How Marisa Alaíde de Castro is expanding her beachwear and uniform business.
Bright blues and oranges, chic blacks and whites, and floral prints accented with birds of the Brazilian jungle -- the swimsuits featured at Verde Limão Moda Praia in Divinópolis, Brazil, could well be, as the website proclaims, "for women who expect more from life."
Owner Marisa Alaíde de Castro, who began manufacturing and selling beachwear and uniforms in 2006, is at a phase in her entrepreneurship journey where she expects more from her business. Operating from her 14-person headquarters in Divinópolis, Alaíde de Castro has built up a good reputation in her native country, and she is now looking to expand by entering the export market. "We started running Verde Limão Moda Praia with a small amount of capital," she says. "Without enough working capital, we had to borrow some money from a financial institution," which meant incurring interest and other charges that could easily eat away at her profits.
But that wasn't the only obstacle facing the company in its early days.
"I originally worked in a multi-brand [retail] store where I was only familiar with the final product," she says. "We didn't have experience in the beachwear [manufacturing] industry sector. It was a surprise, learning about what is behind the finished product."
'WE WILL BE A BIG COMPANY'
As the business grew, Alaíde de Castro and her team learned how to enhance the quality of the products, and also picked up information about production timing and efficiencies that improved the firm's output. Through educational opportunities like The Goldman Sachs 10,000 Women entrepreneurial training program at Fundação Dom Cabral, Alaíde de Castro also enhanced her understanding of operations and finance. "We are investing in our company and already have a new and bigger working space," she notes. "This will concentrate the whole production process, and we are going to purchase more equipment to increase our production. The administration will be located in the old space, and eventually we will be a big company."
The industry, at least by some accounts, has responded well to Verde Limão Moda Praia's product line. "I recently attended a trade fair where our products received a lot of praise and are being featured in a famous magazine," Alaíde de Castro says. "I also learned about investor opportunities, and we're working to get someone to put capital into our company."
Equipment is a big expense. "Today, we have a lot of types of machines," Alaíde de Castro notes. "From coverstitch sewing machines, to sergers, clippers and press machines to attach a label, we currently have a total of 16 machines. We also work with another company to supplement our production in times of great demand."
Alaíde de Castro, convinced that the seasonality of beachwear is holding her business back, has been analyzing her production options. "I'm experimenting to see what kind of product mix and production schedule is the best for us," she says. "For example, we are no longer producing a fitness-wear line because we didn't have a lot of success with that."
After the 10,000 Women training, "I was ready to go where the sun is, due to my beachwear products," she says, referring to expansion through the export market. "But as the dollar is down, export sales have fallen, too." Alaíde de Castro is also prepared to begin manufacturing other clothing lines that might help sustain her business during cooler temperatures.
SUPPORT FROM STYLISTS
Alaíde de Castro worries about the demands of an expanded production schedule that will result from this type of diversification. "I'm afraid of losing my focus and disturbing my summer production, because we start to produce for the summer during the winter," she notes. "We are thinking about buying some knitted clothes and selling them to increase the revenue."
She is also looking at outsourcing production to low-wage locations like Southeast Asia. Besides slicing a chunk from her labor costs, a move like that would help to lean out her inventory levels. "I've been thinking about outsourcing, and also importing goods," she says. "But I still don't have the necessary contacts."
As Alaíde de Castro contemplates taking her business to the next phase of growth, she is determined to stay focused on what she considers to be Verde Limão Moda Praia's solid and successful foundation -- making and selling beautiful beachwear. "We have a stylist who works with us when we produce our showcase," she says. "We are also affiliated with the garment union from Divinópolis, and we have the support of Renato Loureiro, a famous stylist who is recognized nationally and internationally."
Republished with permission from http://www.knowledge.wharton.upenn.edu -- the online research and business analysis journal of the Wharton School of the University of Pennsylvania