LEARNING CURVE: GOLDENWAVE CREATIONS : A Very Good Year

Gerard Chok and Judit Zador had plenty of vision when they founded Goldenwave Creations in 1994 to sell consumer items adorned with pictures from the Chinese zodiac. But they soon realized they needed to focus on their core products and their cash flow in order to stay afloat. Chok and Zador were interviewed by Karen Kaplan.

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We founded the company in November 1994, and I think by now we’ve gotten past the really stressful stage. Last year we put a lot of time and effort into things that didn’t pan out money-wise.

We both come from service-oriented businesses. [Gerard has a graphic design studio and Judit is a paralegal.] But when we entered the realm of mass-merchandising, we started spending money like we were still in the service business. We didn’t do a business plan and we didn’t make a budget. We just paid for things as they came up and hoped that our pocketbooks would cover everything we needed. That was a mistake.

For example, we had a kickoff party to launch our company in style. We had catered food from a Chinese restaurant, we rented out a gallery and we sent out 1,000 invitations. The whole thing cost between $3,000 and $4,000. We did get some exposure, but if we had it to do over again, we’d put that money into products we could sell and get our money back.

Initially, we ordered 3,500 T-shirts and 3,500 sweatshirts. The sweatshirts were a big mistake. When we started going to trade shows, we found that the stores were only buying T-shirts because they’re cheaper and that’s what they could sell in a down economy.

We also ordered too many sizes and colors and ended up with too much inventory to keep track of. We should have stuck to one-size-fits-all and just one color because we already had to deal with the 12 different designs from the Chinese zodiac and we needed to order pretty large minimum quantities of each design.

Our stock was physically taking up too much space and we had to pay to warehouse it. We also had our capital tied up in that stock. Now we print in smaller quantities to avoid those problems. It turns out to cost more per shirt this way, but it’s still worth it.

We were too trusting in the beginning. We worked with a company to make baseball hats and they told us they would use their sales force to market our hats, but it just didn’t happen. Now we know that when someone promises to do something, we need to get it in writing.

We’ve learned that we need to focus on a core group of merchandise that we know will sell all the time. In the beginning we tried to do too much stuff--T-shirts, mugs, posters, greeting cards, baseball caps, gourmet chocolates. It would have been better to choose just a few products and really concentrate on them.

Lately we’ve been quite successful at tapping into the corporate market in addition to our regular retail customers. We did custom mugs and T-shirts for companies that celebrated the Chinese New Year.

We actually had a very good year in 1995. We made some mistakes, but we caught them in time to correct them. We think we did more things right than we did wrong.

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On their financial planning . . .

“We didn’t do a business plan and we didn’t make a budget. We just paid for things as they came up and hoped that our pocketbooks would cover everything we needed. That was a mistake.”

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On trying to do too much . . .

“We’ve learned that we need to focus on a core group of merchandise that we know will sell all the time. In the beginning we tried to do too much stuff.”

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AT A GLANCE

Company: Goldenwave Creations

Owners: Gerard Chok and Judit Zador

Nature of business: Designs and sells T-shirts, mugs and other items adorned with characters from the Chinese zodiac

Location: Santa Monica

Year founded: 1994

Number of employees: 2

Annual sales: $100,000