Editor’s note: This article was first published in October 2014; its figures are from 2014, including the 2008 revenue, the loan, the expected 2014 sales and the claim of greater profitability over the previous three years.
They say that every business, before it becomes a big company, has had to make difficult decisions and even walk that narrow ledge along the cliff of failure. Sometimes the most critical moment for a small business comes when it tries to make the leap from small to big. At other times it simply comes from business natural selection, when many companies in an industry have to close and only those with a solid foundation survive.
Either way, the decisions taken at that moment are critical. Recently the company Pacifica was recognised by the US Small Business Administration (SBA), which named its founder businessman of the year.
This family business, run by Billy Taylor and his wife, Brook Harvey-Taylor, reached a very critical point in 2009 because of the recession and a change in distribution channels. The business was in danger even though it had brought in $12 million in revenue the year before. It lacked a solid foundation. They knew they had to do something very drastic or face closing the company.
They had to reinvent the company, so they took out a $1.5 million loan and invested it in a new direction for the business.
The couple founded Pacifica in 1997 as an all-natural fragrance company. At the time they had hardly any competition, so they soon prospered. As usually happens, when an industry is very profitable, new companies soon appear, ready to take it over.
By 2007 the market was saturated, and with the recession on top of that, the company was heading for failure.
At that point a defensive strategy only delays the company’s imminent death, so these entrepreneurs decided to draw up a strategy of expansion and attack, investing in a new product line in keeping with the company’s mission and spirit.
That way they could keep, and make the most of, all their existing customers and distributors. So they broke into the beauty industry with a line of natural cosmetics.
You need to know what you can offer that nobody else can, and ask yourself where the white space, the empty gap, is, Billy said in an interview with Business Insider.
By expanding into a new market while keeping its philosophy of using natural ingredients, Pacifica managed to hold on to its strongest retailers, including Whole Foods, and increased its sales volume with its existing customers and suppliers. It was also able to win new customers who were now more interested in cosmetics.
In fact, Pacifica now presents itself mainly as a natural cosmetics company rather than as the fragrance company it was originally.
The founders say they will close this year with sales of $24 million, and that over the last three years the company has become steadily more profitable.
The company has gone from fighting for survival to becoming an even stronger business.
The fact is that you cannot face difficulties by backing into a corner and covering up to take every kind of blow. When the time comes, a business has to decide whether to close or carry on. This couple took a risk, but they did it with a clear strategy. And the risk has certainly paid off.
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