Entrepreneur Survives Crisis to Become ‘Hot’ : Magazines: The Irvine-based publication focuses on how-to information to small business owners.

Ayear ago, Entrepreneur magazine appeared to be on the ropes. The Irvine-based publication was having trouble paying its bills, was laying off staff and was looking for a partner to bail it out.

Entrepreneur’s top officials--Chief Executive Peter Shea, Publisher Jim Fitzpatrick and Editor-in-Chief Rieva Lesonsky--insisted the problems were temporary. Today, they wear I-told-you so grins and talk optimistically about the future. And for good reason.

As the great shakeout of the post-1980s magazine boom continues, Entrepreneur is experiencing strong growth. From 1987 to 1990, circulation increased 82% to 325,000 and total advertising pages jumped a strong 178% to 2,002. The growth is continuing this year.

For the second consecutive year, industry trade magazine Adweek has placed Entrepreneur on its list of top 10 hottest magazines, an honor that takes into account ad pages and revenue. Other winners include such big-name magazines as The Economist, The Atlantic and Parenting.

Even Entrepreneur’s peers have begun to take notice.

“There was a time when we didn’t pay much attention to (Entrepreneur),” said George Gendron, editor-in-chief of Inc. magazine. “In the past 18 months, their editorial (content) has begun to gel. There’s a nice focus. “

Industry analysts say that Entrepreneur is succeeding because it brings solid how-to information to small business owners, generally those with fewer than 20 employees. It is a growing niche that no other magazine is reaching.

Entrepreneur’s transformation has been one of image as well as ad dollars. In the April issue, Rieva Lesonsky said the magazine that once was an ugly duckling has become a swan.

“Entrepreneur is now one of the nation’s leading magazines,” Lesonsky wrote in her monthly column to readers. “We were (in the past) a small, basically unattractive magazine filled with unfocused, often self-serving articles.”

Hyperbole aside, Entrepreneur has some things to boast about. The advertising revenues for its parent, Entrepreneur Group Inc., were up 39% in 1990 to $19.7 million, the company said. Ad sales account for about half the firm’s revenues.

Entrepreneur Group has branched out with two other monthly magazines: Entrepreneurial Woman and New Business Opportunities. The company also publishes almost 250 manuals on how to get started in business.

Most publishing analysts have no doubt that Entrepreneur’s fortunes will continue to rise. The magazine has chosen a largely untapped small businesses and franchise market, one of the nation’s fastest-growing business sectors.

“The magazine’s success is the economy,” said George Hayes, director of media planning for New York-based ad agency McCann-Erickson. “Whether you’re out of work or think you’re about to be, the thought of having your own business probably appeals to you. For advertisers, it’s an opportunity to reach somebody who still has some cash.”

Entrepreneur still largely has a soft editorial focus. The May cover story was a thinly veiled promotion of cellular phones, fax machines and laptop computers--the kind of story advertisers are sure to love.

Still, the magazine has much useful information. Last month’s issue contained more than a dozen feature stories. One tells about four businesses that are selling ethnic products from Scottish kilts to Russian literature. Another story describes the basics of great customer support.

The magazine was begun in the early 1970s by Chase Revel, a Los Angeles publisher of small business manuals. The magazine’s theme was similar to today’s New Business Opportunities: Get-rich-quick formulas for the common man. With a downturn in the economy, Revel filed for bankruptcy in 1982 and the magazine struggled to stay alive for several years.

In January, 1987, Shea and two partners, Barry Rupp and Reinhold Pfahler, brought a new image and ownership to Entrepreneur. The partners--owners of Irvine-based Stained Glass Overlay Inc., one of Entrepreneur’s biggest advertisers--paid $3.5 million for about two-thirds of Entrepreneur Group, and later bought the rest of the company,

They decided that Entrepreneur had built in an obsolescence for itself: Once a business was started, people didn’t need to read the magazine any more. So they refocused it to appeal to people who already owned a business for perhaps three to five years.

Fitzpatrick said the key to Entrepreneur’s success is that it holds fast to its identity. “Some magazines try to become all things to all people,” he said. “They see a downturn (in the economy) and they try to broaden their base.”

The magazine field is strewn with magazines that have disappeared in the past two years. Andjust a year ago, Entrepreneur looked like it might be heading for the graveyard as well.

Its expansion had resulted in more than $1 million in unpaid bills. Shea acknowledged that he was talking to foreign publishers about a possible investment. The publisher resigned, and seven people were laid off.

“The reality was we grew faster than our cash flow,” Shea said. “We resolved that. Our problems were not as horrendous as reported.”

But if business is tougher than usual these days, you might not know it reading the upbeat pages of Entrepreneur. Lesonsky, who started as a research assistant with the magazine in 1978, said that is exactly what she is striving for.

“We’re not a news magazine,” she said. “We’re not Business Week; we’re not out to expose anything. We’re out to tell you how to better run your business, and so much of business is psychology. Well, we’re here to help you with that.”