Small Business News Article Analysis
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Addition is a company founded and run by two individuals, Matt Hemeyer and Eric Salenski. This company makes and sells handcrafted liquid spices for use in making beer and cocktails. This means that their main clients are brewers and bars that are interested in customizing their products for their clientele. This small business aims at creating unique flavors that could set its client apart from other brewers and bars. This paper will consider its business strategy and how it operates, especially given the small size of the organization.
The Business Strategy
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According to Weed (2014), Addition Company is operated as a partnership by the two individuals involved with them working together in every aspect of their business. The idea is to support each other and grow the company together as a team. Regarding the strategy, it can be stated that they are currently carving out a niche for themselves as there are no other companies that make handcrafted liquid spices. As of now, their plan is to get more clients interested in what they have to offer. The operation is thus still at a small scale with the two businessmen being the only employees in the organization.
Owing to the fact that they are operating in a relatively new sector, the business strategy currently is to introduce the product to their target customers and get them to like it first before starting to sell it to them. Brewers and bar owners need to appreciate the potential of these liquid spices with respect to their businesses and this company is committed to educating them in this regard. It can be therefore assumed that, as of now, Addition is at an introductory phase where customers are getting oriented in order for them to embrace liquid spices that would add value to their products.
Considerin that the business has just been started, it can be stated that it is on the right track. Less than a year after the company was formed, the founders have managed to capture interests of many brewers within the country. The fact that they are making their spices by hand makes them very special and customers generally like handcrafted products. Currently, the company is looking to expand from making 750 bottles to over 7,500 bottles within the same timeframe, preferably, on a monthly basis. Nevertheless, this will depend on the market as currently customers are still studying impacts of this kind of value addition on their products.
The Business Situation
Based on the current situation, it can be stated that the company’s business situation is favorable and is still looking up. The company does not face many competitors with the same value addition capacity that comes with handcrafting liquid spices. This means that the only immediate threat that they face is that of new entrants into the sector. They have set the pace and have done the groundwork, popularizing handcrafted liquid spices for beers and cocktails. This means that they have opened up a new business opportunity that is likely to attract a lot of interest.
Small businesses often have a lot of threats in terms of competitors who may have a larger capacity and an even larger market share based on their capital. In Addition’s case, however, bigger competitors are not exactly a threat as they are unable to provide custom-made liquid spices that would set their clients apart from the competition on the ground. The fact that the company makes special spices that are handcrafted for perfection and uniqueness implies that it is more lucrative than their bigger competitors. Spices need to be custom made with each combination being crafted to suit the client in question based on understanding of the target market.. Thus, handcrafted liquid spices take the day and unless competitors start handcrafting their spices to suit customer’s needs, they cannot be considered as a threat.
New entrants are however a serious threat to the Addition’s business. Whenever a new business venture turns out to be successful, there will be a number of people willing to join in and share the spoils after the groundwork has been done. In this case, Addition has taken care of the groundwork by ensuring that brewers and bars appreciate the concept of a handcrafted liquid spice for their cocktails and beers. Other entities may come in with the same line of business, thus competing based on Addition’s high standards for few clients available.
Increasing demand for these liquid spices is also a threat to the handcrafted component of the organization’s products. These liquid spices are currently selling because they are handcrafted and made to suit needs of specific customers. With the growing demand, they may need to upscale operations and this may take a toll on the quality of the merchandize. Currently, the founders take their time to craft these spices, but if they expand, they will have to bring in employees who may not be as skilled or as keen with recipes and combinations.
As a new company in a newly crafted niche, the potential is limitless for this organization. The major opportunity concerns expansion into other markets. The concept of brewing or making cocktails is wide-spread, implying that the customer base is limitless. As such, the company could branch out and position itself closer to customers across the globe in order to take advantage of product’s significance in the alcohol industry. This may however start with a planned increase in production that will see the company producing up to ten times more than its current output on a monthly basis.
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