Corrections or additions?
Start-Up on the Edge
This article by Barbara Fox was published in U.S. 1 Newspaper on
November 18, 1998. All rights reserved.
Now is the make it or break it point, says Christopher
Handy, an entrepreneur who seems to have done everything right yet
still is on the verge of failure. Handy has been in business for six
months, and he has enough cash to hold out only for another couple
of months. “I can tell long-term that if I can stick to it, my
business would be a successful operation, but I can’t keep going
unless
I get some serious cash flow,” he says.
Handy was “downsized” once too often, so after a successful
career as a chemical technician, he decided to go out on his own to
open a blind-cleaning business, Handi’s Ultrakleen. He managed to
get into the state’s special program for unemployed people who could
be future entrepreneurs, and he took all the classes. By his account
he followed all, or almost all, the directions.
First, he had an idea that fitted his talents. A Vineland native,
he was the first in his family to go to college, and he enrolled in
the pre-med program at Howard University. But in 1972, after three
years and 90 credits, he ran out of money and began working as a
chemical
technician, moving from job to job for such firms as Western Electric
and Engelhard. After 10 years at Engelhard, he was “downsized”
from his job as a petroleum catalyst test technician.
That would be the last time, Handy decided, that he would be the
victim
of corporate restructuring. “The one thing my father told me,”
he remembers, “is that `You’ll never make any money working for
somebody else.'”
He received his last paycheck in December, and then enrolled in the
entrepreneurial training program run by the Department of Labor for
those who are unemployed. Those classes started in April, 1998. He
officially opened his business on April 28, while the classes were
still in progress.
“I was doing all the groundwork without benefit of the class,
going from one state agency to another and reading — I have tons
of business books here on how to run a small business. You basically
have to take it and modify it for it for your own use.”
“I wanted a service business because supposedly there is so much
growth there, and I wanted something that no one else was doing, so
I could corner the market. I had used ultrasound at Engelhard, so
I knew how effective it was.”
“It’s the most thorough cleaning you can have,” says Handy.
“Generation of sound waves through a liquid media causes bubbles
to form, travel at high velocity, and implode on themselves, and that
strips the dirt from whatever you are cleaning. It reduces the amount
of electric charge and gathers dust less quickly.”
When the class started, he already had cards printed up and had his
tank, an eight-foot stainless steel ultrasonic tank that sells for
$16,000 from the biggest company, Michigan-based Shine a Blind of
America. For him to clean standard blinds costs $6 each, and vertical
blinds are $1 a slat. “I take them down and usually have them
back the next day.”
He assembled $30,000 of his own money plus $5,000 from his brother.
Using a software program, he drafted a business plan and took it to
various banks. All the bankers turned him down for a business loan.
“They liked the business plan but they didn’t feel the market
could be properly tapped with the amount of funding that I have.”
He spent $20,000 for equipment and $5,000 for advertising —
business
cards and direct mail expenses. His income so far, from 20 clients,
has been $5,000. He used that plus the remaining $5,000 from his nest
egg for living expenses and to help pay the $1,400 monthly mortgage
on his house, where he lives with three cats; he has no family
responsibilities.
Where did Handy go wrong? You decide.
Not waiting until he had enough cash. “That it isone thing I definitely fell short on. I underestimated the amountof personal advertising budget that I needed. I overestimated myabilityto draw in business,” says Handy.Other start-ups in his field, he later discovered, required two yearsto get out of the red and had a budget for advertising that was twiceas big as his. He might have taken a silent investment partner ortaken a full-time or part-time job during the early stages of hisbusiness. Or he could have kept on trying to get a bank loan.”I have heard that banks are supposed to be helpful, but I haveno faith in banks,” says Handy. “I have had zero help fromanyone. The only source of help has been my family.” Of his sevensiblings, one brother was able to loan him $5,000.Not hiring an attorney. Handy did the incorporations andcertifications himself, but an attorney might have steered him toa less expensive alternative and also represented him in financingrequests.Not hiring a business-friendly accountant. Handy usedthe storefront accounting service that had been doing his income tax.A corporate accountant might have made a better case to the bankersor suggested financing alternatives.Not doing enough research on marketing. He took someadvicefrom a volunteer with S.C.O.R.E. who suggested that he make the nameof the business (Handi’s Ultrakleen) different from his own name,and that he spell clean differently from the usual spelling.Essentially, he planned his own marketing campaign and spent hisbudgeton direct mail without doing the crucial first step — a test,to see if he was targeting the right people.”I did direct mail and targeted cleaning services, and out of300 or 400 that I sent out I had a one-percent response. They saidif someone calls we will keep you on file. Janitorial services arejust not receptive. It’s almost like they think you are going to taketheir business,” says Handy.He also contacted and faxed 60 property managers but has not heardfrom anyone. “The property managers all think that the janitorialservices are taking care of the blinds, but the services don’t touchthe blinds,” says Handy. But they don’t want to add extra servicesand fees to their bills.”The message that people need is that dust and grime that buildsup on the venetian blind is what causes a major number ofallergies.”To say nothing of the harm that it could cause in a lab. “I haveattempted to sell to scientific R&D environments, but just gettingin those places is almost impossible. They say we already have ajanitorialservice that handles it. I have not figured out a way to get aroundthat.””At least I know what doesn’t work.” His current move is tohave 1,000 brochures printed up.Not being a good salesperson. Handy admits he doesn’tlike to “bug” potential clients by calling them repeatedly,when actually the experienced sales people know that that’s whatworks.”I have limited sales ability,” says Handy. “Quitefrankly,I don’t like sales. I am an operations-oriented person. I havedevelopedbasic methods for getting a set of blinds done and for keepingeverythingin order. But I have difficulty `bugging’ a person. Trying to convincethem to use me. I sort of don’t like doing that.”The upside: “I’ve had some really satisfied customers, who makeme realize there is a market, and that when you do good work peoplewill push your business. Now it is a matter of making enough peopleconnect to the service.”What was helpful advice? “Keep your customers satisfied and tryto persevere, because one day things will get better.”What was useless advice? “All the places people directed me forfinancing. Basically, small start-up businesses do not have anyfinancialsupport. I was turned down by PNC and CoreStates.””Other ultrasound businesses in other areas, if they are honest,will tell you that the first two or three years are really a struggle.I am not meeting my bills. I’m looking at another month or two.”His fallback plan: to install and sell blinds. “Actually thereis money to be made in that. I am diverse enough to see there areother areas to go into. It is not like a lost hope, but the bottomline is I am not supporting myself. I am slowly coming around to thefact that I am going to have to like to sell.”– Barbara FoxHandi’s Ultrakleen, 1012 Greenwood Avenue, Trenton 08609.Christopher Handy, owner. 609-394-1832.Previous StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
