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Flower Power

How Jim McCann sows seeds of fortune with 1-800-Flowers

Jim McCann loves to talk. Business, philosophy, politics, religion-he's got opinions about everything. But press him with questions about how he built Westbury, New York-based 1-800-Flowers into the largest retail floral telemarketing operation in the world, and he'll suddenly turn humble, though he has every reason to boast. In less than a decade, McCann has become the most powerful entrepreneur in the floral industry.

Heading an empire composed of 30 company-owned stores and 100 franchises, 44-year-old McCann gives new meaning to the term "Flower Power." Last year's sales topped $250 million; 1-800-Flowers' 1996 sales are projected at $325 million.

McCann says he stumbled into entrepreneurship. "I think of myself as a 'nontrepreneur,'" he says. "Nontrepreneurs never planned on going into business. Due to circumstances beyond their control, they fell into it. They had to support families, were laid off from their jobs and, thanks to a free entrepreneurial system like ours, they jumped on opportunities."

McCann makes a point of saying that all nontrepreneurs are bootstrappers. "When you start with next to nothing, you're forced to be creative," he explains. "If you're not, you won't be around very long."

Fresh out of college, McCann didn't have the foggiest idea what he wanted to do with his life. "I was just a typical Irish-Catholic kid growing up in New York who didn't see a heck of a lot of career options," he says. "I could join my father's paint contracting business, become a cop or tend bar."

McCann fulfilled what he called his "genetic requirement" by tending bar after he got his psychology degree in 1974 from the City University of New York, New York City. When he heard about an opening for a counselor to work the night shift at a home for teenage boys, McCann jumped at the opportunity to apply his academic knowledge to real life. The hours also left him plenty of time to pursue other interests.

With time on his hands, the restless McCann helped his dad expand his paint contracting business into buying, renovating and selling houses. "I enjoyed doing many things at once," says McCann. He also discovered he had a knack for making money and spotting opportunities.

By the end of 1976, McCann was married, had a child and was climbing the walls looking for a new venture to start. He drew a paycheck from the boys' home and the business he ran with his dad was also thriving. But, it wasn't enough.

That same year, a friend asked him if he was interested in buying a tiny 700-square-foot flower shop in Manhattan. McCann chuckles when he recalls the fortuitous event. "The price was $10,000," he says. "Even then it was a ridiculously low price for an established business. Today, you can't touch a business like that for under $2 million."

McCann saw the tiny shop as an opportunity to be siezed. It didn't matter that he knew nothing about the flower business; he recruited a friend who did to be the store's manager. "I bought the store on a lark," he says, "because it was cheap and I figured it could turn a decent profit."

Hardly six months after buying it, McCann found himself at a crossroads; suddenly his life had become hectic. "I realized I had to think seriously about where I was going to spend my time," he says. "I asked myself, 'What is going to give me the most bang for my buck?'" Certainly, a decent dollar could be made buying and selling renovated houses, yet the floral industry offered bigger and better opportunities.

McCann saw the problem as a mathematical equation. He couldn't account for all the variables, but the ones he could identify pointed to success. "The floral industry was appealing because it was a decentralized business consisting of 40,000 floral shops throughout the United States," he says. "There were no big chains, it was true mom-and-pop terrain and wasn't a faddish business; it's been around since the beginning of time. Even Neanderthal man was buried with flowers."

His timing could not have been better. By the mid-1970s a green plant boom was under way, and plant stores started doing brisk business. McCann opened two more stores in 1977, with sales reaching $200,000, and 12 more throughout New York City over the next decade. In 1983, he was so busy that he recruited his younger brother, Chris, to help him full time. Three years later, McCann quit his job at the boys' home to devote all his time to his blossoming flower business, which he had dubbed Flora Plenty.

The following year, sales leaped to half a million dollars. McCann could have sat back, counted his money and watched his flourishing business grow all by itself, but that's not his style. Again, he was growing restless. Money alone wasn't driving this entrepreneur, but also the inexplicable thrill of playing entrepreneurial chess.

In 1984, a hot new telemarketing company called 800-Flowers asked McCann to fill its orders. The Dallas firm offered a unique service: By dialing 1-800-FLOWERS, people could order and send flowers anywhere in the United States. Both companies profited by the arrangement, until 800-Flowers encountered rough seas a year later.

The company's difficulties read like a textbook in entrepreneurial screw-ups; 800-Flowers was underfunded and poorly managed, and supported a telemarketing center far too large for its volume of business. Even more disastrous, its management didn't understand the floral industry. "The fundamentals weren't in place," says McCann, diplomatically. Translated, 800-Flowers was a mess.

No one in the floral industry was surprised when 800-Flowers' management asked McCann for help. He was the brash new kid on the block with a knack for building a profitable company from scratch.

"The 800-Flowers management asked me if I'd like to run the company," says McCann. Having tasted entrepreneurial freedom, however, he wasn't about to work for someone else again. Besides, he thought the troubled company needed a new owner to get it back on its feet. So he offered to buy it.

McCann saw 800-Flowers' woes as an opportunity in disguise. To his consternation, however, no quick deal was made. Over a two-year period, in a seemingly endless round of negotiations, he commuted between New York City and 800-Flowers' corporate office in Dallas.

"I never thought it would take that long," says McCann. "It was exhausting running a business and traveling back and forth to and from Dallas." In 1987, the drama ended when McCann bought the ailing company for $9 million.

McCann confesses that the purchase of 800-Flowers was an eye-opener: "I realized then I didn't want to be just another player in a big industry. The acquisition of 800-Flowers forced me to dream bigger. Maybe it's because I dug a deep hole for myself by assuming so much debt. One thing was certain, I wasn't going to get out of that with a teaspoon. I needed a big-mouth shovel."

By enfolding his established company and his new acquisition into one company called 1-800-Flowers, McCann destined himself to become a big player. McCann waxes philosophical about the biggest move of his entrepreneurial career.

"There's a point soon after start-up when things are going well and entrepreneurs have to make a critical decision," he says. "The easiest thing to do is become complacent about it and do nothing. Andy Warhol said everyone enjoys 15 minutes in the spotlight. The same thing is true in business. You can enjoy it and stay where you are or move on from there and build on it."

McCann opted for the latter route. He envisioned a sprawling operation and was ready to work around the clock to make it a reality. McCann moved the company to one of his large flower shops in Bayside, New York. He gutted the building and built 25 cubicles, each with a telephone and computer. Then he hired telemarketers.

"I pulled on the reins and tightened the company," McCann says. "We improved quality, offered customers guarantees (they could return flowers if they wilted within seven days) and we launched a national advertising campaign." A year later, in 1987, 1-800-Flowers racked up $400,000 in sales. Then the company really took off.

In 1990, along with an assortment of floral packages, McCann introduced a variety of gift baskets, filled to the brim with everything from herbal teas and snacks to gourmet chocolates. In 1991, McCann moved his entire operation to its current base in Westbury. Today, more than 600 telemarketers (a number that quadruples to 2,400 during the holidays) man the company's telephones 24 hours a day.

Once 1-800-Flowers was on solid ground, McCann concentrated on building a sturdy organization. "Early on I learned I can't do it all myself," he says. "The smart entrepreneur learns how to be a good manager. I worked hard at building an organization of core people who can grow with the company and share in the wealth. Ultimately, they're the keys to sustained growth."

McCann describes himself as sort of a head coach. "I no longer make all the decisions," he says. "As coach, I chart the course, give advice and help shape the company culture. The organization now has a life of its own that is separate from me. It can run without me."

But it wouldn't have happened if McCann didn't shape and direct it. He's not ashamed to admit there were some costly blunders along the way. "It's part of the game," McCann laughs. "Also, there were occasions where we lost focus and went off in too many directions."

Some products turned out to be monumental duds. "I was convinced one product was the greatest thing since white bread," McCann admits. "I'm still trying to liquidate it."

Losing money hurts, but McCann says he learned from his mistakes. "They taught me to recover quickly, stay focused and keep it simple," he says. "They reminded me to stick to my core business and concentrate on quality. The best businesses, no matter how big, are simple. They deliver great products accompanied by extraordinary service."

Bob Weinstein, a frequent contributor to several national magazines, has authored 10 books, including "So What If I'm 50?" (McGraw-Hill).

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