hub.com. And finally, for film makers: http://www.filmfundingblog.com - our newest project.