Extraordinary entrepreneurs reveal the major – and profitable – turning points for their young enterprises.
Entrepreneurs are no strangers to taking risk. To compete with larger, deep-pocketed players, they often need to go big or go home. With a clear, savvy strategy and smart financial planning, radical efforts can be rewarded.
"We realized that with some very modest changes, we could turn a company that was barely profitable into a significant piece." – Rob Basso
Here are five real-world examples of bold decisions that paid off for small business owners.
1. Go all in on the right idea
In 2005, Mark Stevens wanted to grow his small marketing firm. He realized many of his clients knew their marketing programs were not working but lacked solutions. So he bought the URL YourMarketingSucks.com, wrote a book and committed major campaign dollars.
The strategy paid off. He says his two-week, $10,000 radio station campaign netted $175,000 in profit the first month.
"That has only multiplied exponentially over the last 11 years," says Stevens. "When I look back now, I realize my epiphany was not to tell people what they should want, but instead to give voice to what they were already thinking – and to help them act."
2. Never give up
Sometimes the boldest move is to stay the tenacious course. Serafina Palandech and her wife, chef Jennifer Johnson, knew the odds were rough when they opened Hip Chick Farms, which offers organic, transparently sourced frozen poultry products. To ensure their success, the pair took out a second mortgage on their farm, applied for a Small Business Administration loan, started a Kickstarter campaign and corralled funds from friends and family. Palandech also spent two years courting investors.
"Every time we got knocked down, we just got back up again," Palandech says. That resiliency paid off. Last March, they were able to gain $2 million in funding. "We now have 11 staff members, we doubled our distribution, and we're introducing 14 new products in 2017," she says.
3. Buy a competitor
Acquisitions are known for having shaky track records. Many small business owners are wary of them, but in the right situation, an acquisition can catapult a small business, says Rob Basso, founder of Advantage Payroll Services.
After 15 years of running his business, Basso realized growing Advantage Payroll organically had its limits. He decided to look at possible vendors to buy and found Associated Payroll Consultants. "We realized that with some very modest changes, we could turn a company that was barely profitable into a significant piece… because we already had the economies of scale built," says Basso. The vision was spot on: The Freeport, N.Y., company added 30 percent more profit than anticipated prior to the merger.
If you decide to buy a company, Basso advises not to "have your mind set on a specific outcome of a particular deal. This deal changed six times by the time it was done, and if I had my heart set on a particular way it was going to get done, it probably wouldn't have happened."
4. Adopt new technologies
David Frederick began selling handmade futons in Athens, Ga., in 1984. Revenue for World of Futons increased steadily until 2006, when online businesses began cutting into sales. To help, his brother Robert came on board to develop an e-commerce platform. "One of the easiest ways to sell goods online without having a lot of expertise was eBay," Robert says. "eBay had the platform, and we didn't have to build our own site from scratch."
But online order fulfillment was a whole new challenge, particularly after opening an Amazon presence and selling on World of Futons' own website. With UPS marketplace shipping, World of Futons was able to unify online store orders from different storefronts and combine shipments.
"Now that everything is integrated, the labels are prefilled, which cuts the processing time in half and eliminates human error," says Robert. "Anything that saves me time and money is a winner."
5. Change direction with new customers
Fire your revenue stream? It may not sound wise, but three years ago, Greg Galle, John Bielenberg and Mike Burn realized their design services firm had plateaued despite having many clients. Their solution? Give their clientele list a makeover.
"The margins were terrible, so we decided to focus on the parts of the process we really liked, and build a company around that," says Burn.
Today, Silicon Valley-based Future Partners is a cloud-based solution that helps companies innovate with software, training and custom services. "It never would have happened without our being bold," says Burn. "Last year was awful. This year was good – next year is going to be great."