Starting and operating a successful small business will inevitably come with its share of failures and one must be prepared to face these challenges. Sometimes there is no way to plan for the surprise disasters that befall small businesses, but they can be overcome. Examples of challenges some successful owners have faced include firing employees, recovering from natural disasters, making sacrifices to use premium materials in manufacture, and getting creative in the hiring process to find skilled talent. For more on this continue reading the following article from TheStreet.
It’s wishful thinking to say that once you launch a business everything will go smoothly.
In fact, that is rarely the case. And no matter what the problem is, there are always lessons to be learned.
From employee nightmares to natural disasters, here are the stories of four businesses that overcame challenges to prosper:
Lesson No. 1: You might need to get tough with employees
Company: Lady Fortunes Gourmet Cookie Co.
Canoga Park, Calif.
Lady Fortunes Gourmet Cookie Co. CEO and founder Daria Artem was a struggling MBA student when she launched the company in 2004. Artem, who dabbled in baking, was celebrating her birthday at a Chinese restaurant and was challenged by her friends to create a fortune cookie the size of a cake. Not only did she succeed in the challenge; she created a business around it.
Lady Fortunes does custom orders for special events, wholesale and private-label orders for places such as TJ Maxx(TJX), Costco(COST) and Wal-Mart’s(WMT) Sam’s Club, and just this year began to sell to customers directly. The company has expanded into a full-scale bakery with 40 full- and part-time employees.
While Artem, 31, knew what she wanted in terms of her product, she was less familiar with running a team that would produce and sell her creations.
Artem tells the story of a former employee working full time at the company and going to school. The employee had shared with Artem a term paper she had written. Artem, admiring the girl’s work, asked when she found the time to complete a term paper early while working and going to school. Unfortunately, that paper was done on Artem’s time. While the paper got done, the employee’s work tasks did not.
"That was definitely a very illuminating moment," Artem says.
She ended up firing the employee, but more importantly, Artem says she revamped her processes for managing employees and keeping track of assigned tasks. She says her processes make employees more productive and keeps employees accountable.
"I directly changed the way I delegate tasks when I have a project. I’m no longer giving people general [assignments]. They’re more task-oriented in more digestible chunks," Artem says.
Employees are also required to account for their time in weekly reports.
"I had another employee [where] I gave her a project and at the end of a week she had only completed 5% of it. I could do this in my sleep and asked what was going on. The employee explained to me that there was another girl who was sick all week — I didn’t realize she had taken on her job. That’s why she wasn’t able to get to this task. She had a plausible explanation and I was able to manage it much better," she says.
The employee term paper experience also made Artem rethink her hiring process. She says she will only hire employees interested in long-term positions. "I really want to hire people who are passionate about the product and are willing to learn," she says.
Lesson No. 2: A disaster can bring new focus
Company: Marvin LeBlanc, State Farm insurance agent and motivational speaker
Every June, Marvin LeBlanc gets scared. A survivor of Hurricane Katrina, the State Farm insurance agent, author and founder of Marvelous Performance Systems, a motivational speaking training company, still shivers when hurricane season begins.
"The level of fear from my client base really goes up, and anytime you see a hurricane icon on the Weather Channel move into the Gulf of Mexico, you can bet my phone is ringing more," LeBlanc says.
LeBlanc was on a spiritual retreat when Katrina hit his office (and home) in August 2005. His office was flooded with 12 feet of water and had "tornadic activity" on the roof. On top of that, LeBlanc’s house shared the adjacent property line with a broken levy.
Needless to say, his home and office were destroyed. He and his wife evacuated north to a relative’s home (which was not much better; they were cut off from electricity and, more importantly, air conditioning).
LeBlanc’s employees and clients were displaced as well. Cellphones weren’t working well, but clients were text messaging with frantic pleas for help. As the cleanup began, LeBlanc worked 20-hour days, six days a week for 18 months, he says.
"Sixty-eight percent of my income was lost in the first 100 days," he recalls. "The insurance department in the state of Louisiana mandated all insurance companies to not send out premium notices. Premiums were waived. If you’re a full-commission salesperson and no one is paying their bill, you’re not getting income."
LeBlanc had to figure out how to serve his customers with limited information — his clients had scattered all over the country — and zero employees.
He learned the hard way how to be prepared for a disaster: Backing up records, keeping bottled water and nonperishable food in the office and keeping a working generator on site is critical, for instance.
LeBlanc got asked to speak about his experience — first at local groups, conferences and nonprofits, but the speaking events always led to another larger event, and he now speaks all over the country.
"Back then I didn’t have a fee, I was just telling my story," he says.
Friends and acquaintances were also encouraging him to write a book, a process he says was so emotional that he didn’t start until two years later. (His book Come Hell or High Water (Life Lessons from Hurricane Katrina) was published late last year.)
LeBlanc learned so many lessons from Katrina that it’s hard to count. Besides realizing he could create an entire second stream of income for himself through speaking engagements and writing, LeBlanc says that he is better prepared as a business owner for a disaster and able to connect with his clients.
In 2004, before Katrina, LeBlanc was feeling insurance business burnout and becoming disengaged from his practice. "I no longer felt needed. I no longer felt like I could make a difference. When the storm hit, my customers needed me like never before. I made a decision to re-engage" even while dealing with his own hardships, he says.
Seven years later, LeBlanc is still running his insurance agency (albeit from another office), as well as getting more speaking engagements than ever.
Lesson No. 3: You can sacrifice for standards
Company: Cake Envy
Helen Noh launched Cake Envy just nine months ago. Building the store from ground up, Noh has been wearing many hats, from dealing with contractors and licensing to ordering ingredients; her cakes and cupcakes are baked in-house daily.
Noh was running into a problem with finding the local butter she wanted. Her milk distributor did not carry the butter, which was literally double the price of most brands. On top of her other responsibilities, Noh was forced to clear out her local Cash & Carry Smart Foodservices of their supply of the butter each week, literally carrying the 36-pound cases to her small car for transport.
"I had to sacrifice a lot of time going from store to store, and that meant I couldn’t be at the shop," she says.
Her milk distributor kept trying to get her to buy less costly butter from him, but she refused. Noh said it was evident in the cake when she used different-quality butter. "It’s the most expensive butter out there, but I know that it’s the best tasting and it’s local," she says.
Watching her struggle, the distributor was able to secure an arrangement with the local butter vendor to help — at a premium, of course.
As a result of her decision to use the premium butter, Noh has had to cut back in other places — most notably in hours worked by her 14 employees — and must remind them not to be wasteful of any ingredient or mix. "We are sacrificing to pay double … We had to be better about how much we produce per day so nothing goes to waste," she says.
She thinks it’s worth it.
Lesson No. 4: Short on talented help? Get creative
Company: S.V.A Holdings, parent company of SA VA, Van AKen Signature and VA Private Label
Fashion designer Sarah Van Aken, owner of S.V.A Holdings, parent company of SA VA, Van AKen Signature and VA Private Label, a socially responsible maker of trendy women’s clothing and custom hospitality uniforms, cannot find skilled workers to work her production line.
Van Aken, who has dressed several celebrity chefs, including Jennifer Carroll of Bravo’s Top Chef, plans to expand her business from a 15-person team to 70 over the next four years, including 45 manufacturing positions. Hopeful about raising capital, she’s looking to move to a larger manufacturing facility and open two more retail locations. "The plan is to have Sa Va nationwide at independent retailers and open up several more retail locations in the next few years," Van Aken says.
But the gradual slowdown of U.S. manufacturing (and the workers that go with it) is hitting Van Aken’s company hard. Her workforce is getting older; parents look to send their kids to private universities to secure top-paying white-collar jobs, which is ironic right now, Van Aken says, given the troubled economy.
"There are huge barriers right now in my industry in manufacturing domestically. Two generations have passed since these skills have been taught and trained. The folks who do know how to cut, operate machines, finish, pattern-make, etc., are all in their 50s or older," Van Aken says.
Hire unskilled workers and it’s time-consuming to hire and train them, though.
"We really need to train one at a time, and are having a hard time finding the resources. It is difficult for us to spend the money and time to train in the midst of trying to bootstrap and grow a business," she says.
She has taken to finding workers anyplace she can, from posting ads in Mandarin on the job board in Chinatown to calling an insurance agent connected to the local Cambodian community to finding workers through a flight attendant friend’s mother who owned a small cut-and-sew shop.
The company got a grant from Philadelphia Workforce Development to recruit and train machine operators.
Over the long run Van Aken is looking to change the mindset of U.S. manufacturing and hopes to launch apprentice programs for young workers to learn the craft.
"The truth is that these good middle-class jobs are now frowned upon by the American culture, when in reality college isn’t an option for many Americans and isn’t the right fit for many kids. It is why we have unfillable job openings as electricians and various trades that provide great wages. We are not only up against a lapse in vocation in our industry, we are up against a cultural mindset," Van Aken says. "I would like to restore the apparel industry manufacturing jobs to a noble profession. It is a craft."
This article was republished with permission from TheStreet.