Marc Shuman, president of a family business launched by his dad roughly four decades ago, was getting antsy about the future. The company, International Visual Corp., manufactured fixtures for department stores including J.C. Penney and Nordstrom's.
But by the 1990s, business wasn't pretty. Retailers, facing tough times, were jumping to cheaper competition. Profit margins went to 20% from 40% over five years. "The writing was on the wall," Mr. Shuman says.
To its credit, the company had continued innovating while the market withered. Its premium product was a thermoplastic wall panel desirable for its strength, durability, and consistent color. It was modular, giving retailers maximum display flexibility. But the pool of buyers was shrinking.
The Solution: They took their coreproduct, rebranded it, and sold it to an entirely new market.
Mr. Shuman and his partner, Skip Barrett, wracked their brains for new uses of the modular wall material. Driving through Texas on a business trip, one of them tossed out the idea of garages. Couldn't homeowners apply the same modular panels to garage walls, and attach cabinets, shelves and other components? With about 69 million home garages, and home building still going strong, "it was the killer app," says Mr. Shuman. GarageTek of Syosset, N.Y., was born.
Distribution, though, was a question. Sell it through big hardware chains? Franchises? But the avid response they got from home builders set their course. With crude, digital photos as marketing material, they showed the concept to a Long Island home builder. He was their first prospect, and he signed on immediately. As they installed the panels and components atthe home site, another contractor, working on closets, watched them and asked a lot of questions. "Let me do Long Island for you guys," he said, and became their first franchisee.
It helped that they weren't neophyte entrepreneurs. Their contacts directed them to a leading franchise attorney and a venture-capital firm that was willing to back the new company.
Meanwhile, they let the original family business go. They sold IVC to one of their material suppliers, giving the buyer a license to continue to sell the same wall panels to retailers. GarageTek "was a faster racehorse," Mr. Shuman says.
Franchise sales began two years ago, and today 33 franchises operate in 29 states. Last year's sales reached $6 million, and its 2003 forecast is for $18 million. Mr. Shuman still is antsy. "I wake up at 2:30 in the morning," he says. "I can't wait to get to work."
The Lesson: Proprietary technologies may have uses in many markets. Find them.
Copyright 2003 Dow Jones & Company, Inc. All Rights Reserved.