From the February 1996 issue of Startups

Ken Fox is a great believer in grabbing hold of an opportunity the first time it comes around. Rather than finish college, Fox used his job as manager of a Sacramento, California, "spy store" as a springboard to start Fox's Spy Outlets, which today sell $400,000 worth of personal protection and surveillance products annually.

Here's his advice to those who want to explore new entrepreneurial waters:

Act immediately on a good business idea. "I was told by my family I should get a college degree. And yes, that's important, but when I saw how new the security equipment industry was and how profitable it could be, I didn't want to wait until it was too late," says Fox. In the fall of 1991, he resigned from his job in Sacramento to move to Seattle, where he opened his first spy store.

Reinvest profits and grow carefully. Using an inheritance from his father, Fox invested $30,000 in personal protection and surveillance items, rented an 800-square-foot store in a small strip shopping center and opened for business. Within six months, he was operating in the black. With profits from the Seattle store, Fox opened an outlet in Portland, Oregon, and 18 months later used profits from that store to open a third outlet in Sacramento.

Build your inventory by developing vendor contacts. "Probably three-fourths of your success is in getting the right merchandise," says Fox. To expand his inventory, Fox attends security trade shows, purchases catalogs of dealers and talks with other spy store owners. He has built a network of 400 wholesalers and manufacturers throughout the United States, Russia and Japan.

Keep up with industry trends. Four years ago, the miniature pen-hole camera hadn't been invented. Today, it's Fox's hottest selling item. "Merchandise changes all the time and you have to offer what people want. Otherwise, they'll buy from your competition," says Fox, who markets his products through radio commercials and a mail order catalog.

Offer your customers excellent value. "We feel ours is a service-oriented company," says Fox. "I tell my customers I'll not only meet or beat someone else's price, but I'll also give a warranty with every product they purchase." -Carla Goodman

What's the Best $500 You Ever Spent, and Why?

You're just starting out in a new business. If you're like most new business owners, money is tight, and you're unsure how to spend what little money you have. Business Start-Ups telephoned six entrepreneurs and asked one question: What's the best $500 you ever spent and why? Their answers and off-the-cuff advice illustrate the common sense that keeps the American dream alive.

Douglas Clark: Clark's Gourmet Pancakes Inc.

Douglas Clark of Clark's Gourmet Pancakes Inc. in Niles, Michigan, has developed a line of dried blueberries, tart cherries and cranberries called RaisinLikes which he markets primarily to mail order catalogs and gift basket companies. To keep costs low, Clark used a two-color label on the original packaging. "Sales were disappointing," says Clark, "until I paid a freelance artist $500 to design a four-color label. Customers are more likely to buy a pretty package than a plain one and the gift basket companies loved the new label."

The proof of the new packaging's success is that many of Clark's new gift basket clients dropped their old suppliers of dried fruits, in plainer containers, even though the RaisinLikes "label" costs more.

Tom Shearer: Shearer Communications Inc.

Tom Shearer, president of Shearer Communications Inc. in South Bend, Indiana, a distributorship for Motorola two-way radios, tells us that while the expense that he uses as an example is far less than $500, it is still the best money he ever spent. While taking college classes for his MBA, Shearer was required to buy a $25 computer program called 'Joe's Spreadsheet' for one of his accounting courses. With it, he was able to get a grasp on accounting and learn his way around a computer. Shearer continues to use that same program to keep his company's records today.

Inga Gladieux: Gladieux Travel

"Don't buy anything new," advises Inga Gladieux of Gladieux Travel in South Bend, IN. "When we started out we had a used building, used furniture and used file cabinets." What was the best bargain she found for $500? "A two-line telephone system," says Gladieux, "which we bought out of a catalog for about $300. If your company only has one telephone line and a second person calls, you could lose both a sale and a customer with one busy signal."

David Bradley: David's Act II

"At first I wasn't going to bother, but then I spent $500 to incorporate," says David Bradley, owner of South Bend, IN styling salon, David's Act II. "I've never had any liability problems, but all you need is one accident in a slippery parking lot, and you can kiss your assets goodbye. It's nice to know you're covered."

Lynn Daniels: Lynn's Inc.

Lynn Daniels, owner of Lynn's Catering and Lynn's Home Cleaning in South Bend, IN, says she spent slightly more than $500 for Harmony accounting software. When she started the catering business, she paid an accountant to prepare the monthly financial statements. Using her own computer and software to do them herself, she is able to see exactly how her business is doing at any time and only uses the accountant to review her year-end statements.

Dick Monahan: Oliver Inn Bed and Breakfast.

"The best $500 I ever spent? Let me put this in context. Your call catches me in the middle of an emergency repair on a hundred-year-old house. This is not a good time to get all philosophical, but to answer your question, the best $500 we ever spent was for Yellow Page advertising."

For what it's worth, the author got the number for the Oliver Inn Bed and Breakfast out of the South Bend Yellow Pages.) -Gloria Gibbs Marullo

Internal Affairs

Want someone to design ads and write news releases to promote your business? Need help setting up a simple bookkeeping system on your computer? Looking for an individual to survey your customers? If you don't have an extra dime in your budget, you can still get the help you need. How?

Hire an intern. These high school or college students work for little or no wage, in exchange for invaluable experience, the opportunity to put your company's name on their resumes and a shot at a good recommendation when applying for their first jobs in the business world.

Your company can benefit from interns, too. Interns bring enthusiasm and fresh, new ideas to your business and, if properly selected, are excellent candidates for paid positions that may arise as your business grows. Best of all, you'll get the satisfaction of knowing you've helped shape someone's career. Here's how to set up an internship at your business:

1. Determine your needs. Figure out what projects you want done that an intern can complete within a semester (usually 10 weeks). The assignments you give them should be good learning experiences. Although you may have your intern clean out the storage room and do your filing occasionally, assigning only menial tasks may result in an early demise of your internship.

2. Write a job description. Clearly spell out your expectations for your intern, including his duties and responsibilities. Just like a full-time employee, your intern should keep regular work hours and meet completion deadlines for projects. Giving your intern a clear direction and goals to reach will make it easier for both of you to evaluate his performance.

3. Promote your internship. Advertise your internship in a college or high school newspaper or post notices on campus bulletin boards. Designate any skills or level of education you require of applicants in your advertisement. If the college or high school has an internship office, inquire there about qualified applicants. Make sure the responsibilities outlined in your internship meet the school's requirements, as well, or your intern may not receive any school credit for the work he performs.

4. Sign a contract. To avoid misunderstandings and protect yourself legally, put your internship requirements in writing and have your intern sign it. The contract should cover the term of the internship, job duties, work schedule, performance expectations and salary and benefits, if any. Having the student's internship advisor's signature on the contract may help ensure internship credit.

5. Be prepared to mentor. Interns need a mentor, someone to coach them and answer their questions. If you won't be available on a regular basis, assign an employee to serve as the intern's mentor. Unless you hire interns with existing skills, they may need training, too, which can be time-consuming at the outset. Expect to put some time into your interns to get quality work out of them.

6. Check your liability. Your intern must be covered by your insurance for any work-related accidents or injuries. Unless you've specified that your intern is working as an independent contractor, you'll also need to withhold income tax and pay workers compensation on any salary your intern earns. -Carla Goodman