How four old-school cos. beat changing times

We've all heard stories of industries that implode in the digital age, causing many small businesses to close forever. From retailers to service providers, small business owners have had to grapple with the upheaval of the Internet age or risk going out of business. It takes a special kind of business owner to navigate the choppy waves of today's rapidly changing business climate; we profile four of them who have kept their businesses growing even as their industries have contracted.

Peter Doe: Owner, Photo Market, Portland

Red flag that business as usual was changing: Countless customers asking for something new.

Boldest move: Moving the entire store a mile down Forest Avenue, overnight, two weeks before Christmas.

Best outcome: After moving to 945 Forest Ave., with better parking and in-house photo processing, we gained many more customers.

Biggest challenge: The biggest challenge, generally, is the ever-changing competition.

The interior of Photo Market in Portland is not the best place for a small child to be left unattended. The shop is crowded with all things related to photography, from expensive lenses to personalized photo coffee mugs. The high amount of inventory reflects Peter Doe's strategy to be all things to all people when it comes to photography. Photo Market is the state's largest independent camera store, and the only one left in Portland city limits, partly because Doe never left a sliver of potential customer base behind. (It's still one of a handful of stores left in New England that processes film in-store, for example.) It's Photo Market's attention to customers' needs that has created dedicated fans, Doe says.

“We get customers on a typical day who drive from an hour or more away,” Doe says.

Doe has had to do many things right in his 25 years of running the business. One of his most important moves, he says, was to secure a good location in a good building on Forest Avenue about 12 years ago, which gave Photo Market better parking options and space for an in-store photo-processing center. It's helped steer what could have been a diminishing stream of customers through Photo Market's doors.

“Forest Avenue happens to be the busiest street in the state of Maine,” he says.

Doe also has been wise enough to know which way the wind blows and solvent enough to capitalize on it. Around the time Photo Market moved to its new location, digital started becoming a fun new component of photography for tech geeks. The store began offering two megabyte digital cameras that ran between $600 and $900, and miniscule memory cards that cost more than $100 a pop. When digital seemed like it would catch on, Doe also had the capital and foresight to invest in a digital processing lab.

“A good photo lab costs as much as a small house,” he says.

Once Photo Market got its toehold in digital photography, it became a matter of surviving a war of attrition that pitted local photography stores against online digital photo processors and drug-store photo kiosks. Doe attributes a lot of his success to his dedicated staff and “an owner who works like a dog.”

Doe now wonders if the pendulum might be swinging back to favor local photo stores. He's watched big box competitors that carried cameras, like Circuit City, go out of business, and he's seeing people who went online for photo processing come back to Photo Market. He's also worked extensively with buy-local movements in Portland to energize local consumers.

“It's a fun business,” he says of the effort to grow his company. “Photography is generally a fun thing.”

Pam Hurley-Moser: Owner, Hurley Travel Experts, Portland

Red flag that business as usual was changing: When the first fax came in from the airlines in 1995 informing us that they were reducing our commissions from 10% to 8%. Literally overnight, we had to change our business model and charge clients for services that they had never paid for. It was a choice between collapsing and transforming.

Boldest move: Continuing to remain independent, while agency consolidations happened all around us and putting all our eggs into the customer service basket.

Best outcome: Inspired employees, great vendor relationships and the highest rate of customer retention.

Biggest challenge: Too many to count.

It takes courage to open up your own travel agency at the age of 25, as Pam Hurley-Moser did in 1993. It takes courage and smart business sense to succeed in the travel industry in the shadow of Priceline.com and its ilk. The two-decades' long trip for Hurley Travel Experts in Portland hasn't always been smooth, but the resiliency of Hurley-Moser's business plan has sustained the travel management company.

“We put all our eggs into one basket. We decided we were going to just focus on service,” she says.

It's a strategy Hurley-Moser shaped from her early years working in the travel management industry, when she saw many travel agencies focusing on quantity over quality. The pressure was to sell as many trips as possible, as quickly as possible. She found that when she visited other agencies, the travel agents often knew very little about what they were selling.

“At one point, I was really interested in hiking in Nepal … and an agent tried to sell me a Carnival Cruise,” says Hurley-Moser, laughing.

To get away from the high-volume model, she instead focused on servicing the travel needs of corporations, group travel and event travel. Because of the focus on group bookings, Hurley Travel Experts can spend more time making sure clients have a quality experience, she says. In practice, this means that every agent must have deep knowledge of what he or she is selling, and it's mandatory for those who work for Hurley-Moser to take paid vacations to experience what they're offering. It also puts a priority on relationships; she insists that her staff talk directly with international resorts and tour operators to arrange trips. As part of their customer service commitment, her staff monitor flights and when there's a problem, call clients to rebook — usually before the clients are aware there's a problem. Customers have responded.

“There was a real market for that, not only for expertise, but for a high level of customer service,” she says.

Her staff's commitment to customers has, in turn, helped her customers commit to Hurley Travel Experts. Hurley-Moser says she first noticed it in the early '90s, when Delta Airlines unexpectedly raised its fees for travel agents after the first Gulf War. To absorb the hike would have plunged her business into the red, she says. She told clients she would have to raise her fees and expected many of them to drop her business. Instead, while they didn't like it, they understood and stayed with Hurley Travel Experts.

That kind of loyalty was invaluable to her again shortly after the terrorist attacks on New York City in 2001. Few people wanted to travel, and those who did were booking mainly with online mega-companies.

Hurley Travel Experts was losing business and close to closing its doors, she says. Then while watching a Priceline ad, it occurred to Hurley-Moser that she needed her own ad campaign demonstrating the value of using a local travel agency.

“We weren't out there,” she says. “Nobody was out there telling our story.”

Hurley-Moser needed cash she didn't have to create an ad campaign. She went to her employees and asked permission to cut everyone's salaries and benefits. They agreed. The ad campaign, featuring local employees talking about the company's commitment to customer service, paid off. Business came back and Hurley-Moser was able to restore full salaries and benefits and pay back the ad campaign money to employees with interest in less than a year.

Since then, Hurley-Moser has been working to strengthen Hurley Travel's presence in Maine through partnering with nonprofits and charities for community-themed events and giveaways. She believes in doing good in her community, first and foremost, but she knows making her community stronger also helps her company do well. She has never stopped striving to improve through training, peer review and technological upgrades.

“If something is working OK, I always say to myself it could be better,” she says.

Warren Roberts: Owner, Warren’s Office Supplies, Springvale

Red flag that business as usual was changing: We had customers coming to us daily to research [a product] or ask questions about service and we would answer their questions. They would then leave with our answers and purchase the product at a big box store.

Boldest move: We expanded into a new office/distribution facility this past year to support our increased business volume.

Best outcome: We recreated our sales team and sales process four years ago. Since then, we have achieved record results — a 24% increase in revenue in fiscal 2012 and 20% in fiscal 2013.

Biggest challenge: Big box marketing has created the perception local businesses (in all industries) are not competitive. We have to fight very hard to overcome this bias.

Nothing seems more old-school than office supplies. After all, how much innovation is needed in selling paper clips and printing paper?

As it turns out, a lot. The business landscape for office suppliers has shifted dramatically since Warren Roberts first opened a small office supply storefront in Sanford in 1981. Back then, most small office supply businesses maintained a retail storefront. Then, in the mid-'90s, big box office supply stores started opening. Within a decade, they dominated the market.

Roberts says being able to see the writing on the wall and adapting is what saved his business. In 1996, the year Staples Inc. opened its 500th shop, Warren's Office Supplies sold its retail storefront and began to deal exclusively in wholesale and online sales. It was a good time to get out, he says.

“There were some that didn't get that message in time,” Roberts says. “That's one thing we've been able to do is to make the changes that we've had to.”

Warren's Office Supplies has enhanced its success with an unusual marketing campaign. It's probably one of the few office supply businesses in the country with its own mascot, a vibrant, chipper No. 2 called Pencil Man. Roberts says the idea of the mascot came about in 2000 to differentiate Warren's catalog from others.

Pencil Man survived a 2009 rebranding process and even gained a sidekick, Pencil Point. The two are featured in the company's online newsletter, usually pursuing some adventure that allows them to talk about specific products and sales items. Roberts says the tales combined with puzzles and contests for local gift certificates, keep customers reading.

“We found our customers loved that type of thing and the response we got was tremendous,” he says.

Careful observation of trends has helped Roberts expand his business' volume. In 2007, for example, he bought out another office supply business in New Hampshire, tapped into its client list and gained a foothold in the Granite State just as the New Hampshire economy began to boom. Also, he saw early that the definition of “office supplies” was shifting from pens and papers to toners and Keurig coffee cups.

Most importantly, he says, he's been able to build ground support among local businesses by using an engaging online presence with a boots-on-the-ground sales force. Four years ago, he reshaped his business' sales force and enhanced its local presence. It's a strategy the big box stores are late to adopt; Staples is now cutting retail space and trying to pivot to online sales, so far with disastrous earnings results. Roberts says there is no substitute for real customer engagement within a community.

“Small local businesses are recognizing the same things that we are, that we need to work with each other and support each other if all of us are going to continue to grow,” Roberts says.

Rick Tardiff: CEO, J.S. McCarthy Printers, Augusta

Red flag that business as usual was changing: During the recession, the print manufacturing supply was far more than the demand.

Boldest move: We acquired a much larger company. It set the cornerstone for who we are today.

Best outcome: The results we've achieved by instituting lean manufacturing principles. They allow us to compete nationally.

Biggest challenge: Determining future investments as they relate to the changing market demands.

Are you reading this story online? If so, you can understand how difficult it is to stay in the black in the printing industry. The number of printers in the United States has shrunk from 52,000 to 27,000 in the last 15 years, according to figures from New Direction Partners, a mergers consulting firm.

Rick Tardiff came to realize that the only way his business could survive the turbulence of the Internet age was to become as efficient as possible. There's only so much a printer can do to enhance printing quality, Tardiff says. So instead, he has focused on streamlining the printing process to keep prices and costs down, and empowered his employees to find efficiencies. He provides them with top-notch training and technologies and has implemented a model of decentralized problem-solving to shave minutes off each job.

“The printer down the street can probably do as good a job as we can, but how are we going to do things differently?” he asks.

Sometimes, that problem-solving has little to do with a printing press operation. For example, an employee who was working the printing line noticed that people were lining up to use the bathroom. So he installed a light over the production line that connected with the bathroom light to let everyone know when the bathroom was occupied. Employees now can time their trips accordingly.

“No one said, 'Hey, we've got to have a meeting [about this problem.]' He just looked at this and saw it was an issue,” Tardiff says.

Efficiency has been the cornerstone of J.S. McCarthy's growth plan. Tardiff has made a habit of acquiring struggling printing businesses and streamlining their operations to turn a profit. In the past six years, Tardiff acquired four other printing businesses. He found that by streamlining operations, he could sometimes shave 16 hours off the time it took to complete a typical print job at the acquired businesses.

“If you multiply that out over job after job, it really has a true effect on the bottom line,” he says.

In 2000, J.S. McCarthy had 196 employees and did some $16 million in business. Today, it has 175 employees and does $32 million. Over the same period, the number of printing presses has shrunk from 14 to three, reflecting more than $10 million in technology investments. For Tardiff, investing smartly to do more with less is not just a business platitude, it's the key to success.

“If you give employees the good tools and the right training, you're going to maximize your output,” he says.