The way Walter Schep sees it, a bigger manufacturing facility might fix all his problems.

The Thunder Bay resident and owner of Thunder Oak Cheese, the only Ontario producer of Gouda, has been turning down orders on a weekly basis for the past couple of years.

"It's scary because if you don't fulfill the demand, someone else might step in and fill it for you," he says.

But Mr. Schep is at full capacity in his current facility, which has been churning out Gouda since his parents created the company in 1995.

After getting a wholesaler to distribute his product in Toronto a few years ago, his big-city sales increased from about 2 per cent of his revenue to more than 20.

Now, Mr. Schep produces about 150 kilograms of 12 different varieties of the creamy Dutch cheese five days a week, which is more than double the amount that Thunder Oak was making in its early days.

He noticed the surge in demand once his cheese found its way onto shelves of high-end food retailers such as Toronto's Pusateri's and Whole Foods.

It didn't hurt that Mr. Schep's cheese was catching the eye of celebrity chefs such as Jamie Kennedy, who serves poutine topped with Thunder Oak Gouda at his new Toronto café, Gilead.

"In the last three or four years, people really became more aware of where their food comes from and they want to eat locally," Mr. Schep says.

And local is one thing Thunder Oaks Gouda certainly is: It's produced with milk from cows that graze on the Schep farm.

That's also a part of the whole challenge.

Thunder Oak's production is tied to his brother's business, which produces the milk from which Thunder Oak cheese is made.

"To make good cheese you need good milk," he says.

But in order to produce more milk and therefore increase the cheese production, the entire operation needs more space.

"The only thing I can think to do is get a bigger facility," Mr. Schep said.

"In this business if you don't grow, you're going backwards."

"We have to grow."

What the experts say

First of all, slow down, says Kathy Burns, small-business growth consultant and owner of Burns Strategic Consulting in London, Ont. "Going to a bigger facility is high risk in the capital expenditure that goes with that," she says. "The first thing he needs to do is pause and reflect and really decide what his long-term goals are. Walter needs to control this growth rather than have the growth control him."

Heather Reier, owner of Toronto-based Cake Beauty, agrees. She saw her company, which produces lotions and bath gels, go through a growth spurt three years ago. "I stepped back from the business, which sounds like a no-brainer, but we must force ourselves to do that," she says. "I asked myself what my long-term goal was and I came up with a methodical and strategic plan to get there."

Managing that growth can make or break a firm, both experts agree. "What you really want is sustainable growth," Ms. Reier says, "and you can't sustain it if you don't have the proper infrastructure and people in place."

Simply up and moving to a bigger facility right away could hurt Mr. Schep. His first step should be to create a long-term vision and decide just how big he wants Thunder Oak to get. "And that's a decision he needs to involve his brother in," Ms. Burns says.

Currently, Mr. Schep's cheese is priced around $20 a kilogram, about $5 below imports from Holland that he sees as his main competition. "Quality cheese made by hand is a premium product," Ms. Burns says. "And premium products command a higher price." He could be unwittingly hurting his brand by keeping prices on the low end. "Pricing sends a signal in the marketplace," she says. Plus, boosting his price would help him increase cash flow, which could help expansion plans. A good way to manage a price increase is to tie it to an increase in costs for, say, milk or fuel, and to offer a clear explanation to customers, advises Ms. Burns, adding: "Just don't raise it beyond the competitive range."

And if Mr. Schep is serious about leveraging this growth opportunity, he's got to have the time to make it happen. Right now, he pretty much does it all, from making the cheese to selling it to customers to working with distributors, with the help of a handful of employees who mostly run the retail store. "You can't grow unless you have the right people in place," Ms. Reier says. "You start out doing everything yourself. But at a certain point you realize you're not great at everything. And that's when you identify what your strengths are and then fill in the gaps." And not just anyone will do. "It's important you bring someone in who has that entrepreneurial spirit," Ms. Reier says.

Another possibility would be to outsource some of the milk production and increase the cheese run from five to seven days a week (with additional staff). The tricky point is that the brand rests on its reputation for being locally produced and handmade, so Mr. Schep would have to be careful to pick the right supplier.

It's important that Mr. Schep continues to encourage growth. "He'll be able to ride the celebrity appeal for a while," Ms. Reier says. "But there are other things he can do." She suggests he think about producing a limited-edition Gouda or specially packaging his product for the holidays. After visiting the Thunder Oak website, Ms. Burns advises: "The site allows me to order online, which is great, but it doesn't give me any indication as to where I can buy Thunder Oak cheese anywhere but at their facility." She suggests Mr. Schep capitalize on the profile of the high-end stores selling his cheeses by including information about them on his website.

In a nutshell

SLOW DOWN

Decide what your long-term vision is, then decide how to get there.

PRICE YOUR PRODUCT RIGHT

Pricing too low sends a signal to the market. Premium brands command premium prices that are in line with the competition.

DELEGATE

Pick an area on which to concentrate and then slowly hire the right people to fill in the gaps.

CONSIDER OUTSOURCING

The finished product is what customers are most concerned with. If outsourcing some materials helps in managing growth, it's worth considering.

FIND OTHER WAYS

TO CONTINUE GROWING

Consider diversifying the product by offering special packaging or other easy-to-manage strategies.