FROM THE IN BUSINESS ARCHIVES 1979-1980

In Business, November-December, Vol. 29, No. 6, p. 20

ENTREPRENEURIAL ECOLOGY

Jerome Goldstein

THE MORE we develop our own business here at The JG Press and contact many of you around the country, the more we come to appreciate the significance of entrepreneurial ecology. Since we started our company, the basic law of ecology - “Everything Is Connected To Everything Else” - has been proven time and time again. The more synergistic our efforts have been, the better our results have been.
Ecology is concerned with the interrelationship of organisms and their environments. Entrepreneurial ecology is concerned with the personal relationship of the owner to the business, as well as the broader implications of the business to society and the physical environment.
Managing your business on ecological principles may well add to short-term frustrations. In contrast with some surefire Managing-By-Objective lectures we've heard, Managing-By-Ecology will force you to juggle numbers with deep-felt personal beliefs as you probe priorities of inter-relationships. But frustrations and mental gymnastics are a relatively small price to pay for winding up where you really wanted to be when you started out.
In the past few weeks, we received reactions about In Business from two nationally-known persons, neither of whom we've met and, in our opinion, who had always seemed to be miles apart in philosophy. Their words were most encouraging to us, and their evaluations relate to you as well.
From Stewart Brand, founder of The Whole Earth Catalog and editor of Co-Evolution Quarterly: “Glory be, a national magazine for small, warm entrepreneurs. What Rain is for environmentalists, what the Briarpatch Network is for Bay Area small businesses, In Business seeks to be for everybody.”
From Ronald Reagan, former governor of California and president, came these remarks from his nationwide radio program:
“While those who read In Business naturally want to make a decent profit, like all business people, they also want to contribute to the quality of life in their communities. They want to create a network of cooperating producers that can help their communities become more self-reliant, to recycle consumer dollars locally and to shift to a greater use of locally available renewable resources. With our national economy in a highly uncertain condition, and with the growing problem of energy shortages on everybody's mind, these 'briarpatch businesses' (as many call themselves) are working toward human-scale, local solutions.” Nov.-Dec., 1979

SAN FRANCISCO'S SOLAR CENTER
Peter Barnes

SUCCEEDING in any small business is difficult at best. Succeeding in a small business where the market is barely emerging is more difficult still. Fortunately, neither I nor the other people who founded the Center fully appreciated the truth of those observations or we would have missed out on a lot of fun, hard work and personal satisfaction - and what looks like a good shot at being a successful business after all.
We had two primary objectives: To help make solar energy a reality in the San Francisco Bay Area; and To demonstrate that an employee-owned and democratically managed business could compete successfully with conventional businesses.
We've become experts at supporting each other through difficult periods - as well as celebrating birthdays together, rafting rivers together and becoming a kind of family, while respecting each others' separate lives outside of business. Main factors seem to be: Hard work; Moderate pay; Careful husbanding of capital; Friendly investors; Satisfied customers; Idealism that got us in the first place; and Togetherness that comes from shared ownership, equal pay, collective decision-making and mutual concern for everyone's growth and job satisfaction.
We would not have had the confidence, the energy, the staying power, or the wisdom that comes from collectivity - nor would we have had half the fun. Jul.-Aug., 1979

UNDERGROUND OVERVIEW
Malcolm Wells

FIVE YEARS AGO, underground architecture was virtually unheard of in this country, but three years later it had become well enough accepted to have made the cover of Popular Science. I've been following all this since 1964 when I first got involved in underground architecture. By now, everyone has seen or read enough about it to know that it is usually brighter, sunnier and drier than most conventional architecture. Terraculture seems to have arrived. My practice consists of four things: designing solar, earth-covered buildings for my own clients; designing such buildings for other architects; giving lectures; and selling books.
There's a shortage of people with underground know-how. There will soon be a wide demand for the service of:
o Soil experts who can interpret test-boring results with an eye to construction and groundwater problems;
o Waterproofing contractors able to deal knowledgeably with the scores of different systems available to meet various subgrade conditions;
o Insulation contractors versed in the ways various products are damaged by soils, roots, rodents and moisture;
o Rooftop-fill contractors able to place tons of soil on carefully insulated and waterproofed roof decks without causing any damage;
o Landscape architects and contractors experienced in the planting of rooftops and sideslopes;
o Site drainage specialists;
o Recast concrete technicians skilled in low-cost, factory made building parts for underground use;
o Pest control people; etc.
Underground construction isn't the only field that will need the new skills. Similar demands exist, or will soon exist, for people able to produce or service all the other emerging alternative technologies. There's opportunity galore for anyone resourceful enough to see it. Sep.-Oct., 1979

A SMALL BREWER USES HIS HEAD
Nora Goldstein

THE MILLER Brewing Company spent $21 million for advertising in 1978 to promote its imitation Lowenbrau beer. The Straub Brewery in St. Marys, Pennsylvania spent nothing on advertising that year nor any other year since they have been brewing an all-grain, all-natural pilsner brew. Straub is producing at maximum capacity which is not determined by the potential number of consumers, but is directly related to the owner's lifestyle.
“We only make so much and that's it. All the Straubs like to hunt and fish too much. Besides, we're selling all we make now,” says Gibby Straub, brewmaster. Staying small, local and having a good time with their customers is where the Straub success lies. By offering what the big guys cannot, personality with an unusual beer, Straub has captured the local market with demand way out in front of supply. Its local nature allows them to stay on top of their customers' reactions to the all-natural beer - eliminating the preservatives, then the sugar and syrups, and finally the salt.
“Our biggest advantages are being close to our market and knowing many of our customers on a first-name basis,” adds Herb Straub, vice president. A small town setting, production control, growth and expansion by lifestyle instead of maximum profits, and emphasis on personal contact and quality over advertising techniques to distribute Straub beer spell success for this small family business. Jul-Aug., 1979

S.O.B.S VS. NICE GUYS IN THE SMALL BUSINESS LEAGUE
Tom Bender

THE BOOK - Why S.O.B.s Succeed and Nice Guys Fail in A Small Business - is not your normal collection of small business success stories that make failure sound impossible, nor is it the usual polite checklist of marketing, tax, finance sources, pricing and other information. Its tone is arrogant, its contents are enough to boil the blood of any ethical business person. It fits in the top of my “I sure wish I'd seen this when I was getting going!” category.
The book's greatest value is in laying out the business world as a people world woven through its institutional one. It approaches that world of people to exploit their strengths and weaknesses to your own advantage, but at the same time it shows alternatives to dealing with the institutional superstructures we've built around people-to-people relationships. Some of the bureaucratic structures just make it difficult for us, others are set up to pay for the services they give, others to exploit us. You can go to the local newspaper and pay for advertising - or you can hire the advertising manager of the paper to freelance some “p.r.” for you. Guess which gives you more for your money? You can fill out loan application forms up to your neck - or you can get to know a banker who can vouch for you personally. You can look through the classifieds for real estate to invest in - or get to know a realtor well.
The world operates on a person-to-person basis. We all deal best with our friends and people we know because we know when and when not to trust them. Between the lines this book reminds us of that, and behind its bravado lets us know that we can build either a good or nasty world out of it. It's up to the rules we play by and which ones we stretch and which we hold firm. But it for sure won't work if we see only the institutions we're exhorted to look at and ignore the people world within them. Sep.-Oct., 1979

$2 MILLION SALES, THREE STORES ... AND CHEESECAKE
Joseph Kascmer

THE OWNERS SMILE when they talk about dividing responsibility for running a $2 million, 100-employee bakery and how things have changed from the days just the three of them staffed their small, neighborhood San Francisco bakery. Smiles disappear when the subject swings to lease renegotiation for their third retail store, or to the lawsuit they've brought against their vanilla supplier.
Just Desserts was born in 1975 from the favorite cheesecake recipe of a couple living on food stamps. Eliot Hoffman and Gail Horvath were soon baking for eight wholesale customers out of their home with ingredients they bought retail from local supermarkets. Before borrowing $2,000 from family, $6,000 from bank and association sources and selling their Volkswagen, they took their plans to start an American-style dessert bakery to friend Barbara Radcliff.
Today the trio is busy responding not only to the preferences of their customers who have provided an ever-growing market for their homestyle desserts, but also to the rental manager of the financial district office center that houses their newest retail store, to unrelenting food inflation that presses for frequent repricing, to the temptations of hungry investors and franchisers who would like to expand Just Desserts beyond the control of its current owners.
Things were simpler when they began. Says Barbara, “Our plan when we started was to move to the country in five years.” Now they talk of financial goals: achieving 8 to 10 percent pretax profitability; raising retail clerks' wages to five dollars an hour, bakers to nine; and raising Barbara's and Eliot's salaries from $20,000 to $25,000 a year. The country life will have to wait.
Under the company's accounting structure, the bakery sells to each of the three retail stores as if they were wholesale customers. (Half of the bakery's production is sold through them.) Wholesale prices are figured so that food costs come to 40 percent of the wholesale price. Each store then sells al the typical 50 percent retail mark-up. Finding themselves in an industry where mark-up (retail) is typically four to eight times the costs of foodstuffs, Gail and Barbara recall, “Originally we we're afraid to charge too much. We didn't know where the balance was.”
If there's a formula for economic success beyond offering the right kind of quality product at the right time, it's hidden somewhere beneath their consciousness. Maybe it's just flexibility. “Part of the reason for our success,” says Eliot, “was that we didn't know what we were doing. We never planned on a real going business.” Jan-Feb., 1980

ARE YOU AN ENTREPRENEUR?
Frederick J. Beste III

PEOPLE who have built successful businesses are alike in many respects, conclude behavioral scientists who specialize in entrepreneurial research. While it is generally conceded that some entrepreneurs are born, it is equally true that others are at least partially made. Since almost all firms operate in a competitive environment, and since free enterprise is an exercise of the survival of the fittest, exceptional effort tends to rule the day. Especially during the struggling, formative period of a young venture, when setbacks are frequent. There is no substitute for small owners who simply redouble their efforts whenever they hit a roadblock.
Successful entrepreneurs don't give up easily when confronted with obstacles and disappointments. Self-confidence is primarily of the inner variety; they know their abilities and limitations and therefore the heights to which they can rise. Their self-confidence should not be confused with arrogance, nor is it unbiased. They are in touch with reality, and base their enthusiasm on facts.
Another reason our entrepreneurs are not subjected to surprises is because they know where they are going and how they are going to get there. By taking the time to carefully prepare an annual business plan with supporting projected financial statements, they know how fast their business can reasonably be expected to grow given their resources and strategies, and how much capital they'll need along the way. Their goals are challenging yet attainable given the considerable effort they are willing to put forth.
Entrepreneurs are good listeners and handle constructive criticism/feedback well, regarding the latter as an educational opportunity. They realize that even nonconstructive criticism may contain truth, and are therefore less inclined than most of us to make the same mistake twice.
Knowing their own (or former) venture's limitations, entrepreneurs seek help whenever they feel they are in, or may be about to get in, over their head. They solicit advice from knowledgeable friends and advisers and are inclined to spend occasional evenings at the library studying up on relevant matters to their business. They are the antithesis of the know-it-all. April 1980

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