Growing Pains: The Story of EGO

Adil Moosajee

CEO EGO

The story of EGO is about the journey from one to twenty five outlets, of a growing number of face book fans, and the brand that has doubled its business every year for the last four years. The graph here depicts the trajectory these four years.

The white line shows sales. There was a sudden growth I the last two years. During this time, we increased the retail price but the market refused to buy. We had to decrease our selling price yet we in sales.

Let’s first compare it to the red line. The red line is sale team. This is the amount of money we pay in sales, whether we do it ourselves or some franchisee does it. If you see the red line growing at a lesser angle than sales, it shows there are more sales per person over time. This means we learned how to sell more with lesser number of people thus reducing our cost.

The second comparison is the area per square footage of retail that’s shown by the blue line. Its angle is lesser than sale which mans from less square footage we generated more sales. So we learned how to do it right and stop doing what was wrong.

The most incredible line is the yellow line. It represents the core management our intellectual capital that include: designer, finance department, accounts, and training department. If the yellow line is increasing with the white line, it shows we were able to spend more intellectual capital and they were able to make our sales grow. Both are growing together.

EGO’s growth, however, hasn’t been an unmitigated success story. There have been ups and downs too. The growth process has its own set of issues that we had to contend with, and with time we learned how respond to the changes and correct the mistakes. It’s a journey that’s spread over seven years. And this is how it started:

A Small Shop in Zamzama

EGO started out as a small shop in Zamzama with the staff of two people:

I and my manager. The two of us ran the shop from 12 am to 11 pm at night, and we were practically doing everything from working with the

The consideration thus is how to keep the essence of the brand alive amid the rapidly occurring changes

Brand ideology was geared towards the trend setters, a small group that wanted to wear new, cutting edge fashion. I used to personally speak to my customers-still have the contact number of the first 2500 customers in my cell phone-asking them to help me improve my designer, work on my pricing strategies, etc. I sought the opinion of my target market and worked with it. And then we started growing.

The Flip Side of Growth

The growth has its own dynamics and you have to adjust accordingly. When you are doubling your sales you don’t have time to adopt a wait-and-see approach, you have to make your calls right away.

Keeping the Ideology Alive. As we grew and our customer based increased, we headed toward the mass market and the mass market is about apparel that works for the majority. The demand thus becomes slightly different. In our case it meant less sleeveless, less deep necks, dupattas, different motifs and different colour combinations. As the feedback started coming in from the wider market to our design department, confusion reigned. The vital question was how to keep the brand ideology alive and yet incorporate the changes that the mass market wanted. We have realized that when a company grows, its target market changes. Moreover, with massive growth more and more people get involved-we now have 140 people in the office. Instead of a small team now it’s about departments and responsibilities, and this bring

Our core team sits in every meeting and is part of every major decision

Tapism and delays. If the change happens over a period of 50 years, it is not difficult, but when you are growing that massively it is maddening. Initially where ten people were giving opinion now there are a lot more to voice their views. The consideration thus is how to keep the essence of the brand alive amid the rapidly occurring changes.

To deal with the challenge of keeping the brand ideology alive, we have developed a core team. There’s a core team of four management people and one designer. Our core team sits in every meeting and is part of every major decision. This ensures that every decision is made in accordance with EGO’s philosophy. If something is headed in the direction that negates the brand ideology, the core

My first peon is now head of fabrics with twelve people reporting to him

Team will object and put it back on the track. If you can create this kind of core team it aids in the smooth running of your business.

And you have to make an effort to retain your people, to give them a feeling of ownership in the company. None of my employees have left, they know that EGO belongs to them and every time the company starts doing better, they start doing better. Letting  people go is wasting a lot of money.

Growth from Within. One of the difficult things that you face when you grow that fast is whether to grow from within or hire people from outside. There are internal ceilings in the company like language, education and capability barriers. A person who is supervising six stores today may not be able to supervise eighteen stores morrow, or maybe your management can’t grow at the same speed. We, however, decided to grow from within. Our strategy involved in-house informal training and education system with discussions on every aspect of business and every element of design. My top two employees are within the company since its inception and have grown within the company; my first peon is now head of fabrics with twelve people reporting to him; and same is the case with other employees. They all have gained experience and education, and the company growth has led to their personal growth.

Shift in the role of top management . The most difficult part of the growth process for me has been the shift in the role of the top management. I was involved in every aspect of the business. I used to do all he designing, have even sewn samples with my hands. Letting go of the total control, of delegating work and responsibilities is something. I had to learn, and it is something I am still learning

I believe that the person who create a business and the person who runs it

I believe that the person who creates a business and the persons who runs it are two different people

Are two different people. If you can change into that second person it is great. But usually it is not possible, and that’s the downfall of the company. This is one of the reasons why certain companies grow in the beginning and then stop doing so. Growth requires a change in management, and this is one of the lessons one has to learn.

Toward Micro Finance. Initially when I started expanding my product offerings, I wasted a lot of money in one and a half year by purchasing from different vendors. This is when my first five stitching employees came to me and asked if they could have the showing machines to start their own stitching unit. That was the start of the micro finance system. Now we invest in our vendors who grow their production every time we grow and they pay back by doing work for us. And we have grown from financing 5 sewing

Growth requires a change in management, and this is one of the lessons one has to learn

Machines to 140 machines. We use the same micro finance system for our embroidery and printing work.

Highs and Lows of franchising. Our first four shops were company owned. When we expanded further we came to Lahore to seek franchisees for EGO. At that stage nobody knew about our brand so we started giving no loss guarantees for six months.

We moved from majority owned stores to franchises. Right now we have four stores and rests of the 21 stores are on franchises. Franchising poses its own challenges because there’s somebody else’s money involved. Besides , there are questions like how to deal with the franchisee regarding changes in costs, dynamics of discounts, sales tax, etc. And as you grow you also need your franchisee to

My first five stitching employees came to me and asked if they could have the showing machines to start their own stitching unit

Absorb the changes. For instance, when the company grew and expanded the product line we had to ask our franchisees to change their stores or move to bigger stores, redo the interior, pay more money for stock in their stores, and make other changes that the growth demanded. To achieve all this you cannot call the shots, you have to transfer your vision to the people connected to your business, and this involves building a mutually satisfying relationship based on trust.

EGO’s story is thus a journey that’s fraught with pains and successes, mistakes made, and lesson learned on the way. It’s a seven-year long  journey that may not be an exceptional success story, but it definitely gives some interesting insights into the process of growth of a new and emerging company.

Questions?

Question: Was growth worth the pain? Answer: For the first and a half year I hated myself for starting EGO, but I had invested so much money and couldn’t run away. It was very stressful. However, after having lived through the entire process of growth and having experienced the pains and the sense of achievement it involved, I can say that I love my work. And profit is one of the elements, it is not the element. It is about having created something for me that I love doing. So yes, it was absolutely worth it. Question: No one has focused on the orientation and training of employees, don’t you think it plays a vital role in establishing and growing any business? Answer: Yes, training is extremely important. For seven years we haven’t had any formal training programme at our company. Formal training, however, is not the only method of training employees. There are so many effective modes of doing it. At our company we have a culture of discussing every aspect of the business with our employees so their training is kind of automatic. But at the stage that we are now, we are figuring out a system of formal training for the company staff.