A change of plans

Annette Zientek is president of Christine Columbus, a Lake Oswego, OR-based catalog of women’s travel gear. Annual sales, less than $5 million; annual circulation, less than 50,000.

Our whole circulation and marketing plan changed dramatically from our original business plan. Four years ago, when we created our business plan, we weren’t even thinking about the Web, and today we’re almost exclusively there. We’ve really cut back our circulation to focus on the Web.

Our original business plan followed a very traditional catalog model: prospecting for customers, printing catalogs, and continuing to increase circulation. But about three years ago the industry was hit with increases in paper and mailing costs. Even the well-established players were scaling back their circulation and having a difficult time meeting their projections. So we felt that unless we looked for alternatives, we would really be hit hard and maybe not make it.

Between 1996 and 1997 the Internet changed completely, with all the attention that Amazon.com was getting. People were finding the Web to be a new medium they could sell from, as opposed to being strictly an information tool for teenage boys and scholars. We decided to take a chance and go on the Internet, cut back our circulation, and be in the forefront of a new marketplace.

We had to re-skew the circulation, production, and printing costs in our business plan to fit our new Web strategy. Instead of testing lists, we shifted the money in our budget toward testing banner ads. We also allotted our circulation dollars to public relations and marketing. We had to be a little bit more liberal in our financial projections because there wasn’t a lot known about what the Web would produce in terms of sales, whereas with a printed catalog you can calculate projected response rates and average orders and have an idea what you’d make.

Craig Cox is owner of Cartouche Ltd., a Delmont, PA-based catalog of handcrafted Egyptian jewelry. Annual sales, less than $10 million; annual circulation, 200,000.

Products from Egypt are taking off, and we didn’t project that in our business plan. We started seeing jewelry stores and catalogs demanding more Egyptian jewelry. There was a small problem with backorders between August and September 1997, during which our supplier, based in Egypt, had to get up to speed with our increased orders. Once he hired more staff everything fell into place, and we haven’t had a problem since.

We’ve also gone into the wholesale end of the business more than we’d projected. In the beginning we planned to sell jewelry at the retail level, but so many people contacted us to buy large quantities for them to resell that we got into wholesale.

We write a business plan every three years. We’re constantly updating our goals and looking for new avenues to expand the business. We’ve exceeded our sales goals and have had to hire more people than we planned on, and we’re moving into larger offices. Lette Birn is president of Form and Function, a Santa Fe, NM-based cataloger/retailer of Southwestern-style lighting. Annual sales, $365,000; annual circulation, 100,000.

At this very moment we’re pretty much right on with our business plan, which I think is odd. I had counted the number of catalogs we would have to send out per month to generate revenue, and so far this figure has proved to be true. We are still novices at this, however, because even though we’ve printed a catalog every other year since 1989, it wasn’t until 1996 that we drew up a business plan.

We don’t know exactly which month generates how much. My predictions in that respect have been a little bit off. A lot of people get our catalog, then visit our store, then order from the catalog. There is a lot of crossover between the store and the catalog, so the revenue fluctuations between the tourist and nontourist seasons have been larger than I expected. We started the catalog mainly as an extension of the retail store, so people who came into the store would be able to go home and make a decision on a purchase.

Now I look at the business plan all the time. Every three months I sit down with my CPA and the other employees here to look at the plan and work with it. We see where we are in terms of the plan and make amendments.

Greg Zedlar is CEO of Conceptual Thinking, a Burbank, CA-based catalog of greeting cards for businesspeople. Annual sales, approximately $1 million; annual circulation, about 150,000.

We’ve strayed quite a bit from our business plan, which we wrote prior to mailing the catalog. We had to remain flexible to the feedback we received from clients once we had our products on the market. In some ways we wanted to fight that feedback and stick with our business plan, but we also wanted to remain flexible enough to be responsive.

We didn’t want to change our plans too quickly; we waited for trends to develop. For instance, people said the logo on the back of our business cards was too big. In our business plan, we had decided to make the logo prominent so that whoever is sending the card also sends our name, Web address, and phone number on the back of the card. We reduced the logo on a couple of cards, and now it’s being reduced on all the cards in our new catalog.

We’ve exceeded our financial projections-thank God, knock on wood. Our business plan looked ahead for three years. We go back to some of the plan’s key spreadsheets constantly, to see how we did this month against last month, this quarter vs. last. N

How does the state of your company differ from what you had projected in your business plan?

A catalog, like a child, will not always grow up the way you expect. Its progress is vulnerable to unforeseen events, as some of the small catalogers we spoke to this month can attest. Most of this month’s mailers report that their catalogs have seriously deviated from their business plan in one way or another, and that their business plan is something they must constantly refer to and amend. Of course, deviating from the business plan isn’t necessarily a bad thing. One small cataloger, for instance, didn’t include Internet marketing in her original business plan; four years later, she derives 98% of her sales from the Web.