Although building a business around the impulse buyer seems risky, it was a successful strategy, and today, Thrifty Florist is one of the largest florists in Michigan.
About 80 percent of Rea's customers are impulse buyers -- people passing by who see the store, decide to stop in and buy flowers on a whim. The other 20 percent place orders via phone, catalog or the Internet.
"Most florists are the opposite," says Rea. "They only receive 20 percent impulse buyers."
Rea's business model differs from that of his competitors in more ways than just his clientele. When he opened his first three stores, he was able to bring in flowers by the truckload and cut out the middleman.
Growers ship flowers directly to his distribution facility and the flowers are transported to Thrifty Florist shops that same day or, at the latest, the following day. That guarantees the flowers are fresh, and without a middleman, lowers the cost to the consumers.
As Thrifty Florist grows -- the company employs more than 150 people at 14 locations -- Rea is proving his business model works just as well for a larger company as it did when Thrifty Florist was smaller.
Smart Business spoke with Rea about his unique business model and how he has made Thrifty Florist a success.
How does your business model differ from that of your competitors?
We are located on major intersections throughout the city in freestanding buildings. We attract a substantial amount of impulse buyers.
Eighty percent of our business is walk-in, which is not typical of traditional retail florists. We also spend a tremendous amount of time on merchandising.
How do you attract impulse buyers?
Through our locations and displays. Our retail locations allow customers to come in and look, as opposed to shop through a catalog. We do have catalogs, but people generally like to come in and look.
Why don't you hire people with industry experience?
We've always been more successful when we hire people who have experience outside the industry because we do a lot of things that differ from typical florists.
We work in a fast-paced environment. In that sense, it is a little bit of a culture shock for people who have been in the industry for a while and worked for other florists, although we do have some employees who have owned shops before and have industry experience that are successful employees in our shops.
We train people on how to use our POS system, which we run our business on. There's also specific software we use that helps us track our orders and sales, as well as monitor our customers.
We also give our employees telephone training, which helps them to take sales orders over the phone. We give employees an overview of how the store operates, with guidelines on the merchandising look and feel for the store.
Once an employee has been with us, we also offer design classes on how to make arrangements, corsages, wedding arrangements, etc. Over time, they receive fairly extensive training on running a flower shop.
How has that helped you to better run your business?
Training is a key part of our business because we do things a little bit differently than other florists. In terms of providing our customers with great service, it's critical that our employees understand how our business works and our merchandise.
It is also critical that they have enough knowledge to have the ability to offer our clients expert advice. Customers appreciate that. I think a critical component of a company's success is spending substantial time and effort on training.
How are you able to keep prices lower than your competitors?
Fifteen years ago, I made a better effort to understand the business and where these flowers come from. Over the years, I have established many relationships with different growers.
Flowers are shipped directly to us from whatever part of the world they are grown -- they are not going through a middleman or sitting in a wholesale house facility. The flowers are actually grown and cut specifically for us.
From the distribution standpoint, we can cut anywhere from two to four days.
As you continue to grow and open new stores, is it still feasible for you to cut out the middleman?
The key to that is having a significant volume. When you are buying direct from growers, it is a lot more difficult to buy direct if you don't have a large volume.
Actually, the more stores we have, (the more that) enhances our ability to outsource products.
How do you cater to your customers in a way that makes you stand out from the competition?
The key to our business is we provide a tremendous amount of convenience for our customers. They can get in and out of our stores within a few minutes. They don't have to park in a big parking lot and walk a couple hundred yards to get into our store.
Identities and prices for all products are clearly displayed on each item. Our staff has decades of experience in the floral industry. All of our Thrifty Florist representatives can provide knowledgeable information about all of our products.
We also provide a wide range of services at reasonable prices. We do weddings and parties and events. Many of our customers shop at our store a couple times a week.
HOW TO REACH: Thrifty Florist, (888) THRIFTY or www.thriftyflorist.com
Initially, the company provided on-site support services, sending technicians into the field to fix problems. But as time went by, technologies were developed that allowed Netfor technicians to fix problems using remote control technology.
From there, the company grew into a full-service help desk that takes calls from approximately 30,000 end users around the country. And as Netfor has continued to come out with new technologies, it has grown in size and popularity. Revenue for 2003 was $1.6 million, growing to $2.5 million in 2004.
Smart Business talked to Medley about Netfor’s fast growth and rapidly changing technology.
What obstacles did you have to overcome as Netfor grew?
Cash. We’ve never borrowed any money. Early on, I was able to leverage credit cards. We’ve really shied away from going to investors it’s a wholly owned company.
We haven’t gone after venture capital, and we haven’t borrowed money from banks. We’ve grown on our own profits. We could probably have 80 employees instead of 34 if we would have sold out to somebody.
To what do you attribute your company’s fast growth?
In the late ’90s, a lot of companies tended to be product-focused, selling only certain products, like Microsoft. We made a commitment around 1998 to become more client-centric. That basically meant we started taking the interest of the client and what they wanted into account, rather than what we thought they wanted.
It was really about listening. We parlayed that into developing products around what a lot of clients wanted. We developed a customer satisfaction tool to track the satisfaction of our clients.
We also developed a piece of software that is Web-based, that allows enterprises like our clients, as well as our own technicians, to track all of the issues through a single interface. Everyone can work on issues as needed and can assign them from one person to another.
Then the managers and owners of the companies can report on all these issues. They can find out where the problems are in the enterprise and check which technicians are fixing the most problems and which are fixing the least.
How do you plan to continue your company’s growth?
We continue to develop and implement the latest technology for our clients so that they can utilize everything on the cutting-edge that’s available to them when it comes to support and installation of their computers. We’ve partnered with Cognos, which is a business intelligence software company, so that we can elevate the quality of the reports that we give our clients.
One of the vertical markets that we work in is K through 12. A lot of the employees that we bring on here are high school graduates rather than college graduates.
We started working with the Department of Education in Indiana to help write the curriculum so that kids coming out of high school are better educated and have more hands-on experience when it comes to technology. Then they are more employable when they come to companies like mine.
How do you train new employees?
We go through the basic certification process. But, for the most part, because we are customer-focused, we go through a process with our new clients where we go on-site with them to their enterprises and learn their technologies. Not specifically how to fix one piece of hardware, but how they use it.
That way, when they call into our service desk, we know what they are using it for, and then we can better service them.
We also have a great knowledge base where we capture information about a particular issue so that it can be used the next time that issue pops up.
How do you differentiate your company from the competition?
We are unique and really don’t know anyone else like us out there. We both own the software that we use and provide the resources or the people to actually do the service.
Most software companies sell to help desk companies who own the people. Most help desk companies don’t write their own software. They buy it from someone else.
We’re unique in that we write our software. Our customers see a lot of value in that and a lot of customization opportunities. If they need a certain button there or certain feature there, they know they can get it with us, whereas if they are using a different piece of software, we all know how easy it is to call up Microsoft and ask them to change their software to make it easier to use.
What are your growth goals for the future?
We feel like 57 percent is a good number, so we’re trying to maintain 50 percent to 60 percent growth. Recently, we started testing the waters out in other states. One of our growth goals is to grow our partners program into other states. That is something that I am working intently on.
Those are our two focuses right now, as well as continuing the development of our own technology.
HOW TO REACH: Netfor, (877) 638-3674 or http://www.netfor.com
Benedict got her first peek at the moving industry after she gave birth to her son and found a job that offered flexible hours at University Moving & Storage. Before long, she was working full time for the company.
“I just fell in love with the industry,” she says.
Benedict worked her way up from bookkeeper and in 1986, when she was vice president general manager, she decided to purchase the company. Since then, the company has continued to grow and prosper under her leadership.
Smart Business talked with Benedict about the challenges of running a company and the importance of not giving up.
What challenges did you face when you bought University Moving & Storage?
All of them. Initially, there were huge amounts of financial issues. There were tax issues and supplier issues and van line industry issues. I also think it was a huge challenge going from an employee to an entrepreneur.
Another challenge was going from being invisible as a very small agency to adapting to the double-digit growth that we had from the first year (I took over) to the next eight years.
Also, it is definitely a male-dominated industry. It took a while even to get (my) first contract put together, because this particular van line and this particular industry had never really worked with a woman coming in, not having been an owner, and all of a sudden wanting to purchase it.
What are your business strategies?
The main ones are a common-sense direction that is hands on. Enthusiasm has to stay high. People are always surprised at how much they can grow. Then they don’t realize how much they’re growing as they’re doing it.
Sometimes, it’s seen as a negative thing for people to have to grow. Then they realize that is where the true benefits of having to work come from it’s when you can really enjoy a sense of accomplishment.
I’m hugely into the lifelong customer aspect. I expect that everybody takes responsibility. We have a great group of people. There’s a huge shoulder-to-shoulder type of responsibility in terms of that.
How have you been so successful?
Pretty much all of the above, and never giving up. And I don’t just mean me never giving up, but not allowing other people to give up.
People don’t realize that the little things can mean so much. If you’re a navigator in a ship and it’s off by just a fraction, you can end up in Hawaii instead of Japan. That’s what little steps are like. They add so much to the final product.
It’s a lot of just not giving up and keeping an eye on the goal. It doesn’t matter how you get to the goal, it doesn’t matter if you make mistakes, it doesn’t matter if you have to readjust, it’s keeping your eye on the goal and getting there.
How do you communicate your vision to your 200-plus employees?
We do a lot of conference calls. We do face-to-face. We do a lot of benchmarking, because everyone gets excited about seeing their name on a list somewhere.
Everyone has to sign a form that says they believe in the philosophy of lifelong. When you commit to a lifelong customer, that means you care about that customer. The vision is real clear that you have to care about them. It’s not an option.
What advice do you have for other business owners?
Find your passion. Never settle. Never give up.
It’s a lot about finding what you love about it. It doesn’t mean that you love your job every day, and it doesn’t mean you love to come to work every day, but you love the passion of what you’re doing.
HOW TO REACH: University Moving & Storage, (800) 448-6683
In 2000, Schmitz formed his own private equity firm. In 2001, he orchestrated a merger between KPMG’s national finance and accounting business process outsourcing (BPO) practice and accounting firm itAccounts, forming Outsource Partners International Inc. (OPI).
The deal stipulated that Schmitz join OPI as chairman and CEO.
During OPI’s first year, revenue was $2.6 million. By 2003, revenue had grown to $26.8 million, a 941 percent increase from 2001. OPI’s growth slowed in 2004, with $28 million in revenue, but Schmitz expects that 2005’s revenue to be about $40 million.
Smart Business spoke with Schmitz about how he runs a rapidly growing business with 800 employees across two continents.
How do you communicate your vision to employees?
First, there is an internal monthly newsletter where we try to communicate pride-building, things about culture, what’s going on in the business and where we are heading. I have a lengthy column in that newsletter that talks about how we’re doing and opportunities for our people.
I also have a fairly broad-based conference call once a month with a large number of our leaders probably the top 25 people. We spend at least an hour or more each month talking about what’s working and what’s not.
I also travel a lot. I travel every week somewhere. I go to India twice a year we have over 600 people in India. I break them down into groups of 30; I take an hour with each group. I give a presentation about where we are and where we are going and, most important, what opportunities exist for them.
Then I entertain questions.
How does fast growth help with employee retention?
We are very unique. And what I promote is not so much the money, because at the end of the day, I don’t believe that money itself is all that much of a retention device.
I promote career advancement. I promote the idea that if people wish to pursue a career in accounting, we offer a very unique opportunity for them. With us, because we are growing so rapidly and because we have such a nice portfolio of clients, people who join us enjoy a very unique career opportunity.
They enjoy career advancement as we grow. They pick up additional responsibilities without having to wait for someone to die, retire, quit or get promoted.
They get to see a large number of different companies. We can rotate people from client to client. They can experience different things and add to their knowledge base. The career opportunity we offer is the No. 1 thing that causes people to be attracted to us and stay with us.
What obstacles have you had to overcome with such fast growth?
The challenge is always managing the various aspects of your business. In our case, I can divide that into, how many people do we have at any one time standing by, preparing for the next client in India? How many people should I have in my sales and service group? How do I balance that versus the India head count?
And then there is infrastructure. As you grow rapidly, some of the systems you used back when you were a $5 million company no longer apply. You have to really expand and upgrade. It’s more than just adding servers and spending money. It is building out that infrastructure that enables people to readily communicate.
Balancing the infrastructure build-out and the ever-changing need for more sophisticated infrastructure, along with my sales and service personnel, along with my India personnel, is a challenge.
Those things can get out of whack pretty quickly. And once they get out of whack, you have a problem, because they can’t be fixed overnight.
How do you continue to improve your business?
I always believe the old adage, ‘That which is measured gets improved.’ So we drive our improvement by measuring the things that we want.
We have a client-satisfaction survey. We also have Web-based tools that enable us to monitor our group on various functions. As we monitor and measure those types of things, we learn both what our clients are expecting of us and we learn from our mistakes. The way to be successful in business is to learn from your mistakes.
The 90-day challenge is a methodology that we deploy on our clients. In addition to improving our business, we’re also committed to improving our clients’ businesses and the way our clients operate. We use the 90-day challenge to sit down with our clients and figure out how they can improve their operations and what we can do and what role we can play.
So we have two levels of continuous improvement. One is for our own business and one is for our clients’.
HOW TO REACH: Outsource Partners International Inc., http://www.opiglobal.com
WD Partners has increased its revenue by 630 percent over the last six years.
“For me, the key is you believe in what you’re doing,” says Doerschlag. “You put your heart and soul into it. I am very fortunate in that I cannot see myself doing anything else.”
Smart Business talked to Doerschlag about how he expanded the company’s offerings and why that has been so successful.
Q: Why did you increase the number of services you offer?
To address a need in the industry. I really enjoy what I do and I feel very fortunate. It is not about the financial aspect. It’s about being able to put together an innovative business model to provide value to our clients.
I really get excited about being able to provide innovation and working with smart people and finding a better way. I’m really passionate about that. It motivates me to be able to pursue that end.
Q: How does offering multiple services set you apart?
In the space that we serve, multi-unit retail, it is typically serviced by a highly fragmented professional-services industry. We have been very fortunate that, due to timing and due to the growth of our business ... it’s really something that has allowed us to financially be able to pursue that focus. Being able to add all of the services to specifically address the need of our end user has allowed us to differentiate ourselves and bundle together more services to offer an integrated solution.
Q: How are you able to specialize in each area when you provide so many services?
The way that we look at the world is we look at the end product. Our end consumer is a multi-unit retailer. We use that as our focus. We specialize in all the different areas of the business that are required to provide services to a multi-unit retailer. We really spend a lot of time in learning and development areas of our business to ensure that we are always pushing the envelope and always asking ourselves, ‘Is there a better way?’
That’s a big part of our culture not settling for the status quo. That just continues to push innovation in each area.
Q: What challenges do you face when you add new services?
The challenge is always organizational change and being able to adapt your organization to ... service the client’s needs. We’ve been fortunate enough that in our culture, change has essentially been embedded in our DNA. Our culture is more adept at change than most business cultures because we have lived with change for such a long period of time. That is a result of fast growth.
Q: With more than 500 employees in offices throughout the United States, how do you get them to buy into your vision?
It takes continuous work. What we have recognized is that it is a full-time job, and that it is my role. When you are in a leadership position, you need to understand the benefits that unity of culture and unity of brand bring to an organization and the impression that you make on customers. It is definitely a challenge.
It definitely takes bandwidth to do that. And you need to make that bandwidth available by, as the old adage goes, surrounding yourself with people who are better than you, primarily surrounding yourself with people who can take care of the operations component of the business. Then you can be the czar of culture and bring that unity together.
We hired 100 employees already this year. We have a decentralized office network, so it really puts added burden on that role and responsibility. It’s a continuous effort to align (employees’) expectations with what their role is and what the goal for the company is.
Q: How did your company continue to grow and expand even when the economy was doing poorly?
I think it is the focus on the niche that we are in and being able to offer a unique solution set and add value to the customer’s process. When the economy was doing poorly, we were adding services and expanding what we offer.
Q: What advice can you give to CEOs of other fast-growing companies?
I have learned the lesson so many times that you never want to compromise in regard to a key hiring decision. If you have any doubt whatsoever, you need to wait for the right person to come along. Really rely on your gut instinct. That has been a big key for us.
HOW TO REACH: WD Partners, www.wdpartners.com
But that is exactly what happened to Jimmy and Andrea Zeilinger of Shaker Heights the couple was inspired by their kids, Sienna, 11, and Amanda, 8, to create Crayola Crafty Cooking Kits.
“I like to do crafts with my kids,” says Jimmy Zeilinger. “And Andrea enjoys cooking. We decided to combine those interests into Crafty Cooking Kits because there was nothing like it on the market.”
The Zeilingers wanted to develop a line of cooking products to help children create lifelong memories with their parents, so they began conducting surveys, leading focus groups and talking to food brokers.
The end result was six kits that include quality ingredients, detailed cooking instructions, fun facts, games and an affordable price of $4 to $5. And the kits are simple sometimes as easy as just adding water. The Zeilingers formed Brand Castle, a privately-held company, to manufacture and distribute the cooking kits.
Next, the Zeilingers approached Crayola about their idea.
“They were very receptive to it,” says Zeilinger.
Crayola liked that the kits were high-quality and promoted wholesome and limitless creativity between children and parents. The company decided to partner with the Zeilingers, a boon for Brand Castle because having the Crayola name attached to the product attracts parents looking for a quality product for their children.
“A lot of parents are busy. They want to be an involved parent but they don’t have the resources,” says Zeilinger. “This gives them an affordable way to be an attentive parent and get involved with their kids. All the tools they need are right there at their fingertips.”
In addition to sharing their food and memories with their parents, children can also share their creations online at www.CraftyCookingKits.com. The virtual refrigerator allows children to post pictures and participate in monthly contests to win a Crayola Crafty Cooking Kit party. The Web site also includes help on how to make the products and new creative ideas.
What is next for the Zeilingers?
Then, while making deliveries to high-end executives, Levin made an important discovery: Even in the most lavish of homes, office furniture looked like it belonged at a corporation. Residential office furniture was not an option in the marketplace at that time, something Levin decided to change.
In 1998, he founded Home Office Solutions, which specializes in high-end, ergonomic home office furnishings. Levin’s idea took off, and today, Home Office Solutions Group consists of three retail stores around Chicago and three Web stores: www.UltimateBackStore.com, www.OfficeDesigns.com and www.HomeOfficeSolutions.com.
Gross sales have increased from $5 million in 2001 to $20 million in 2004.
Smart Business talked with Levin about the importance of the Internet in the growth of his company and how he plans to continue growing Home Office Solutions Group.
How did you use the Internet to grow your company?
The Internet is an international market, not just a local market. In January of 1999, we moved our store to Yahoo and became part of Yahoo shopping.
Back in those days, the Internet was still in the Stone Age. People were hesitant to shop online, but they trusted Yahoo. Getting on there was our first exposure. We also advertised on other search engines. So that brought our product to the marketplace nationally and internationally. In the spring of 2000, we really started to see an increase in online orders.
With 90 percent of your sales made over the Internet, how do you ensure quality customer service?
When we started Home Office Solutions, our motto was, ‘Service to exceed Nordstrom.’ Being a retailer and a shopper, I felt that Nordstrom had the highest level of customer service and had highly trained employees dealing with their customers. I felt that if, on a bad day, we are just as good as Nordstrom, then we are going to be successful.
Being a smaller company, we were able to micromanage every word that came out of our associates’ mouths. We gave them extensive training. We have 90-day training for sales and customer service reps before they are allowed to talk with customers. In the retail industry, that is like years.
We also use successful people who know the techniques to train the new people. Sometimes your best people don’t want to be training other people, they just want to be selling or dealing with the public, but we force them to train.
You sell Herman Miller products and have a good relationship with the company. How do you establish relationships with other companies and turn them into profit?
The way to establish relationships with other companies is to be able to bring their product to the marketplace in a venue that is superior to other dealers. One way is to have phenomenally trained staff on their product and product knowledge.
Another way is to have a large inventory of their products and not have to rely on them to ship products for you. The third way is to give them input from our customer base on what people are looking for and questions that they ask.
We have around 3 million unique visitors a year to our Web site. There is a fair amount of communication coming from the public to us that we forward on to Herman Miller. They need to know what is going on in the marketplace, too. They can do marketing studies, but the best study is to talk to your high-profile dealers.
How has your company grown to meet to the changing needs of consumers?
We keep adding products all of the time. Every month, a new product comes out online. With us being No. 1 in high-end ergonomics products on the Internet, the manufacturers like Herman Miller and Steelcase come to us with their new products in the development stage. They ask us how we feel about the product and where we think it would be in the marketplace compared to their competition.
How we continue our growth is we are doing a complete new software platform, which is connected to all of our stores and our warehouse. It is going to help us grow the company in the future.
How did your company continue to prosper after Sept. 11, while many others suffered?
When Sept. 11 happened, I started to hear about how people were afraid to leave their homes and afraid to go to the shopping malls, and all this hysteria that the media created. This led me to believe that people were going to nest.
One of the rooms that I thought people were really going to spend time in was the home office. I just knew that was going to happen. And it is actually what happened. The home remodeling business went crazy. People stopped taking vacations and they took that money and put it into their homes.
We were right there ready for people to upgrade, redo or for the first time do their home office. We were already there with the products, ready to go. We were also able to ship furniture in the same time frame that Amazon ships a book.
What are your growth goals for the future?
We are looking for about 25 percent growth for this year. We are already exceeding that.
“I’ve been in athletics all my life, and I’ve never seen a little sports card with a 7-year-old on it,” he says. “And it got me thinking about what is lacking in the youth sports photography industry.”
That thought led to many more, until Burgner came up with an entire business plan for a youth sports photography company. That same year, he and co-founder Carl Hansson bought a lab and started making sports cards and other memorabilia for youth sports, and The Sports Section was born.
The Sports Section started slowly but has been growing rapidly since 1990. Revenue increased from $17.5 million in 2001 to $25 million in 2005, and the company employs approximately 1,200 people who work in more than 200 franchises throughout the United States, Canada, New Zealand and Australia.
Smart Business spoke with Burgner about how to perfect an idea and maintain a company’s original vision while it grows at a rapid pace.
With franchises opening every year, how do you ensure that customer service is not compromised?
About 10 years ago, we made a company decision that we are basically turning into a full-service company rather than a manufacturing or selling company. We have a pretty good size staff in the office that will not let any of our franchises fail.
They go out and find business for them, they create leads, they fix their cameras and they show them how to better take pictures. Only a small portion of our staff actually sells franchises. All the rest are service-oriented.
We have a 24/7 hotline that anyone around the world can call and we can answer a problem for them. That decision was one of the best decisions we have ever made. That is why we’re growing so fast.
We also have what we call Sports Section University about six times a year, where our people can come in and learn how to take better pictures, how to get into school markets, how to make presentations, how to have good product selection on their envelopes, how to sell and how to market. We have conventions twice a year and regional seminars about 20 times a year.
If there is anything that a Sports Section franchise wants to know about how to make money, they can call us, and we have the answers.
With employees spread across several countries, do you have trouble keeping your vision from becoming diluted?
Never. Our people are so dedicated. The only trouble we would have is other businesses coming in and wanting us to sell their product or line of business.
We made a decision long ago that this is our niche, and it has just materialized into perfection. This is the big reason that people buy this franchise rather than go out and start on their own.
It is very tough. It took us seven years to basically figure out how to work this franchise. I wish we could have done it earlier, but there was no template there was nobody else doing what we were doing. We only sold an average of three franchises a year for those first seven years because we did not know exactly what we were doing.
When 1990 hit, we began selling 30 franchises a year, and we have never stopped.
Jumping from three franchises a year to 30 is huge. What challenges accompany such rapid growth?
The challenge is producing more programs, keeping interest with more product selection and keeping prices down so that it stays affordable for the customers. We have overcome these challenges. That is why we keep growing.
We will sell 48 franchises this year up almost 15 from what we did last year. And it is because we have perfected and we keep continually perfecting what we are doing. We could sell 50 to 100 franchises a year if we wanted to and still stay on top of it.
But we are going to limit it to 40 or 50 a year so that we do not lose the vision of keeping our existing franchises happy.
What are your growth goals for the future?
We have quite a few territories open in the United States, and we would like to fill them all up by the year 2010. We would also like to add at least four more foreign countries. We are already the dominating youth sports photography company in the world. There is nobody else bigger than us. So that goal is already accomplished.
We also want to cover all aspects of youth photography. About 80 percent of our business is youth sports photography. We are getting into schools now, which we haven’t before. We are also getting into young adults.
We are really broadening our base and not limiting our franchises to just youth sports.
HOW TO REACH: The Sports Section, (678) 740-0800 or www.sports-section.com