Small Is the New Big

Like a lot of entrepreneurs, Jay Goltz couldn't imagine doing anything but building his company as big and as fast as possible--until it almost destroyed him.

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Life got bad for Jay Goltz in the spring of 1997. It wasn't any one thing--it was everything: the huge cost overruns on the building he was renovating, the new business he was launching in an industry he didn't understand, the credit line he'd already maxed out, the suppliers he was stringing along because he couldn't pay them. In the midst of all this, he'd had to fire his second CFO in two years. And then there were the problems his son was having in school, which raised questions in Goltz's mind about his own shortcomings as a parent.

It was, he says, the worst period of his life. He remembers lying in bed, tossing and turning, unable to sleep more than three hours a night. "I just had this horrible, dark feeling," he says, sitting in his office on North Clybourn Avenue in Chicago. "I can't really describe it. It was circuit overload. I had so many things to worry about. Yes, my first start-up had been stressful, but this was different. This was self-imposed. I didn't have to buy that building and go into a business I knew nothing about. Was I out of my mind?"

Goltz survived the experience, and today the store he launched that year, Jayson Home & Garden, is thriving, as are the other three businesses that make up the Goltz Group: Chicago Art Source, an art gallery for corporate and residential customers; Bella Moulding, an importer and wholesaler of picture frame moldings; and Artists' Frame Service, the largest--and, some say, the best--custom frame shop in the country. Goltz says he gets more satisfaction out of his ventures than ever before. And that, oddly enough, has been one of the long-term consequences of the ordeal he went through in the spring of '97. It was the beginning of a major change in his perspective on business, he says, forcing him to start thinking about fundamental issues he'd never considered before--such as, how big is big enough? And even, what is success?

In 1997, Goltz's peers would have been surprised to learn that he had doubts about these matters. In fact, he was widely viewed as the most successful independent retailer of custom-made picture frames in the country. Although scarcely 40 years old, he'd already had a profound impact on the industry, having demonstrated that it was possible to do framing of the highest quality and make money in the process.

That was something few people believed when Goltz started Artists' Frame Service in 1978. He remembers hearing a speech by the former president of the industry's trade association, who said he'd been in the business for 30 years and had never met anybody who made money in framing. "We do it because we love it," the guy said, and his listeners nodded their heads in agreement. Goltz was dumbfounded. He, too, loved the art of framing, but he also loved business, and he saw no reason the two couldn't coexist. The industry's real problem, he believed, was its failure to implement sound business practices.

Take service, for example. At the time, the typical wait for a custom frame was three to six weeks. Goltz thought that was ridiculous. From day one, he promised customers that their framed pictures would be ready in a week and organized his company accordingly. Meanwhile, he scoured the market for the best moldings and mats, attending three or four trade shows a year, even traveling to Europe to import materials. A fanatic about quality, he hired someone to check each order before it was sent out, making sure that it met his standards. Was the art perfectly straight? Were there unexpected color variations in the frame? Had the wire been put on properly? When he began hiring salespeople--he called them consultants--he chose those who had backgrounds in art and gave them continual and extensive training. Their primary duty, he told them, was to help customers pick out materials that would display their art to its greatest advantage.

But his most noteworthy innovations were in the production area. He had a knack for inventing systems that would maximize efficiency and minimize errors. In other framing companies, for example, an employee would typically handle a framing job from start to finish. To Goltz, that made no sense since different people obviously have different strengths. One person might be great at cutting frames, but not so great at cutting mats. Someone else might be an excellent mat-cutter but too slow when it came to assembling the final product and adding the wire.

Goltz divided the framing process into discrete tasks and set up teams to handle each one. New hires would try their hand at the various tasks before settling into whichever job played most to their strengths. It was an assembly line of sorts, though without the conveyor belt and without the problems that arise when employees are so far removed from the final product they can't see how they contribute to it. In one fell swoop, Goltz improved both productivity and quality, leading the Chicago Tribune to label him the Henry Ford of framing.

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