Stationery Store Addressed the Issues

A pair of lucky breaks helped a tony stationery shop in Montecito Village staunch its cash flow problems and find enough new business to allow it to squeak into the black for the year.

The two sisters who own Stationery Collection were able to slash overhead by 50% by moving to a smaller space across the street. They were thrilled to escape their crushing $4,100 monthly rent bill while remaining in the exclusive upper village area that had drawn them to the business in the first place.

“To have left the village, I would have been horrified,” said Nancy Carr, who owns the now-tiny shop with her sister, Julia Postle. “I wouldn’t have moved.”

There didn’t seem to be an alternative a year ago when the sisters first contacted The Times for a Business Make-Over. The shop they bought in January 1997 had a long history of serving upscale clients in the area, but it had fallen on hard times. Sales were down, the merchandise was shopworn and a rent hike for the 2,700-square-foot space was in the offing. The sisters knew the shop had potential but were having a hard time figuring out how to jump-start sales.

“How do you revive something that was once so thriving?” Postle asked in a November 1997 article in The Times’ Business section.

Find new customers who can make the business grow, then sell them on the store and its products, was the advice given by business consultant Philip J. Borden, who met with the owners at The Times’ request.

To free up the cash needed to pull that off, Borden, executive director of the Women’s Economic Development Corp. in Long Beach, advised the sisters to find a smaller, cheaper space, even if they had to move from East Valley Road, where commercial space was tight. In the interim, he suggested they rent space in their cavernous shop to a related business, such as a wedding planner.

Carr, who didn’t want to move the business from the area, jumped on the subleasing idea. She tried to convince an event planner to share the space, but the idea didn’t pan out. “It was confusing for everybody--how to split this or that--it wasn’t working out logistically,” she said.

To eke out more cash, she began, against her instincts, to think about trying to sell more gift items in the store. The gifts they had weren’t moving, and those that did sell weren’t as lucrative as the boxed stationery, greeting cards and other paper goods the store carried. But the small local community just wasn’t generating enough stationery business to keep the shop afloat.

Carr knew businesses could get in trouble by adding too many products because of the unforeseen overhead generated in other areas--more employees to unwrap and display them, time spent ordering the products, paying the additional bills and trouble-shooting invoices. But she didn’t know what else to do.

When a jeweler across the street retired suddenly and his 835-square-foot shop became available, Carr snapped it up.

A second lucky break helped her decide what to carry in the tiny new shop and opened a new source of business.

It seemed like bad news at first when a longtime employee told the sisters she was going to quit and take a new job managing a competing stationery store. But the more Carr thought about it, the more she realized how much the change could help her store.

“I analyzed her strengths and what she liked, to see where she would take that store,” said Carr. The former employee was “more into the stickers and glitter and confetti and crafty items,” Carr said. So Carr decided to drop those items from her own shop and concentrate on more upscale, exclusive paper goods. She added the Smythson line of hand-engraved English stationery and leather portfolios.

“It really, really worked,” Carr said. The Smythson line attracted corporate business clients, just the type of customers the consultant had recommended to help the store grow.

With a smaller, cheaper location, a new focus on fancy paper goods and custom stationery and a new source of customers, Carr and her sister were able to make headway on Borden’s other recommendations.

They adopted his suggested slogan for the store: “Traditions new and old.” He had chided them on their lack of letterhead, an odd omission for a stationery business, and the need to project a consistent image. They had their calligrapher design a new logo and printed it in sage green ink on cream-colored business cards, letterhead, even scratch paper pads, Carr said.

After mixed luck with past marketing efforts, they decided to take a personal approach more appropriate to the store’s new product mix. Carr scoured her customer files and invited a small group of successful businesswomen to a free seminar at the posh San Ysidro Ranch resort. At each woman’s place at a U-shaped table, Carr put a stack of junk mail. Each stack contained a different hand-engraved letter or note in a hand-addressed envelope made of top-quality paper. It wasn’t a surprise that each woman opened the hand-written letter first. The impact of a personal note on quality stationery wasn’t lost on the businesswomen, and the round-table discussion that ensued addressed the sometimes puzzling protocol of social and business communications.

No selling was done at the seminar, but the event generated a lot of business for the Stationery Collection in the days that followed, Carr said. More invitation-only seminars are being planned.

As part of their plan to pursue business clients, Carr and her sister bought a second store in August, the Perfect Note in Pasadena, which Postle now runs. About 60% of the Lake Avenue shop’s business is from corporate clients, Carr estimated. The sisters are now considering hiring a salesperson to concentrate on corporate sales for both shops.

Although they squeaked into the black in 1998, the sisters have yet to draw a salary. Carr is hopeful, though, now that they have their overhead under control and money to use for marketing. In addition to corporate sales, she’s beginning to make inroads with people who use a lot of custom stationery and paper goods: the men and women who host and organize the endless charity circuit in Los Angeles.

She says that finding and sticking to a core business works even for a small company like hers. “Those concepts are not just for chief financial officers at those corporations you read about that have millions of shareholders,” Carr said.

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Business Make-Over in Review

* Company: Stationery Collection

* Headquarters: Montecito

* Owners: Nancy Carr and Julia Postle

* Sales: $275,000 in 1997; 430,000 in 1998

* Employees: 5 part-time in 1997; 1 full-time, 2 part-time in 1998

Main Business Problem One Year Ago

Attracted to its exclusive locale, Carr and Postle decided to buy this old-line stationary store in January 1997. They knew they faced a huge monthly rent bill, outdated merchandise and a shrinking client base.

A Year Later

Stationery Collection has moved to a much smaller space, and the sisters have focused on fancy, personalized stationery and new corporate clients. They bought a second store in Pasadena in August.

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DOES YOUR BUSINESS NEED A MAKE-OVER?

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