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October 15, 2007

A new expansion moves The Little Hat Company beyond retail

By Mindy Favreau

They say third time's a charm, but it was lucky number four for Jen Houghton, founder of The Little Hat Company. The mother of three had started her own consulting, cookie and landscaping businesses that all flared and then fizzled. Her husband, Steve, advised her to hold off on starting a fourth business until their third child, then-four-month-old Libby, turned five.

And then Houghton made a little hat.

That brightly-colored cotton sunhat for Libby became the seed that started Houghton's newest venture, sprouting a flagship store in South Berwick and another in Cape Neddick, wholesale accounts in six states, and a website and catalog. She sells two lines of hats, the "Stroller Lid" that started it all and its winter counterpart, the fleece "Loope Lid" — so named for the loop of ribbon at the crown that allows a parent to remove it with the simple hook of a finger — for kids up to the age of seven. The store also is chock full of toys, oversized stuffed animals, games and other handmade crafts by other women and even a few kids.

And it keeps on growing. On Oct. 15, Houghton will unveil a new 600-square-foot addition that will double the South Berwick store's size. The Little Hat Company, she says, has been her most successful — and most spontaneous — endeavor. "I never really set out saying I was going to start The Little Hat Company," she says. "It kind of happened on its own."

The new space, upstairs from the store, isn't an expansion of her company's retail space. Instead, Houghton figured she could build on the success of The Little Hat Company by recasting the store as a family destination. The space will be available to rent for events like birthday parties and baby showers, and will provide Houghton with roomier quarters for the music and story time she currently holds downstairs. Houghton says she hopes that incentives like discounts for party hosts and guests will boost sales, and that kid-friendly activities like arts and crafts will lure more families into the store. "There are a lot of young families moving into the area, and they're dying for culture and for something to do," she says.

The Little Hat Company is on track to hit $150,000 in sales by the end of the year, not including the Christmas rush, according to Houghton, who has a degree in human resource management from New Hampshire College — now Southern New Hampshire University — in Manchester, N.H., and spent seven years working in business development for small start-up companies like the Swedish Herbal Institute in York and Franchise Solutions in Portsmouth, N.H.

Still, the company has yet to turn a profit. Houghton says she's waiting for the website and catalog to develop the revenue to sustain themselves, and she admits to sometimes not being able to pay herself. "Everyone is under the impression that this company is bigger than it is, monetarily," she says. "But this little store can't keep paying for everything."

To move her balance sheet into the black, Houghton has ambitious plans, including opening more stores and selling wholesale across the country, all while keeping production as local as possible. Her goal? To hit $1 million in sales in five years. (Houghton's other goal is to hawk her hats on Oprah Winfrey's talk show.)

Still, Houghton says she's learned about the dangers of fast growth with her other entrepreneurial ventures. As a result, she's resisting the urge to get ahead of herself so that The Little Hat Company won't suffer the same boom-and-bust fate as her other ambitions. "I want to make these two hats successful everywhere before I think of doing something else," she says.

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