Three Small-Business Problems and How They Got Cured

By Paulette Thomas
Staff Reporter of The Wall Street Journal

THE PROBLEM: An entrepreneur sells his beloved company, and watches it wither.

Scott Wainner is the guy you envision when you think of the dot-com boom. When Scott was six, his grandfather gave him one of the early Texas Instruments computers. As a 16-year-old in Dallas, he launched a couple of techie Web sites. One was ResellerRatings.com, where users rated their experiences with online hardware and software merchants. Living with his mother, and relying on off-site servers, he sold about $100,000 a year in Web-site advertising.

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In early 1999, he was living in Portland, Ore., and focusing on his thriving Web sites. "I got an e-mail out of the blue from a company that said, 'We are interested in partnering with you,'" he recalls. "Then the next e-mail said that they were interested in buying the company."

Soon, a bidding war erupted, and Mr. Wainner's Web sites were acquired by EarthWeb for several million dollars-more than twice the original offer-and the company hired him.

It was heady stuff for a guy just turning 21. He happily set about redesigning the sites and hiring new content writers. "I loved the sites," he says. "They were my whole life basically."

But as the dot-com economy crumbled at the end of 2000, EarthWeb was acquired by another company (and later another), and the sites became a low priority. Soon, the new owners eliminated the budget for the Web sites and in October 2001, laid off Mr. Wainner. By early 2002, they shut down ResellerRatings.com.

THE SOLUTION: Mr. Wainner had no income, but a nice pot of cash. So he wrote his old employer, and inquired about buying back his old sites. After a month of back and forth, he acquired his old business "for way less than what EarthWeb paid me for it."

By April 2002, he was working again on ResellerRatings.com. He hired consultants to redesign it and improve the user interface. He added a pricing-comparison service, and licensed the product reviews to other sites. He began selling survey data back to the retailers. Traffic is climbing steadily. He has no debt, no outside investors, and works with part-time consultants. Revenues for last year were about $750,000. "It's awesome to have it back," he says.

THE LESSON: The value of an enterprise depends on the level of commitment-and few managers are as committed as a founder.

THE PROBLEM: A business plateaus in an endless grind.

Rose McCoppin is a gritty example of the immigrant entrepreneurs who thrive in America. Reared in Turkey, she worked as a chambermaid while attending college in England. In 1975, at age 18, on a visit to Los Angeles, her possessions and plane ticket were stolen. To earn money for her trip home, she worked 7 a.m. to 11 p.m. at a convenience store, often crying on the job from homesickness. But she married, had a child and stayed on.

As her baby grew, she became antsy. "I said, 'it's time to start a business,'" she says. So she began cleaning homes as Rose Maintenance. Her goal was a small, manageable business, but referrals poured in. So after she amassed as much business as she could handle herself, she would advertise the sale of her "cleaning route," generally selling it for a price of four times monthly sales. Then she would start fresh, building another one. She went through that cycle five times in 10 years.

But in 1995 a divorce, two children and foreclosure proceedings on her home forced her to reconsider her strategy. She quit selling her "routes," and began hiring teams to work for her. She cleaned houses all day, then would come home to get routes ready for the next day. By 2000 she had three teams and sales of $1.5 million.

Her business was expanding, yes, but life was as grueling as ever. Was there a way to grow, keep tabs on quality, and enjoy herself a bit?

THE SOLUTION: Ms. McCoppin began attending workshops and conventions of cleaning businesses. She was amazed at what she didn't know. She heard discussions of rigorous, by-the-minute cleaning schedules, hiring tips and the latest cleaning chemicals. She researched franchises and bigger cleaning businesses for two years, and then bought two franchises of the Maids Home Services. She found that the franchise systems help her target her marketing. She sends employees for two weeks of training in Nebraska. Her more efficient systems and support, she says, more than make up for what she pays in franchise fees and added costs. Now she has more customers than ever, and leaves the scrubbing and waxing to her employees.

THE LESSON: "Don't think that you know it all," says Ms. McCoppin. Tap into those who have succeeded.

THE PROBLEM: Is it possible to make a living playing with kids?

Tommy Rueff, along with a partner, built a successful advertising firm in Cincinnati. A trained sculptor and painter, he pursued his artwork on the side, showing his pieces in local galleries.

The Contemporary Arts Center in Cincinnati asked to include his studio on a tour for fourth-graders, and Mr. Rueff loved talking to kids about art. But he thought it would be better if they took part. So, when the next tour came around, he arranged for each child to create his or her own montage work. He was struck by their pride in their work. "That was so life changing for me," he says.

But could he build a business around it?

THE SOLUTION: He sold his interest in his advertising firm in 1999, and started Happen Inc., a nonprofit to bring children and parents together through the arts.

His only ambition was a five-week class for kids and parents to create artwork together. Outreach projects naturally grew. One successful program gathered kids from a homeless shelter to produce their own films over a summer. Some 500 children from Head Start took part in a Let's Play with Clay program, making pottery.

Still, it's a financial struggle, and he has relied on his advertising contacts for support. Procter & Gamble donated $20,000 to Happen. The Greater Cincinnati Foundation paid Mr. Rueff's salary for a year. Happen also launched an artsy moneymaking arm called Toy Lab. Using old toys, kids assemble the parts into new, weird objects-a ballerina-robot-animal, say.

Mr. Rueff works for a "considerably lower" salary but finds other rewards in his creation. Recently he encountered a 12-year-old he recognized from a pottery class, a boy whose mother worried he was running with a bad crowd. Mr. Rueff was disappointed when he saw the boy flash what he thought was a gang sign. No, the boy told him. He was showing off that he remembered the hand position for holding a bowl on the pottery wheel. Mr. Rueff went back to the potter he worked with that day, and said, "We don't have money, but we will expand this program." The next week an unexpected $5,000 donation arrived.

THE LESSON: An enterprise built on the passion of its founder often finds a way to survive.