Uncontrolled Spin: The Power and Danger of Spin ("Un"missable Series Book 1) (9 page)

Sean interrupts, “So, just to clarify, you intend to manufacture in the United States, increase production, and market through individually owned storefronts? Is that correct?”

Jessica nods. “Yes, exactly. In this manner, the major costs are finding and securing appropriate commercial spaces for retail sales in the new market or markets. Finally, I plan to fund this expansion through savings and increased sales.”

“I see,” Sean replies, considering her drive and strategies. There is a knock on the door, and Evelyn pokes her head in.

“Lunch has arrived,” she tells them.

“Let’s take a breather momentarily to enjoy our meal,” Sean says, and Jessica nods agreement.

They enjoy their catered lunch with Sean’s merlot and dessert cannoli, including small talk about the weather and their mutual friends, Mark and Bonnie. When Sean resumes the business discussion, he begins by telling Jessica he has a proposal he wants her to consider.

“Since our first meeting, I have done a fair amount of research and thinking about how SGM could help the Beauty Boutique. What I have discovered is that you have a very interesting niche market that has tremendous growth potential, as most designers have neglected it. Jessica Silva designs, as I’ve been told, are appreciated for their quality and pricing, but because of your limited exposure to various markets, you are virtually unknown except to the very few in your target market. One of the problems I see is, once your success becomes known and other designers see the market potential, competition could become quite intense, and you should have at least three or four years of designs ready to roll out on very short notice. I agree with you that the Beauty Boutique needs to develop deep market penetration and market share by the time this niche market potential is recognized by others. Much like the footwear industry, you need to be prepared to drive newcomers in your niche market out by way of pricing and tight profit margins. This brings us to the fact that your distribution channels are extremely shallow, even anorexic, since they are limited to your corporate-owned boutique. Research indicates you have resisted selling outside your properties, and unless you intend to open a vast number of outlets, your market penetration will remain insignificant compared to others in the industry. Your profit margin per piece is very good for an American-manufactured product, but you’ll need to cut the price by at least thirty-five percent if you intend to dominate the niche market.”

Jessica interrupts Sean and says, “That’s impossible if I want to maintain the same quality. It’s not realistic and you can’t fake quality.”

Sean smiles. “That’s a good assessment, if you’re manufacturing in the United States.”

Jessica mildly shakes her head, processing, then says, “If you’re outside the United States, you have labor force issues, distribution issues, and quality control concerns. Additionally, I am vehemently opposed to using child labor or sweatshops and will go bankrupt before I will consider either of those options.”

Sean smiles again genially. “Have I suggested either of those options?”

She gives him a suspicious look. “Not yet, no.”

“Nor do I ever intend to. You jumped to several conclusions that are way off the mark. First, let me point out you already have distribution issues much larger than you have anticipated. Quality control is always an issue in your chosen industry, and salaries make up your largest labor force issue in the United States. So these concerns aren’t going away no matter what is eventually decided.”

Jessica nods, her red hair falling softly over her shoulder. “Well, you have a point there.”

Sean clears his throat and continues, “What I have envisioned for the Beauty Boutique is a four-pronged approach that will required a two million dollar minimum capitalization within the next ninety days. It will also require establishing a production facility outside the United States, and I have identified a possible site in Brazil. It will require some innovative benefits, and it will require allowing your designs to be sold outside of your privately owned boutiques at a slightly higher pricing premium than what can be expected in your facilities.” Sean notices Jessica becoming uneasy as she fidgets with her pen, so he pauses for a moment, compelling her to make eye contact, then says, “This outside distribution will be limited in both time and scope. The intent is to get the deeper market penetration via a much broader distribution channel with the strategic focus of replacing this distribution method with corporate-owned facilities after a primary market is established. So let me get a pulse check before I continue. Do you currently have two million dollars in liquidity you can access within ninety days?”

Jessica replies, “Not personally, but I believe I can get it in that time frame.”

Sean inclines his head, slightly surprised. “Very well then, let’s continue.”

Jessica interrupts. “Wait, why Brazil?”

“Well, there are several reasons. First, the government is actively soliciting U.S. companies to consider expanding into Brazil. It’s an emerging market with a desire, even a hunger, for products manufactured locally. Second, the labor force is better skilled than other emerging countries, and politically, the corruption is minimal in comparison to other Latin America governments. And third, Nike recently abandoned what appears to me to be a fairly well-equipped clothing facility forty-five minutes south of Mark and Bonnie’s villa. I would like to fly you to Brazil so you can tour the facility with me in two weeks at no cost to you. Mark has already offered us his villa while we are there. If the facility is a possible option, we can develop this strategy much further. If it isn’t, we will have to put our heads together and develop another one. Jessica, this is in no way a commitment on either of our parts to continue beyond the initial investigative phase, but in order for my first draft proposal to work, this factory must be a fit for your company. Since I know nothing about clothing manufacturing, I would like you to educate me, at least a little bit.”

Jessica says, “I’m not sure about the size of the expansion you’re proposing. What about my employees? I can’t relocate them.”

“Understood. I am not proposing you relocate all your employees. I see the initial production being completed in Brazil, then shipped to your facility here for quality control and finishing touches before distribution. Once you have the staff and management trained in Brazil, then, and only then, can orders be shipped directly to the markets.”

Jessica nods slowly, taking in Sean’s ideas. “You mentioned earlier distribution being outside of my own outlets. What did you have in mind?”

“I would like to see you partner with a footwear manufacturer or designer only to share retail space, then cross-train employees, yours and theirs, to sell each other’s line of products on a commission basis. In other words, you each pay your own employees as normal, but when one of your employees sell shoes with an outfit, they will receive a commission on the shoe sale and vice versa. It gives the employees of both designers incentive to cross-sell and match outfits under one roof. Then their customers can match outfits with shoe purchases, and your customers can purchase matching shoes for their clothing purchase,” Sean answers, pleased with his idea.

Jessica raises a single eyebrow and says, “I see where this type of arrangement might work. I’m just not sure it is the way I want to market my designs.”

“Well, we are just brainstorming right now, so please just keep an open mind. Don’t feel the need to accept or reject any suggestion at this point, as there will be plenty of time to study the merits and pitfalls of everything we have discussed here today. There are significant pros and cons to everything that needs to be considered. On that note, are you able to clear your calendar for a weekend to fly to Brazil, say, two weeks from now?”

“Yes, I can, but it’s a huge step to even consider this type of expansion…” Jess replies, sounding a little unsure and clicking her pen again.

“I know it is. But you told me you wanted to dominate the professional women’s clothing market, and I’m a firm believer that any type of domination requires significant risk and vision. Are you and Beauty Boutique Clothing ready for this type of bold move and strategy?” He pauses and gives her a quizzical look, then holds up a hand. “Don’t answer. Just ponder it, and if you decide it’s not for you, call me in a day or two and we’ll cancel our trip to Brazil. Otherwise, I’ll pick you up two weeks from Thursday at 8:00 p.m., and we’ll fly to Brazil. We will start work as soon as we land and clear customs. Fair enough?”

Jessica agrees, thanking Sean for his time and energy, and leaves his office. Her head is reeling from all the possibilities, and she decides she needs to talk to Nate, and then Bonnie.

CHAPTER 9

BUSINESS OR PLEASURE?

W
hen Jessica arrives back at her office, everyone has left except Nate. He is waiting, not so patiently, for a blow-by-blow description of how Jessica’s meeting with Sean went. He has just started tapping his foot when she breezes through the door. She looks determined and happy at the same time, and as they make eye contact she says, “We have so much to discuss, but right now, I need to pee, and you need to make us both some very strong coffee. Call Phillip. Let him know it’s going to be a long evening for both of us. I’ll make it up to him by giving you another holiday soon.”

She turns in the direction of the restroom as Nate begins to smile, then says, “Honey, don’t worry about Phillip. He’s working late himself and totally understands what’s going on in our world right now.” She flashes him a grin over her shoulder, and he heads to the kitchen.

Jess is sitting at the conference room table with preliminary design improvements scattered all around in front of her when Nate comes in with the coffee and sits down daintily.

She looks up at him and reaches for her coffee. “All I can say is
wow.
Sean was a complete gentleman, he apologized for being an asshole, and he actually
thanked
me for the gifts I sent. He planned to take the time to have a proper meeting today, had lunch catered, and served the merlot I gave him, which I thought was a very classy touch, by the way. He asked seriously about what I expect for Beauty Boutique Clothing in the near future and we had a great discussion of where to go from here. He works at a pace that would send anyone’s head spinning. I found myself wondering what he was up to today… He had personally done an enormous amount of research into my industry and the outcomes look pretty favorable. He doesn’t like the idea of expanding into the Soviet Union, but he looked at a factory in Brazil that he wants me to go check out in two weeks to see if it would meet our needs. He’s talking a big expansion, Nate. I’m going to need two million dollars of capitalization to fund it, within ninety days. I told him I can raise the funds in that time frame.”

Jess pauses to take a breath, and Nate interrupts. “How in the hell do you plan to get that much money?”

She gives him a sly smile and says, “I haven’t a fucking clue at this point.”

Nate giggles. “Nice bluff. Did he believe you?”

She shrugs, tossing her hair over her shoulder and leaning back in her chair. “I don’t think it mattered much to him at that moment.”

“Well, are you going to Brazil? How much do we need to set aside for the trip?”

“Yes, I’m going, and nothing.” Jessica smiles and shakes her head, still amazed. “Sean is flying us down on his corporate jet at no expense to me, and we will be staying at Mark and Bonnie’s villa. Apparently, the factory is a forty-five minute drive from there.”

“And what if the factory won’t work for us? Then what?”

Jessica sighs. “Well, Sean said we would have to regroup and devise a different strategy for any possible expansion.”

“So he has decided to take us on as a client then,” he pauses, realizing a change, and gives Jessica a knowing look. “And I can’t help but notice that it’s
Sean
now, and not Mr. Green. What’s up with that, sister?”

She waves her hand, brushing off the innuendo. “It’s not like that at all. Sean explained that he loathes formalities and will only work with his clients on a first-name basis, that’s all. He thinks it helps build trust and rapport.”

“Oh. Well, then it has to be Sean. I see.” He resists the urge to giggle again.

She rolls her eyes. “Wipe that cat-swallowed-the-canary look right off your face. This is strictly going to be a business relationship, nothing more! He wants me to have three or four seasons of designs ready by the time we undertake any type of expansion. Finally, we have an understanding that neither of us has made any type of commitment to solidify a working relationship. We’re each just exploring options at this point in time.” She pauses, gazing at a sketch and gracefully corrects a line, then looks up at Nate. “So what are your thoughts?”

“I believe you have a lot to think about and a lot of work to do just to keep Sean interested in pursuing expansion options with us. I also believe he has done his research and has concluded there is money to be made for both Beauty Boutique Clothing and SGM. If you pursue expansion plans with Sean, you will be stretched beyond anything you have ever experienced before and at an operational tempo you haven’t even imagined. Sean could be a great mentor, or he could be a vicious colleague. He obviously has great expectations for you and believes you have the ability to perform at the level of his expectations, or he wouldn’t invest his time or resources getting you to Brazil. Do you know what his expectations, especially financially, from the Beauty Boutique are? What are we going to end up paying for SGM representation during this expansion?”

“Well, that’s what has me concerned. When I tried to cover that subject, he blew it off and told me there will be time later to discuss such mundane topics. First, he wants to see if the factory in Brazil will ever work. He said if it does, we will go into much greater detail about finances.”

Nate cocks a dark eyebrow at her. “Well, darling, I suspect you should be prepared for a bill somewhere in the million dollar range for SGM’s representation.”