Firm With Formulas for Success Seeks One : Entrepreneurship: Kessler Exchange has fallen on hard times while trying to sell self-help tapes to small businesses.
Geoffrey Kessler, a small-business consultant, is learning just how hard it is these days to run a small business.
Since 1986 his Northridge firm, the Kessler Exchange, has been knocking on the doors of small business owners nationwide, trying to sell them a membership in a sort of small-business resource club.
Kessler’s staff interviews business owners around the country and compiles their self-help tales and ideas, which are packaged mainly in cassette tapes and then mailed monthly and on an order basis to members.
But after six years, the Kessler Exchange itself has become a case study of a small business in trouble.
Kessler hoped to have 100,000 members, but his firm never got more than 5,000.
So Kessler is basically starting over; he recently scrapped the $695 a year membership fee, cut his staff in half--to about 20 workers--and has a new plan.
Kessler, who has been a small business consultant for 28 years, conceded he was charging too much.
So earlier this month, he set up a new membership rate of $30 semi-annually, for which members receive one cassette tape a month of their choice. And so far, he said, about 170 small business owners have joined at the new rate.
Most agree that the Kessler Exchange is a good idea.
But it has been hurt by the recession and burgeoning entrepreneurial programs offered by chambers of commerce, government and schools as well as some competitors--all of which vie for the little time a small business owner has for such activities.
Steven Nichols, chairman of K-Swiss Inc., a sneaker maker based in Chatsworth, said he belongs to The Executive Committee, a nationwide organization in which a dozen top executives in a region meet with each other to share ideas.
For $250 a year, Nichols also receives a cassette tape every two weeks from Newstract in New Jersey. The tapes contain stories and ideas culled from business magazines, he said.
“I get charged up when somebody comes up with a great idea,” he said.
But Nichols said he has never heard of the Kessler Exchange--a fact former Kessler employees attribute to the company’s ineffective marketing.
Kessler’s biggest mistake, though, was probably pricing, former members said.
“It was more than what I wanted to spend,” said Stanley May, president of May Brick Co. Inc. in Encino and a former member.
Until recently, for the $695 a year Kessler Exchange fee, a member received seven cassette tapes, a videotape and some publications.
“A lot of people are struggling right now, and $700 can go a long way in paying expenses,” said Michael Lee, director of the U. S. Small Business Administration office in Los Angeles, which provides most of its assistance at no cost.
Kessler, 51, said the Kessler Exchange was unprofitable, but he declined to disclose its losses or revenue.
State records show that Kessler is also involved in separate consulting, investing and printing businesses.
Kessler, a former consultant with Laventhol & Horwath, said he is “very successful” overall.
Former employees say that Kessler, who lives in a Santa Monica house appraised at $1.8 million, is a millionaire and that the Kessler Exchange is more like a pet project. Even so, Kessler doesn’t like talking about a venture that is hurting his pocketbook.
“We’re in a transition right now,” he said. “We’re still in a development process, and it’s going to take a long time to perfect it.”
Kessler himself is driven and energetic, say those who know him, and that has helped him pick up members during speaking engagements. The Kessler Exchange has also advertised on cable television.
“He’s like a small business evangelist,” said May, the Encino business owner.
“Jeff is really an entrepreneur and he really understands the concepts,” said Ken Podgorsek, who runs a printing business in San Jose and was interviewed by Kessler’s staff.
But Podgorsek isn’t a member of the Kessler Exchange.
Asked why, Podgorsek gave what appears to be a common reason: “When times are tough, memberships like that go out the window.”
Like a growing number of small-business executives, Podgorsek also belongs to a private group in which business owners get together to talk out their problems.
Such networking or meeting clubs have proliferated in recent years, experts said. Many chambers offer them in one form or another. At the Mid-Valley Chamber of Commerce in Van Nuys, for example, about 100 executives get together every month to talk about business over breakfast. It costs them $12 a month.
Still, Kessler has a potentially huge market to tap from.
Experts say there are about 21 million small businesses in the country, which are technically defined as firms with 500 or fewer employees. (A majority of small businesses, however, have fewer than 25 workers, experts say.) Many of those undoubtedly could use help.
And while there are thousands of small business consultants, who charge anywhere from $50 to $300 per hour, analysts say, there are few such small business research and consulting firms as Kessler’s.
Every year, Kessler says, his staff interviews about 25,000 small business owners across the country.
Kessler retells many of these stories in hourlong cassettes, which Kessler himself makes, and then markets them based on themes such as how to get financing or build public relations. Using these interviews, Kessler also produces surveys and reports about how small businesses are contending with, for example, the Americans With Disabilities Act. Kessler also offers a toll-free number that members can dial for personal help or referral to other sources, all of which are based on experiences of business owners.
“Our members are getting real help from real business people,” said Kessler, who has a doctoral degree in management from UCLA. “It’s not slipshod advice from so-called experts.”
Many small business consultants like Kessler’s idea.
“The concept is a good one,” said John Bryant, head of Bryant Group Consulting in Century City. “I’d rather put a tape in my car rather than go somewhere that takes me away from my company.”
Kessler acknowledged that competing executive programs are obstacles for the Kessler Exchange.
But he said his new formula will help address that problem. “We’re now trying to give them the most information” in the least amount of time.