The Real Deal

What It's Really Like to

... Fail
Scott Hildula knew his business was in trouble when his wife suggested, "You might want to rethink what you're doing for a living."

For the previous eight years, Hildula, now 43, had made a living doing what he loved: building homes. He'd started San Francisco-based Rose & Daisy Renovating Co. with just himself and his station wagon, eventually growing to 12 employees. Then in 1999, he bid too low on an old Victorian home in San Francisco and became ensnared in a money pit. Before he knew it, he had to lay off his entire work force and struggled for months afterward to finish renovating the house by himself-knowing that every day he was losing money. That project marked the end of Rose & Daisy Renovating Co.

Hildula took his wife's advice and landed a PR gig during the dotcom boom in 1999. He enjoyed the work but hated being employed by somebody else. "I really lost my edge," says Hildula. "I felt like a neutered house cat in the corporate environment."

Three years later, he opened his own PR boutique, Red Umbrella Group. The San Francisco company now has three full-time employees, five subcontractors and projections nearing $800,000 for 2005. Today, Hildula doesn't mind looking back. "I learned a lot," he says. "Once I [finished that house], I was really proud of myself that I sucked it up and pulled through. The experience I gained back then is tremendously helpful now."--G.W.

... Spin Off Your Company
You'd think Tori Swaim would have been thrilled that her success allowed her to spin off a company from her baby products business, New Arrivals Inc. You'd be wrong.

"It was very scary. Just because we were successful with an upscale product line in upscale boutiques, we weren't sure how we were going to do in a mass market," says Swaim, 44. "So there was excitement, but also a lot of caution."

While Atlantic Beach, Florida-based New Arrivals Inc. caters to the high-end market, Swaim's spinoff, My Baby Sam Inc., sells its baby products in Babies "R" Us, J.C. Penney and other mass-market retailers. Swaim's experience with infant products helped her get noticed by the retail giants, but My Baby Sam still had to be aggressive and creative to get buyers to look its way. "The buyers are pummeled with calls from people wanting to get into these stores," says Swaim. The effort paid off: My Baby Sam's 2005 sales are expected to hit $1.5 million.

"It was a huge learning process," says Swaim, who notes that she let one large retailer offer too much input on how several products should be designed. They didn't sell well, so from now on, says Swaim, "We have to love it to go into production with it."--G.W.

... Open a Second Location
Ike Rodriguez and Ingrid deGranier, 31 and 38, respectively, were in for the ride of their lives when they made the spontaneous decision to grace New York City with a second Find Outlet store. Their first boutique opened in 1999 in Chelsea and featured quality outlet merchandise. It had been open a year when a friend closed her store in Nolita and offered them the lease. They jumped at the opportunity.

Little did they know of the growing pains to come. The challenge of operating two locations and having to rely on others hit home when employees would fail to show up to open one of the stores. Technology posed another challenge. Rodriguez and deGranier operated their first store using a computer equipped with basic software. For the second store, they incorporated a multi-unit point-of-sale program and invested in more sophisticated technology and software. "Once we opened the second location, we decided to restructure the company to run as a real business, rather than a mom-and-pop shop," says Rodriguez.

It was by embracing these challenges that Rodriguez and deGranier achieved growth. In March 2005, they celebrated the opening of their third store, and months later opened a fourth, in Culver City, California. This year's sales are expected to be $1.2 million. "The second [store] happened so fast that it was almost like taking a Band-Aid off fast," reflects deGranier. "We didn't even notice the pain."--Sara Wilson

... Expand Internationally
In March 2004, Rich Mak, 33, and his wife boarded a plane to Hong Kong with no return tickets. Mak was setting out to open Crown Marketing Group's first international office. He wasn't certain what the future held, but he was sure of one thing: The time it took his Chattanooga, Tennessee-based design and marketing company to develop a product could be cut by three times if Mak was closer to Chinese manufacturers.

Due to visa restrictions, Hong Kong was the closest Mak could get to China, and while he and his wife adjusted to living abroad, co-founder Phil Sieg, 38, had his own adjustments to make back in Tennessee. Says Sieg, "Without Rich and our natural competitiveness in the office, I found that unless I made prioritized lists, nothing got done."

The partners quickly learned the importance of finding a good accountant and asking lots of questions. By doing so, they have absorbed the ins and outs of establishing an overseas business, and project 2005 sales of $2.5 million. Their most important lesson has been in mastering the art of patience. Says Sieg, "Ultimately, this sort of expansion has to be viewed as a growth of infrastructure to lend long-term stability and value, not short-term profits."--S.W.

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the September 2005 print edition of Entrepreneur with the headline: The Real Deal.

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