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Details on Industry Insight.
We’ve been checking in with young brands recently to see if and how they have survived the recession.
Today, we catch up with Tavik founder and CEO Erik Paulsen, who shared with us the varied business strategies and alliances he has employed to make it through the downturn, which hit the brand hard.
Paulsen founded the brand in Laguna Beach in 2004. Known for loud graphics and grassroots marketing, prior to 2007 the company raised capital through strategic angel investors and spent a lot of its budget on staff and marketing.
“We were shipping hundreds of accounts. Stores were paying and retail was pumping for us,” said Paulsen.
Then the recession hit.
“Overnight, everything stopped,” Paulsen said.
With stores closing and most of its capital already invested into developing the future season or tied up in products that shipped to stores, Tavik started losing money.
Instead of closing shop like some brands did, Tavik implemented a few strategies that stabilized its business, Paulsen said.
First, they cut their account base to retailers who they knew could pay, and extended terms and developed deeper relationships with the accounts they kept. At one point Paulsen said they only had 30 accounts.
Paulsen himself said he took on quadruple the work, and the company leaders found ways to cut costs wherever they could.
One of the smartest moves Paulsen said the company made was to get out of its current lease, and move into a warehouse with one of his manufacturers.
“To share overhead costs at such a tough time, made sense,” he said. “Instead of spending money on rent, I could work to start paying a few vendors we owed money to and get caught up. We could start planning, budgeting and forecasting again.”
Tavik also teamed up with a vertically integrated, locally-based screen printer and manufacturer, CS Fashion Enterprises, known for its history of printing for action sports brands like Ocean Pacific (Op), Hobie, Hang Ten, and Quiksilver.
Paulsen describes the partnership as a type of joint venture. CS Fashions helps Tavik with production, samples, trade shows, manufacturing of printables, and has linked them to a team that helps the brand run sell-through reports for all territories as well as conduct direct sales to major accounts in the Midwest territory.
Tavik kept its East and West Coast sales rep teams, and still runs all the design and marketing.
“The partnership became a hybrid between a manufacturing partnership and licensing agreement, and has allowed us to focus on what we are good at: sales, marketing and design,” he said. In return for backend help, Tavik shares profits with CS Fashions.
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