If you’re an entrepreneur creating handmade items or artisanal food products, being approached by a large retailer can seem like the perfect opportunity to grow. Big retailers are increasingly looking to small makers to meet consumer demand for niche products, from the West Elm Local program that offers regional goods at select stores to the launch of Etsy Wholesale, which connects retailers with craft entrepreneurs.
However, there are specific concerns for artisanal producers when they’re approached by large retailers, including ability to fulfill large orders and the cost of using quality materials or ingredients. “It's always exciting when a big retailer approaches your small business, but you need to take several things into consideration,” says Jennifer Lewis, founder of smallfoodbiz.com and author of “Getting Your Specialty Food Product Onto Store Shelves: The Ultimate Wholesale How-To Guide for Artisan Food Companies.”
Here are six questions to ask yourself when big retailer comes knocking:
Question #1: “Where will this land us in the next one or two years?”
Evaluate your business plan. Looking at — and possibly amending — your business plan can help you determine the plausibility of fulfilling an order. While you most likely have a business plan if you’ve been pitching to retailers or investors, a small cottage food or craft business might not have one in place. Before moving forward, create this simple business road map, using resources such as the U.S. Small Business Association guide and templates from companies like Bplans. “A business plan helps you determine what direction you'll take the business in during the next 12 to 24 months,” Lewis says.
Question #2: “Can I deliver?”
Find out whether the timeline to deliver is flexible. “If your product is handmade or made in small batches, it may not be possible to meet a large retailer's order,” Lewis says. “You may want to talk to the retailer about pushing an order out so that you have more time to prepare.”
Turn down the offer if it’s simply not possible to fulfill the order. “[The retailer] will most often appreciate the honesty as that means they won't be holding shelf space for a product they won't get and can instead put something else in that space,” says Lewis. “Better to say no now and save the opportunity to say yes in the future when you're ready to work with them.”