Bottom-Line Boosts

During challenging economic times, business owners are required to take a hard look at their books to determine the best possible path toward shoring up revenues.

For many – as headlines so often show – profits are protected by downsizing.

There are, however, other methods Springfield businesses are using to stabilize profits, from adding new services to cutting overhead.

New market opportunity
SCS Home Entertainment is adding a commercial division to bolster its existing residential and retail operations.

This isn’t the first time SCS – Springfield Central Systems – has evolved to achieve growth. When President Larry Batson joined his father in business, he added central vacuums to the company’s repertoire, and upon taking the reins in 1990, Batson added audio-visual systems. Two years ago, he took SCS into the retail realm with the purchase of Stereo One.

With the newly launched commercial division, SCS will install audio, visual, security and automation systems for commercial clients.

Batson said the decision to branch out was brought on by a couple of factors.

“Retail’s just been dropping every year,” he said, noting a growing commercial demand for automation systems that control functions including lighting, heating and cooling.

Batson’s team installs myriad automated systems, including those that can detect when a room is being used and systems that can allow remote control of energy use.

He sees growth potential in the hospitality industry. For instance, when a guest checks in, the front desk clerk can hit a button that will bring the room to a comfortable temperature, turn on the lights and open the blinds. The room wouldn’t be heated or cooled unnecessarily.

“I think commercial  – and hospitality especially – is a huge, huge market that we’ve never really tried to get into,” Batson said.

Batson has promoted Domenic Tate, who came on board with the Stereo One acquisition, to manager of the commercial division.

Tate already has gotten several requests to bid commercial jobs, and Batson expects that the commercial side will outpace the company’s residential business, even though the profit margins are slimmer.

“You need to bid correctly or you’ll lose money. We’ll have to work a little harder and do a few more jobs to make the same amount of money,” Batson said.

Shuttering a storefront
The four co-owners of Rockridge Group LLC chose to close their brick-and-mortar retail shop, Ampersand, to focus on catalog and online operations and improve their profit margins.

Three of the four co-owners were working for Direct Retailing Inc., a catalog business that went bankrupt in April 2008.

“We were all going to lose our jobs, and we all really liked what we did,” Rockridge co-owner Gretchen Dexter said.

The trio added a fourth partner, pooled their resources, took out a small loan and negotiated for the intellectual property, catalog names, URLs, photography, copy, sales data and the customer list. They also bought some inventory at a liquidation auction, and set up shop in 100,000 square feet at the former Fasco building in Ozark, where Direct Retailing had been located.

While they knew all along catalog and online sales would be their primary source of revenue, the company needed to sell its physical inventory as well, Dexter said. The 100,000-square-foot space was far more than they needed, so the hunt was on for a smaller location.

When they found the old Turner’s Department Store on Campbell Avenue in downtown Springfield, its 8,000 square feet seemed ample, with retail space and a basement where they could box orders.

They opened Ampersand in 2008 in the storefront and worked on the online and catalog sales in between retail customers.

It worked OK for a while, but when Rockridge began mailing catalogs again in 2010, it became clear that even with storefront retail space, the building wasn’t suitable after all.

“We were taking orders by phone, fax and e-mail,” Dexter said “It just became clear that brick-and-mortar store or not, it was not going to work. It was too small, had no office space and delivery trucks had to park on Campbell …  backing everything up."

Earlier this year, the group made the decision to shutter Ampersand and move operations to a commercial space near Cherry Street and U.S. 65. Now, the partners are focusing all energy on the company’s online and catalog product lines, The Music Stand, Linda Anderson and Characters.

The decision was easy from a financial standpoint, Dexter said.

“Toward the end, our revenue from the bricks and mortar was about 3 percent of our overall income, which is OK … except that it took up a lot of time,” she said, noting that the partners figured out that the storefront was eating up about 30 percent of their time.

Since moving to the 12,000-square-foot space at 310 S. Union Ave., the partners have a great deal more office and warehouse space and much-needed loading docks.

“We’re all so much more efficient because we don’t have the distraction of the store,” Dexter said.

She concedes, though, that closing Ampersand caused a few pangs.

“Sentimentally, and for a lot of community involvement reasons, I’m really sorry we don’t have that brick-and-mortar store, especially downtown,” Dexter said. “Emotionally, it was hard. Businesswise, it was the easiest, clearest decision we made.”

Rayanna Anderson, director of Missouri State University’s Small Business and Technology Development Center, said all business owners must take time periodically to look at what is profitable, what isn’t and what opportunities they might be missing.

And, she said, setting aside emotions is important, so that owners can think more analytically, like consultants.

“They have to operate their business. They can’t let it operate them,” Anderson said.

For businesses that need help uncovering what’s working and what isn’t, SBTDC has tools that can help entrepreneurs arrive at that analytical mindset.

The center’s services include one-on-one consultations for many aspects of business, including financial analysis, cost and inventory control and operations, as well as access to financial analysis tools, according to SBTDC.MissouriState.edu.

“It’s really eye-opening when you compare your business to other businesses. It shows you where you’re doing really well and where you have room for improvement,” Anderson said.[[In-content Ad]]