Staying Power
Whoa, whoa, whoa, feelings???? In 1975, all the radio stations were playing it. For eight months, this ode to emotions remained in the 100 top-selling singles. "Feelings" was warbled at weddings, parodied by comedians and sung in showers across the nation. Morris Albert had a hit.
Who?
Exactly. Albert, a Brazilian singer and songwriter, never hit the charts again. That's the way it goes sometimes in the music biz.
Or in any business. Any entrepreneur who hasn't proved himself or herself again and again is a candidate to be the next one-hit wonder. Which begs some questions, if you're longing for longevity: How can you go from pet rocks to Petland, to manufacturing parachutes instead of parachute pants? How can you go from being a Morris Albert to being a Marv Albert? (Okay, bad example.)
Luck aside, multiple-hit wonders are the result of good planning. Gerri Norington, founder of the Women's Business Training Center in San Diego, says that when clients first visit, "I immediately try to get them to diversify so they're not putting all their eggs in one basket."
This doesn't mean that if you sell, well, eggs, you also have to distribute bacon. But it does mean you should never be completely satisfied with your currently successful product, insists Mary Ann Edwards, an assistant business professor at the College of Mount St. Joseph in Cincinnati.
"There's always a competitor who's going to be looking at your product and adapting it to make it better or cheaper," says Edwards. "If you get into the trap of saying `I've got my niche; I've got my product,' the more successful your product or service is, the more there will be somebody who will say `I can do that, too. Now how can I do it differently?'? In other words, if you don't improve your product or service, somebody else will.
Geoff Williams is a freelance writer in Cincinnati.
Taking Off
Eight years after "Feelings" hit the airwaves, Rob Harshaw was talking to a cousin and a friend about a recent rash of commercial airline crashes.
"The thing about all these accidents was, you kept hearing a recurring theme," recalls Harshaw, 40. "The pilots thought they had completed the [preflight safety] checklist, but typically something distracted them, and they never went back and finished [the inspection]."
Harshaw was a defense laser systems specialist at Dallas-based Texas Instruments at the time, but his job enthusiasm was waning. Harshaw's cousin Tim Doell and friend Dennis Keith, having just sold a company that made air conditioners for jets, were hankering for a new investment. "Right on the spot," recalls Harshaw, "we came up with the concept for this device," a software program that wouldn't allow a pilot to take off until the preflight checklist was completed. In 1985, Harshaw founded Heads Up Technologies Inc. in Carrollton, Texas, with Doell and Keith as silent partners.
Harshaw designed the CMS-400 (Checklist Management System) so it would verbally present a checklist of preflight tasks to the pilot, who no longer had to rely on memory. The product was a success, largely because Cessna Aircraft Co. started installing the software in its jets.
But it wasn't until 1987 that Harshaw quit his job to run Heads Up full time. Having already devised his first hit, he began working on his next one. Employing the principles he used with the CMS-400, Harshaw created the PBS-250 Digital Passenger Briefing System. Because small aircraft frequently lack stewards, the pilots read the passenger safety information aloud. Harshaw's passenger briefing system's computerized voice sounded so authentic, pilots could now inform passengers with the press of a button. USAir Express, Mesa Airlines and American Eagle all lined up to purchase the system, as did companies with corporate jets, such as Domino's Pizza, Gerber and Coca-Cola.
"There were [similar products] out there; they just didn't work very well. This was a better mousetrap," Harshaw says, echoing Edwards' assertion that someone is always looking to improve an existing product.
By 1991, Harshaw had a firm that still hadn't quite taken off. Although profits were pouring in, there was a problem. "There are only so many airlines to sell products to," Harshaw explains. "To see dramatic increases in your business, you have to wait for new airplanes to be built or for competitors to go out of business."
Handle With Care
In 1991, brothers Josh and Seth Frey were driving an ice cream truck--a former postal vehicle they had bought and converted into a dessert-mobile. They operated it between semesters at the University of Wisconsin-Madison. Seth, a senior, planned to join the corporate world after graduating, but Josh was enjoying being his own boss: The Hebrew and history major felt he had finally figured out his future. Still, he didn't want to be the neighborhood ice cream guy for the rest of his life. What else could he sell?
Care packages. That's what Josh decided the following summer. He was impressed that a few dorms at his university offered care packages for parents to send to their kids. How to improve on the product? They should do this campuswide, he thought.
When Josh, 26, learned his university sold mailing lists of the addresses of students' parents, he scraped up a few hundred bucks and bought 8,000 names. He then purchased cookies, became a regular customer at warehouse store Sam's Club, and soon customers were paying $10 for his care packages, which he dubbed Granny's Goodies in honor of his then-89-year-old grandmother.
Josh earned $2,500 selling the care packages during his senior year. After graduating in 1993, he took a job at a nonprofit organization. Miserable there, he returned to Granny's Goodies four months later, setting up shop in his parents' McLean, Virginia, basement. Upon learning that most universities don't sell mailing lists, he secured a bank loan and, in 1994, purchased a mailing list of 70,000 names and addresses of parents with kids heading off to college. Using that list, Josh grossed a cool $20,000. Unfortunately, start-up costs were more than $30,000. Nevertheless, Josh was convinced Granny's Goodies was something special. If only he had a partner, someone who had studied business in college . . .
"I left a $30,000-a-year job to make zero," says Seth, 27, who quit his account manager position at a Washington, DC, commercial security company to work at Granny's Goodies. In their parents' basement, Josh handled production details while Seth spearheaded sales and marketing. "We had no business experience--just an idea, a name and passion," recalls Seth. "It was staying up until 2 or 3 in the morning and waking up at 6 or 7 to put together care packages."
Two years later, as revenue increased, the brothers moved the business into a warehouse in Alexandria, Virginia. (They had previously been outsourcing production.) Sales were around $300,000 a year, but profits were sketchy. Parents clamored for care packages early in the school year and during final exams. But summer sales were sparse and, with the exception of a few glorious weeks, so were sales in autumn, winter and spring.
Moving On
When the desire to diversify finally hits, the temptation to do something dramatic is natural. But business owners should reign in their enthusiasm about expansion, says John W. Altman, who has founded six businesses over the past 38 years. Now a multimillionaire, Altman is also the director of the Thomas C. Page Center for Entrepreneurship at Miami University in Oxford, Ohio.
"They begin to think they're omnipotent," Altman says of entrepreneurs after their first big hit. "As a result, they often make ill-advised investments in new areas and lose what they made in the first [venture]."
The bottom line, Altman insists: "Stick to what you know. That's hard for successful entrepreneurs to do."
That's what Harshaw did. In 1992, a shareholder sent him a newspaper clipping about Luminator, a Dallas company that makes electromagnetic route signs for the front of buses. To comply with the Americans With Disabilities Act of 1990, Luminator was trying to create a program that would interface with its signs to verbally provide route information to visually impaired passengers.
"I saw right away how our technology could work [for Luminator]," recalls Harshaw, who wrote a letter to the company's president. Today, Heads Up manufactures Luminator's integrated voice enunciator system for buses, which gives instructions in a variety of languages.
But the bus industry isn't an exploding market, either. This time, that was fine with Harshaw, who knew he could find another use for his software. Having conquered the aviation and mass transit industries, it was obvious what was next: laser tag.
Diversify, Diversify
Well, maybe it wasn't so obvious. "Keep an open mind," Harshaw advises one-hit wonders in search of a second hit. In 1993, he was talking to a neighbor who needed someone to manufacture equipment for his laser tag company. Harshaw realized a lot of the technology he used in his checklist and passenger briefing systems was applicable to laser tag. And it didn't hurt that Harshaw had once been a defense laser systems specialist.
Harshaw's talk with his neighbor led to a formal meeting with Universal Studios. Although the neighbor's business folded, Harshaw landed a contract with Universal that transformed his slow-crawl company into a fast-moving firm. Heads Up's LaserTrek laser tag systems are now used in theme parks around the world. The company's 1997 sales hit $4 million, and its 30 employees currently split their time between the transportation and entertainment industries.
The Frey brothers took a different approach to expansion. Instead of creating a new service, they found new markets for their existing one. That's the strategy suggested by the Women's Business Training Center's Norington, who believes going in too many directions takes your attention away from improving your product.
The Freys found their new markets a few years ago, after The Washington Times did a story about their care package business. A law firm called, asking if the brothers could make packages for law school students it was hoping to recruit.
Today, Granny's Goodies has five full-time employees, about 25 part-time workers, and expects $1.5 million in sales this year. In addition to college students, the partners provide summer campers and soldiers abroad with customized packages. Especially lucrative are corporations: Granny's Goodies specializes in creating packages for recruiting, law, accounting, real estate and mortgage brokerage firms. If a law clerk is preparing to take the bar exam, for example, his or her firm might send a care package.
"A care package is a classic idea," says Seth. "We just need to educate the public as to [the many different ways to use it]."
Educating potential customers about new uses for your product is key, says Edwards, who explains the three-pronged approach: "Change the age; change when it's used; change where it's used."
How can you find new uses for your product? Edwards recommends asking your customers--the ones who know you well--for suggestions.
Harshaw's company has often sought advice from those who use its products, but because his industry is so technical, customers didn't always understand the blueprints for product ideas. So Heads Up started using computer technology to change its blueprints into 3-D-like photographs that allowed clients to offer suggestions. Heads Up had developed a new skill--computer animation--that came in handy when the company created graphics for a laser tag exhibit at Sea World of Texas.
"One thing I live by, and it's probably my strongest rule, is to grow the company by adding capabilities, as opposed to adding specific products," says Harshaw. "We've found that every time we have the capability to do something, the opportunities make themselves known, and you can respond. But if you don't have the capability, well, you can't do it anyway."
And woe to those companies that try to do it anyway. Says Altman: "The single [biggest] flaw entrepreneurs have is that once you've built your company and have been successful, you think you have the golden touch. But guess what? The odds [aren't any better] the second time around."
Still, if you don't attempt to brave those odds again, you risk remaining a one-hit wonder; somebody else's product or service might make yours obsolete. "Somebody can notice you and copy or emulate you," says Edwards. "That's part of the risk of success."
Contact Sources
Granny's Goodies (800) 888-1636, http://www.grannysgoodies.com
Heads Up Technologies Inc., 2033 Chennault, #100, Carrollton, TX 75006, rharshaw@heads-up.com
Thomas C. Page Center for Entrepreneurship (513) 529-2491 fax: (513) 529-4164
Women's Business Training Center, (619) 239-9282, fax: (619) 239-1158