From the Front Lines: A CEO's Take on Technology
What to do when you don't have the hours to get plugged in
Time is of the essence in my small design and manufacturing business. Founded in 1992, Mike & Ally makes decorative purse, bath, and tabletop accessories--everything from mother-of-pearl lipstick cases to hematite-studded cotton-ball jars--for high-end stores like Saks Fifth Avenue and Bloomingdale's. With only two principals--myself and my partner, Michael Nash--and nine employees, our energy is spread incredibly thin. By October 1993 we had a customer base of 500, more than 100 items in our line, and sales of $250,000, yet we were still handwriting our invoices. Michael and I were putting in 60-hour workweeks to handle the additional duties of controller, marketing manager, production coordinator--in short, nearly every job required to manufacture and sell our collections. We knew we had to computerize--but where to find the time to do it?
There was no question that the so-called big-bang approach (closing up shop for a technology overhaul) was not for us. The decision to go digital had come when we were at the height of shipping Christmas orders, and we calculated that if we took off even one week to automate, we'd miss the shipping dates of at least 40 customers. That could mean a loss in revenue of $40,000 down the road--a devastating blow to a company our size. And the idea of hiring a person dedicated to automating us was laughable. Michael and I were only taking home $25,000 apiece; how in the world could we pay even a part-time MIS person?
The only way to go, we decided, was to computerize on an as-needed basis: buy hardware and software only when we felt that not having it would mean losing orders or something equally as disastrous. A crucial part of the strategy was to select products as much for the way they fit into our schedule as for their features and price. For instance, we considered buying Peachtree Accounting for Windows because we were intrigued by its job-costing module but settled on Intuit's QuickBooks because it was easier to learn. And when the large department stores insisted in 1996 that we begin using electronic data interchange for order-taking, invoicing, and shipping, we sought out a service bureau that would run the system for us at a nominal fee rather than spend the hundreds of hours and the staggering sums required to bring the process in-house. Computerizing on a time shoestring, we called it.
Devising the strategy was one thing; setting it in motion was another. We learned the hard way that there are important elements to making the approach work. For starters, you have to be flexible and willing to improvise. And we learned that you need someone, even on an extremely part-time basis, who knows what technology is best suited to your particular business. Early on, I made the mistake of buying a PC, a 486, from the same people who sold us the software we still use for our orders and invoices--Maker's Automated Clerk, from Industrious Software Solutions. Needless to say, the salesman couldn't set up the system. We finally found a consultant who could wire us up, but he could do little else. That left us on our own when we needed technical support--which was most of the time.
Things began to turn around two years ago when we hired an on-call consultant who specializes in manufacturing concerns. She agreed to provide us with unlimited phone support for $400 a year and to come to our Manhattan headquarters for $60 an hour to give us hands-on training whenever we were ready to take the next step. With her help we bought a Pentium PC and installed QuickBooks, for accounts payable and receivable; Microsoft Office, for word processing, labels, and price sheets; and Microsoft Excel, for cost sheets. During the six months it took to set up the software and master it, business more than proceeded, it boomed. We racked up $250,000 in new sales and shipped out more than $500,000 in merchandise. I shudder to think where we'd be now had we decided to automate any other way.
The payoff of computerizing on an as-needed basis has been twofold: we've been able to maintain our cash flow while speeding up operations enough to expand our business. In the last year and a half, thanks to time freed up to spend on R&D, we've increased the number of collections we offer from 3 to 14. And we've taken on some 900 new customers, including various private-label collections (I Love Lucy products for Viacom is one), which have come to account for 30% of our business. There's a personal payoff as well: with the increased time--and demand--for customized items, Michael and I have been able to return to the designing we fell in love with as artisans in the costume-jewelry business.
We still have a ways to go. We're now at almost $1 million in sales and still rely on a physical inventory--it's a lot easier to eyeball shelves of stones and beads to see what we need than to enter every raw material into the computer. Every now and then we reevaluate, again trying to quantify what we would lose, or maybe gain, by closing our doors and going full steam ahead. But the numbers always come out the same. "Slow and steady wins the race" has become our mantra for the information age.
Allison Rosson is the owner/president of Mike & Ally, a home-accessory manufacturer in New York City.