The Real Deal: Highs and Lows of Entrepreneurship

What's it like to be embezzled, expand internationally, or sell your product to Target? Get the inside scoop.

By Geoff Williams

Opinions expressed by Entrepreneur contributors are their own.

Admit it--you're curious. Like the irresistible urge to gawkat tabloid TV or read a gossipy celebrity story in Peoplemagazine, you can't get enough intimate details of what otherpeople have gone through. As an entrepreneur, you've wondered,What would it be like to expand internationally or surpass yourcompetition? You've dreamed about fighting back againstgovernment regulation or seeing your product appear on theToday show. And though you have no desire to experience it,you want to know how an entrepreneur survived an embezzlementscandal that cost him over $250,000. You even want to learn theheartbreaking details of the small-business owner who failed, butthen dusted himself off and built another business.

Face it, you want to hear how other entrepreneurs have weatheredstorms, overcome obstacles or surpassed all expectations tocatapult their businesses to the next level. Read on to share someonce-in-a-lifetime experiences.

What It's Really Like to. . . Get a Product IntoTarget

"You can't get a better feeling than when you get yourfirst customer," says Joe Heron, 43, CEO of theMinneapolis-based Ardea Beverage Co., which manufactures airforceNutriSoda, ahealthy soda pop packed with amino acids and B vitamins and lackingthe usual ingredients like sugar, aspartame, sodium and caffeine.In Heron's case, the feeling he had after landing his firstcustomer was pure euphoria-because his first client was Target.

Heron had his eye on Target early on. He found a qualified andwell-connected food broker, FMN Moscoe, which started negotiationswith Target in May 2003, just months after Heron started hisbusiness. In April 2004, Target agreed to a slow roll-out, sellingthe sodas in 100 stores around the country. Today, they're in365 stores and counting.

During negotiations, Heron attended meetings, filled outcountless forms, found and bought product insurance, and built aninfrastructure so that if Target said yes, Ardea could accommodatethe retail giant. "To get into that scale of a company, theelation is so high because it means you can conquer anything,"says Heron, whose sodas are also sold in specialty stores and 21airports and are expected to capture over $3 million in sales in2005. "There's nothing more exciting than watchingsomebody go to a shelf and buy your product."

So Heron really went into stores and waited around to see acustomer pick up his soda? "I still do."--GeoffWilliams

. . . Lose a Business Partner

When a business partner dies, it can be as devastating as losinga family member. It's doubly painful when your partner is afamily member.

Kirsten Judd was 33 when her husband, Dr. Richard Irons, died in2002 at age 52. On Valentine's Day of 2000, they had foundedtheir for-profit professional association, Professional RenewalCenter, which offers behavioral health services andconsultations for professionals trying to conquer work-relatedchallenges such as career burnout, substance abuse and sexualmisconduct. They also created PRC Management Co. LLC, whichprovided the management and operations to the clinic. Irons workedon all things medical, while Judd took care of management.

When Irons died unexpectedly, Judd had little time to grieve.She had two young sons and 10 employees depending on her. Butburying herself in her work was difficult because, as Judd recalls,"There was a definite void in the organization, and in lookingback at the stages of what an organization goes through in responseto a disaster or a major trauma like a death, it's very similarto the stages of grief that a person goes through."

Still, Judd did lose herself in her work, trying to keep thingstogether and finding a new clinical director, Dr. Scott Stacy, toreplace her husband. "I had a job to do, and what that did wasprolong my reaction or grief, while I quote-unquote'crashed,'" says Judd. "It was probably a yearafter he passed away before I realized I also needed to starttaking care of myself."

Judd's company lost revenue for a while, but in 2005it's projected to bring in $1.25 million, the same levelreached the year Irons died. "We're at a stage now of anacceptance of change and a realization that a fusion has takenplace," says Judd. "I use the term 'fusion' for areason. If a fracture heals properly, that point of fusion is evenstronger than the rest of the bone."--G.W.

What It's Really Like to . . .

. . . Fail

Scott Hildula knew his business was in trouble when his wifesuggested, "You might want to rethink what you're doingfor a living."

For the previous eight years, Hildula, now 43, had made a livingdoing what he loved: building homes. He'd started SanFrancisco-based Rose & Daisy Renovating Co. with just himselfand his station wagon, eventually growing to 12 employees. Then in1999, he bid too low on an old Victorian home in San Francisco andbecame ensnared in a money pit. Before he knew it, he had to layoff his entire work force and struggled for months afterward tofinish renovating the house by himself-knowing that every day hewas losing money. That project marked the end of Rose & DaisyRenovating Co.

Hildula took his wife's advice and landed a PR gig duringthe dotcom boom in 1999. He enjoyed the work but hated beingemployed by somebody else. "I really lost my edge," saysHildula. "I felt like a neutered house cat in the corporateenvironment."

Three years later, he opened his own PR boutique, Red UmbrellaGroup. The San Francisco company now has three full-timeemployees, five subcontractors and projections nearing $800,000 for2005. Today, Hildula doesn't mind looking back. "I learneda lot," he says. "Once I [finished that house], I wasreally proud of myself that I sucked it up and pulled through. Theexperience I gained back then is tremendously helpfulnow."--G.W.

. . . Spin Off Your Company

You'd think Tori Swaim would have been thrilled that hersuccess allowed her to spin off a company from her baby productsbusiness, New Arrivals Inc. You'd be wrong.

"It was very scary. Just because we were successful with anupscale product line in upscale boutiques, we weren't sure howwe 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 tothe high-end market, Swaim's spinoff, My Baby Sam Inc., sellsits baby products in Babies "R" Us, J.C. Penney and othermass-market retailers. Swaim's experience with infant productshelped her get noticed by the retail giants, but My Baby Sam stillhad to be aggressive and creative to get buyers to look its way."The buyers are pummeled with calls from people wanting to getinto these stores," says Swaim. The effort paid off: My BabySam's 2005 sales are expected to hit $1.5 million.

"It was a huge learning process," says Swaim, whonotes that she let one large retailer offer too much input on howseveral products should be designed. They didn't sell well, sofrom now on, says Swaim, "We have to love it to go intoproduction 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 spontaneousdecision to grace New York City with a second Find Outlet store.Their first boutique opened in 1999 in Chelsea and featured qualityoutlet merchandise. It had been open a year when a friend closedher store in Nolita and offered them the lease. They jumped at theopportunity.

Little did they know of the growing pains to come. The challengeof operating two locations and having to rely on others hit homewhen employees would fail to show up to open one of the stores.Technology posed another challenge. Rodriguez and deGranieroperated their first store using a computer equipped with basicsoftware. For the second store, they incorporated a multi-unitpoint-of-sale program and invested in more sophisticated technologyand software. "Once we opened the second location, we decidedto restructure the company to run as a real business, rather than amom-and-pop shop," says Rodriguez.

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

. . . Expand Internationally

In March 2004, Rich Mak, 33, and his wife boarded a plane toHong Kong with no return tickets. Mak was setting out to openCrown MarketingGroup's first international office. He wasn't certainwhat the future held, but he was sure of one thing: The time ittook his Chattanooga, Tennessee-based design and marketing companyto develop a product could be cut by three times if Mak was closerto Chinese manufacturers.

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

The partners quickly learned the importance of finding a goodaccountant and asking lots of questions. By doing so, they haveabsorbed the ins and outs of establishing an overseas business, andproject 2005 sales of $2.5 million. Their most important lesson hasbeen in mastering the art of patience. Says Sieg, "Ultimately,this sort of expansion has to be viewed as a growth ofinfrastructure to lend long-term stability and value, notshort-term profits."--S.W.

What It's Really Like to. . .

. . . Surpass Your Competition

When the SARS epidemic hit in early 2003, Jeremy Shepherd,founder of online pearl retailer, was suddenly inundated withe-mails, faxes and phone calls from Asian pearl farmers offeringgreat prices on shipped pearls. Shepherd, who traveled to Asiamonthly to purchase pearls, suspected--correctly--that the priceswere due to the SARS scare and travel-reluctant pearl buyers. SARSdid give Shepherd pause, but ultimately, he decided the deepdiscounts were worth the risk: "It was a chance I couldn'tpass up."

Shepherd, 31, speaks Mandarin and knew pearl farmers from hisbuying trips, so he felt completely comfortable venturing intosouthern China, where SARS had hit hardest. "There was nocompetition at that point," Shepherd recounts. "Not onlydid I get great prices, but I was able to secure future harvests aswell." could now offer pearls at prices farbelow its competitors'.

Shepherd returned to southern China on a regular basis and sawno competitors there until the following fall. Because he developeddeeper relationships and negotiated well with the farmers duringthat time, Shepherd maintains he still pays "astronomicallydifferent" prices than his competitors. With no advertising, experienced a 1,000 percent increase in sales for2004 and projects 2005 sales of over $7 million.--April Y.Pennington

. . . Get on the Today Show

Andy Schamisso, founder of Inko's WhiteIced Tea, sent cases of tea to various shows and newspapers inthe New York City area in the spring of 2003 to attract attentionto his product. But he was in for a surprise when, with no priornotification, the Today show aired a segment in August 2003on white tea. Lo and behold, the Inko's bottle was among thewhite tea products displayed while their health benefits weretouted on-air. Instantly, phone calls from around the countryflooded Inko's lines, and e-mails poured in for a weekinquiring about the tea, all saying they had seen the Todayshow segment. Schamisso, 42, was stunned. "We got a tremendousresponse without our name being mentioned!" he says.

Offering the ready-to-drink white tea since February 2003, whenthere were few competitors, Schamisso projects 2005 sales of $2.5million and now faces heavy competition. If he hadn't taken themarketing gamble and sent his product to the Today show, hisbusiness might never have taken off. He credits the show withcreating a broader awareness of his New York City-based company."It helped our expansion and paved the way to where we aretoday."--A.P.

. . . Get Embezzled

Jay Myers was reading an article about embezzlement in April2003 when his antennae went up. He wondered, Could an employee dothat to my company? He looked into the payroll records of Interactive SolutionsInc., the Memphis-based videoconferencing/audiovisual systemsintegration company he founded in 1996, to investigate his gutfeeling. "I thought about the fact that we might have aweakness," recalls Myers, 48. He was chilled to the bone whenhe saw what he'd feared: His trusted accounting manager hadbeen paying herself unauthorized commissions, almost since the dayshe started.

Outraged, Myers called the police and a friend who was a fraudinvestigator. They discovered the employee had embezzled a total of$255,000. While building a case against her, they learned thatshe'd stolen over $2 million from other companies in the past.The ordeal lasted nearly a year while she awaited trial, recallsMyers. "It was driving me crazy," he says. "I wasable to convince a federal judge after putting all her other theftstogether and testifying about how badly she hurt my business."The employee was sentenced to eight years in prison in 2004.

Even with the embezzler incarcerated, Myers admits his abilityto trust will never be the same. He now keeps payroll records underlock and key and looks over every paycheck himself. And though hereceived some restitution from insurance and his bank, it was hisforthright attitude with his other employees about the situationthat inspired them to double the company's business in 2004-tothe tune of over $10 million in sales.--Nichole L.Torres

. . . Lobby for Small Business

Sandra Abalos does it all: She runs her accounting servicesfirm, Abalos& Associates, out of Phoenix and lobbies in Washington, DC,as an advocate for small business. Starting as an accountant in1978, Abalos became a partner in her accounting firm in 1981 andtook over in 1988 after her partner retired. Though she lovedaccounting, she hated the 1986 Tax Reform Act, which she believedunfairly penalized entrepreneurs.

Her other cause has been codifying independent contractorclassification so businesses won't incur hefty penalties formisclassifying an employee. "I was so angry, and that'swhat got me interested in public policy," says Abalos.

She's since sat on numerous committees, most notably a 1995conference on small business with then-President Clinton-all whilebuilding her business to over $1 million in sales. Abalos, 48,says, "If you come forward, not complaining but with asolution, [the government] will listen."--N.L.T.

April Y. Pennington, Nichole L. Torres and Sara Wilson arestaff writers for Entrepreneur magazine. Geoff Williams is awriter in Loveland, Ohio.

Geoff Williams

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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