Ann Arbor Area BUSINESS MONTHLY magazine brings the reader the latest business news and information important to the businesspeople in Washtenaw County. Each month articles cover real estate, legal, Internet, employee concerns and the climate of business in the greater Ann Arbor area. There is news about company employees and feature articles on local businesses. We cover business news from Ann Arbor, Chelsea, Dexter, Manchester, Milan, Saline, Whitmore Lake, and Ypsilanti.
Local Small Biz Entrepreneurs
Working Hard For Success
Chuck Pardon, name•droppers, posing in front of his sign listing most of the hundreds of items his firm offers.
Tiffany Salsini (standing) owner of Café DuJour, interacting with a new customer at her restaurant.
By Stephanie Kadel-Taras
Tiffany Salsini has growing pains. As the owner and head chef of Ann Arbor's downtown lunch spot Café du Jour, she sees the pros and cons of her own success. When she bought the business seven years ago, she was up at three a.m., worked until five p.m., and did everything-buying food, making soups and sandwiches, baking desserts, selling to customers, cleaning, hiring, budgeting, and paying the bills. "It was all I could do to be ready to open the doors every morning," says Tiffany.
Now she has six part-time employees, and her day doesn't begin until seven, but an emerging catering sideline keeps her working long hours. And she spends much more time in the office than in the kitchen, where she'd prefer to be. "I'm hardly cooking now, but I had to delegate. I learned that I need to work more on the business, not so much in the business."
This is a common lesson for small business owners, even though it often means their first love, the one that got them into business-cooking, designing, sales, computer programming, whatever-takes a backseat to their new responsibilities as manager, entrepreneur, and strategic planner.
Fortunately for the small businesses we talked to, the growing pains have not been too painful, and each has figured out a way to survive and succeed, and to reinvent when necessary, while always keeping their core mission intact. None was particularly anxious about the current Michigan economy, urging me to avoid any "gloom and doom" reporting when they are feeling pretty upbeat about the future.
The Small Business Climate This optimism came as a bit of a surprise, given the aggregate perspective of Michigan small business owners reported by the quarterly "Small Business Barometer." Just 17% of small business owners-the smallest percentage in the thirteen year history of the Barometer-say they plan to increase investments in their operations in the next twelve months. Only 16% report an increase in profits over the last quarter of 2006. More respondents than ever give a "negative" rating to the Michigan business environment (51%) and the Michigan marketplace (19%).
"It's difficult not to come across as excessively gloomy," says Michael Rogers, vice president for communications at the Small Business Association of Michigan (SBAM-which publishes the Barometer). "But despite the barriers we have small businesses that are absolutely thriving in Michigan. This cuts across all classifications, not just high-tech. People find a way to succeed. It's a tribute to the entrepreneurial spirit." Michigan has over 800,000 small businesses (defined as those with fewer than 500 employees); only 200,000 of those have any employees.
Taken as a whole, it's a powerful sector of the economy. Small businesses in the U.S. employ half of all private sector employees and generate 60-80% of new jobs annually. They employ 41% of high-tech workers, produce 13% more patents per employee than large firms, and make up 97% of all exporters. Only 3% of small businesses are franchises, while 53% are home-based.
We've all heard the statistics about how tough it is to make it in a small business. According to the U.S. Small Business Administration, two-thirds of new small businesses survive at least two years, but only 44% survive at least four years. Rogers points out that people close their small businesses in good times when lucrative job opportunities lure them away from self-employment. They also close in down times when in search of a steady paycheck. However, he adds, "Those who are enthusiastic about their business and love what they do will find a way to thrive regardless of the economic climate." That seems true for the small businesses profiled here.
Dynamic Edge, Inc. If you want an example of a local small business taking advantage of the economic climate, look no further than South State Street where eight-year-old company Dynamic Edge is continuously growing. It has the feel of a 1990s edgy dot-com business, with the average employee age of 27˝, no dress code, no assigned desks, retro décor, floor pillows, and video games in the staff area.
But this technology consulting firm isn't banking on an Internet-based blockbuster. It is built on the day-to-day technology needs of small and mid-size businesses, like computers, servers, and wireless networks that function; Web sites and Web applications; and custom databases and other computer programs tailored to their operations. This support is in greater demand in bad economic times when companies are cutting back on in-house IT staff and turning to hourly consultants to fill the gap. Dynamic Edge has sustained an average 64% revenue growth each year for the last four years.
"We are a business's concierge," says owner and founder Bruce McCully, a lanky, handsome 29-year-old computer engineer turned visionary leader. He started the company while a senior at U-M when a few small businesses asked him for help buying, installing, and servicing their computers and networks. Soon he had hired a second tech consultant and then a bookkeeper. "I learned early on I couldn't hire people just like me. I needed people who could successfully compensate for my weaknesses."
Now with 35 full-time employees and more still to hire, Dynamic Edge has nearly outgrown its conference room and doesn't have enough mobile desks for everyone. So most employees work at least a couple days a week at home on their company laptops. Since some staff live in other communities, like suburban Detroit, they are now marketing more to clients beyond the Ann Arbor area.
With that geographic expansion has come an expansion in services to including business consulting on accounting, human resources, strategy, and so on, all issues that may need technology solutions but must begin with smart planning. "We'll go outside of technology if you need it," says Bruce. "Our people are really excited about helping people. That's what makes our company work." The company prides itself on excellent customer service at any hour of the day or night.
Most customers come through word-of-mouth or searching the Web. Director of marketing and public relations, Rebecca Lopez Kriss, spends her time building relationships and networking. She arranges a community service project for the staff every quarter, such as answering phones for a public radio fundraiser or running the Detroit Marathon to raise money for Washtenaw Literacy. Dynamic Edge is currently accepting grant applications from nonprofits for free technology consulting.
Nurturing a team spirit within the company is a key commitment. "The success of our team is what's important," says McCully. "I try to lead by example." He joins in the rotation of 24-hour on-call assignments and is always on-call for his employees. This April McCully was honored as Young Entrepreneur of the Year by SBAM, but he is uncomfortable in the spotlight. "I got this award because of the hard work and creativity of the staff."
Employees enjoy generous benefits. Health insurance, including dental and vision coverage, is provided for all full-time employees, and the company pays 50% of coverage for dependents. Life insurance is also provided, and the company matches 401K contributions 100% up to 3%. A wellness program pays for small exercise classes with a personal trainer, while snacks and a fully-stocked kitchen are always available. The company buys lunch for everyone on Fridays and hosts multiple staff parties throughout the year. "We create an atmosphere where people want to come to work," says Kriss.
Dynamic Edge is on the edge of further expansion with the hope of opening a second site in another city this year.
Mast Shoes You might think a company that started in 1942 and prides itself on doing things the old-fashioned way would have a dubious future in the 21st century. But Mast Shoes, located in the Westgate shopping center, is applying decades of know-how to modern day problems-and retaining their niche in the marketplace.
"We elected to go for function, not fashion," says business manager William Pemberton, who has been with the family-owned business for twenty-one years. Known as a comfort shoe store, Mast doesn't sell dress shoes or the latest high heels. "We're thinking about what's good for you," William says. This focus has won them lifelong customers and regular referrals from five hundred area health care professionals.
It has also required a focus on customer service. When new customers come in, take a chair, and start working with a salesperson, they are often heard saying, "I haven't had my foot measured in thirty years." Says Greg Mast, "In here, the shoe business hasn't changed. We still take it one customer at a time."
Greg and his brother, Tom, are the sons of Mast Shoe founders Walter and Helen Mast, who opened their first store on Main Street in downtown Ann Arbor sixty-five years ago. They soon had a second location on Liberty Street. The fact that those stores are now gone might suggest hard times for the company. Not so, according to Pemberton. When Mast opened its third Ann Arbor location in Westgate in 1993, their regular customers slowly migrated away from downtown to where the parking was easier. When Mast closed the Main Street store in the late 1990s and the Liberty store three years ago, they brought the inventory and the staff to the Westgate shop. They keep 10,000 pairs of shoes in stock, representing roughly 20 product lines.
"We've had continued growth here," says Pemberton. "This is a solid, labor-intensive, skilled business." The store has eleven employees, seven of whom are full-time, some of whom have been with Mast for dozens of years. Mast pays a portion of the cost of its employee health insurance plan and offers vacation time and discounts. Employees are not paid on commission, and Pemberton believes they are paid better than average for retail. "The staff make our store," he says. "People see faces here they've known for years and trust."
A key market for Mast Shoes are people with health conditions that require a good-fitting or specially fitted shoe. Patients who have foot problems like plantar fasciitis or arthritis, who wear braces, or who need orthotic inserts come to Mast. More and more are coming because of diabetes. "If you can't feel your feet, you need footwear that fits right," William says.
Molly Mast, Greg's daughter, is a certified pedorthist-someone who is trained in how to fit shoes for special health needs. "I'm like a pharmacist to podiatrists and orthopedic surgeons," she says.
To increase awareness of these services, Mast is making a more concerted effort to reach out to the health care community. They hold an in-store reception each year for health care professionals to showcase the latest products from shoe manufacturers. After three years, the event has a waiting list. They have also asked satisfied doctors to provide testimony for print advertising.
Mast Shoes has a Web site but has avoided the trend toward on-line sales. That would, after all, defeat the purpose of finding the right fit for each customer.
Northway Marketing Group, Inc./Name.Droppers "If you want to drop your name in front of a group or company, this is what we do," says Muriel Pardon, co-owner of Northway Marketing and its subsidiary, Name.Droppers. "We work with companies to imprint their name, logo, and message on almost everything." She's not exaggerating. In addition to dozens of "wearables"-T-shirts, dress shirts, jackets, and so on-Northway's Web site offers a dizzying array of products awaiting promotional imprints. The business has come a long way from pens and pencils. The list begins at stuffed animals and air fresheners and ends at wrapping paper and yo-yos.
The challenge for Muriel and Chuck Pardon is to help people find Northway Marketing when they think up a giveaway to put their name on. "People want a badge," says Muriel. "They don't always think they are buying advertising." Northway added the Name.Droppers moniker in 1988 to help clarify what the company offers. Most of their customers come by word-of-mouth, and most are in the local area, including U-M departments, small companies, schools, and even families having reunions. They also get referrals from printers when customers ask about putting their logo on, for example, a cube of scratch paper.
The Pardons, husband and wife, have worked together out of cramped office quarters on the corner of Hoover and Greene since 1967. For twenty years they ran an ad agency, and their primary clients were banks. When these clients began buying pens and other items with the bank name on them, the Pardons figured out how to meet that need. Before they knew it, they were in the "advertising specialties" business. Now they do about one thousand product orders a year.
They've continued to roll with changes in the business. The computer, of course, has created a whole different process. Now they spend a lot of time chasing down digital files that have a high enough resolution to print on mugs and shirts. When necessary, Chuck recreates images from scratch on the computer.
The number of suppliers has grown with the market; Name.Droppers works with at least one hundred different suppliers in a given year. Even a simple pen requires careful research depending on the size of the order, timeline, budget, design, and product preference. When "just-in-time" inventory hit the marketplace, the Pardons figured out how to get products done in just a week, but, says Chuck, "Are you willing to pay for it? And overnight shipping charges really add to the cost."
So-called wearables have been another big change in recent years. "People always want a T-shirt," says Muriel. But that's not all. The trend toward casual dress in the workplace has substituted suits with polos, and companies have responded by branding the casual clothing with their logos. (Indeed, Dynamic Edge-profiled earlier in this article-has a wide range of hoodies, cotton shirts, and button-down dress shirts sporting their square logo.) The Pardons estimate that wearables account for 40% of their business these days.
Another hot item are imprinted flash drives. Name.Droppers has suppliers that will not only put the logo on the outside but also upload files to each one, so you can give out information as well as the memory stick at conferences, business meetings, and sales calls.
Northway Marketing has stayed nimble by staying small. The only other employee is the Pardons' daughter, Patricia. "What makes it work for us is being hands-on," says Muriel. "But we have to be jacks-of-all-trades." She declines to estimate how many hours a week they work to keep their small business afloat. "We work whatever hours it takes."
Café du Jour Chef Tiffany Salsini is willing to admit she works sixty to seventy hours a week in her restaurant and catering business. Even though Café du Jour is only open for lunch (11 a.m. to 3 p.m.), Salsini also delivers breakfast platters and sandwich trays to downtown business meetings, serves private parties after hours at the café, and offers custom catering for evening and weekend events. She'll even cook an intimate dinner for two in your own home.
"I just love catering to people," says the young, blonde chef with a twinkle in her eye. "I love to make people happy with my food and my smiling face." By all accounts, she does. Customers quickly become regulars at the tiny restaurant where about two-thirds get take-out and the rest spend a quiet hour in the homey back dining room hideaway. Tiffany and her staff pride themselves on knowing customers' names and their favorite orders. "I want customers to feel like they're coming home, and I think they do. I love my customers. They bring the brightest light to my day."
Chef Tiffany bought the restaurant, formerly known as Soup du Jour, in 2000 from Susan Haas, who had run it for seventeen years. Tiffany had been managing a restaurant in Fenton, and even though she had little formal culinary training, she had been cooking since childhood for her Italian family, thanks to instruction from her grandmothers. "When I was two I used to take all the cans out of the cupboard just to look at the food," she laughs.
Haas taught Tiffany all her recipes, including forty-five soups like French onion, gazpacho, white bean and ham, and roasted apple and squash. Tiffany's mother and grandmother worked with her for the first year, at which point Tiffany changed the name to Café du Jour to reflect the wider menu-sandwiches with all condiments made from scratch, multiple gourmet salads, quiches, and sinful baked goods. "I wanted to be known more as a restaurant than just a soup place," says Salsini, especially to boost spring and summer sales.
Thus began the growing pains of turning a soup place into a business. Salsini brought in two business partners for expert advice, marketing help, and capital. She honed her budgeting skills and brought her costs in line with her pricing. She grew the catering business from 3% to nearly 20% of her income and garnered glowing testimonials from other downtown restaurants, like The Earle and The West End Grill, who have used her catering service for their own meetings and parties. "It is a struggle for me to let go of some of the café to do the catering," says Salsini. "But I know it will benefit me and my staff."
Tiffany treasures her part-time staff, most of whom have been with her more than three years now, even though the only fringe benefit she can offer is a free lunch. "They are everything to me. I'm with them more than my family. I give them the greatest amount of appreciation."
Café du Jour has seen a decline in foot traffic in recent months with the struggling economy, but Chef Tiffany is optimistic. "New customers always seem to replace those we lose," she says. And the catering business is filling in the gap. Her only regret: "No one has asked me yet to do an Italian dinner."