Super Sizing It!
Passion, an eye for opportunity and a willingness to make mistakes have helped many area entrepreneurs enjoy a bigger helping of success.

By Linda Cruse

Good things come in small packages, the saying goes, and that holds true for some of Kansas City’s best-known businesses. Marked by humble beginnings, each began as a small business and grew into an industry leader.

Take the Russell Stover Company. From her home, Clara Stover hand-dipped candy that her husband, Russell, sold. In 1931, the couple moved their Colorado-based candy-making business to 1206 Main St. in Kansas City. It became a multi-million dollar enterprise.

Ewing Marion Kauffman founded Marion Laboratories Inc. in 1950 in his modest Kansas City home. When he sold the business in 1989 to Merrell Dow, the company was a globally diversified pharmaceutical giant, boasting nearly $1 billion annually in sales.

Joyce C. Hall overcame poverty and a lack of formal education to found internationally known Hallmark Cards.

Walt Disney worked at a $40-a-week job making animated commercials for the Kansas City Film Ad Company before founding Walt Disney Co.

More recent entrepreneurs boast similar modest beginnings. The American Italian Pasta Company went from being an unknown to the largest pasta producer in North America. Three Dog Bakery’s founders started by rolling out dough for dog treats on their kitchen table. Now there are more than 30 Three Dog Bakery stores, and the company sells its products in pet food store chains throughout the nation.

The stories go on and on. But what are the signs that a small business is destined for large business success? How does a small business know it has the potential to grow large? And what steps should small business owners take if they want to grow into a large business?

Local entrepreneurs share their vision, challenges and milestones on the way from small business owner to big business leader.

Passion and Timing
A common thread weaving its ways through the fabric of these business success stories is passion. Successful entrepreneurs agreed that in today’s uncertain economic times, passion is more important than ever.

“There’s no question it’s more difficult to achieve success today,” said Barney Karbank, chairman of B.A. Karbank & Company Industrial Realtors and Developers. “Timing has a great deal to do with success. I started my business during a period of exceptional growth. But the key to success then and now is to be passionate about what you do.”

Karbank founded his business on March 1, 1950, on the cusp of a building boom taking place throughout the nation. “After World War II there was a period of incredible expansion,” he said. “Thanks to timing and the good fortune of meeting people who took an interest in me, my company thrived.” Passion, perseverance and measured judgments have helped Karbank remain in business for more than 50 years.

Dan Dye, co-founder of Three Dog Bakery, said he and partner Mark Beckloff shared a vision of creating all-natural dog treats. “Our plan was to convert all dog owners to buying natural treats for their pets,” he said. “We believed so strongly in the idea that it never occurred to us that we wouldn’t succeed.” The company has since gone international, opening two stores in Canada and three in Japan.

Timing was also critical to Three Dog Bakery’s success, said Dye. “We started our business at a time when dog owners were having fewer children and began treating their dogs more like children. Also, they had more disposable income. The timing was great for our products.”

Mark Ferrel, another local businessman, made his entrepreneurial debut with Hallmark Card stores. He and his partners opened 12 stores throughout the city. But nearly two decades ago, he began pursuing a new vision. Along with several partners, he opened a store that has evolved into a $100 million business.

“Our first store, Containers and More, opened 18 years ago at 91st and Metcalf in Overland Park,” said Ferrel. “We now have 21 stores located from the West to East coasts, with a new store soon opening in Long Island, New York.”

Now known as Organized Living, Ferrel said the business represents “a lot of sacrifices, passion and determination. To grow a business, business owners have to make a lot of sacrifices, be passionate about what they do and never give up. There will be plenty of times that you’ll want to throw in the towel. Successful entrepreneurs don’t.”

Visionaries . . . or Serendipity?
Sometimes a company’s founding vision is to become the big kid on the block. Tim Webster, president of the American Italian Pasta Company, said the company’s goal was always to become an industry leader.

“We knew we had a better mousetrap, and we knew if we got it right we could become the leading pasta producing company in the nation,” he said. “We’re now the largest pasta producer in North America.” The company, based in Excelsior Springs, has topped $450 million in annual sales.

Webster’s business philosophy is that all companies must have a reason for being in business. “The vision for this company has always been crystal clear,” he said. “Our mission is to provide a product that people want at a good value and with exceptional service. We win customers by meeting and exceeding their requirements.”

Ferrel said his vision was to grow a $100 million business. “I thought it would happen much quicker than it did, but that was always my vision,” he said. “My goal wasn’t to create a job for myself. It was to build equity.”

Karbank, however, didn’t plan to grow Karbank and Co. to the size it is today. “I didn’t have aspirations of being the biggest kid on the block,” he said. “I decided early on that I’d rather be a more hands-on company with a smaller staff and more client involvement. In my dreams, when I started as a company of one in 1950, I never imagined this level of success.” The company now owns more than 100 buildings containing over 5 million square feet of space.

Barnett Helzberg Jr., who grew his family’s jewelry store chain to 143 stores prior to selling the business in 1995 to Warren Buffet, also didn’t set out to become a big business.

“I never thought we’d grow to the size we did,” he said. “I just did the best job I could, hired the best people I could find and took advantage of opportunities that came along the way,” he said. Helzberg served as president of Helzberg Diamonds, Inc. from 1962 to 1995. He expanded the family-owned business from 13 stores to 143 stores in 23 states.
Another local entrepreneur enjoying unplanned success is Rick Krska, president of LaserCycle, Inc. “I started my business in 1992,” he said. “I had no idea that the industry was even as big as it is.”

Krska said he developed a business plan but didn’t seek big success. “I think companies earn opportunities to grow to that next level through hard work and perseverance,” he said. “If they’re really passionate about what they do and strive to become the best in the world at it, they will succeed.” LaserCycle, Inc. will be a $40 million company by the end of 2003.

Dye said that while working at his kitchen table up to his elbows in dough, “it was hard to envision the level of success we’ve achieved. But it was always something in the back
of our minds. It was always something we wanted, even if we didn’t specifically plan for it.”

Open to Opportunity . . . and Mistakes
When opportunity knocks, successful entrepreneurs aren’t afraid to answer.

Initially started as a toner remanufacturing company, LaserCycle switched into the inkjet business. “That decision caused our business to take off,” Krska said. “Sometimes the right opportunity just presents itself at the right time. Successful entrepreneurs have to be poised to take advantage of that.”

Sometimes entrepreneurs don’t take advantage of opportunities, or the “opportunity” doesn’t play out as expected. Ferrel said he was eager to open a second store in St. Louis after enjoying success at his Overland Park store. “Unfortunately, we didn’t understand our customer base, and the store was initially a huge money loser,” he said. “It was really a disaster. But we managed to turn things around and we tripled the volume over 10 years before relocating the store.”

Webster, of American Italian Pasta Company, said he has made “hundreds of mistakes. They’re too numerous to mention. But having a system in place to identify mistakes, having the courage to change them and the humility to learn from them is a quality of a successful entrepreneur.”

“We’ve always said yes to every opportunity,” said Three Dog Bakery’s Dye. “And while we have no regrets in regard to lost opportunities, I’d have to say some of the opportunities could have been managed better.”

Dye said Three Dog Bakery weathered one mistake that nearly destroyed the business. “When contracting with our first national pet food chain, a mistake was made in the Electronic Data Interchange (EDI) system that resulted in our producing a year’s excess of inventory for both us and the store chain,” he said. “The glitch nearly destroyed our business. Now we’re much more cautious, we probe deeper and we experiment better when exploring new opportunities.”

“Opportunities came along that I took advantage of, and many of these succeeded beyond my expectations,” said Karbank.

In retrospect, Karbank said there were also numerous opportunities that he didn’t take advantage of that would have resulted in more business. “If I traded my mistakes for my successes, I would probably come out ahead,” said Karbank. “But the mistakes you make in starting and running a business are often your best teachers.”

Marking Milestones
Most entrepreneurs can point to major milestones that were the turning point for success.

For Three Dog Bakery, gaining a national PETsMART account was such a milestone.

“That contract represented a quantum leap—going from being a local baker to distributing our products nationally,” said Dye. “We had to build a distribution facility, learn how to accept orders via an EDI system, bar-code and label our products for all 50 states and much more.”

Another milestone for Three Dog Bakery was partnering with Kansas City Equity Partners. “They helped us think like a big company and create a board of directors. They also invested in our business. And some of our public relations milestones have been getting a national show on the Food Network, writing three books, appearing on the cover of Forbes Magazine and appearing on the ‘Oprah’ show.”

Ferrel said opening his first 20,000-square-foot store a decade ago marked his first milestone. “It was a dream come true for me,” he said. “We will mark another key milestone this year when we hit $100 million in sales.”

Webster said that producing more than one billion pounds of pasta in one year was a key milestone. “But it’s dangerous to say that you want to produce a certain amount or achieve a certain sales goal,” he said. “It’s more important to stay focused on pleasing customers and gaining new ones. Companies must stay focused on their reason for existence, which is to provide a provide a product or service that someone wants.”

Keys to Success
Ferrel said a key for a small business interested in attaining big success is “learning to work with the resources you have. I call it guerilla warfare.”

At one time, Ferrel operated with only four staff members in his corporate office. “We had one buyer, a receptionist, a bookkeeper and myself,” he said. “Times were tough. It’s really hard to run a business on limited resources. But that’s what entrepreneurs do to achieve success.”

Hiring top people and making them believe they’re part of something special is another common denominator among successful companies, said Webster. “It’s all about the people,” he said. “We’ve attracted people with the potential for greatness and convinced them they’re part of something special. That is what has made the difference.”

Recognizing weaknesses—as well as strengths—is another key. Helzberg said entrepreneurs often make great leaders but not good managers. “I hired great people to fill the roles that I wasn’t capable of filling,” he said. “I surrounded myself with people who knew more than I did. And my managers taught me to think that no matter where I was, I was just getting started. I believed that we had opportunities for unlimited success, and we did.”

Making cautious decisions is important, said Karbank. “Don’t shoot from the hip and don’t bet the farm on a single decision,” he said. “Learn how to retreat, come back and fight another day.”

SIDEBAR
Local Entrepreneurial Resources

Many successful entrepreneurs relied on the help of mentors and local entrepreneurial resource organizations. Below are a few of the resources and classes for entrepreneurs who want to grow their small businesses.

For a more complete listing of local resources for entrepreneurs, visit www.kcsmallbiz.com.

For up-to-date information about business programs and classes, visit www.kcsmallbizcalendar.com or www.kcsmallbusinessclasses.net.

Women’s Business Centers
Kansas Womens Business Center, 8427 Bluejacket, Lenexa, KS, provides services to advance the success of women business owners. KWBC offers training, mentoring, networking and one-on-one business consulting. Also offered are Kauffman FastTrac programs, the Athena PowerLink Mentoring Program and Springboard Enterprises venture capital education programs. Classes include Out of Your Head & Into Your Business: Assessing Your Entrepreneurial Potential, which introduces participants to the Kansas Women's Business Center and helps them learn about the ideal characteristics of the entrepreneur; Fast Forward Strategic Planning Orientation, a workshop designed to show how the Kansas Women’s Business Center can help entrepreneurs grow their companies and align business goals with personal vision; FastTrac Planning for Women and peer-to-meet mentoring programs. Call (913) 492-5922 or visit www.KansasWBC.com for more information.

Missouri Women’s Business Center, 4747 Troost, Kansas City, MO, provides business education, access to capital and mentoring programs to women entrepreneurs.

Services are provided at little or no cost. The center also offers a series of professional seminars focused on helping women start and build financially sound businesses.

These hands-on seminars are designed to give women entrepreneurs the tools and insight they need to make decisions throughout the lifecycle of their business. Seminars are organized into four series: Basic, Management, Expansion & Growth, and Exit. Call (816) 235-6146 for more information.

Small Business Development Centers (SBDCs)
SBDCs help business owners through no-charge, one-on-one business counseling as well as courses and seminars.

Johnson County Community College SBDC, in addition to several other classes, offers Success Right from the Start, a seminar providing useful business information for start-up businesses on government requirements, forms of business organization, record keeping and financial planning. Call (913) 469-3878 for information.

UMKC SBDC, 4747 Troost, offers Starting a Business: The First Steps, which is an introductory, three-hour course discussing the critical first steps for entrepreneurs thinking about staring a business. The UMKC SBDC offers several other programs as well. Call (816) 235-6063 for information.

Additional Resources
GO Connection, 4747 Troost, Kansas City, MO, helps small businesses become financially sound through business education, access to capital and mentoring. The class Planning for Your Business is designed to help prospective and existing business owners take their ideas and put them on paper. The Loan Basics Workshop introduces new and prospective businesses to the loan process. Call (816) 235-6146 for more information.

Helzberg Entrepreneurial Mentoring Program (HEMP), 4747 Troost, Kansas City, MO, focuses on the development of a long-term relationship with a mentor who acts as a coach and sounding board for businesses generating between $1 million and $75 million in annual revenues. Applicants must have a desire to substantially grow the business. Call (816) 235-6125 for information.

Linda Cruse is managing editor of Kansas City Small Business Monthly.