Can Expansion Recession-Proof Your Business? One Entrepreneur Says Yes!

With expenses soaring, saving accounts dwindling, and customers holding onto their cash with white knuckled fists, it can be hard to keep the doors open during even the smallest economic downturn. During these difficult times, many business owners cut back, focusing on core products and putting off any kind of expansion. However, in a few notable cases expanding a small business has been instrumental in keeping it alive in a downturn.

Success with a Capital ‘T’

StinkyKids LLC was poised to become another victim of the recession. The company had risen from its humble beginning as a hobby painting business into a mini custom t-shirt empire. Boutiques all over the nation and even a few upscale chains carried these t-shirts, which were snatched off shelves despite a price tag that ranged from twenty-eight to forty-four dollars. However, this amazing success began to die down with the recession. Sales dwindled as cash-strapped customers began to reevaluate extra expenses such as clothing, and big name stores began to talk about dropping the line.

Building a Brand

While some business owners would simply accept their bad fortune, Britt Menzies, the owner of StinkyKids LLC, decided to take it as a wakeup call. Knowing that most people love to buy books for the children in their lives, Menzies designed a whole new product line including books and dolls that corresponded to them. Because these items are less expensive than the t-shirts that had previously been the sole products, they stood a better chance of surviving the recession. Best of all, the new items tied in with the t-shirts and helped create a more rounded brand, one that was nearly recession-proof.

Worth the Gamble

This unusually timed expansion did not come without an element of risk. Menzies began pouring all product earnings back into the line, even giving up her own salary. She dedicated some of her husband’s earnings to the cause and put thousands of dollars on personal credit cards. There have been setbacks, including problems with overseas production, but the willingness to learn from changing times rather than resisting them has helped this company survive where so many fail.

The results of Menzies’ risk-taking speak for themselves. StinkyKids t-shirts are still a fixture at Nordstrom, which will also be carrying the new doll and book line. Other stores, including FAO Schwartz, will be joining the upscale department store. Instead of dying out, StinkyKids LLC is expanding into new and lucrative markets, with a newly minted brand identity and a plan for a bright and successful future.

This is certainly an approach to be used with caution, as it may involve taking on new debt and borrowing time and money from core parts of the business. However, sometimes the only way to stay afloat is to throw caution to the wind, to take a chance that might pay off. In Menzies’ case, the risk was rewarded richly, with increased product sales and a fresh new direction for her now not-so-small company.