Money Well Spent
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Funds are typically tight, so it may seem like the best idea to freeze spending even when some extra dough comes your way. Not necessarily. Here's a look at three businesses that made small but strategic investments that paid off in big ways.
Name: Sammy Grant
Gig: Founder, SG Financial Advisors
Stats: An Atlanta-based financial advisory firm founded in 2005; four employees
What for: A second monitor for each computer and a high-performance scanner
Rationale: Grant and his team decided to make the move to a paperless office, and to do so required having multiple files open simultaneously on their computers. "We would need to have a trading application and a client's file open," Grant says. "There was no way to do that with just one screen, and we didn't want to have paper files all over the desk." Within a few months, the firm was able to downsize its space to exclude room for housing paper files. The reduction in rent paid for the monitors within one month.
Payoff: More than $12,000 per year in rent savings, plus minor savings on computer ink and paper. Grant also estimates a 20-percent increase in productivity per employee.
Name: Marla Lander, M.D.
Gig: Founder, Women Supporting Women
Stats: A sports bra manufacturer based in Rancho Mirage, Calif., founded in 2008; two employees
What for: Public relations support, plus a pay-for-performance deal for marketing help
Rationale: Operating on a shoestring marketing budget, Lander knew that public relations would be an effective way to get the word out and build credibility for her new concept in sports bras: "Dr. Marla's Wellness Bra," which Lander, a board-certified radiologist specializing in breast imaging, designed to correct some of the deficiencies in traditional sports bras. Working with Octagon Strategy Group in New York City on PR and the Brainstorm Group in Toronto on packaging and marketing, Women Supporting Women got widespread publicity for the design and the company's commitment to donating part of its profits to breast cancer research. That helped impress mega-retailer JCPenney, which had limited online distribution with the company, to put its shoulder behind the brand, even featuring it on the front page of one of its circulars.
Payoff: Lander is mum about exact numbers, but she credits visible PR and marketing as the catalyst behind the expanded JCPenney deal, which has spiked sales by as much as 400 percent and led to opportunities with other retailers in the U.S. and Canada.
Name: David Carnes
Gig: Founder, ArcStone Technologies
Stats: A Minneapolis-based web development and hosting consulting company founded in 1996; 16 employees
What for: ArcStone acquired the assets and customers of a web-design and -hosting company that was going out of business and spent approximately 300 hours to get the sites and servers virus-free
Rationale: When a mutual colleague was contacted by a failing web-hosting firm to see whether she knew anyone who would be interested in buying the distressed company's assets, she thought of David Carnes. Although the existing servers and clients' sites were "riddled with viruses," he says, his team's fast cleanup work allowed ArcStone to keep approximately 80 percent of the customers. As part of the deal, he also was able to score two servers that had never been used.
Payoff: Around $345,000 to date. The web-hosting accounts have brought in approximately $3,000 per month for the past four years, and that pool of prospects has led to approximately $200,000 in consulting projects. Carnes now keeps his eye out for other distressed web-hosting and -design companies.