Dealing with Sudden Success

In November 2007, Andy Dunn was interviewing accountants when he got a call from one of the investors in Bonobos.com, the men’s apparel company he cofounded that year. The website was down. What was the problem? It turned out that a hip e-mail lifestyle ezine called Urban Daddy ran a story on Bonobos’ pants that day. The flood of visitors crashed the site, but not before mulching Dunn’s sales projections. “We’d been doing $500 a day in sales,” he says. “That day we did $2,700.”

That was just the beginning of Dunn’s experience in the quick-hitting world of 21st-century consumer attention. Next, a trend-setting blogger called The Cool Hunter praised his pants, which are designed for übercomfort with features such as a curved waistband. “That day we did $15,000,” Dunn says. A plug from online menswear guide Uncrate generated a $25,000 day. Today, Bonobos is an established online menswear retailer with $12 million in 2010 sales and a cofounder who respects the power of digital influence.

Ramping Up

Clearly, an influential mention can make a small company. It’s not a new phenomenon. In 1975, a mention of the Pet Rock on television’s Tonight Show made the whimsical gifts the craze of the holiday shopping season, recalls Larry Galler, a Valparaiso, Ind., small business coach who owned a gift store at the time. “The next morning we had folks coming in asking if we had the Pet Rock,” Galler says. “I had no idea what they were talking about.” More recently, Twitter rocketed to prominence after it was named top new Web offering at the SXSW Interactive industry conference in 2007.

But while fads have always been around, today they have a different character when viewed from the perspective of a small business owner charged with satisfying them. As management professor Paula Englis of Berry College in Georgia points out, surges in demand that crash websites, deplete inventories, and create surly employees can lead to the kind of negative word-of-mouth that 20th century entrepreneurs experienced only in nightmares.

“It’s not that they’re just going to tell 10 people” if customers are unhappy, Englis says. “They can even go on YouTube and talk about the experience. That kind of stuff is hard to recover from, especially if you’re a small company.” The glare of global attention can be your big break -- or it can kill your company.

But the promise is usually worth the peril, she adds. “Something like this is a once in a lifetime,” Englis says. “You have to take advantage of it as much as you can.”

The question is: How? Follow these steps to make sure you get the most out of your sudden success:

Plan ahead. It’s a little easier if you expect -- rather than are surprised by -- a surge in business, Galler says. If you offer a promotion on Groupon, for instance, you have to be ready for it to go viral.

Preparing for a sudden boost in business varies depending on what type of company you operate. Online businesses should use a hosting company that can quickly add bandwidth in the event that the website is unexpectedly overwhelmed. Most major webhosting providers can do this, says Kevin Doyle, cofounder of small business technology consultants 3Points in Countryside, Ill. “If you need more bandwidth, you can pick up the phone, call your provider, and you’re good to go,” Doyle says. That’s what Dunn did, and the Bonobos website was back up within hours. Paying for a flexible plan that can boost bandwidth at a moment’s notice costs only about $5 to $15 per month, Doyle says.

Service firms should cross-train employees to do more than one job and hire part-timers who can be quickly bumped up to full-time status if necessary. Companies may also be able to arrange reciprocal deals with others in the same industry so they can help each other fulfill unexpected demands. These sorts of arrangements are common disaster-recovery tools, Galler says, and they can work in the event of a sudden spike in demand.

If you plan a promotion, tell employees to expect being busier than normal, and consider adding more service personnel. After his first blowout, Dunn hired a dedicated customer service person, and today he has a half-dozen working in the same facility as the designers and engineers to improve their ability to solve customer problems.

Manufacturers should source from suppliers that have excess capacity and employ multiple sources when possible. “And you should have good relationships with those suppliers so they’ll help you out,” Englis says.

Dunn also keeps about 20 percent of his manufacturing in the United States, in part because turnaround on orders to U.S. factories is three weeks instead of seven from Asia. The problem with doing it all in the United States, he says, is that so much of the U.S. apparel manufacturing industry has gone overseas that in addition to better pricing, Asian suppliers now have superior technology.

Line up capital sources. When orders increase quickly, you need the ability to fulfill them without entering a cash flow freefall. Dunn has gone through several rounds of angel financing, but he still nearly ran out of cash in July 2010. “I had to go back to my investors, and they put $2 million more in the company to keep us going,” he says. Add investors to the people you should stay on good terms with.

Galler suggests talking with investors, bankers, suppliers, and others in advance to find out whether you can count on them to help if something out of the ordinary happens. “Many small businesses consider their vendor relationships to be adversarial,” Galler says. “It doesn’t have to be that way.” Cultivating good relationships with suppliers might, for instance, enable you to get a referral from them for another source if they can’t fulfill your orders.

Know when to say no. When all else fails, sometimes business owners may have to turn customers away. Hard as it is, Englis says it may be a better alternative than giving someone a bad experience. To soften the blow, she recommends being upfront about the situation and letting customers choose to order now and wait or come back later. In practice, this can be as simple as putting a notice on your website saying that a product is sold out and inviting back orders.

To maintain the customer relationship, consider setting a firm date on which you will be able to fill the order. For instance, Galler says an online coupon campaign by one of his clients resulted in so many house-cleaning inquiries that the client began scheduling sales appointments with prospects for months in the future. “They accepted that,” he says of the put-off prospects.

The kid-glove approach worked for Merus Winery in St. Helena, Calif., when an influential publication gave it an unexpected and somewhat inappropriate boost. In July 2010, says JC Flugger, hospitality manager at the four-employee high-end winery, San Francisco magazine placed the winery 38th on a list of 100 Bay Area places to visit.

The problem was that Merus is an exclusive winery that sells only 1,000 cases a year of $135-a-bottle wine to an invitation-only clientele. Tastings are strictly by appointment and given only after a referral from one of a handful of concierges. The article, though, recommended a trip to see the winery’s ultramodern architecture -- even for people who drank no wine or alcohol. “It left us hanging with our shorts in the wind,” Flugger says.

Worried about camera-toting tourists intruding on private one-on-one tastings, Flugger began asking callers where they had heard of the winery. If they mentioned the magazine, he began asking whether they had a wine cellar, collected vintages, or bought much wine at that price level. “We always found a way to either accommodate them or to let them find out for themselves that this isn’t something for them,” Flugger says. If visitors showed up anyway, Flugger would show them around. “I’d welcome them if they insisted, because everybody’s a customer. I would not turn away people.”

Flugger’s and Dunn’s differing experiences with 15 seconds of fame highlight the unpredictable, uncontrollable, and uneven benefits of sudden global attention. But they also show that the burden of fame can be managed. In part thanks to its digital plugs, Bonobo ended its first year with $2 million in sales, double Dunn’s most aggressive forecast. After the Urban Daddy article crashed his site, Dunn had his engineers build in more capacity. And the next time Bonobos’ website wandered into the digital spotlight? “We stayed up,” he says, with palpable relief.