Welcome to the Small-Business Soap series, in which we follow a start-up in real time. Getting a small business off the ground can have as many twists and turns as a daytime drama. But unlike television plots, these stories can inspire and educate entrepreneurs -- be sure to tune in every Wednesday to find out how.
"People are outsourcing everything," says Marina Rosin, co-founder of Due Farina, a luxury shoe company she founded with Milan native Fabiana Rigamonti.
Rosin and Rigamonti met at the Parsons School of Design in New York City. Three years ago, they started making shoes by hand out of their Manhattan apartment for themselves and a few friends until a pair was noticed by an editor at
magazine. Soon Due Farina had secured its first bulk order for spring 2005 at upscale New York shoe vendor Otto Tootsie Plohound.
The decision to go global and begin manufacturing in Italy later in 2004 was made primarily because Rigamonti's U.S. student visa had run out. Plus, says Rosin, all business owners should have some sort of relationship with their location of choice. Rigamonti, born to parents entrenched in Milan's fashion industry, grew up working alongside her father making handbags and accessories, so she was aware of the industry's central role in Italy.
"Italy has the biggest history with fashion in terms of brands starting there," Rigamonti points out.
Rigamonti went door to door in Milan and scouted out a small factory to make samples for Due Farina. Because they didn't have a volume business yet, Rigamonti had to choose a factory near her home; the shoes were then picked up by nearby Italian boutiques.
"In retrospect, we could have done a majority of the things we did differently," says Rosin of the huge learning curve they were about to embark on.
Stalling in Italy
When Rosin and Rigamonti went to Italy, they knew it would be a challenge to compete in the saturated luxury-shoe market there, but they were confident in their highly aggressive design focus. "We had a very detailed business plan, but some of it was written as we went," Rosin says.
Production went smoothly for the first season, and the company had the dual benefit of being able to market Due Farina in Italy as a New York fashion brand and in New York City as a New York/European fusion brand.
Still, after a few months it was clear they weren't selling at the volume they wanted, and after two years in Italy, the company was making about $400,000 a year -- $300,000 less than their projected goal.
The biggest barrier to their entry into the Italian shoe market was trying to sell at such a high price point in a market inundated with high prices, says Rosin. To make matters more difficult, "Other luxury goods
already had huge marketing machines behind them," she says.
"We spent three seasons in Italy with limited success," says Rosin. "We couldn't move forward with our volume unless we made drastic changes."
That's when Rosin and Rigamonti turned to the
Small Business Administration and met Harry Dannenberg, a counselor at
Score NYC, in 2006. "We knew what our strengths were," says Rosin. "We needed to get a firm grasp on what the core problem was."
Rosin knew they would have to source their materials in an area with less-expensive production costs to bring down Due Farina's prices. Dannenberg, who has business experience in the shoe business, hit the nail on the head when he advised them, "Don't try to build a penthouse starting at the top with no support from the bottom" -- that is, don't put your prices so high before you have a well-known, well-marketed brand. "
You need the marketing tool that goes along with the brand," says Rosin.
While Dannenberg liked the drive behind the line, he helped Rosin and Rigamonti tighten the collection aesthetically and bring the retail price down from the $400 range to around $200.
Within two weeks of meeting Rosin and Rigamonti, Dannenberg told them to pack up and go to Brazil. After some research in the area, Rosin had found that Brazil conducts its own leather expo every season, similar to Italy's, where designers pick out their materials for the upcoming seasons. The next one was coming up in ten days, so Rosin decided to attend and possibly make a production-location switch.
"In my experience it's better to make a quick decision than a hesitating nondecision," says Rosin. She and Rigamonti would soon discover that an up-and-coming hot spot in South America could provide more advantages than Italy's fashion capital.