Wanted: One Crystal Ball

Q: I'm off to the summer trade shows, and I know I'll have to make buying decisions for the coming Christmas season, and even next spring. How can I predict what's going to be popular months in advance?

A: It takes a lot of faith to be a giftware buyer, because it's difficult — make that impossible — to be certain what will sell.

We do know that styles and trends in gifts and decorative accessories are influenced by those in fashion and home decor, so it's worth paying attention to these fields. Roosters, for example, have gone from being a popular motif for kitchen decor to being featured on everything from stationery to soaps and soup tureens. While we'll never know if consumers want roosters because they saw them being used by decorators, or decorators used roosters because consumers said they liked them (which came first, the chicken or the egg?), we do know that once a motif catches on, it can spread to many different product categories for some time — but not forever.

In addition to popular design ideas, look at what colors are going to be big in the upcoming season. In order for various manufacturers' merchandise to be compatible, color palettes are actually agreed upon in advance, so it's not accidental that certain “color stories” appear repeatedly during the season.

Here are some tips for finding out what trends may be headed for the gift industry:

• Read consumer and trade magazines to see what merchandise and home decor motifs pop up time after time.
• Get on the mailing list for major catalogues.
• Go shopping! Check out the colors and designs featured in fashion and home furnishings.

When you go to gift markets, you'll see what manufacturers in our industry are predicting will be big. And while there's no guarantee they'll be right, it's worth observing these trends. One of my trusted sales reps suggests visiting the showrooms of major suppliers in your field to see what they have in common — remembering also that you'll need some unique items to make your store stand out from the crowd.

Once you have an idea of what's happening on the national giftware scene, you need to take into account whether or not your part of the country is on the cutting edge. In the Midwest, we usually only follow East or West Coast trends once they've proven popular. We know from experience, though, that really edgy or expensive goods will probably never make it in our area.

You can also find out about the trends unique to your region.

• Ask sales representatives what's selling well in their territory.
• Visit area stores, especially those that offer different categories of merchandise.
• Talk to your customers and your employees, especially if they're in a different age bracket.

The final task is to determine whether new merchandise will be right for your store. After all, just because roosters are hot doesn't mean they'll sell to young adults. Think about what fits with your merchandise mix, and consult your notes from the previous season to see what worked best last year.

Buying merchandise is always a gamble, but with adequate market research, you can hedge your bets — and when you make a mistake, cash in your chips and try something new.

Q: I have a passion for children's literature and several years experience as a teacher — but not much money. A friend told me that I should look into having an angel investor provide the startup capital for the children's bookstore I hope to open. How do I find an “angel” to help my dream come true?

A: Angel investors are a relatively new phenomenon, and most of us don't really know who they are — or what they do. According to the Small Business Administration's website ( www.sba.gov), “business 'angels' are high net worth individual investors who seek high returns through private investments in start-up companies. The typical business angels are often former entrepreneurs or executives who cashed out and retired early from ventures that they started and grew into successful businesses.”

Though angel investors get their name from the wealthy businessmen who once backed Broadway plays (often without much hope of financial return) the truth is that most individuals and firms that put money into a small business are hoping to get a rapid return on their investment. This means, unfortunately, that neither angel investors nor venture capitalists usually invest in retail ventures.

An angel investor may be more patient than a venture capitalist, but the return on investment from a retail business is usually so slow in coming, and so modest, that a retail business is unlikely to be funded. There's also no natural “exit time” for investors to get their money back.

Who can you turn to for money, if not an angel? Start by looking at your own resources, such as stocks or savings bonds, which you can use as collateral. Your bank will help you apply for an SBA loan backed. You may also be able to borrow money from family or friends, but be sure to treat these loans as business transactions, with formal, signed notes spelling out the terms. Perhaps you can find a business partner who'll bring funds to the table.

Keep in mind the reasons why angel investors turn away from retailing. Whoever puts money into your business should only invest what they are comfortable risking, and should be prepared to keep the money in the business for a long period of time.