Entrepreneurs who use market research and personal experience to target a growth industry increase their odds of success.
When Carol Conway moved to southwest Florida in 1993, she had almost two decades of experience in computer hardware manufacturing working for big guns like IBM as well as Silicon Valley start-ups. In looking for a new business venture, though, she eschewed the computer hardware industry in favor of a service business, Cape Coral-based Computer Rescue Squad, believing that the competitive environment was better for a small computer service business than for a small hardware maker. "Our economy is shifting from an output of goods to an output of services," observes Conway.
Conway, recently named Florida Small Business Person of the Year by the U.S. Small Business Administration, drew on her own background in making her decision. Entrepreneurs who don't have personal experience to draw on should thoroughly investigate whether the market for their proposed product or service is growing or shrinking; they also must determine whether trained workers are available in the business' locality, and they must research trade barriers to exporting the product or service.
Conway's professional instincts appear to have served her well. Since she bought Computer Rescue Squad in 1993, annual revenues have grown from $240,000 to $2 million in 1997. The business, which in 1993 served mostly small businesses with fewer than 10 employees, now focuses on the design, installation and support of Microsoft and Novell Local Area Networks for businesses with five to 50 PCs. Last year, Conway opened a second office in Naples, and she plans three additional offices in the next five years, most likely starting with an office in the Venice/Sarasota/Bradenton area.
So what are Florida's hottest industries today? Not surprisingly, computer companies, such as Conway's venture, top the University of Florida's 1997 list of the 100 fastest growing businesses in the state. The UF ranking, which measures private companies' revenue growth over a three-year period, includes computer training companies such as Productivity Point International of Florida, technical support businesses such as Computer Rescue Squad and Palm Bay's Solunet, and software companies Vento Software of Miami, MindSolve Technologies of Gainesville and Design Data Systems of Largo.
Bucking Conway's views on small computer hardware companies is UF's number one company, Singer Island's WalkAbout Computers, a maker of portable personal computers with screens that accept handwritten entries. The company posted revenue gains of more than 8,000% from 1994 to 1996.
Other industries that generate fast-growing Florida companies include temporary staffing/employee leasing, healthcare, telecommunications and "nondepository" credit institutions, such as pawn shops, that cater to low-income residents.
RETAIL MARKETING
Building a Captive Audience
By Julie S. Bettinger
Increasing customer traffic is perhaps the No. 1 challenge for most retailers. The Cannery, a combination antique mall and 90-seat gourmet restaurant in Havana, faces greater challenges than most retail outlets because of its rural location away from main highways in Gadsden County. To attract customers, owner Trey Morgan introduced events-based marketing to make the Cannery a destination and to capitalize on a concept he calls "shoppertainment." Over the past two years, Morgan has increased revenues more than 40%. Here are some tips from his marketing primer:
1. Plan a calendar of events. The Cannery is a 31,000-square-foot building with 120 miniature shops. There's plenty of flexible space, including a stage area in the restaurant, open spaces on the outside grounds and a recently renovated second story for larger gatherings. Morgan puts the unoccupied areas to good use by hosting outside vendors for quilting festivals, a car exposition and even an equestrian-art show. On a smaller scale, he also hosts chefs' competitions and a "hot pepper fest." At Morgan's most successful events, 2,000 to 5,000 people flock to the Cannery.
2. Get creative with advertising. Once Morgan attracts a particular festival or event, he promotes it using everything from t-shirts to radio broadcasts. Often, he co-ops with other vendors on targeted direct mail and advertising in niche publications, spreading the advertising costs among several vendors. He also uses small, one-by-two-inch ads in local entertainment tabloids to draw last-minute funseekers.
3. Get a non-profit involved. Morgan has paired with a food bank and a wildlife sanctuary for events he's hosted in the past, which he says helps gain additional exposure through newspaper editorials and public service announcements on radio and television.
4. Be patient and keep your day job. "Anything that I do to build traffic is going to take me three years to see a profit," Morgan says. So his goal right now is to increase exposure and break even. The payoff, he says, will come when visitors return to the Cannery, bringing friends and neighbors with them.
EXPORTING
A Bridge to Japan
The USA/Japan Trade Expansion Center, a Pensacola organization funded by the U.S. Small Business Administration, is sponsoring a trade mission to Osaka, Japan, for small and medium-size companies. The program, designed for companies with the greatest export potential, is scheduled for Oct. 17 to 24.
The mission's organizers will set up business meetings between U.S. firms and potential Japanese buyers. In addition, each U.S. business will have a booth to showcase its products at the Global Business Opportunities Convention, one of Osaka's largest international trade shows. For more information, call Miki Nakamura, 800/511-7024.
FINANCE
SBA "504" Program Update
The U.S. Small Business Administration (SBA) is proposing several changes to its 504 loan program, which provides small businesses with long-term, fixed-rate financing for property, buildings and equipment. One regulatory change would streamline the loan process for borrowers by increasing the decision-making authority for many local Certified Development Companies, the non-profit organizations that make SBA-guaranteed loans for approximately 40% of the total loan. (Private-sector lenders generally loan 50% of the total, and the business owner makes a 10% down payment.) Other proposed regulations would let two or more small businesses borrow together to finance a single project; allow borrowers to finance attorney's fees up to $2,500 for a 504 loan closing; and permit the SBA to provide financing to a borrower who will be a passive owner of a property that will be occupied by two or more unrelated small businesses. Final decisions on changes are expected this summer.
RESTAURANT MANAGEMENT
On The Menu
The University of South Florida Small Business Development Center will offer Restaurantology II: "Ask the Experts" on June 29 in Tampa. The half-day advanced training program will address Florida regulations to prevent food-borne illnesses, restaurant tax law, hiring and keeping workers, marketing, budgeting and expanding to another location. To register ($40 including breakfast), call 813/554-2351.
COMPANY PROFILE
Ambulance Chasers
Fort Lauderdale's Protect-A-Med is tapping a niche in the emergency medical industry.
Joseph Corente doesn't claim to be a medical expert; he's a salesman pure and simple. But by following the golden rule for selling - keep in touch with your customers' needs - Corente developed a product that is boosting sales at his Fort Lauderdale company, Protect-A-Med.
Corente's product, a disposable fitted sheet for ambulance stretchers and emergency room gurneys, isn't high-tech. He developed the "E sheet," which retails for about 98 cents and is made of a sturdy non-woven fabric called polypropylene, after talking with workers at emergency care facilities who weren't satisfied with the cotton and paper sheets on the market. According to Corente, cotton sheets are sturdy but expensive, costing about $6 apiece, plus 60 cents to $1.10 for laundering after each use. He says paper sheets sell for 50 cents, but are easily torn and offer little protection from blood or other fluids. "I met people in the emergency industry and found out there was a need for a better sheet," says Corente. "They needed it to be strong, fluid-resistant and fitted."
Protect-A-Med, founded by Corente in 1993, started by selling protective clothing for healthcare workers. A year later, when the company began production on the E sheet, Corente faced an uphill battle with the nation's 11 major emergency medical supply distributors. "As a new, young company we were begging distributors to carry us," he concedes. After being rebuffed by Florida's leading emergency medical distributor, Corente opened Emergency Linen Supply Co. to serve in-state clients. With that operation up and running, out-of-state distributors took notice. Corente now markets E sheets throughout the U.S. and in Canada and Australia.
Last year Protect-A-Med posted $1.6 million in sales and turned its first profit. Corente expects revenues to double in 1998, and his long-term goal is annual sales of $100 million. To finance growth, he's relying on cash flow, credit lines with suppliers, money he's collected from his family and 15 private investors.
Although Protect-A-Med produces a line of five sheets - three for ambulance stretchers and two for emergency room gurneys - 95% of sales comes from the ambulance market. To build the company, Corente is slowly venturing into the much larger hospital market. "They're a very different market to sell to if you're a nobody," he says. "We need to work with specialty products distributors in the hospital industry."
SMALL TALK
Online Loans
Florida small-business owners now can apply for loans online through NationsBank's Web site (www.nationsbank.com). Using the bank's "Loan Finder," borrowers answer a few questions about how they plan to use the money, what collateral is needed, and their payout preference (lump sum or withdrawals on an as-needed basis). Those responses are used to direct the borrower to the appropriate loan application, such as for a business mortgage or credit line. The application takes about 15 minutes to fill out, and NationsBank maintains it will provide a response within one business day. The site also includes basic information on debt and equity financing along with three credit calculators that help applicants determine monthly payments, mortgage refinance scenarios and borrowing limits.
Central Florida Research Help
The University of Central Florida (UCF) in partnership with the Central Florida Innovation Corp. has developed TechnoLine, a free research service that helps companies tap into the high-tech expertise of UCF faculty members. UCF professors will help companies prepare Small Business Innovation Research (SBIR) grant proposals, assist with up to four hours of pro bono consulting or research and set up contract research with the university. Call TechnoLine at 407/277-6514.
Entrepeneurial Insights
More than 50% of entrepreneurs work 50 hours per week or more and 25% claim work weeks of more than 60 hours. Those figures are from a recent survey by the Michigan-based Edward Lowe Foundation of more than 1,350 small-business owners nationwide. The survey also revealed that although 90% of small-business people predicted increased sales for early 1998, only 64% planned to add workers. And when it comes to the Internet, almost 60% of small businesses use the technology for e-mail or research, but only 28% sell their products online.