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Expanding on small business success has rewards, challenges

When a small business does well in the marketplace, and customers from other areas start saying, “Why don’t you open another store in my town?,” it can be tempting to do just that to expand on the success of the company.

Two Coast retailers who have followed that path are Hopkins Blvd. Imports, a home furniture and accent store, and Classy Coverups Inc., a discount decorator fabrics store. Each started with an idea unique to the marketplace, found their wares well received, and expanded to two other locations.

Hopkins Blvd. Imports was launched in October 1997 by Jim Peresich, whose goals include having “the most unusual merchandise mix available under one roof that can be found anywhere in the world.”

“We are a niché retailer,” said Peresich, who named the store after the street he grew up on in Biloxi. “We selected a segment of the market where we can offer something different that no one else has. While there are furniture stores out there and import stores out there, we feel we are different from them because we deal in handicrafts, hand-produced items made one at a time. We deal with individuals, families and companies in different countries, primarily Asia, as opposed to buying from large factories, mass producers or middlemen.”

The craftsmen that Hopkins Blvd. purchases from are very proud to be exporting their goods to the U.S. The families they buy from tend to concentrate on one area of expertise. For example, one family might produce three or four different styles of dining tables, and another three or four styles of TV cabinets.

While there are now three Hopkins Blvd. stores, with a store in Mobile opening in 2000 and a store in New Orleans opening in 2002, the idea almost didn’t get off the ground to begin with. Peresich said he got turned down for financing by almost every bank on the Coast. Then a loan officer with People’s Bank, C.J. Tennant, decided the business had great potential. She said it was the best idea for a new retail concept that she had seen in a long while. People’s Bank and the South Mississippi Planning and Development District teamed together on the loan.

“One of the problems with small business is lack of access to capital,” Peresich said, “With retail, it is hard to get financing with a bank. But the People’s Bank loan officer saw photos of the items we would be carrying including mahogany and teak furniture from Asia. She said it was a trend seen in larger cities, and she believed it would be viable in our market.”

Some retailer experts doubted the concept could make it on the Mississippi Gulf Coast, or even in Mobile and New Orleans. Peresich has proven them wrong.

“They didn’t think we were going to make it,” Peresich said. “But my feeling was that the whole concept of hand-crafted products you won’t see anywhere else in the area was attractive. My feeling was this was truly missing in this market.”

By working directly with craftsmen from foreign countries, Peresich cuts out the middleman. That allows the craftsmen to get better pay for their work, and for the customer to get lower prices.

“Another thing we do differently than many people who are our competition is we import from many different countries and many different regions from a country,” Peresich said. “We bring in a good mix including garden pieces, hand-carved stone items, mahogany furniture and original architectural pieces 100 to 200 years old such as windows, doors, frames and arches.”

Often the biggest challenge in opening a new store is finding management that can be trusted. Merchandise walking out the door with out being paid for or even outright embezzlement can be serious concerns.

Peresich responded to the challenge of hiring good help by training people, and making them a partner in the store.
“They came to work for me, and have not had to put up any capital to be a partner,” he said. “They are paying with sweat equity. They are owners as I am. If they get cut, we both bleed. In my opinion, I have the three best guys I could ever have.”

The co-owners and managers are Phillip Patterson in Gulfport, Carlton Mallory in Mobile and Todd Kinard in New Orleans.

Classy Coverups addressed the personnel issue for their first expansion in another way honored in small business. Family members were tapped to manage their second store in Hattiesburg. They now also have a store in Pensacola, Fla.
Classy Coverups is owned by Skip and Peggy Ryland, who grew up on the Coast. Skip Ryland was in the Navy for 32 years, finishing his service at the Naval Oceanographic Office at Stennis Space Center. After moving back to the Coast, the Rylands wanted to open a small business.

“We wanted to start a business, and my wife had always been interested in decorating,” Skip said. “We looked around and saw there were really no discount decorator fabric stores, and so we decided to try our luck at that. That was 1986. We bought a small house, and turned it into Classy Coverups. We started out with 127 bolts of fabric. We just pumped any money we made into building our inventory.”

They noticed that they were getting a lot of customers from Hattiesburg at the Coast store. So when their oldest son, Mark, got out of the Air Force in 1989, he and his wife opened a Classy Coverups in Hattiesburg.

Classy Coverups in Gulfport started out with 1,300 feet and after two additions over the years is up to 5,000 square feet. The Hattiesburg store stared with 1,300 square feet, and an addition has increased that to 2,700 square feet. The company’s Pensacola store that opened in 1995 is 3,600 square feet.

“We saw the same niché in Hattiesburg and Pensacola as here on the Coast: the lack of decorator fabric,” Skip said. “We are a discount store. We sell primarily fabric that has been put out into what the industry calls the off goods market: closeouts, seconds, overruns and inventory reductions. What that does for our customers is provide a quality product at much lower price.”

Some Classy Coverups customers are doing the work themselves, sewing fabric into drapes, for example. The store carries a list of upholsterers and fabricators for the majority of customers who aren’t do-it-yourselvers.

Skip said their experience has shown there are both benefits and drawbacks to expanding on small business success.

“Finding personnel you can trust is often a problem,” he said. “We found out bigger is not always better. You can’t always spread yourself thinner. It has advantages because, for example, you have more purchasing power, which gives you the opportunity to get better deals on what you are buying. But you also then have the challenge of getting it distributed.”

The fabric comes into Gulfport, where it is cut and distributed to other stores. That means a lot of time on the road transferring goods around.

“You have all those logistical problems just due to geography of where your stores are, and the number of stores,” Skip said.

While their store in Pensacola didn’t have any physical damage from recent Hurricane Ivan that devastated the Panhandle of Florida, it did suffer from the economic impact of local residents not being able to purchase right now.

“A lot of people there got wiped out,” Skip said. “Eventually they will have money from insurance to redo their houses. But our challenge is to stay open long enough to reap that benefit. Pensacola is about 29% of our business. When you take a hit in your business, you have to have a nice, cozy relationship with your banker. But we will pull through, and hopefully it won’t be long before people are starting to buy again over there.”

Skip’s advice to others considering expanding on small business success is to do good marketing research in the area where an expansion is being considered including the locations being considered to locate another business. He also highly recommends getting the free assistance from government resources such as the Small Business Development Centers run by the U.S. Small Business Administration.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

About Becky Gillette

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