Running a small business these days is making a lot of local owners feel like self-described “tweeners.”
The economic picture is brightening, but still high unemployment and cautious big business are causes of concern for small-business owners.
The Business Journal took a look at four such small-business owners and their efforts to build bigger customer bases as the county moves out of recession and into recovery.
GT Beverage Co., San Juan Capistrano
GT Beverage Co. is trying to get its Sportastic sports drink into more mainstream stores.
“In this environment, stores aren’t really willing to experiment or test new products,” said Tom Weiss, managing director at GT Beverage in San Juan Capistrano. “You can go to a grocery store and show them that you’ve got a great product at great pricing and they don’t want to take a chance. All they want to know is: What other stores are you in?”
He’s trying to counteract that initial hesitance with cool designs, healthy ingredients and lower prices.
“By doing all of the design work ourselves and making sure our pricing is extremely competitive, we’ve been able to attract large orders out of the gate with retailers,” Weiss said. “Each bottle is molded into a round bottle. We then apply a sports-themed label so that the finished product looks like soccer balls, baseballs, basketballs and other types of balls.”
The company’s drinks have been picked-up by major retailers such as Wal-Mart Stores Inc., Costco Wholesale Corp. and Big Lots Stores Inc.
Another big help has been the outsourcing of manufacturing and basic product development to other companies, according to Weiss.
“They mix everything together to come up with the best flavor,” he said. “We fine tune those mixes until we get a finished drink we’re satisfied with. Then someone else actually manufactures the product.”
The company started in 2008. Even though times were tough, Weiss said GT Beverage’s niche was unique enough to generate sales.
The Business Journal estimates GT Bever-age’s annual revenue at less than $10 million.
The company is working on a line of juices. Accompanying bottles will resemble oranges and apples along with other fruits.
Prices range from $3.99 to $4.99 per six-pack, according to Weiss.
“We’ve made sure that our products are very competitive with other sports drinks on the market,” he said. “In this market, knowing your competition and pricing your products correctly are critical elements.”
Another part of GT Beverage’s game plan that is helping to win business is its focus on using healthier ingredients, according to Weiss.
The drinks are created to be diabetic-friendly with 4 grams of carbohydrates and 15 calories per bottle, he said.
That has helped the company gain footing in schools, which are trying to cut down on unhealthy food and drink offerings, according to Weiss.
Green Wave Energy Corp., Newport Beach
Financing still is difficult to come by these days for small businesses, according to Mark Holmes, chief executive at Newport Beach-based Green Wave Energy Corp. The developer and maker of renewable
energy systems opened in October two years ago.
“It was right as the market fell off a cliff and Bear Stearns had just gone under,” Holmes said. “We were staring into the abyss.”
It took almost 18 months to get the business off the ground, he said.
“We had a little bit of financing, but it took a lot of time,” Holmes said. “It was literally taking one brick at a time to build the resources to buy raw materials and do research and development.”
In the past few months, three angel investors have agreed to provide several million dollars in financing, according to Holmes.
“It’s going to allow us to ramp-up and grow much more quickly,” he said.
The firm’s initial product was the World Light Pole, which generates power for lights, personal electronics and equipment in remote locations.
For example, a company in Nigeria is using the poles to run security cameras at remote locations.
The company has more than $5 million in deals signed with companies around the world, Holmes said. Holmes also is in negotiations with several other companies and is projecting revenue of $25 million to $30 million this year, he said.
The company keeps costs down by outsourcing production.
It is talking to land developers as potential sources of business.
“If you’re trying to build something off the local power grid, this opens up a whole new market,” Holmes said. “Cities don’t have to dig up trenches and run all of the wire and cable any more. They can distribute our power systems to run pumps, motors or just about anything.”
The company plans to hire a dozen full-time employees starting in June.
Firefly Events Inc., Huntington Beach
Getting people to know who you are can be difficult for a startup, said James Bennett, chief operating officer at Firefly Events Inc.
The Huntington Beach-based company sells packages of events for bachelor and bachelorette parties.
“We’ve put a lot of our efforts into social networking to get our message out,” he said. “And we’ve emphasized (traditional) networking.”
Since starting up last year, Firefly has been able to cut deals with about 300 companies that provide everything from wine tastings to stunt driving events, according to Bennett.
Firefly then packages those events for different parties.
Bennett cofounded the company with Nadine Sandeluss.
“By narrowing our focus, we know our client base better and can target our efforts,” he said. “We based our model on existing and successful models in Europe. But in the U.S., that particular niche is still a pretty wide-open marketplace.”
Bennett’s learned to emphasize online marketing, such as making sure the Web site pops up high on search results.
The company’s Web site also includes a blog and Twitter feed.
Bennett has a background working in graphic design and computer programming. Sandeluss is a veteran of the tourism industry, according to Bennett.
“Without that combination of experience, our start-up costs would’ve been much greater,” he said. “Just building and maintaining a Web site can be very costly and time consuming.”
Pass the Baton Inc., Newport Beach
Steve Healis decided to sell a janitorial services company seven years ago to his employees. That experience spawned so many questions from friends and other small-business owners interested in doing the same that he became an adviser on more than a dozen deals, he said.
Earlier this year, Healis decided to turn that experience into a business with Pass the Baton Inc.
To date, Healis has worked with about 15 different businesses transferring ownership to employees.
“We’re finding a lot more business owners who’ve been kicked in the teeth looking to change industries or even sell their existing businesses,” he said. “We’re seeing a lot of baby boomers tired of what they’re doing putting their companies up for sale.”
But the market for buying businesses is still sluggish, according to Healis.
“It’s really hard to do deals now,” he said. “So a lot of small-business owners are taking a new exit strategy of considering turning over control to key employees.”
But companies need to make sure they have the right employees before handing over the reins. Healis suggests that small companies steer away from recent college graduates.
“There’s a better pool of candidates from large to midsize companies available now who are experienced and looking for more entrepreneurial opportunities,” he said. “A lot of people are interested in owning their own business. So they’re looking for a career path that can lead them to learning a business and eventually taking on more responsibilities.”
