Microcap Companies

Microcap companies definitely fit the bill of a weakly recognized entity. Microcap companies face enormous challenges in getting their products to market. Microcap companies must establish means by which to manufacture and package their product before they ever make a single sale. This frequently involves expensive equipment purchases and the need for far-reaching financial backing. The company must find an outlet in which to sell their product once this is accomplished. This in itself can be a complicated process as large chain stores are inclined to purchase products that they are familiar with. A microcap company which offers an unknown and unproven product is often a difficult sell for these large chain stores. If the microcap company can clear these initial hurdles, they then reach the really difficult part... that is, competing with the big boys. Microcaps are at a considerable inconvenience when their products are compared to those of distinguished corporations. Established products have the preliminary advantage of name recognition. The consumer already knows about the established product due to years of advertising. Most microcaps simply are not able to compete with this. To start off, they don't have the sizable advertising budgets that large corporations use. In addition, they don't have the history that established products possess. If they don’t have name recognition and an established history, the sale of a new product is a difficult task. A corporation may produce the best product in the world, but if nobody has ever heard about it, that product is not going lo sell.

Throughout the years, we have been involved with a quantity of small startup companies that were trying to achieve a foothold in the marketplace and all of these companies faced the challenges that we have just described. Even though all of these companies produced wonderful products, the carrying out of the sale of these products was always a difficult undertaking. One company that we worked with was trying to compete with the internet giant eBay. Now that was an impossible task! eBay has some of the best brand acknowledgment in the business. As is obvious, this company was not successful in its efforts. Another company that we at one time dealt with produced a line of paint and cement products that were in direct competition with well known corporations such as Quickrete and UGL. This company produced a line of high quality products that worked the same if not better than the products made by the larger corporations. The small startup was indefatigable in its efforts and eventually landed a contract to have its products sold in a small number of Home Depot stores. Home Depot, Being the leader in home improvement product sales, wanted to sell the company's products on a trial basis in a small number of its stores before committing to a nationwide order. While the company was in the beginning bristling with excitement at the prospect of having its products sold in Home Depot stores, it almost immediately discovered that having an unknown product sitting on a store shelf next to a well known and established product made sales difficult. Some of the product lines failed to sell and were in the long run pulled from the shelves at Home Depot. The small company was unable to fill Home Depot's requests for additional inventory of the few products that did prove successful as a lack of working capital hampered the company's production, packaging, and shipping capabilities. Could this company have been more successful if it had co-branded with better known entity? Regrettably, we will never know.

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