The founder of ArtCalendar faces the same quandary confronting legions of entrepreneurs whose once-fledgling businesses are coming of age. Can she grow her company while meeting her personal needs, too? If so, how?

A humid May morning on a rural country lane in Virginia -- heat-soaked air, the whine of a distant lawn mower, cats passed out in the shade of benches. Inside, the house is quiet but for the hum of the air conditioner and the clicking of computer keys. A baby gurgles; the mother absentmindedly coos back, "Oh yeah?" The phone rings; after a short conversation the house is again ticking with keystrokes.

Set under oak trees, a long stone's throw from the Potomac River at the edge of their property, is the home of Carolyn Blakeslee and Drew Steis -- and the home of ArtCalendar, as well. The company tour is short: climb eight steps, turn right, and find next to the baby's room a compact, 10-by-9-foot office containing exactly one desk, two chairs, one Macintosh computer, and two bookshelves. That is the nerve center for ArtCalendar, a monthly publication for visual artists that lists grants, juried shows accepting applications, and other forums to which artists can submit works.

Started in 1986, ArtCalendar has doubled in size each year in both circulation and revenues: in 1990 ArtCalendar had $84,000 in revenues, with a circulation of 5,500, and the publication is on schedule with $178,000 this year. Blakeslee, 33, began ArtCalendar with the mistaken belief that it would be a half-time venture. After earning her living for seven years by playing cocktail piano at the Hyatt Regency on Capitol Hill, she had planned to take up oil painting more seriously but was spending a lot of time trying to track down information about shows and commissions she could apply for. Figuring other artists were similarly frustrated, she decided to launch a journal that would bring all that information together.

Five and a half years, 55 issues, and one baby later, Blakeslee today is at a common and difficult crossroads. The business turned out to be full-time and more. ArtCalendar has become the definitive source of listings for artists nationwide. Spurred by pride, aspiration, and her success to date, Blakeslee wants, on one hand, to keep growing the journal and even to undertake new, related projects. On the other hand, she wants more free time with her new daughter. Blakeslee is tentatively taking steps in the direction of expansion, but she wonders if she can carve out a manageable family life at the same time.

Can she continue to grow with the business structured as it is -- a home-based operation run almost entirely by one woman? Or will growth demand a change in the very nature of the business -- forcing a move to an outside office or the hiring of more people? If she doesn't want that, should she stop growing? For that matter, can her business stop growing and still survive?

And what's this thing -- the product of five and a half years of sweat and sacrifice -- worth, anyway? Like countless other proprietors of small, often one- or two-person service operations, Blakeslee wonders: What steps should I take to build equity, to wind up with something I can sell? That isn't just a hypothetical quandary; it's Blakeslee's life. She's smart, ambitious, and deeply thoughtful. And she wants to know: Can I grow ArtCalendar and meet my financial goals while devoting myself to my family and my art, too?

What should I do?

Until about 18 months ago we were winging it on a lot of things," says Carolyn Blakeslee, perched on a swivel chair in her sunlit office, with daughter, Sheila, propped in a baby seat. Winging it for sure; Blakeslee has grown her business on practically instinct alone. When she started it, she compiled information on regional art shows during her spare time. She called local art associations and rented or was given their membership lists. She made brochures offering her unfledged journal and addressed them with high hopes. "I thought when I sent out a thousand brochures that half the people would want it," she admits. She was crushed when just 3% placed orders (actually, not bad for the publishing field). Eventually, a couple hundred subscribers signed on, and Blakeslee printed 300 copies of the 20-page first issue. "I wept when I took it to the printer," she recalls, "because I was so scared."

By the third issue Blakeslee was including national listings and soliciting a national audience. She relied on intuition when choosing which lists to rent to boost her subscriber base. She didn't have a business plan, and she didn't keep close watch on why people did or didn't renew. "I can't believe we didn't keep track of those things," she reflects today, shaking her head. "It didn't seem necessary. It's amazing we're still afloat. But you learn as you go."

Growth came fairly easily. The incremental steps of doubling the number of subscribers from 600 to 1,200, then 1,200 to 2,400, then 2,400 to 5,000 weren't unwieldy to execute; Blakeslee has reminded subscribers to renew with just one renewal mailing each year, and has sent out direct mail steadily, if scattershot, over the past few years. Same with gross revenues: ArtCalendar realized $84,000 last year without any preplanning. Blakeslee thinks the next one, or maybe two, doublings of circulation and revenues may come nearly as easily.

In 1989 she began signing on free-lancers to write some of the four or five columns and interviews that appear each month on topics such as marketing and art law. (The meat of the journal has remained its 15 or so pages of listings.) A part-time employee works out of her own home for the company, putting stickers on mailings, typing new names into the promotional database, and sending out books sold by the journal.

Blakeslee is helped by her husband, whom she married the year before she started ArtCalendar. Drew Steis, 52, spent years with United Press International as a reporter and, eventually, bureau chief, and worked around Capitol Hill at the National Endowment for the Arts and as a ghostwriter for various politicians. He also had helped start another home-based newsletter, now 11 years old, with his first wife. Steis writes at least a feature a month for ArtCalendar, edits some, and helps with the phone work and choosing the graphics. His steady source of income is his position as director of advertising and promotions for a producer of antiques shows, for which he works both at an office and from his home.

Blakeslee, like every other person who starts a business, had images at the outset of making more money more quickly more easily than was realistic. Although cash has never been a problem -- after eating about $6,500 from savings to get started the first year, the publication has been self-funding -- it also hasn't been plentiful enough to support the family. Still, ArtCalendar has met one major goal: it's a business of deliberate flexibility. Blakeslee has been able to play the business by ear, have fun with it, and make it function with nominal planning or self-imposed bureaucracy. Those characteristics have had real value to her.

Although Blakeslee never thought of the journal as a cute little "income substitution" arts-and-crafts project, she also didn't think it would become as prominent as it has. Not surprisingly, success has enlarged her view of the journal's potential. After five years of changing little about the way ArtCalendar looks, Blakeslee is toying with redesigning it, adding color, and seeking advertisers to support more editorial content. One reason for her impulse is boredom; another is her near embarrassment about the publication's "humble" look, particularly given that its readers are visual artists.

She also wants to try to take circulation up to 20,000. But there are serious questions about growth like that. Exactly why should she expand her audience? What would be the benefits and the costs of inflating a business that has so well served her personal interests in its past?

I don't know; the business has doubled every year, so I think, Why not continue?" says Blakeslee over a bowl of cucumber soup in her dining room. The wall next to the table is decorated with oil paintings she made when she had time, seven years ago -- five two-foot-tall close-ups of roses, each a different color. "It's kind of a game, a challenge to continue that."

But despite her drive, decisions about whether to expand, and in what ways, are not easy. For one thing, the business is already getting harder. New demands have resulted from volume alone -- demands as mundane as opening the increasing amount of mail to more important tasks such as handling phone calls and making sure all the readers receive their issues. There's already a reasonable degree of confusion.

Those are purely the challenges of maintenance. In fact, even without pushing for growth, Blakeslee faces headaches that need remedies. One is her use of second-class postal service, which is becoming slower and slower, and is causing delays for many of her subscribers. She is considering a switch to first-class-only delivery, but she's uncertain whether subscribers would pay for it. Less than 30% of her readers now ante up the additional $10 for first-class service, electing ArtCalendar's $29 rate over its $39 rate. She could lose subscribers by raising the price.

New steps in new directions will only intensify the challenges ArtCalendar faces. Take a potential redesign, for instance. Blakeslee has no reason to think that current subscribers care whether or not she invests the time, energy, and bucks to transform ArtCalendar from its newsletter look into something more magazine-like; they may even balk at a less information-intensive format. So why consider it? Pride, in part. "I have a perfectionist streak, and I can see what the magazine ultimately could be," she says. "Part of me thinks, Don't fool with it if it's working, and part of me can't resist." For now, the redesign is on hold.

Blakeslee's pride might also push her to grow circulation, but growth will be harder at this point. It's harder to find lists of people she hasn't approached before, and harder to decide if using general-interest lists -- which may yield a 1.5% rather than 3% positive response -- are worthwhile.

Then why grow? For three reasons, at least: (1) to reach an annual income higher than the $30,000 she now informally draws; (2) to lock in her position in the face of new competition; and (3) to build a more profitable property in case she wants to sell it.

The publication doesn't yet generate the kind of money Blakeslee wants to earn; she draws a start-up-like wage of $2,500 each month from the company checking account. For tax purposes, she thinks the business will show only a $22,000 pretax (and presalary) profit on projected 1991 sales of $178,000. That's somewhat misleading, though; there's a lot more cash sitting around the business. Subscribers, remember, pay not only for the current issue but for those over the next year as well, and Blakeslee expects to take in another $135,000 in cash during 1991, which will be "deferred" to cover costs on issues for 1992. Until then, it will be sitting in her bank account. The business also is reaching the point where Blakeslee expects profits to grow much faster than expenses, and if next year's sales double, from $178,000 to $355,000 (with the number of subscribers topping 10,000), Blakeslee thinks profits will quadruple, from $22,000 to $90,000.

In the first few months of this year there were rumblings of new competition, but so far similar publications are doing random listings of events, maybe one-twentieth of what Blakeslee runs each month. ArtCalendar is based on publicly available information, and "by its very nature," admits Blakeslee, "it invites competition." She's been looking into what's copyrightable, and is even considering litigation against publications that are lifting her edited summaries verbatim. But the best strategy may be to ignore competitors and put the money into solidifying her own market position instead. She's not sure.

The third reason to grow is to build equity -- so Blakeslee can one day sell all or part of the property. To see if she had even the option to sell, she spoke with a business broker this past spring. He advised her to get circulation up to 20,000 -- what he termed "a magic number" in the industry -- as a necessary first step. Blakeslee thinks it's doable; more than half her subscribers are people who make most of their income either as artists or as arts-related teachers or administrators. There are a good many more such people, Blakeslee is sure.

Blakeslee also is considering developing new products. Three years ago she, Steis, and another friend coproduced a book of detailed profiles on the art galleries in and around D.C., and she wants to develop similar books for other cities. She envisions other publications for the visual-arts market, maybe a magazine on artists and their studios. "I do have enough sense not to embark on those projects right now," she says. But expanding the business into a kind of publishing house could make it a more valuable property, even if none of the titles did more than break even. The downside: every project would divert attention from a product that still very much needs Blakeslee's expertise and energy.

In addition to circulation and new products, Blakeslee is grappling with whether to grow by adding new people. Part of her thinking comes from an awareness of the need to develop a venture that looks to be, for all the world, more than the product of her efforts alone. That can be a crucial step for any small, one-person business at some point in its growth: creating a worth beyond one person's efficiencies. Separating her self from what the business is would be particularly important if she wanted to unload the publication. But even if she's not grooming it for sale, experts contend that the discipline and intelligence brought to bear when thinking about a business that way helps make a founder smarter. Looking at a business as a dispassionate seller -- or, better yet, a dispassionate buyer -- uncovers inefficiencies that can be corrected and strengths that can inspire confidence.

All of this is, for Blakeslee, a new way of thinking about the business. It fights what she's liked about the venture so far: the informality of how, and even why, business decisions are made, and the intuitive way she can balance family choices and business choices. Taking advantage of the options now open to her may mean having to create a new kind of operation -- and a new kind of personal life. Which is why this turning point is so complicated for her and is likely to be just as complicated for legions of other company founders with small-scale ventures that have come of age. Blakeslee, like so many of them, sees her business as the best way to combine work and family. The business may be changing, but she doesn't want it to rip up her life.

As big a question as growing the business is for Blakeslee, just as nettlesome is her conflicting -- or at least potentially conflicting -- desire to pull away and make more time for her family and her painting. "Having a baby really changed things a lot," she says, somewhat sheepishly. "I'm rather surprised I'm so into being a mommy. It's taking a lot of my time, and it's wonderful, and I really love it. My goal is to have more time with Sheila."

For more than five years Blakeslee's life and work merged quite nicely, giving her schedule the elasticity she sought. That's not to say ArtCalendar didn't take up more time than she'd ever anticipated: Blakeslee invested a good 60 to 75 hours a week in it before the baby arrived, and has spent 30 to 40 hours per week since giving birth, last December. "On the one hand, I look at myself and feel I'm spoiled," she says. "I'm making enough for my expenses. I can get out of bed and hit it running, or I can slack off for the morning. I'll think, I'm so lucky. Then I'll think, I'm so busy."

There are few role models to show Blakeslee how to further shape that amalgam of life and work. She wakes up, makes coffee, feeds the baby, and spends a couple of hours editing listings and answering correspondence. She plunks Sheila in the car and goes to the post office and the bank with yesterday's checks; she comes home and bikes five miles on a stationary bike while opening the mail; then she enters new subscriptions, does books, and prepares deposits. After lunch it's more of the same, although she occasionally pauses to gaze out past her front yard to a fenced-in field where her two borzois run during the day. "I'm a hermit," she says. "Once in a while I feel I'm not getting enough stimulation or companionship. Not very often, though." She's fashioned a growing business and a life that suits her, but both are being challenged by the business's growth.

She's passionate about the idea of a home business, despite a certain self-described inferiority complex. (If she had a separate office, would the business seem more real and important?) "I like working at home," she declares. "I don't have to fight the traffic or pay tolls. I don't get dirty looks if I take a 45-minute lunch." Her ideal: keep working at home and have all the people who work for her also work out of their homes.

Plus, one of her goals is to be able to watch her children herself, even while working. Until this point that's been OK, but her infant hasn't become a toddler yet. "It would be ironic to put her into day care," Blakeslee says with a grimace. "It would be 180 degrees from how I want to raise my little ones. I have silly visions of reading her stories, taking her for boat rides. Babies, I think, have to take priority."

So what should carolyn Blakeslee do? Slow down her growth? Keep expanding fast, but begin hiring and delegating? It could turn out that putting in the extra effort, time, and money now would afford her the kind of freedom she wants -- although the freedom would come later. Making production less reliant on herself, putting to paper the figures and strategies in her head, and even extending ArtCalendar's product line into auxiliary items could lead to a company structure that would enable Blakeslee to be a part-time coordinator.

But can she both grow her business and find more time for her daughter now? She thinks she can -- sort of. She's mostly confident that she can adapt as her baby grows more mobile. "Like the business, parenting will pick up in intensity," she predicts. She plans to sustain current 100%-a-year growth for the next 18 months, albeit at bigger volumes. "It'll be a pretty big effort in terms of managing," she says, "but it's handleable."

She has become more savvy with her company's numbers: she's keeping track of renewals (61% in 1990 and 58% so far for 1991) and of how each list is performing. She's setting aside 20% of cash receipts for savings, and tracking how much money needs to be held to fulfill subscriptions.

For now, she's made some decisions and put off others while she thinks through her choices. A friend with an M.B.A. is helping her develop a business plan. ("I was pleasantly surprised when he told me I was doing OK," she says.) She's hoping to free up some time by getting her part-time worker to take on more clerical work and by enlisting one of the free-lance writers to write some of the listings, as well.

She's alert to the compromises she may be forced into by the growth of circulation alone. But figuring out which steps to take next remains a challenge; they seem so big, so daunting. So Blakeslee just keeps tapping at the computer keys, making calls, feeding the baby, writing listings. And wondering how to keep balancing, balancing, with both her children demanding attention.


Hire help, focus on circulation, and search your soul

So what should Carolyn Blakeslee do? Inc. assembled an ad hoc advisory board and asked.

The advisers are: Thomas J. Gilgut Jr., former owner of several newsletters, author of How to Buy, Sell, and Price Newsletter Properties, and now vice-president of Shakespeare on Disk, which produces educational software; Lesa and Jon Ukman, a sister-and-brother team whose company, International Events Group Inc., tracks the advertising-sponsorship-marketing industry, employs 20 people, and has annual sales of more than $3 million; and Trish Vanni, who owns Sullivan Communications, a three-year-old, 5-employee, $500,000-a-year contract publishing business. (This past summer Vanni, who was expecting her first baby as Inc. went to press, hired a consultant who will become her business partner in January.)

Should Blakeslee grow, sell, or just hold ArtCalendar steady?
Lesa Ukman
: She can't keep it where it is. It's too much work. She's definitely got something here, but just leaving the business where it is now is the worst of all worlds because she has the everyday burden and not enough freedom to care for her child and pursue her art.

Gilgut: She should grow, yes, but slower. Target 50% a year, not 100%. She's already dealing in large numbers, and mistakes can compound. This is a woman with a new baby, cutting back her workweek, with a publication that already has 5,500 subscribers. Overextend yourself and suddenly the whole thing comes down on you.

Vanni: Also, it sounds as if she's working really hard to make $2,500 a month. She can grow more, make more money, work 20 hours a week -- and have just as satisfying a product -- by giving up control.

Gilgut: She can't have more time for her family and grow and diversify, all by herself. It's impossible. And it's dangerous for all this to be weighing on her, anyway. What if she gets sick? What if her daughter gets sick? She has to protect her asset by getting help.

Jon Ukman: But remember, if ArtCalendar isn't her passion, she should sell it; it's a real option. She could stop growing the business, reduce expenses, and make her P&L look as strong as possible.

Gilgut: The thing I'd start doing immediately is training people. If she's sitting on $50,000 of deferred revenues, she could be hiring some of that help she desperately needs.

Vanni: I'd suggest she delegate the clerical things. I found that when I added people, the growth was geometric, not arithmetical. You can get tremendous surges when you add people and help them really use their talents.

Which growth strategies are smartest?
Lesa Ukman
: Build circulation. At this point each new subscription is pure profit. Blakeslee should buy lots of lists, because even if her return is just 1.5%, she should still be making money.

Gilgut: Push renewal rates, too; 50% to 60% isn't good -- you have to replace too many readers each year. Send out eight or nine renewal solicitations before you give up on someone. With her Macintosh she can set up a mailing schedule fairly easily.

Jon Ukman: And raise the subscription price. If you're looking at 100% growth a year, you're leaving money on the table. Blakeslee has priced ArtCalendar like a consumer publication, but she's selling a business publication.

Lesa Ukman: She should not go after new markets like those gallery guides. She's already got an audience; selling to those 5,500 people is a lot cheaper than selling to a new audience entirely, having to reintroduce herself. She could do what we've done: start with a newsletter and add products such as directories, seminars, and legal guides. Leverage your existing audience. Why not add an annual directory? Blakeslee's already got the information; she could re-package what she has, sell advertising in it, and price it at $200.

Should the product itself be altered?
: Maybe -- but instead of turning it into a magazine, I'd suggest a hybrid. Blakeslee can insert advertising: maybe a sheet of classified, a sheet of display ads, maybe go four-color. With inserts, she doesn't have to turn the whole newsletter four-color or change the way she produces it. And as long as her readers still get their 20 pages of editorial, they should accept the advertising. Making those additions gradually is the key.

Vanni: I'd caution her not to do anything with her product until she researches what readers want, need, and will pay for. As one person alone, you know your instincts have carried you. But things like a redesign are very, very big decisions and shouldn't be relegated to instinct.

Will these steps build equity?
: Partly, yes. Because when you are the business, the business is worth zero. My solution was to take on a partner. But I have to point out that my partner and I went crazy trying to value this business so he could buy in -- our respective estimates ranged from $750,000 to nothing.

Gilgut: When you're selling a newsletter -- realizing its equity, so to speak -- it's a matter of increase your subscriber base, increase your equity. Because in most cases an acquiring company can find a talented writer who can replace the founding editor. What Blakeslee will be selling is her subscriber list and proof that an arts-schedule newsletter is desirable.

What she doesn't have to do is reach 20,000 in circulation; she's already at a size that makes ArtCalendar an attractive publication. If she were to sell today, she could probably get eight times pretax earnings -- better than $150,000.

But what about personal and family goals? Can they coexist with a growing business?
: The problem is the idea that you can do it all. In my opinion, you can't. The fundamental question is, What balance do I strike between raising my children, nurturing my marriage, and being committed to my business? That should be the starting point for her, deciding what she really wants out of life.

What I did to explore my business options and their life consequences was to put together a network of advisers -- professional and personal intimates who acted almost like a board. And I talked to all of them about my goals, where I wanted to be personally and professionally, and got their advice. In the course of conversations, what I want and what my commitments are became clearer.

Still, when I found my partner, it was hard to make the decision to give up power. I've spent two years nurturing a staff, and I've been good at delegating, but it definitely is different with a partner. I had to do it, though, if I wanted to keep growing. Blakeslee may have to, as well.

Gilgut: If she's clever and brings on quality people, she can grow ArtCalendar and maintain her lifestyle. Since she seems to be doing everything pretty well, I'd be confident she could train a talented, competent person.

Vanni: She sounds like I've felt -- torn between a great business opportunity and an idea about being a mother that was formed in her head before this business entered the picture. The question is, is that the picture she's still committed to? Or has it changed?