In our fourth series, Martina Egan, founder and owner of Sleeping Patterns, explains to Maree Morrissey her obstacles with the business, outlines her current plans and puts her questions to the panel. In return, our panel advise on where Sleeping Patterns needs to redirect its focus to achieve future business success.

VITAL STATISTICS

Martina Egan, owner of Sleeping Patterns

Business Name: Sleeping Patterns Year of Set Up: 2003 Founders: Martina Egan Location: Co. Offaly Business Type: Designer and manufacturer of luxury soft furnishings

Designer Martina Egan is in business of producing luxury soft furnishings. Egan launched her business in 2003 with her own label, Sleeping Patterns, using a cottage as her design studio in Offaly.

Describing her business as small with approximately €20K in stock, Egan is self-financed, chooses the fabrics and designs the products and employs two people on a flexi basis.

RIGHT NOW

With Sleeping Patterns, Egan originally decided to sell directly to the consumer to cut out the retail intermediary. Sleeping Pattern's core model is an organically grown wholesome Irish product using 100% Irish linen and Irish wool. And, through her website, Egan has been targeting her products to the American market.

Egan now supplies to interior designers and produces wedding gifts while she is also in the process of developing the company website. "This has not proven very successful but I have a company optimising and marketing my site over the next few months." Egan hopes that the revamping of her website will bring in new buyers as the business is currently only turning over enough to pay her workers.

Feeling that perhaps she was 'naïve' in thinking that, if Irish linen was mentioned on a website, there would be hundreds of Americans emailing their orders, Egan has since been advised by her web designer that it's a slow process getting high in the rankings. Egan now believes her focus needs to change from web to retail sales.

When she previously supplied stores with her products, she resented the massive profit margins they received. However, Egan now recognises that customers are hesitant to purchase online without having a visible presence in these stores where they can touch and see the products.

FINANCING

Egan financed her business using private funds.

THE CROSSROADS

A trip to a Paris exhibition in September 2005 has been a major catalyst for Egan to rethink her business planning. At the show, Egan visited companies who carried linen products similar to hers but whose products were a quarter of her price despite being similar in quality. "I knew that I was going to have to reduce cost base or import to have a growing business and began to look to get materials and manufacturing done in lower cost countries. I also broadened my product line to include luxury silks and cashmeres."

Since the exhibition, Egan has carried out further research on the products she wants to design. "I have sourced companies in China and Mongolia who can produce these products for me under the Sleeping Patterns label." Over the past months, Egan has been receiving samples of their products and says she can buy her products readymade from them and sell them at a significant mark up. "I plan to visit various suppliers in the New Year and finalise product design, packaging and labelling." Dealing with manufacturers in China brings new challenges, however, as bulk orders are necessary and this means considerable upfront investment. Egan and her husband have decided to invest a further €20,000 as they believe it will give them a good return.

This also means working very hard at selling. "I am already researching at which home furnishing shows I should exhibit to develop my sales to retailers." Egan says she will continue with her website optimism. "My target is that 40% of my sales will be web-based and the remainder will come from luxury retailers." With her goal of achieving more sales through retailers, Egan believes that this can only be realistically done by exhibiting at shows where Europe's luxury retail buyers merge.

ANTICIPATIONS

The core competency of Sleeping Patterns is in design and sales. Egan says she has a proven track record in these areas and can see herself focussing on these strengths and outsourcing the other functions of the business such as manufacturing, packaging and distribution. Egan has also approached her local enterprise board for a marketing mentor. The Crux of the Matter for Egan's business right now is in finding the most effective way of getting hits on her website and ultimately turning these into orders.

EGAN'S QUESTIONS FOR THE PANEL

1. With my new suppliers and range of products, where should my sales focus be?
   
   
2. In which geographical area should my sales to retailers occur?
   
   
3. What is the most effective way to target retailers?

Read below comments from our panel of experts about ways in which Egan could manoeuvere her business in future directions to overcome present obstacles.

Egan states that her core competencies are in design and sales. As such, she needs to build on these competencies to develop a range of branded high-end bedding products to be sold through Irish, UK and EU retail outlets. The key strategic decisions for Egan are: does she develop a generic 'Sleeping Patterns' brand or a new luxury brand with an Irish design element? Does she drop the linen and concentrate on silk and cashmere? A Clear Image Egan needs to do some market research right now as the company is going in several directions. The current website certainly won't have the world beating a path to her door. I don't believe the online marketing will have an effect until Egan identifies a clear image or persona for Sleeping Patterns. Close To Mind Some good research with key buyers in the industry should help identify where Egan can develop her brand and unique design capabilities. I don't believe that on-line sales into the US is an option in the short term until she has found her market niche, developed a brand and a unique design. There are more opportunities in the home market to gradually build up sales rather than risk it all in developing the US market. Patrick Munden, Director, South East Business & Innovation Centre

At the Paris exhibition, Egan saw her competitors products were a quarter of the price of hers even though they were similar in quality. This in a nutshell is where some Irish manufacturing and most Irish crafts find themselves in this new millennium and there is no clear clean solution other than 'playing to your strengths,' which in Egan's case are design and sales. It's now time to put the mistakes of the past to bed, having taken the learnings on board. An excellent place to start is the website. If managed properly, it can still be a profitable sales channel and, with a reasonable level of investment, will prove to be a winner for the business. Site Presentation Good classification, navigation and search options are essential for a successful website, as customers expect fast and easy access to information and if they can't find it easily, will go elsewhere. Some sites try too hard to entertain without giving hard information. Animation, multimedia, video and other tricks deter visitors / customers because they are impatient. Keep It Simple Use links that allow visitors to get to other sections of the site, without these links the site page becomes a dead end, with nowhere to go. Keep it simple, concentrate on content and minimise the presentation. Mark Fielding, Chief Executive, ISME

Two key issues to be addressed here are familiar to all owner-managers: increasing profitability and increasing sales. There are just three broad methods of achieving this: increase price, increase sales, or decrease costs. Increasing price is not option, according to Egan, although this is not necessarily true if she was to target the high-quality end of the market. She is focussing on decreasing costs by outsourcing to Asian regions, and has very little payments to make in terms of overheads. However, I believe that she will lose an opportunity to create a distinct market niche if she loses her sense of Irishness by having all of her products made in these regions. Know Your Customer What is particularly interesting is that the customer is hardly spoken about and the primary competitors listed are all American companies. I would have thought that there is a significant opportunity in Ireland for an Irish company that provides high-quality linen, silk and cashmere products together with superior customer care. I would recommend that she begin by identifying different market niches that she could target, undertake focus groups to explore their needs and how best they can be met, then develop a customer-orientated marketing strategy that delivers to the upper end of the market. As part of this strategy, Egan should also redesign the website which lacks energy and excitement. Tom Cooney, Lecturer of Entrepreneurship, Dublin Institute of Technology

In relation to sales, I suggest the focus should be on top of the market retailers such as Brown Thomas, Arnotts, Avoca, House of Fraser and Harvey Nichols; they serve a useful purpose in that they provide a shop front for the product. With geographical area, I recommend Ireland and possibly UK retailers as above. Egan is going to have to crawl before she walks; this market is more manageable than trying to spread her limited resources too thinly. In targeting retailers, identify the key contact and knock on doors with samples and full information in terms of pricing, delivery times etc. With only one opportunity to present, Egan can't afford to get it wrong. On Target One of Egan's key target markets is the wedding gift market so she should identify the main wedding related websites and look to have sleepingpatterns.com listed as link on as many of those sites as possible. Should they invest €20,000 at this stage? Before making this level of investment I would suggest a lot more research needs to be done at the retail level to establish the likely level of demand for the product. Unless sales are achieved, the business will not be a success. So, instead of investing in stock, invest some in research and some on advertising the website. Gerry O' Neill, Assesment Officer, First Step

Sleeping Patterns currently doesn't have a viable business model. Egan needs to develop a clear business plan focus on design, sales and marketing and on creating a brand. I would rethink the company name; it should be short, preferably one word. Egan should rethink how she presents and markets the product, its packaging, positioning and pricing. The company also needs a larger range of products and more choice. To supplement the range in the short term, they may be able to take on other agencies. Focus Before Expanding My clear advice in relation to the Sleeping Patterns website would be to see it as an information tool, just as Egan would use a brochure, rather than a serious sales channel. Egan should focus on selling to retail outlets, interior designers, showhouse companies, Irish product shops and by word of mouth. Given her limited resources, Egan should focus on one or two urban areas with the aim of building market share before expanding elsewhere. There is no short cut to selling to retailers, creating a target list and call list, sending out information and following up with a sales call where the product can be shown is the standard process. Offering a merchandising solution plus sale and return is an advantage. The core competencies and focus of the company should be sales, design and distribution. Liavan Mallin, Serial Entrepreneur and founder of NFTE Ireland

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