Shifting Gears

BRANCHING OUT IS A MUST-HAVE GROWTH STRATEGY, BUT EXPERTS CAUTION TO STEER TOWARD TERRITORY YOU KNOW.

Glen Bolofsky has made fighting New York City parking tickets a lifelong career. First, he came up with a calendar that poked fun at New Yorkers and their parking sagas, but also provided critical information on the days people had to move their cars to avoid getting tagged.  Next was a line of novelty products positioned as the “tools to survive” parking in New York. From there came a software program and service aimed at large companies with car fleets in the city to help them keep costs low by fighting for ticket dismissals. The latest Bolofsky endeavor: Parkingticket.com, a Web site where individuals can access those same kinds of capabilities to contest tickets in New York and other metropolitan areas.

While Bolofsky’s products have changed and his business model has evolved—from a one-man, door-to-door sales operation to a nationally recognized Web site—his basic business premise has not. For over 25 years, he’s been the go-to guy on New York City parking tickets, and despite the different manifestations of his company, its principal focus has stayed the same. “We are pioneers in this area,” says Bolofsky, now president of Parkingticket.com, a $3-million, 10-person company in Paramus, NJ. “Sticking to our foundation gave us tremendous credibility with the customers we’ve had and relationships we’ve developed over 25 years.”

Bolofsky’s stick-to-your-knitting tactic may be the best piece of advice for any small business looking to shift gears, whether it’s to embrace a different business model, pick up new categories of product, or branch out into new markets. Smal l-business experts say reinventing a business and augmenting your existing products and services are vital strategies for growth. However, doing so well outside of your sphere of expertise can be a risk many companies are not—and should not—be prepared to take. Taking on an unfamiliar product line or competing in a totally separate category can be expensive, especially when you factor in costs associated with a steep learning curve and the legwork required to cultivate new relationships.

“The biggest mistake companies make is relying too heavily on one income source,” explains Steve Strauss, president of The Strauss Group (www.mrallbiz.com) in Portland, OR, as well as an author and columnist in USA Today, who covers small-business-related issues. “The second biggest mistake is diversifying into an area where they don’t know anything or tackling a project that’s too big.”

It’s a little bit of a catch-22. Strauss is adamant that small businesses need to diversify their income source, having multiple profit centers in order to foster growth over the long term and weather the ups and downs of traditional business cycles. But like Bolofsky, he advises companies to carve out those new areas around a market or a product or an audience that they know. “A business needs to really understand what their core competency is—what it is they do best—and off-shoot from there,” he explains. “If you venture into an area you don’t know, the learning curve is too steep and mistakes will be made.”

Sit But Don’t Stay

One way to avoid such mistakes is to branch out and reposition your company in slow, measured steps. That’s exactly how SitStay.com staged its reinvention over the last nine years, from an early informational Web site and community to an e-commerce shop selling specialty products for dogs.

When Kent and Darcie Krueger started the site way back in 1996, they envisioned a community for fellow enthusiasts of the Belgium Shepherd breed, and the project was really more of a hobby for Kent so he could hone his programming skills for what was then novel terrain: The Internet. As the community grew, Kent and Darcie began selling cups, T-shirts, and novelty products with Belgium Shepherds on the site, and customers kept coming back and asking them to provide a broader array of goods. “Where we are today just grew out of that,” says Kent, chief dog lover at SitStay.com, based in Lincoln, NE. “People just kept asking for things, and we’d been giving them what they wanted from day one. We grew this thing slowly. It’s not like you can flip a switch overnight.”

The switch has definitely been flipped, although it’s been a gradual progression. Each step of the way, Darcie and Kent have taken their cues from customers and gone on gut instinct. When they began the transition from informational site to e-commerce destination, they made sure they didn’t abandon their core audience by transforming too quickly away from what customers already knew and trusted. They merged shopping capabilities on to the site in stages: First shopping was accessible as a small icon; then the site was split down the middle, with information on one side and shopping on the other. Eventually, SitStay.com was transitioned to a full-blown shopping site once the core Belgium Shepherd constituency was comfortable with where to go to get what they had become accustomed to. “We didn’t want people coming to the site as Belgium Shepherd people to think we were focusing on a store and then alienating them,” Kent says.

The measured approach has paid off. Today, SitStay.com sells over 3,000 products, and both Darcie and Kent have left their former jobs to run what is now an eight-person company overseeing an 18,000-square-foot warehouse. The couple is planning to move into a new 50,000- square-foot warehouse, complete with a small, on-site retail store, as well as branching into products for cats as part of the next chapter in its ongoing evolution.

For Neal Greenberg, owner of Nealsharbor.com, the metamorphosis was about leaving the brick-and-mortar retail world behind in favor of a much more specialized Internet retail presence. Greenberg had run a family camping and marine business in the Hartford, CT, area for years, but decided to call it quits for a number of reasons, including not being up for the challenge of reinventing an aging business to move it forward.  After taking a year off, Greenberg decided to leverage his 20-plus years in the business to start an e-commerce site that would sell a very targeted segment of what his old business sold—specialty cleaners, waxes, and accessories for boating, car, and RV enthusiasts. “It was an adjunct of my old business,” says Greenberg, in Andover, CT. “It was [something] I already knew.”

Greenberg found an ex-co-worker who helped him find someone to build the Web site and leveraged old banking contacts from his prior business to help him figure out how to set up for processing credit cards in-house.     After testing the waters for sales of the products on eBay, he commissioned to have the site built and opened for business in 2000. “I didn’t know the Web, but I knew the products and had a basic business foundation,” Greenberg explains. “The products might change, the audience might change, but business is business.”

Parkingticket.com’s Bolofsky feels exactly the same way about his 25-year metamorphosis. Bolofsky was able to easily segue from one business to the next primarily because he leveraged contacts and applied core business principles, but also because he stuck to the theme of disputing parking tickets—a practice where there was clearly an established market and he was visibly an established expert.When he and his team began selling the software package that could automate the process of drafting letters for ticket dismissals, he brought along the calendar, which people had seen in local card shops and bookstores or heard about on the radio or TV. “The trick is to build off your existing success and use everything as a launch pad,” Bolofsky says. Even if a product or service wasn’t a smashing success, Bolofsky says, don’t be afraid to show it off because it proves continuity in a particular area and is critical to establishing expertise and persistence.

Bolofsky and other small-business the importance of the stick-to factor when it comes to reinventing or augmenting your business. Twenty-five years after he set out to sell a parking-ticket calendar, Bolofsky is now overseeing a nationwide Web site that’s expanding beyond Manhattan—now serving consumers in Washington, D.C., and San Francisco and soon in Boston,Chicago, Los Angeles, and Houston. People log on to the site, answer questions about their ticket, and are presented with a dismissal letter specific to their case as well as instructions on where to mail it. If the ticket gets dismissed, half the cost of the ticket is paid to Parkingticket.com; if the customer doesn’t win, they pay nothing.

Bolofsky credits his success with being able to see changes in the market and adjust accordingly. “We’re a chameleon,” he quips. “But a chameleon that never changes its stripes”

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