Ingredients for a Catalog Startup

The desire to create something, to invent something, was Eileen Spitalny’s dream since high school. “It was in the back of my mind in college that I wanted to start a business. I worked at the entrepreneur program at USC, reviewing new business plans, and I found the prospect [of starting a business] very exciting.”

Spitalny and childhood friend David Kravetz had an idea for a business since they were kids: to sell David’s mom’s made-from-scratch brownies. They had no idea it would turn into a direct marketing business.

Fairytale Brownies—the business Spitalny and Kravetz started in 1992—celebrates its 10th anniversary this year. Spitalny shares what she has learned as a founder of a catalog.

It all started with a list. In the beginning when the two friends first sold their gourmet brownies in farmers’ markets and street fairs, Spitalny says, “We always had a list, though we didn’t realize we’d use it one day to start a catalog. We just knew we wanted to be able to keep in touch with our customers.”

While it was not the original intent, that list gave Fairytale Brownies the jumping-off point for testing direct marketing. In 1994, it mailed a couple of two-color hand-sorted fliers to its list. “That’s when we knew we had something here.”

But Spitalny says she quickly realized that with food, that kind of marketing vehicle doesn’t tell the story. “We knew we needed to do a color catalog.”

Catalog creative: Never satisfied. In 1995, Fairytale Brownies created its first four-color catalog. Spitalny recalls, “A girl we grew up with did the photography. We had a beautiful picture on the front—one photo with everything in it—plus some testimonials and the story about how the business started.” It was a good first shot, but not very effective at showing off the product, Spitalny says.

They hired a different photographer, along with a photo stylist. “They were very good and creative. But we realized we were still putting too many products in a shot,” says Spitalny. Next time around, another professional photographer and food stylist team were used, says Spitalny. “That got us to the next level of professional presentation.”

But Spitalny still wasn’t satisfied, and felt the finished product lacked creativity. “We look at our catalog as our sales team,” she explains. “We wanted to communicate the aura of the product along with the high quality, and that just wasn’t happening.”

Digital production has given Fairytale Brownies the flexibility it was looking for to be more creative. “We can see the shots right away; it gives us more flexibility to make changes.” Today, she says, the company uses a stylist who is highly creative, adding things such as Easter eggs and a purple spoon to shots. “Interestingly, she’s not a food stylist,” says Spitalny.

Another addition to the catalog pages that Spitalny loves are the little hand-drawn elements added between shots and copy. “They add a sense of whimsy, and they really capture the essence of Fairytale Brownies.”

Keeping the money flowing. As with any new business, a big challenge for the company has been financing: “We don’t have outside investors. So it’s been a constant personal challenge to get bank financing.” Initially launched with $14,000 in personal financing and a $40,000 bank loan, the founders didn’t take a salary for three years.

“When we got going,” Spitalny recalls, “we were growing at 100 percent a year.” The problem: “We didn’t have any profit or equity to show for it. So it was difficult to get the bank to pony up more money each time.”

Being persistent paid off. “For two young people with no experience at owning or starting a business, it took a lot of persistence to get the banks to give us the loans. And if one [banker] said ‘no,’ we went to another.”

Finding time to grow. An unanticipated challenge for a startup, says Spitalny, is trying to keep up with growth. “When you start out, you have no knowledge of manufacturing, direct marketing or catalogs. You’re learning so fast that you don’t have time to plan new projects.”

For example, she says, having a seasonal peak at the holidays has always meant gearing up in September for the rush and shelving any new projects until January. “That’s changing for the first time this year,” she says happily. “We’re just now at the level where we have a team in place and everything on the operations side is running smoothly enough so that the executive staff can continue to move ahead with planning.”

Opportunities await. Spitalny knows that a lot of opportunity exists in the corporate business. Key to stepping up the company’s b-to-b effort is finding the right person to head corporate sales. “We need a dedicated person in charge of that effort.”

Fairytale’s initial attempt at business-focused marketing will consist of a catalog featuring a separate cover depicting custom boxes, and on the back of that cover, information on volume discounts for corporate customers. The guts of the catalog will be the same as the consumer book. In the next one to two years, Spitalny hopes to have a separate business catalog and to be growing that business segment. “We always knew it was there,” she says. “It was just finding the right time to explore it.”

The Internet is the other area Fairytale hopes to leverage in the next year. “Online has become a big part of the business for us, ranging from 20 percent to 40 percent of sales in the off season. The goal is to have it year ‘round at about 30 percent,” Spitalny says, noting that the Web is a great tool for a small cataloger.

Fairytale has been online since 1995. Company executives snatched the brownies.com name early on, and the cataloger now owns 13 or 14 domain names. “We didn’t have a big call center at the time,” recalls Spitalny, “and on the Web we could be up and running overnight for just a few thousand dollars.”

Keep studying the big guys. To maintain the company’s growth, Spitalny plans to keep doing something she’s done since the beginning: learn from practices done by larger companies. “When you’re starting out, it’s smart to get on the mailing lists of the companies you want to be like someday. It’ll give you ideas and inspiration. Call and request their catalogs. Do the same with e-mail.

“We always wanted our own catalog to be as good as the big guys’, so we kept working on it until we got it right.”

Alicia Orr Suman is executive editor of Catalog Success magazine.