Small Business and Franchise Success Stories

Many entrepreneurs know exactly what small business they want to run. Others seek to buy a small business that meets specific criteria. Mike Royw’s, owner of eSupplyStore.com, spent three years looking for the right opportunity.

“I was a corporate guy,” Mike explains. “I worked at ACI Worldwide, a technology-based company, for 25 years. I made my way through operations, management, sales, marketing, business development, and ultimately corporate acquisitions. So I had a few parameters in mind.”

Mike’s family wanted to stay put. As a senior executive Mike was well compensated and wanted to remain that way, so the business had to be of a certain size. And he didn’t want to own a restaurant, a retail operation, or anything requiring heavy assets. “In short,” he says, “I wanted something light on assets with a focus on cash flow and a lot of variable margin.”

Mike found eSupply Store through a small business broker. One problem, though: The business was located over 500 miles away in South Bend, Indiana. So what did he do? He moved operations. “We had the business moved inside of eight weeks,” he says. “In fact the office administrative functions, the computer functions, telephone systems, office management… all were moved within the first week. The rest was just shipping as much inventory from South Bend as we could while we stocked up the Omaha location – we didn’t want the expense of trucking inventory from one site to the other.”

As a small business owner Mike services other small business owners, providing shipping and packaging supplies. “We serve the segment of the small businesses that need shipping supplies and packaging materials that do too much volume to pay the markup at a major retailer like Staples or Office Depot… but they don’t have a local distributor to turn to. We fill a major void in the marketplace.”

“Our unique differentiator,” he continues, “Is that we’re able to sell various lines of bubble products and deliver them to our customers’ doors for a good price. Bubble wrap, bags, and mailers are our leading product – in the future we’ll expand our product line to become a single-source provider for the packaging needs of small businesses.”

What challenges has Mike faced in buying a small business? One risk entrepreneurs face when they buy a small business is that major customers may disappear during the transition the old owner to the new. As an internet-based ecommerce business, eSupplystore.com customers had never met the previous owner face to face, and since no customer made up more than 1% of total sales, the transition was relatively low risk.

Another challenge was going from a major corporation to being the head of a small business. Yet oddly Mike feels his stress levels are now lower, not higher, since leaving corporate America. With an MBA and a B.S. in computer science and nearly thirty years in technology positions, Mike handles all computer and web efforts on his own. He functions as his own webmaster and also manages internal systems, product procurement, accounting… which according to Mike may sound like a lot but on a day-to-day basis is easy to handle since he purposely avoided custom systems and uses proven third-party applications whenever possible.

“I also feel my stress has gone down by owning my own business,” Mike says. “At my previous job I was on my fourth CEO in five years. I like to be able to make decisions. In corporate America more people were involved, more presentations, more data, more communications, more differences of opinions, and more politics. When you own your own business you gather the information you think you need and you decide and in 60 seconds it’s over.”

One decision Mike made fairly quickly was to avoid traditional small business financing methods and enlist the help of Guidant Financial Group to use retirement funds to help purchase of the business. “I was an analyst,” he explains, “And I analyzed company acquisitions and returns on investment based on multiple-year timelines under a variety of assumptions. I looked at what I was able to contribute to my 401(k) and my historical return and realized if I could make 20% on my money over the long haul by owning my own business, why would I not do that? In my mind I’m not spending my 401(k). I’m simply investing it differently. And I’m investing in my knowledge, my work ethic, and my own success or failure.”

Now that Mike has completed the transition phase he looks forward to growth. His first step is to diversify eSupply Store’s product base. When he bought the company it sold approximately 1,000 SKUs; currently they sell 2,500 products and are hoping to hit 10,000 in the near future. The goal is to penetrate the existing customer base while gaining new customers through a wider variety of product offerings. “Our goal is grow our business by helping our customers grow,” he says. “A number of our customers are home-based, and as their businesses expand they’ll need alternative business models to support that growth.”

What thoughts does he offer to potential small business owners? “My main advice is to never pay for growth when you buy a small business or purchase a franchise,” he says. “People selling businesses have a business that is worth ‘X’ dollars and they want you to pay ‘X’ plus ‘Y’ because the business may grow. Don’t pay extra for growth potential; getting to ‘Y’ is your job.”


Starting a small business can be incredibly stressful… unless your small business develops products that actually reduce stress.

Along with his partners Sonja and Jasminka, Kenneth O’Connor had worked in the food industry for about twenty years. “The problem was as executives for many corporations we created formulations, built manufacturing plants… but we were always small cogs in a big wheel. Two of us went to work for one company and created a number of formulations and made them a lot of money – and then when they were finished with us they let us go. So we decided not to put up with that again and went out on our own.”

Together they founded Emerald Star International (www.emeraldstarinternational.com) to develop and manufacturing fine foods and supplements. Their first compound was Accord, a beverage designed to work with brain chemistry to reduce stress, and improve clarity, focus, and memory. They tested the product, launched into the retail market, developed distributor relationships – and just last week launched nationwide.

How did they find success so quickly? “We have done this for other companies,” Kenneth says. “And we made them into very large companies. By education we’re not only food scientists; for example, Sonja is a machine engineer and a pharmacist. We have a lot of skills in doing a lot of different things. I don’t recommend people starting a business in something that they don’t know, if you’ve never made donuts don’t open a donut shop. If you’ve never groomed dogs before or don’t like animals don’t open a dog grooming place. What we know is the food industry and especially about food supplements.”

Their goal was to find a new product in a developing category. They also wanted to own their own business without outside investment or interference. After investigating a number of possibilities, Kenneth turned to Guidant Financial Group for small business financing advice. “I talked to a few companies and I just wasn’t happy with what they offered. I loved the thought I could actually take a 401(k) and use it to invest in the business. After all, my 401(k) hadn’t done well for many years. So we all pulled our money out of our 401(k)s and as a result we own the business ourselves. Just make sure you get professional guidance,” Kenneth continues.

In the early stages Emerald Star focused on developing a product with a broad appeal. Instead of competing in the energy drink market, they took the opposite approach. “We decided most people could use stress reduction and a way to eliminate some anxiety. We know a lot about herbs and supplements and we combined that knowledge with scientific results. Then we started testing, and 87% of the people who tried the product said they could feel the effects. We even tested our product with paratroopers – who feels more stress than someone jumping out of an airplane?”

Along the way they noticed an interesting phenomenon. 20% of the people that took their products felt a “runner’s high” after about ten minutes. After some research he determined that some of the product was absorbed through the tongue, bypassing the normal digestive process and entering the bloodstream quickly.

Early results were encouraging, but they didn’t stop there. Over time they tested their products with army rangers, teachers, firemen, policemen, salespersons, and students. In fact, the company actively evaluated their product using high-stress, high-risk professions to ensure they were on the right track.

In each case they experienced great results. And since the people who tried the Accord tended to love it, Kenneth and his partners realized that demonstrations and samplings were a great marketing tool. They started servicing smaller independent stores, built up a solid base of sales and experience, and eventually moved into large chains like Whole Foods and Henrys.

“Now our problem is being able to service all the stores we’ve landed,” Kenneth says. “I just got word we’re going into 15 new stores in New York. Once again we need to organize demo people and ramp up quickly.”

Kenneth feels part of Emerald Star International’s success is due to his having a marketing and advertising background; his first job out of college was in sales and marketing. When they started the business, he and his partners developed a strong business plan and extensive marketing model. “A business plan is not something you write and put away, it’s something you follow,” he says. “Evaluate what is working and what is not working. Measure everything, especially marketing. I look at marketing as a profit center. Every piece of literature I put out I expect a return on.”

But while he keeps a close eye on how the business operates, and is conservative in how he allocates funds to different projects, Kenneth is not conservative is when it comes to projecting growth. “In five years we are going to out-perform products like 5-Hour Energy and be a serious contender in a new category of foods. I think we will hit $150 million in sales.”

And due to the nature of his product, he and his partners will probably experience a lot less stress along the way.