Year’s Top 10 Tips for Small Business Success Include the Personal Touch

Every week Learning Curve gives entrepreneurs a chance to share the secrets of their success and dispense firsthand advice about how they’ve gotten their businesses off the ground--and kept them running. Here are the top 10 tips of the past year.

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1. Small businesses can compete against superstores by managing costs and emphasizing personal relationships.

Michael Fox tightly controls the growth and the expenses of his paper and copier supply firm, M&M; Paper Co. of Van Nuys. Taking advantage of cash discounts from his suppliers, tracking line-item margins and profit daily and keeping inventory low has been critical to his ability to compete with big competitors like Office Max and Staples. Personal service and first-name relationships are key to his high customer-retention rate.

“As long as we keep our costs down, stay competitive, provide good service and a genuine thank-you to our customers, we’ll be around,” Fox said. (Feb. 2)

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2. Don’t undercharge for your products or services.

Graphic designer Peter Scherrer did a pricing study at the prompting of a consultant. By keeping meticulous track of exactly how much time he and his assistant spent on various projects, he realized that not only was he underbidding jobs and losing money on them, but he was losing potential clients because they thought his rates were suspiciously low.

“I always thought I had to come in with the lowest bid or I wouldn’t get any work,” Scherrer said. “Now, my prices are still very fair, but they correspond much more closely with the actual time and effort I spend on a project.” (Feb. 9)

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3. Create an online customer community to bring traffic to your Web site.

What would a Seal Beach bait and tackle shop do with an Internet presence? Big Fish Bait & Tackle decided to go beyond selling rods and reels in cyberspace and offer extensive content, contests, message boards and expert advice. They got such tremendous response that they expanded their online catalog within six months, hooked up with national distributors, and established an international clientele that quickly grew to 20% of their revenue.

“What we’re really doing here is creating an avenue for our customers to talk about fishing, plan fishing trips and just be around other fishermen,” said Robert Lienau. “Once they get involved in our community, they are very loyal to us.” (March 1)

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4. Take a strategic--rather than shotgun--approach to marketing.

Like most small businesses, Adult Care Planning Inc. of Santa Margarita didn’t have a huge promotions budget. Rather than scattering resources blindly, owner Kathleen O’Toole and her husband, Lawrence, gathered the staff to brainstorm about where their revenue was coming from, what client segment they served, what message they were communicating to each segment and how effective it was.

“This showed we had underestimated the power of influencers in bringing us clients,” Lawrence O’Toole said. “It also helped us refine our marketing message. To be most effective, we want to cater our message . . . to each group.” (April 12)

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5. Meticulous financial planning is crucial to a successful start-up.

Hilary Stern did months of industry research and detailed financial calculations before she started an Italian ceramics import business in Los Angeles. Realistic estimations of her start-up costs, leasehold improvements, equipment needs, supplies and miscellaneous fees helped her calculate a break-even point so she could determine how much inventory and reserve funds she would need to get started.

“I took the time and trouble to make these detailed projections because I knew that if I planned my start-up carefully, I could avoid overspending and . . . optimize my cash flow,” Stern said. (April 26)

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6. Overcome bad timing by pulling back, cutting expenses and consolidating effort.

Macy Pettit’s online hosiery sales grew steadily after she established AlexBlake.com in 1996. But she expanded her company and began the search for additional capital just as “dot-com” businesses began falling out of favor with investors. When AlexBlake.com could not raise the money needed to continue, Pettit laid off staff, moved the company back to her home and abandoned an ambitious advertising campaign in favor of guerrilla marketing.

“Getting back to where we started, we find we have to do a balancing act: believing in the big picture and the absolute of success, but pacing our growth at the same time,” she said. (Aug. 18)

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7. Business principles that work in the bricks-and-mortar world also apply to online e-tailers.

Aron Benon runs his online flower shop, Florist.com, very much like he ran his corner florist business for a dozen years: without outside capital, expensive and aggressive advertising or a huge product line. Instead, Benon has stayed private, reinvesting net proceeds in the company, sticking to his conservative business plan and respecting his online customers’ right to privacy by posting an extensive privacy policy and refusing to sell customer data.

“My biggest lesson is that an online business has to be run by people who know something about the industry, whatever it is,” was Benon’s advice. (Sept. 20)

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8. Never say no to a customer or decide that a project is impossible.

David Brookwell and Sean McNamara take a can-do attitude with their television and film production company, Brookwell McNamara Entertainment Inc. in Los Angeles. Finding new technology and investing the hard work and long hours it takes to bring a project in on time and on budget has allowed them to develop a core group of loyal customers in a competitive industry.

Bartering for services, devising breakthrough systems, hiring new talent that will work at lower rates, and striking deals with union workers has been key to the partners’ philosophy that no job is impossible.

“We believe that when clients ask us to do the impossible, our first response should be to analyze the proposition and find a way to deliver,” said David Brookwell. (Nov. 15)

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9. Business expansion on a budget is possible with strong centralized operations.

Susan Johnson wanted to move into San Diego County with her line of healthful, home-delivered meals, but she could not afford the $100,000 she estimated it would take during the year before the new operation would break even. So Healthy Gourmet, based in Irvine, began offering service in San Diego without opening a local headquarters or costly food-preparation base there. Taking advantage of contracts for pickup and delivery at local yogurt and sandwich outlets and handling customer service and administration from the company’s Irvine offices meant that the new arm of the firm could break even within six months.

“I don’t have to travel to oversee remote operations, and we haven’t had to purchase new computer and telephone systems that can go bad on us,” Johnson said. (Dec. 6)

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10. Start small and do research and test-marketing as you go.

Alfonso and Alejandra Porras started selling candied nuts at street festivals and farmers markets, refining their recipes, settling on suppliers, learning about the industry, and trying out new products while they were operating without expensive overhead or staffing costs. After three years, they decided they were ready to make the investment and had built up enough clientele to justify opening a storefront, Sir Walter’s Candy & Nut Shop, in Monrovia.

“We knew the demand for a retail location was there, but we took it slowly and . . . established multiple revenue sources . . . since retail sales can’t bring in enough to cover the overhead,” Alfonso Porras said. (Dec. 13)

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Send letters to Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or e-mail kklein6349@aol.com. Include your name, address and telephone number.