Ava DeMarco and her partner, Rob Brandegee, founded Little Earth Productions in their backyard 23 years ago. Today, they employ 35 people who help produce sports apparel for more than 170 teams across the NFL, NBA, MLB, NHL and NCAA. Over time, DeMarco said, Little Earth has changed a lot, but never did she and her partner think the company would grow so immensely. From a time when the startup was financed with credit cards and the duo took out three mortgages on their home, to the present when Little Earth Productions holds some of the most highly sought licenses to produce sports apparel for fans, Little Earth Productions has come a long way. DeMarco went behind the business plan with Business News Daily to discuss the company's success and what factors went into making the business what it is today.
Business News Daily: In a nutshell, what service does your business provide?
Ava DeMarco: Little Earth Productions, based in Pittsburgh, is a leading manufacturer of licensed fashion accessories and apparel for professional and college teams.
We have licenses for more than 170 teams, including all teams in the NFL, NBA, MLB, NHL, and more than 60 colleges. From purses to scarves, hair accessories and select apparel items emblazoned with team colors and logos, we produce high-quality products that allow fans to bring team spirit to their everyday lives.
BND: How long have you been in business?
DeMarco: We started Little Earth out of our backyard in 1993. Twenty-three years later, we’re now operating out of a building we renovated on the South Side and are employing 35 people.
BND: Did you start with a formal business plan? If not, how did you lay the groundwork for your business?
DeMarco: Our business plan was written as part of a class in entrepreneurship that my partner Rob took at the University of Pittsburgh. After we presented the plan, the response from the class was good (Rob got an "A") and we started doing local sales and market research to further test the concept. Over the next six months, we refined the business plan. It's amazing to think that this business has grown into what it has become, and that it started with that entrepreneurship class.
BND: How did you finance your endeavors, both initially and as your business grew?
DeMarco: Initially, we could not get any traditional bank financing – so we opened several different credit cards. I was a partner in a graphic design firm, and eventually I was bought out by my partners and used that money to invest in Little Earth. Over the years, we have used bank financing, including a line of credit, and several rounds of friends and family financing. Now, of course, we're in a much stronger position, but in the beginning, we faced all the same financial issues other startups face.
BND: How much did you invest personally?
DeMarco: Initially, $60,000 from a buyout of my previous business. Over the years, we have invested or loaned money to the company on several occasions.
At one point we had three mortgages on our house. That is something to think about when you start a business – are you willing to risk something like that? Are you willing to make the personal commitment you need to take in order to become successful? If you are not, you can't expect other people to support you.
BND: Is your business today what you originally envisioned at the outset, or has it changed significantly over time?
DeMarco: No, a lot has changed! Our first fashion accessories were made from recycled materials, including inner tubes, license plates and bottle caps, which attracted the attention of a lot of big-name celebrities, like Brook Shields, Jay Leno, Chelsea Clinton, Oprah, band members of Van Halen, and the Steelers.
We wanted to offer more affordable prices, but given high overhead costs, we had to change the way we did things, including giving up much of our stateside production. Although the initial stages of production are now handled overseas, many of our products are hand-finished by our local employees here in Pittsburgh.
And, of course, we’ve also undergone some big changes with our product line. When the Steelers made it to the Super Bowl in 2006, we made custom purses for the organization just for fun. They liked our product so much that they introduced us to the NFL, and, a year later, we were awarded our first license, allowing us to launch our new product line, "Accessories for the Fashionable Fan." Our licenses with the NBA, MLB, NHL and NCAA followed suit. Today, fan fashion is our entire business and we feel like we're leading the field in producing stylish products that allows fans to show their team spirit seven days a week.
BND: What are some lessons you’ve learned? Is there anything you would've done differently?
DeMarco: We always want to grow and change to meet the changing desires of customers. And that requires bringing a team to the table that can expand your knowledge base.
Rob and I used to do everything ourselves, but we have learned over time that you have to hire great people who are more knowledgeable than you in key areas of the company. We have a vertically integrated company – we do everything from product development and sourcing to design, sales, production and fulfillment. Now, most of the team we have here are skilled in areas where Rob and I have limited expertise, and as a result, the company has grown far beyond what it could have if we had insisted on directly managing all aspects of the company.
One other important thing I have learned is that more sales does not always mean more profitability, and it's important to maintain margins while growing your business. Also, the old saying "inventory is the silent killer" is true – over the years we have learned to look more analytically at our inventory and make sure it is turning enough to keep cash flow coming in.
BND: What were the most important factors that contributed to your success?
DeMarco: I'm very analytical and resistant to change, whereas my partner, Rob, is always looking for new ways to expand the company into new product lines and distribution. So Rob brings in ideas and I look at them in terms of how they would affect our operations and profitability. In that way, we do a pretty good job of balancing each other out.
Also, we have had to reinvent the company over the years as our customers and the market changed. We learned that even though you may personally love a product line, sometimes you have to move on to other things to keep the company relevant and growing. We have always stayed open to new opportunities.
BND: What are the next steps you want to take as a business owner? How do you see yourself achieving those goals?
DeMarco: We want to continue to grow our product lines and customer base by acquiring new licenses and expanding into new areas … We also are focusing on continuous improvement with our operations. Our team continuously upgrades our system so that routine tasks are more automated, allowing our people to focus more of their attention on coming up with great products and interacting with our customers.
BND: What is your best advice to someone with a great business idea who is ready to give it a shot?
DeMarco: Take advantage of all the resources you can. For example, I am on the board of the Institute for Entrepreneurial Excellence in Pittsburgh, which offers advice and services to businesses ranging from small startups to mature $100 million companies.
Make sure you network with everyone, and with no agenda. You never know how someone you meet will be able to help you, or how you will be able to help them.
Be realistic about the size of your market and how you are going to reach them. I once had a gentleman come to me with a business idea that he said had 1 billion customers. It was a product that could be used by car owners, so his logic was that all of the car owners in the world were potential customers!
Keep that balance between optimism and realism. You need to be able to push your idea in spite of hearing "no" over and over again, while listening to those "noes" and adjusting your strategy to make your idea better.