After Rick Martinez started a business making sangria in 2006, he spent three years developing his product — developing the right combination of recipe, ingredients and processing needed to distribute a premium product.
But when the distribution for Maplewood-based Señor Sangria began growing three years later, he ran into a problem he didn't foresee: having the cash flow necessary to pay his primary supplier, a winery in New York.
"The big issue with my product is that I need to make the product before I sell it. As our business grew, those production runs became a little bigger," Martinez said. "That's when I realized really quick that, 'Oh my gosh, I need money before I sell my product.'"
Martinez read about the New Jersey Small Business Development Centers, a program backed by the federal and state governments that's based at Rutgers Business School and operates 11 regional centers, as well as 27 affiliate and satellite offices throughout the state. The centers' services range from providing personalized counseling on how to grow a small business, to assistance in developing business and marketing plans to linking businesses with lenders.
Working with SBDC counselor Al Izzi, Martinez realized there was a simple way to ease the cash-flow crunch. He asked the winery to allow him to pay within 60 days, rather than the standard 30-day deadline. The track record of growing sales meant the winery readily agreed.
"That's something I had never really thought about, and they had no issue with saying, we see your growth and we see no issue with giving you 60-day terms," Martinez said.
Izzi also advised Señor Sangria on how to plan for seasonal ebbs and flows of revenue.
"Working with Al, he's been able to challenge me on my financials," Martinez said, adding that Izzi has pushed him to find paths to grow his business rather than falling into a rut.
Señor Sangria is growing: The company's products are sold in more than 1,000 retail locations in New Jersey, and it plans to expand to New York, Connecticut and Massachusetts. A 750-milliliter bottle has a suggested retail price of $8.99, while a 1.5-liter bottle sells for $14.99.
"We're still a small company, but we've become a player in the sangria category," Martinez said. "I've worked with other startups in the past, but … having someone who coaches you along the way is helpful."
While Martinez is frustrated with the lack of financing from banks, he has been in talks with private equity investors.
"What I've done so far, anyone can do. My background isn't in the food industry, it's in technology," Martinez said. He credits the SBDC for playing a key role in building a path for future growth.
"We have the confidence that the sacrifice that we're doing now is going to pay off in the future," Martinez said.
Plastics manufacturer Acrilex Inc., of Jersey City, had a different set of concerns.
While the company had emerged from a challenging period after the 2007-08 recession in decent shape, it was looking for new ways to market its products, according to David Grunberg, chief financial officer.
When an SBDC official contacted the company in September 2011 to see if it was interested in a free consultation, executives were intrigued.
"Lots of small to midsized businesses are kind of constrained by finances and are missing management-tier personnel to do things, so they do things on a limited budget and not very professionally," Grunberg said. For Acrilex, one of these areas was marketing. "We were doing things, but not really in a logical way. We hadn't really stopped to take a look at how we were doing," he said.
SBDC personnel sat down with Acrilex officials and helped focus on an area that had been underserved: understanding who their customers were and what they wanted from the business.
"This is stuff that every business needs," Grunberg said of the self-assessment the SBDC helped Acrilex perform.
The marketing effort, aided by SBDC staff member Don Egan, was part of a broader effort to expand the company's expertise in different management areas, Grunberg said. He added that his own hiring in 2011 was part of that plan.
"We were bringing in their expertise and applying it into key areas of our businesses where we just didn't have that kind of expertise," Grunberg said of the centers.
Acrilex moved on to analyze both its entire marketing effort and individual members of its sales staff, including which customers they served and whether they changed from year to year.
Egan was invaluable in these assessments, Grunberg said. He said Egan drew on his background in the highly competitive beverage industry to relate it to the challenges facing the plastics business.
"We're more knowledgeable of what we don't have, and we recognize more what we do have than we did before" the assessment, Grunberg said.
Grunberg said thinking about marketing forces a company to plan for the future.
"You could lose market share quickly because your regional market is changing, you lose a couple of key customers," Grunberg said. "These are recessionary, tough times. Marketing is a kind of insurance, but it's complicated, it's difficult and it takes a whole lot of thought."
Interestingly, Grunberg found that the largest investment to improve Acrilex's marketing was in time, not money. Much of the information already was available to the company, but hadn't been compiled or considered.
While it will be some time before Acrilex knows whether the new approach to marketing is paying dividends, Grunberg said the company has been growing.
"We've had a good year, a stronger year than the prior year, not so much as a result of marketing," Grunberg said. "Marketing hasn't added any business as of yet. There's potential to see the business grow, but it's still too early in our process."
Acrilux also has been aided by SBDC in getting certified as a small business, making it eligible for small business set-asides.
"Those things are also difficult to get certified for, but the SBDC is helping us in a crucial way," Grunberg said. "They guide businesses through the process."
Acrilux is aiming for growth as many manufacturers retrench.
"We're right in the heart of a city — this is what America has lost and this is what America has to regain," Grunberg said. "The mission of small business development centers and government agencies that are like them is more crucial to today than it has ever been, to try to help businesses grow out of this recession."
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