When Paul Reitzen launched his furniture business, the former salesman was eager to please customers by offering a variety of product lines. But as Studio RTA grew, he realized that the large number of products was expensive to maintain and that paring them down requires a tremendous amount of discipline. Reitzen was interviewed by Karen Kaplan.
When we were just starting out, we figured we needed as many customers as we could get. We thought we needed a bigger product line so that we could grow. Plus, I am a salesman at heart. Whenever a customer would ask, I'd always say, "OK, I'll do that."
It's very important to stay within a niche, which for us has always been the steel and laminate market--drafting tables and computer furniture. In the drafting table arena, we were a big fish in a little pond. In the computer furniture world, we were a small fish in a big pond. There was more temptation to offer more sizes and shapes and colors.
We didn't consider the side effects of growing our business too much. We took deals that were tight. We had too many customers wanting too many things. We were overstocking ourselves and over-customizing. We were reacting to our customer wants instead of being proactive and doing what made sense.
We didn't really lose focus, but we got away from the KISS method--keep it simple, stupid.
We learned that you have to know when to say when. In the first couple of years, you're building your line and you need to have enough items so that you look like you're in business.
But you can go out of business real fast if you create too much selection in the beginning. All of your customers want to see something fresh and new, but you have to be ready and willing to support each item with inventory and advertising dollars. If you're going to have a large selection of products, you have to be willing to back that up, and that's expensive.
Maintaining that focus, however, is easier said than done. It's hard to change the path once you've gone down it. We sold a tremendous amount of catalog books, and once the items are in print, we have to support it for at least a year. What we've had to do to fix this is plan ahead.
The most important thing is to create a plan and stick with it. We have monthly "goals and controls" meetings to focus on our short-term goals so that we don't get caught up in the big stuff. If we've got $200,000 worth of slow-moving inventory, it's easier to focus on getting rid of 500 items in one month than trying to sell the whole bundle. We take it in segments so that it's easier to swallow.
Staying focused is the most important part of running a business. You have to create a plan, then look back and evaluate how you did. If you don't have goals and controls, you don't have a gauge of how well you're doing. If you don't face up to your challenges, the problems will get so big that they'll become insurmountable.
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AT A GLANCE
Owners: Paul Reitzen and Robert Hughes
Nature of business: Manufacturer of computer and office furniture
Year founded: 1987
Number of employees: 95
Annual sales: $25 million