Insurance and Utilities and Small Business

Niche firms thrive despite anonymity: Some small businesses don't need storefronts to keep customers coming

November 26, 2007

Whimsical Whisk isn't your neighborhood bakery. Pastry chef Clare Welage never wanted it to be.

She started the patisserie in 2004 with plans to differentiate herself from the competition by making desserts from scratch using all-natural ingredients, designing items specifically for the customer and-just as important-going without a storefront.

"I've always felt that if you open up a storefront and you have a specialty product, something somewhere gets compromised," Welage said. "Ultimately, it's the quality of the product or it's customer service or it's a little bit of both because those things get factored in your price."

Thank goodness for the Internet, which has helped Welage and other entrepreneurs build successful retail businesses without a retail presence.

Food businesses in particular seem well-suited to the virtual storefront, said Kathryn Rietmann, information manager for the Neighborhood Self-Employment Initiative.

"They can have the perception of a bigger identity on the World Wide Web than they might have just working out of their kitchen," she said. "If their product is good or unique and there can be a demand created for it, many of these small businesses can see a profit and can grow and expand."

Rietmann said she's seen some foodrelated startups sell their goods at craft fairs and farmer's markets. Others have rented kiosks at malls, which gives them an instant indication of whether they can bring in enough sales.

Not having a storefront allows Welage to save on rent, utilities, insurance and other expenses. With some small businesses, that can mean the difference between success and merely scraping by.

Welage said not worrying about how to pay for commercial space has freed her to provide the customer service nec- essary to run her three-employee specialty operation. She doesn't just take orders; she also meets with customers, designs products for them and bakes to order. You want a cookie shaped like a beach sandal? You got it.

She does rent space for a commercial kitchen, located in an off-the-beaten-path building near Fort Benjamin Harrison. Occasionally, customers walk through the door and into her kitchen to see her preparing treats like the Campfire (coconut, pecans and two kinds of chocolate), which is to be featured on an upcoming "Rachel Ray Show" as the "snack of the day."

Though you can find her goodies at the downtown farmer's market during the summer and year-round at Yat's and the Higher Grounds Coffee House in Fishers, they're also online at whimsicalwhisk.com.

The Web site serves as a virtual storefront that allows customers to see her specialties: killer truffles and intricately designed cookies. She also goes to customers' homes to present her treats.

Since the majority of her business is generated by word-of-mouth, that works out better than keeping a display case full.

"You have to work much harder these days at creating that niche for yourself and selling it," she said. "It's very easy to open up the door and put up a sign. But if you keep your door shut, you become a little more of a Willy Wonka mystery."

Best of both worlds

Candymaker Elizabeth Garber has tried it both ways.

Not wanting to incur the expense of a storefront, for nine years she served up her truffles, turtles and toffee from a warehouse-style space in Franklin. But in January, she opened a shop, The Best Chocolate in Town, at 880 Massachusetts Ave.

Garber had seen demand for specialty chocolates grow, and she wanted to get closer to Indianapolis, where she lives. So she gave up her 2,300 square feet in Franklin for a 900-square-foot shop on the northeast edge of the Mass Ave. business district. There, customers can watch Garber and her employees make chocolates. Shipping is done from the rear of the store.

The business has changed as a result of the move, she said. She's now getting more corporate business from people who are discovering her by seeing the store. And of course she's getting foot traffic she never had in Franklin.

She was able to make the move-and not increase prices-by making the business more efficient. She watched her employees work and realized that mostly they stayed in one work station at a time. So she didn't need as much space.

"I realized that work space could be limited," she said. "We get a little cramped with the shipping now, but it's also adjustable in a way that we can make it work efficiently."

Corporate credibility

As Welage and Garber prove, success without a storefront certainly is possible. Even so, a 2006 Small Business Administration study found that it's a less-profitable road. Home-based businesses' revenue averages $62,523, compared to $178,194 for businesses with a public presence. More than half of all small-business owners operate from their home.

Victoria Hall, director of the Central Indiana Small Business Development Center, said her office has seen more homebased businesses spring up in the past five or six years. Some are run by parents of small children who need to be close to home, others by people who provide a service-home repair, for example-that's done at a customer's home or business.

"Most successful businesses that start at home do, at some point, get a business location," she said.

That was the case for Lorraine Ball. She started Roundpeg, her marketing firm for small businesses, out of her house in 2002. Today, she's located in a building on 106th Street in Carmel. She chose to have a separate office for three reasons: visibility, credibility and to separate her home and business lives.

"I was really surprised by how people's attitudes changed when they found out I had a real location," she said. "Even though my business was exactly the same, once I could say I have an office here, I moved up a notch ... in people's eyes."

That said, Ball understands why someone like Welage would prefer to go without a shop.

"If she has enough people who know who she is and they're coming to her on referral and word-of-mouth and she's running at maximum capacity, she doesn't need a shop," Ball said. "To expand, it might be necessary. But that would change her business-and not necessarily change it for the more profitable."
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