Small cataloger seeks partner

It’s a bittersweet story many catalogers have heard before: With a small initial investment, a start-up catalog grows steadily during its first few years in business. But then, alas, the company hits a wall and needs more capital to grow – or, in a worst-case scenario, to avoid shutting down.

Waterfront Living, a Lake Oswego, OR-based cataloger of shorefront-themed home decor and gifts, isn’t on the verge of closing. But the company, which has grown from $100,000 in sales for its first full year in ’96, to $2.6 million in ’99, needs to refill its coffers, says its owner (and lone employee) Mark Roberts.

Roberts, who has approached numerous potential investors and catalog companies during the past year or so, is seeking a business partner to fund continued growth, establish an Internet presence and affiliate marketing programs, and most of all, take advantage of economies of scale.

Having launched the business in 1995 with $150,000 of his own money, Roberts was able to secure an additional $500,000 the next year with a Small Business Administration loan and two lines of credit, which, he says, are paid down to $415,000. But now, “I am down to just living off the cash flow created by the catalog mailings and will be in dire straits if I lose money this year,” he laments. Waterfront Living is on track to break even, and possibly even make money this year.

Scaling back – again Roberts has already scaled back on the number of merchandising shows he attends and the number of catalogs he mails. Having mailed 1.7 million catalogs in 1998 and captured more than $2 million in sales with a $40,000 profit, the company mailed 1.8 million catalogs last year. But response flagged, and Waterfront Living took a $151,000 loss. This year the company mailed 1.75 million catalogs. Roberts says that if he doesn’t find a partner by the middle of next year he’ll need to make more drastic cost cuts, such as taking his fulfillment inhouse.

Although Roberts admits he has had no luck finding a partner so far, some believe that Waterfront Living could be quite the catch for a larger company. “Mark has identified a viable niche,” says John Lenser, president of San Rafael, CA-based catalog consultancy Lenser Associates, which has worked with Waterfront Living. “It could be developed into a wonderful lifestyle book.”

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