"I was devastated when we lost Nordstrom," King remembers, and not just because of the fact that at the time the giant retail chain represented more than 50% of his then $440,000 business. For Nordstrom it was just a matter of economics, but King took the blow "very personally," he says. "I had a real attitude and asked myself, 'How could they do this to me?"
Though he began to worry that other customers might follow Nordstrom's lead, King concluded that "it didn't do any good to expend my energy lamenting lost business." He cites at least two valuable lessons learned from the debacle: the importance of expanding his customer base, and the dangers of being a one-product company. Today, no one customer of Jo's Candies can account for any more than 60% of its business (and he's trying to keep that percentage lower). "Whenever I get proud of myself and trot into my accountant's office like a lab retriever, saying, 'Look who I've landed,' he'll say, 'That's great, now go out and get three more," jokes King. King's CPA, Gordon Michie, a partner of Smith-Linden & Basso LLP, in Newport Beach, Calif., appears pleased with King's progress, describing him as "a chocolate guy who's becoming a very good businessman."
He needs to be. At least a half dozen companies, he estimates, have copied his confection since he began. "Yes, it hurts," King admits, "but it just challenges me to create new combinations to be one jump ahead of them."
Over the past four years, King has been gradually phasing in new products. (His first, Dr. Peter's Peppermint Crunch, is named after the doctor who pulled him through his peritonitis surgery.) So far, most of King's newer products are selling in gift baskets through Jo's Candies' mail-order business or to its small, upscale specialty-food retail customers, but King is beginning to focus on getting them into the hands of his large customers as well.
RULE #4
If Your Business Depends on Just a Few Customers, Take Them Very, Very Seriously
Diversifying enabled King to recover from the Nordstrom setback, but the company's rapid growth began to take its toll on him. The more negotiations King found himself in, the more he began to feel that he couldn't handle it all. While he could rationally tell himself that buyers were "just doing their job" when they asked for a better price, their requests felt like personal affronts to King every time. "It was the worst thing in the world," he recalls.
What's more, with just a part-time secretary until the middle of last year (in addition to his candy-making crew, which fluctuates between 10 and 25 people on an as-needed basis) to help out in the front office, King felt overextended. Then came that fateful dinner with Louise Groper last year.
They met at Draeger's, an upscale supermarket in San Mateo, which King was hoping to land as an account. (He since has.) Upstairs at Draeger's, Groper had heard, the chef from the San Francisco Ritz-Carlton had opened a restaurant.
Though King denies that he met with Groper expressly to hire her, after she so freely dispensed her opinions and advice, that's exactly what happened. "Why don't you do this for me if you have so many ideas?" King blurted out.
On January 5, 1998, Groper became national accounts/sales manager for Jo's Candies--for a whopping 40% cut in pay (and a potential bonus equal to her old salary). "I'd been a fabulous soldier all my life and thought it was time to take a risk," Groper says by way of explanation. In addition to overseeing the packaging and graphics for the new products, and keeping in touch with the company's distributors and brokers, Groper manages virtually all of Jo's Candies' key accounts--attending to the delicate negotiations. "All the gory details that get in the way of doing business," as she likes to say.
Hired along with two additional front-office people, Groper also frees King up to do what he loves--namely, play with chocolate. (The message on his voice-mail cheerily announces, "Hi, it's Tom, and I'm up to my elbows in chocolates.") "I've got at least three proven winners I will roll out in the next three years," he announces. His goal is to have Jo's Candies be a $15-million company by 2005.
King isn't worried about finding customers for the new products. (He won't say what they are, but think chocolate with lemon, cinnamon, or Oreos, for starters.) Plenty of his current blue-chip customers will be only too willing to increase their business with him. They know him, after all; they trust him. "You're selling a product, but you're also selling your reputation," says King. While he confesses that he once was "in fear" of his big-company customers, after nearly a decade of practice, calling on them now has become second nature. "I am never, ever intimidated," he says, "because I go in there prepared."
Alessandra Bianchi is a contributing writer at Inc.
SWEET on Jo's Candies
The following large customers (listed in no particular order) generate 75% of Jo's Candies' revenues:
- Borders Group Inc.
- Williams-Sonoma Inc.
- Starbucks Coffee Co.
- Caribou Coffee Co.
- Nordstrom Inc.
- Seattle's Best Coffee
- Gloria Jean's Gourmet Coffees Inc.
- Norm Thompson Outfitters Inc.
- Neiman Marcus Group
- Tully's Coffee Corp.
