Oprah's magic touch can make or break your business

It was about four years ago that I took a midday stroll to hip-hop mogul Jay Z's 40/40 club in Manhattan for a press conference. There it was announced that a then-relatively unknown beauty and skin-care line, Carol's Daughter, was teaming up with a few bigshots, including Jada Pinkett Smith and husband Will.

Among the samples distributed to attendees, I discovered the Brooklyn-based company's Jamaican Punch body scrub, an aromatic and moisturizing sea salt scrub that pleases the senses. According to the product label, it contains a blend of oils, Brazilian orange, Fiji apple, exotic ylang-ylang, spicy canella bark, nutmeg and tropical sugar cane. Can't you just smell it already?

But those Carol's Daughter products once had a promotion far more valuable than a Manhattan press conference: an appearance on The Oprah Winfrey Show. On Thursday night, CNBC aired a special, The Oprah Effect, illustrating just how influential the media mogul can be on product sales.

After the Oprah appearance, owner Lisa Price was faced with many questions on how she was going to expand. After being approached by music-producer and marketer Steve Stoute for a financing deal tied to big celebrities, the company took off. Carol's Daughter stores can now be found in several U.S. states and the products are carried in retailers like Sephora and Macy's.

From her Favorite Things to her Book Club, Oprah Winfrey has that magic touch. It's quite amazing, the effect that a vote of confidence from one human being can have on product sales. To name a few:

Amazon's (AMZN) Kindle:
the e-book reader sold out during the holiday season following an Oprah appearance by CEO Jeff Bezos. Oprah viewers (like myself) had the opportunity to download a $50 Kindle coupon from Oprah.com.

Books: Oprah's endorsement of new novels for her book club has created dozens of New York Times Bestsellers.

KFC's grilled chicken: In early May, the queen of talk gave a thumbs up to to KFC's new grilled chicken, and Oprah.com offered coupons for a free meal, complete with two sides and a biscuit. Diners turned out in droves to take advantage, and KFC was quickly overwhelmed. After failing to meet demand in some locations -- and even running out of chicken -- the company had to apologize and offer rain-checks to customers who could not claim their free meal.

As the KFC fiasco shows, keeping up with demand after you have been Oprah-ized is not for the faint of heart. If a fast-food giant can slip up, imagine how Oprah's endorsement can strain a small business. Phones will ring off the hook, orders will swell, websites may crash, financing may suffer, and employees will be strained. If you're not up to the challenge, her Midas touch could literally put you out of business. Oprah's Seal of Approval can just as easily make you rich quick or hasten your doom.

Here are a few key tips for small businesses which face a sudden growth spurt:
  • Seek advice. Rely on consultants or other professional help to guide you in areas outside of your expertise.
  • Address staffing issues. Before you become overwhelmed, consider increasing your headcount, especially with key positions like a CFO or COO.
  • Learn how to delegate. One mistake that many entrepreneurs often make is trying to become a jack-of-all-trades. Sharing duties will allow you to focus on strategies that can help boost your bottom line.
  • Keep a cash cushion. Having extra cash on hand will help you stay afloat during challenging times. You should also use this time to carefully consider any new financing needs.

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