Crash Course

You've imagined being successful since you were a little kid. You've dreamt about it, drooled over it and desired it. But are you ready for success, especially if it drops in all at once? If you aren't thinking beyond those initial moments of glory, pucker up and practice saying "Has-been."

See Dick open a dot.com company. See Jane start a hamburger chain. See the dollars flow into Dick's Internet enterprise. Invest, Dick, invest! See the customers flow into Jane's hamburger chain. Grill, Jane, grill! Watch Dick's stock options skyrocket. Watch Jane open restaurants in Boise and Guam in the same week. See Dick and Jane become suddenly successful--very, very quickly.

Sometimes, success is easy. It was for Dick and Jane. Their books were an instant success for textbook publishing company Scott, Foresman & Co. (now Addison Wesley Longman Inc.) in 1930. And they've enjoyed longevity. By the time the last Dick and Jane story was written, it was 1965, and their books had reached 85 million boys and girls. The books would continue to be sold until 1970 and read beyond that.

Geoff Williams is a reporter for The Cincinnati Post and a frequent contributor to Entrepreneur. Reading about Dick and Jane as a child obviously affected him.

Not So Fast

Entrepreneurial success can also be easy. It's reacting to that success that isn't always simple. If you don't react in the right way, success can overwhelm, control and humiliate you. It can happen to the biggest of companies, like Planet Hollywood, which, after going $250 million in the hole, had to declare bankruptcy and restructure last year. It had expanded too quickly, Robert Earl, the company's CEO and co-founder, told the press.

Success can also overwhelm even the smallest of companies. Just ask Bill Edlebeck of Chicago. The 35-year-old owns The Heritage Bed & Breakfast Registry (think of it as a "front desk" for bed and breakfasts, says Edlebeck); after 12 years of growing at 33 percent a year, the oil started gushing. Because in 1998, Edlebeck did what many entrepreneurs were doing at the time: He established a Web presence (http://www.heritageregistry.com). After allying himself with IBM HomePage Creator, the phone started ringing. And ringing. And ringing.

Edlebeck remembers the turnaround vividly. He had made plans for lunch with a friend one morning, and by the time lunch came around, he couldn't leave. The phone had been ringing steadily all morning. Usually, he was lucky to receive 10 calls and make one, maybe two, reservations in a day. But about 50 calls had come in, and he'd made five reservations, all before lunch.

The phone kept ringing the next day. And the next. Edlebeck was running the business on his own, and life had been moving along no faster than the plots of those Dick and Jane books. But now...

"I was afraid of my own office," remembers Edlebeck, who soon realized he wasn't equipped for what was about to happen: In 1996, The Heritage Bed & Breakfast Registry's sales were $73,000. In April 1998, everything started to change, and Edlebeck's company made more than $176,000 that year. His 1999 figures, estimated at press time, topped $205,000. Sounds good now, but back in April 1998, his sudden success was quickly becoming a nightmare.

"I desperately needed new phone lines, phones, computers, a LAN and a more efficient way of running the office," recalls Edlebeck, who has since hired two employees to help keep up with the onslaught. "Another glitch was that the sudden jump in volume sent up a red flag with our credit card processor. After years of the kind of slow, steady growth characteristic of a homebased business, they wondered why our volume had jumped and, fearing the worst, stopped making deposits into our account. They never told us this, though, so I couldn't figure out why we were making more money than we ever had and yet had no money in our account to cover the checks that we were paying to hosts."

Edlebeck's crime? Not preparing for the day he would become very successful. As an entrepreneur who once went through similar problems and now delivers seminars on dealing with sudden success, Russ Holdstein, president of Growth Strategies, says, "The real problem is when you have a business that hasn't evolved or changed. To stay successful, you must change to keep growing and adapting."

Success Can Be A Bully

"It took me 20 years to make an overnight success." Eddie Cantor, the vaudevillian, said this in 1963, long after his red-hot career had cooled. But it could apply to almost anyone who wants to make a name for himself or herself. It took Holdstein about four years, and when his overnight success came, it almost destroyed him.

In 1975, Holdstein started Payday, a then-revolutionary company that provided payroll services to small businesses out of his San Francisco apartment. By 1979, Holdstein's company had swelled to several dozen employees and was pulling in about $4 million. At the time, Payday was considered one of the fastest-growing companies in the country. But that's when disaster struck.

"We couldn't keep up with the growth and nearly crashed," Holdstein, now 54, says. "I wound up firing my two VPs at the same time--my biggest management mistake. It took two years, and cost me probably $2 million, to correct my mistakes." About the same time the vice presidents were let go, Holdstein's CFO walked in one day with important news.

"It was the only time in my life when somebody said, `Sit down, I've got to tell you something,'" recalls Holdstein. The employees at Payday were organizing a union.

It was Holdstein's last chance to turn things around--and he rose to the occasion, giving the speech of his life, convincing his employees that unionizing wasn't the way to go and bringing his firm back from the brink. He sold his company, still successful, a few years ago and now runs Growth Strategies, a Kentfield, California, firm devoted to teaching entrepreneurs the lessons he's learned:

Lesson No. 1: Stay aware, entrepreneur, stay aware! "I was too busy trying to keep the wheels on. Nobody had any idea what the company was about," says Holdstein. So he advises that you should include a representative from the trenches in your top-level management meetings. "Bring in somebody from the mailroom," he says. "Talk about your company together. You'll bring in their perspectives, and it will add a lot of credibility to the process."

Lesson No. 2: Strategize, entrepreneur, strategize! "What I find typical," says Holdstein, "is that entrepreneurs are great problem-solvers and great in a crisis, but they aren't very good planners."

Lesson No. 3: Adapt, entrepreneur, adapt! (Hmmm, we're beginning to see why Dick and Jane lost some of their appeal.) "Most entrepreneurs do what I did," notes Holdstein. "They keep doing what they've been doing until they hit a wall, and only then do they make changes."

You need to prepare for a successful future and realize that when it arrives, your company will not operate the way it once did, says Holdstein, adding that he's made it his life's crusade to help entrepreneurs plan for success. And he seems sincere when he says that entrepreneurs can write him at russ@holdstein.com if they want advice (and presumably not just a consulting sales pitch). And what would some of that advice be? "If you're doing what you did in the past, then you're going to run into trouble. You've got to be fundamentally prepared to redesign the machine while you're experiencing a lot of growth."

And keep watch on the world outside, warns Holdstein. "A lot of entrepreneurs get stuck contemplating their own navel--wondering how they can do things faster, easier and cheaper," he says. "But if you're just turning the crank, trying to be successful, you're going to lose sight of what's going on outside, and you need to have a real understanding of the total environment that the company operates in."

A Southern Success

It was the chicken and dumplings that ultimately gave Marlene Wyatt her sudden success. Wyatt's two little boys loved them--in fact, they were all the boys wanted to eat. So Wyatt made them. But the process of creating this edible opus from scratch was leaving her kitchen a dough- and pastry-covered mess.

Ironically, Wyatt had grown up without a lot of dough--her family was poor. Wyatt, now 43, grew up with 11 siblings on a 40-acre self-sufficient farm, where the family raised cattle, chickens and hogs and had an extensive garden. They made do, but they were never rich and they had to work hard. Which might explain why Wyatt, instead of buying something to fix her doughy-mess problem, decided to do something about it herself. In the late 1980s, Wyatt made what is now called a No Mess Dough Disc, a contraption that allows dough and pastry to be rolled and kneaded without sticking to the countertop and making a mess.

Fast-forward a holiday or two to when Syble Whitlock, Wyatt's sister, strolled into Wyatt's kitchen and said, "Where'd you get that?" And minutes later: "I think we could sell these things."

In 1990, Wyatt, her two sisters (Whitlock and Pauline Dillard) and her niece, Mona Elliott, began Wood Family Enterprises, dedicated to selling the No Mess Dough Disc. They began selling the disks at crafts fairs and in local crafts shops, but nobody quit their day jobs. And then in 1995, Wyatt managed to get her product on the cable shopping channel QVC.

In five and a half minutes, Wyatt sold 2,494 No Mess Dough Discs--roughly the quantity the partners had previously sold in an entire year. Later that week, she received an order from QVC for 6,000 of the disks; an order for 12,000 came soon after that. And the orders kept flooding in. Three months later, when Wood Family Enterprises was pulling in 20,000 orders per month from QVC, and $67,000 in start-up debts had been paid off, Wyatt dissolved her day-care center to concentrate on selling the Dough Disc. This past year, Pyatt, Arkansas-based Wood Family Enterprises' sales topped $2 million. The company now also sells cookbooks and other culinary items, including gourmet dough mixes.

How does Wood Family Enterprises keep up with its orders? The company assembles and ships its products to its customers, but vendors do their own manufacturing. Wyatt says her main secret for success has been to never accept more orders than the company can fill. "Never agree to do more than you know you're capable of doing," she says. "That will ruin you faster than anything."

In the beginning, Wyatt had half a dozen ideas for what she wanted to sell to the public, but she only introduced one item at a time--"and each time we made profits, we turned a big part of those profits into a new product," she says.

It's also important for you to keep things in perspective when the success comes rushing in. "Don't become too full of yourself," says Wyatt. "I think if I had, I would have been knocked down fast."

Conversely, Edlebeck warns not to be insecure when your business suddenly takes an upswing. "Success is always something you read about somebody else achieving, and when it happens to you, you may mistake it for something else, like not being prepared or not knowing enough," says Edlebeck, who plans to take his bed and breakfast registry to other cities, like New York City and Los Angeles. "It wasn't until I started looking at our growth as the culmination of everything I'd been working for, as opposed to not being ready for all the new business, that I was able to start moving forward again."

And perhaps the best reward for managing success has nothing to do with money or business. Wyatt enjoys having the financial freedom to help out her family, such as when she was able to fly family members out to visit her ailing mother and when she was able to offer financial assistance to a seriously ill older sister. "That never could have happened without Wood Family Enterprises," says Wyatt, who credits her company's success not to intelligence but to diligent work and a watchful eye from above.

What Now?

Sudden success won't just affect your company; it's bound to affect you. You'll have some questions to answer, sooner rather than later. How many extra hours should you work? What sort of car will you buy with that new wad of cash?

Jeff Kennedy, 41, is the president and CFO of Sight & Sound Software, a Portland, Oregon, company that designs Web technology for the travel industry. His biggest clients are Wal-Mart and American Airlines. Sight & Sound started in 1994 and made $20,000 that first year. By 1995, Kennedy and his partner, Mark Tilden, 44, were bringing in $100,000--not the pot of gold at the end of the rainbow, but Kennedy notes he could start buying groceries regularly again. In 1996, American Airlines hired Kennedy and Tilden's company "to devise a disk-based direct-dial product that allowed American's customers to make their own air, car and hotel reservations."

That may be Greek to all of us, but this won't be: In 1996, the partners made about $500,000, a 400 percent jump.

American Airlines liked Sight & Sound's product so much, it asked Kennedy and Tilden to create the booking engine for its Web site. "When we heard we had the contract to build the booking engine for http://www.aa.com, Mark and I just sat there for a minute, stunned," says Kennedy. "We knew it was huge, that it would change everything. We looked at each other and grinned. I leaned a little too far back in my surplus office chair and fell over. All I could think about was a good, stiff drink."

Sight & Sound has since hired 25 employees and has experienced an 865 percent growth rate over the past five years, bringing in $4 million this past year. Which, among other things, means Kennedy has had to put off taking a European vacation with his wife. In fact, he says, "it's very difficult for me to justify taking more than a week off."

But Kennedy insists that even the busiest and most successful entrepreneurs need to take care of themselves. So he takes a lot of three-day weekends and two-day getaways, even if it's just to a Holiday Inn in downtown Portland.

Sudden success means your own bank account will likely swell, too, notes Rob Elliott, senior executive vice president of Bessemer Trust, a New York City wealth management firm. And his company, of course, would only be too happy to help you with your finances. But Elliott makes a good point: "You do have a responsibility to think very seriously about your wealth and how it will impact you, your spouse, your children and your society." We suggest you think about that while driving your new Lexus.

Contact Sources

Bessemer Trust, (212) 708-1900, elliot@bessemer.com

Sight & Sound Software, http://www.sight-n-sound.com

Wood Family Enterprises, (800) 456-0851