Question

he Unsustainable Business

Scenario: I had this great idea to create kiln-fired pottery dishware and sell it online, allowing customers to choose the style and glazes and any patterns they wanted. My Pottery Farm started out with just me. Within 6 months, it began to boom as newlyweds especially loved the idea of being able to create their own dishware. I hired another potter and provided 3-day shipping at cost and advertised on bridal sites. After the first year, I was swamped with orders and had to hire another potter friend to come in and help along with my son to manage the website and process orders. By the end of year two, I had an accountant, and I began to worry as several imitators came into the market and our sales started to plummet. I would hire a consultant to help me, but I cannot afford it. Any suggestions?

• Discuss what the founder did right and what you think went wrong.
• What happened to her market and why?
• What could she do to mitigate the damage and downslide of the business?

Answer 1

a) The founder was right about her business idea, but her approach failed her. Allowing customers to choose styles and glazes was indeed a unique idea in the marketplace to start with, and the founder thus gained the first mover advantage for her business in her first two years. Also, advertizing her business on bridal sites was again a good move, as founder did get huge orders for the same.

The founder although should have foreseen the chances of competitors and new entrants into that market, who can easily copy her idea, as the cost of replicating her business idea was not high. Also, the founder only focused her efforts on a very limited customer base, of new couples to grow her business; she should have kept her focus wider to ensure order flow for a longer period of time.

b) The market declined for the founder, as both there were many new players in the market who were doing so; hence the idea lost its charm and uniqueness. Also, the trends in wedding market shift a lot based on influencers like celebrity weddings, latest trends like ‘go green’, etc. hence, the market plummeted as the new couples shifted to other trends.

c) To mitigate the damage her business myopia caused her, and prevent her business downfall, the founder immediately needs to identify new markets, and start advertising in them. Also, she has to create a differentiating factor for her business, and that will allow her to stand apart from her competitors. Lastly, the founder should think about cost cutting and get rid of permanent staff and replace with contractual workers where possible, as to ensure staff numbers and cost are aligned to demand.