CEO's Notebook

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Two years ago we started using the Internet to connect with our customers. With sites like www.dummies.com, we're learning more about our readers and why they feel excited about our product line. And that gives us the confidence to expand the brand into new subject categories, like Golf for Dummies and Wine for Dummies. --Written with Anne Marie Borrego

The Quotable Entrepreneur

"When I'm looking for senior management, if they have nothing but successes, that scares the heck out of me. I want someone who's seen it all, who's ridden the rocket up and down. Because you learn a lot more coming down."

--Bruce Fernie, founder and chairman, Tealuxe Inc., a chain of tea bars based in Boston

A Can't-Miss Plan for Cutting Costs

See if you can relate to Mike Scimeca's story: After founding Florida CirTech in Sarasota, Fla., in 1991, he experienced five straight years of consistent revenue growth. But then the pace slowed. And instead of the 80%-a-year increases he'd come to expect, sales grew 30%. For Florida CirTech, an $8-million supplier of chemicals and metals for the circuit-board industry, the result was stalled profits. Scimeca had overestimated how much the company could spend.

To regain the 25% margins he was accustomed to, he made cutting $200,000 a yearly goal. His methods have paid off handsomely.

One of his strategies is asking suppliers for helpful advice. Unhappy with how much the company paid to ship its products across the country from its new headquarters, in Greeley, Colo., Scimeca quizzed his suppliers about their strategies for cost-effective trucking. He reasoned that they'd know about managing freight prices, since they trucked tons of materials to Florida CirTech each month. Scimeca learned that his freight could travel at a cheaper weight classification than he'd been using, and he reduced freight costs -- a $700,000 annual expense -- by 15%.

Scimeca also comparison-shops among suppliers, scouring the Internet and buyer's guides for savings. Sometimes the comparisons lead to cost-cutting epiphanies. Florida CirTech used to pay $9,000 monthly on recycled containers for chemicals, buying 600 at $15 each. Another supplier offered to sell his containers for $13. Scimeca inspected the supplier's facility for quality. His conclusion? "I saw that we could recycle containers ourselves in-house," he says. "It was just a matter of buying some equipment."

Florida CirTech bought $10,000 worth of equipment and began the project. Scimeca now pays $1.25 per container, mostly in labor costs. "We made back the $10,000 in two months," he says.

Since Florida CirTech's customers take an average of 60 days to pay their bills, Scimeca's cuts have improved cash flow more quickly than increased sales would have done. The cash has allowed the 25-employee company to continue adding cost-saving equipment and make a recent acquisition, all without paying interest to the bank. That's something Scimeca takes pride in. "Our company is almost completely internally financed," he says. "You've always got to be thinking about where you can save." --I.M.

In a Former Life: Lou Weisbach

LOU WEISBACH, 51

Present life: Weisbach is the founder and chairman of Ha-Lo Industries Inc., a $650-million promotional-products business based in Niles, Ill.

Former life: For 13 years Weisbach coached basketball at a private high school in Chicago. "We were a small school with very short kids -- no one taller than six feet -- and the only way we could be successful was to be better at little things and outexecute our competition," he says.

Lessons learned: In addition to the standard lessons in team building and discipline, Weisbach believes that coaching the underdogs taught him how to succeed when your team is seemingly outmatched. "When you don't have the horsepower but still expect to win, you need to do the little things," he says.

Because Ha-Lo distributes promotional products, its efforts usually only spread the brands and logos of its customers. So in 1983, when Weisbach felt it was time to publicize the Ha-Lo name (but couldn't spend as much as his competitors could), he was forced once again to devise a creative game plan.

As it happens, an idea hit him when he was talking to an old friend who'd become a marketing guy for the NBA's Chicago Bulls. "We were talking about some different projects, and somewhere in there came the concept of putting logos on the players' chairs at basketball games," says Weisbach. "We did it at the Chicago stadium, knowing that TV cameras show the chairs whenever the team is standing during a time-out. A year later Michael Jordan showed up, and suddenly we had some valuable real estate. But at the time, selling space on chairs was a new marketing opportunity for the team. And when you're buying something that's never been bought before, it's pretty cheap." --I.M.

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