BUYING A SMALL BUSINESS

Case Study Update: To Buy or Not to Buy a Business?

In November 2007, we wrote about Rick Detkowski, who impulsively offered to buy a struggling furniture manufacturer, then stopped to think about it.
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The Problem

Rick Detkowski knew real estate. He didn't know much about the furniture business. In 2006, Detkowski owned eight buildings in a Clarkston, Michigan, industrial park that housed Moon Valley Rustic Furniture, a furniture manufacturer that had a strong reputation but was barely breaking even. When the owner approached Detkowski about buying the building that housed Moon Valley, Detkowski said he would -- but only if he could buy the whole company. Later, he started to wonder whether it was a good idea. Detkowski thought he could improve the company by developing new products and breaking into new markets. But banks, his wife, and a potential business partner weren't so sure. "Michigan is depressed, and that's where most of your customers are," the would-be partner said when he opted out of the deal. Nevertheless, in the fall of 2006, Detkowski found two banks willing to lend him a total of $2.3 million and decided to go ahead with the purchase. He and his son Rick Jr. took over Moon Valley. They kept the entire work force, put $60,000 into marketing, and began adding new products.

What the Experts Said

Carl Prindle, CEO of Furniture.com in Waltham, Massachusetts, advised Detkowski to choose dealers carefully and maintain a strong brand so customers would pay a premium for its products. Jane McKellar, former CEO of Stila Cosmetics in Glendale, California, said Moon Valley should make its factory as efficient as possible. And John A. Frank, a CPA and consultant in High Point, North Carolina, suggested that the company offer cheaper imported products in addition to locally produced goods.

What's Happened Since

Detkowski has been overhauling his manufacturing processes, adding products, and reaching out to new distributors. By the end of 2007, sales were up 65 percent, to $1.7 million. The company is manufacturing more products, such as the new Nicholas Collection, which is named for Detkowski's grandson and includes bunk beds and toy boxes. Detkowski expects revenue of at least $2 million in 2008.

What's Next

Moon Valley is expanding into Canada in 2009; eventually Detkowski hopes to tackle Europe and Japan as well. He also plans to add custom high-end furniture. "It's all coming together, and we should be profitable by the end of this year," he says.

Last updated: Oct 1, 2008




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