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Trial by fire Featured

10:02am EDT July 22, 2002

At age 59, Art Lassa was in a position he'd never before been in-he was out of work.

He'd risen through the ranks in management at RCA Service Co. and was later hired by an independent dealer, Tipton Appliance Co. in St. Louis, to set up a service department.

After 14 years there, he and his wife left four grown children, away at college, for Columbus, where Lassa would set up an appliance repair service-contract program for Sun Television & Appliances. He had managed the program for nearly nine years-even hiring a staff to help-when, during a restructuring, Sun executives outsourced his department. He lost his job on his birthday in 1996.

What developed, out of necessity, was the launch of a business-and a crash course in entrepreneurship.

Almost a year and a half later, Lassa's Serv Pro Marketing has its own office space in East Columbus, eight employees, $750,000 in service contract sales-and double-digit profits.

Still, with just one client, Lassa knows it's not necessarily smooth sailing ahead.

Ready or not

Lassa's interest in entrepreneurship started as early as sixth grade, when he and a buddy bought 16 mm films and charged admission every Friday night for the Frank Buck adventure flicks, complete with popcorn, Kool-Aid and music via an old Victrola.

"We even took it one step further and offered reserved seats for the guys who wanted to sit next to their girlfriends," he says.

Then there was his high school home TV repair shop, and the time he put acoustical tile, rugs and a couch in a van so he could offer a carpool service. He also used his own stereo system to provide music for high school parties and events.

At age 59, however, Lassa thought he was beyond those enterprising undertakings.

"I wasn't looking to start my own company. I wanted to do what I did at Sun," he says, referring to his consulting relationship where he sold aftermarket contracts to customers whose warranties or previous service contracts had expired.

He was collecting unemployment-from himself, ironically, since, to gain tax advantages and liability protection, he had incorporated as Arthur G. Lassa Inc. a year before he lost his job at Sun.

When he sent out direct mail pieces to try to find an arrangement similar to the one he had at Sun, however, he found out that was not what the market wanted.

"I received a number of responses, but all more or less said, 'We'd like for you to do our marketing, but we don't want to do it in-house. If you had your own company, we'd consider it,'" Lassa says.

So he answered the call and started a trial run with his first client, Boscov's Department Stores, a privately held retail company based in Reading, Pa.

"I called people who had lost their jobs at Sun," he says, "and working out of my house and their houses, we called Boscov's customers to see what we could do to generate service customers."

The trial was successful. Lassa hired those six former Sun employees to work the account, which included stores in Maryland, Delaware, New Jersey, New York and Pennsylvania.

Doug Brice, director of service at Boscov's, says his business grew 46 percent in 1997, the first year he gave Lassa the contract. By the fall of 1998, it had increased nearly another 90 percent.

In addition, Brice says he knows Lassa's employees are treating clients right, because Boscov's customers don't complain or ask him why they're getting calls.

"When we don't get those issues coming back to us, we know the people talking to our customers are doing a good job and being very thorough," Brice says.

Learning on the fly

Although he found success with one client, Lassa quickly realized that to continue his business, he'd need some outside expertise.

He had taken an $18,000 loan from a life insurance policy to buy a computer system and office equipment and pay the first couple months' rent for office space. But within a month, he had accounts receivable problems.

"The normal response time in retail is 30 to 60 days, and I didn't realize that," he says.

Although he had some money set aside for unexpected problems, Lassa found it wasn't enough. He used his entire $4,000 emergency fund, borrowed another $5,000, and laid off three people for a week. Then he talked to Boscov's about the problem, and executives agreed to help.

"They realize we're a small company and we don't have the deep pockets that the big guys do, and they were willing to make our bills priority. They pay within two to three weeks. In that industry, that's not the norm," he says.

Lassa's also learned to focus on his strength-marketing the contracts-and entrust other parts of his business to experts. He hired a computer consultant to write software programs, an accounting firm to handle payroll and tax reports, his former secretary at Sun to be his office manager, and another employee to supervise the telemarketers.

"That frees me up to make the business grow and find new clients," he says.

That, in fact, is his most pressing task at hand.

Seeking a comfort level

Lassa's counting on what he sees as a niche in the business to put his company on solid footing.

He markets appliance repair contracts to customers of small companies that provide their own service. Some of his competitors, in contrast, are national companies such as VAC Service Corp. in Middletown, N.Y., and Independent Dealer Services in St. Louis who provide the whole ball of wax, including the servicing.

To find his own client base, he sent direct mail pieces to the top 100 television and appliance retailers across the country. He's received about a dozen inquiries-but only the one customer.

"That's scary," Lassa says of putting all his eggs in Boscov's basket. "It would make me feel much more relaxed to have two or three clients of that size."

He knows he'd have "a mad scramble" if he lost Boscov's, since that's his only customer. And it's not just his company and his employees at risk; he subleases space to Westerville's Truform Graphics Inc. for its direct mail business.

Lassa has done some test marketing for a company in North Carolina he declines to name, as well as for Philips Magnavox, but he's still awaiting their responses.

Lassa has also attracted interest from an unexpected prospect: Sun TV, which is again in the midst of a major reorganization.

Meanwhile, he's planning phone follow-ups to his top prospect list and considering additional mailings to companies beyond the 100 he already targeted.

Once Serv Pro generates contract sales of $2 million to $3 million-more than three times his company's current level-he'll look at jumping other hurdles.

For example, he's not yet able to offer employee benefits. To compensate, he's incorporated a profit sharing program for telemarketers.

For now, he'll be content if he can net one or two more clients and grow his company to 20 employees.

"I really don't want to get much larger than that," he says. "And three, four, five years from now, depending on how the company is going, I most likely would relocate it back to St. Louis, so I could be with family and grandkids. But not now."