Katherine and Wayne Klesky’s road to success hasn’t been an easy one, but they have arrived by following an atlas of good business practices.
Katherine’s Collection was founded in 1991, with a $3,000 investment, in the couple’s suburban home. The company, now boasting $2.6 million in annual sales and employing 27 full-time and four part-time workers, is on the brink of outgrowing its 20,000-square-foot facility in Twinsburg.
This growth has required dedication, long hours and not a little patience. But the Klesky’s biggest challenge has been obtaining capital to finance their company’s expansion. They did it by building relationships with the decision-makers at lending institutions and persuading them to believe in Katherine’s Collection nearly as much as they did. Here’s how:
Love what you do
Perhaps the most significant factors for Katherine’s Collection have been the Kleskys’ belief in their product and the passion for what they do. The team, which now involves their two grown daughters, developed a unique collection of decorative giftware. Wayne creates original designs, which follow seasonal and decorative themes. Katherine, a skillful marketer, sells the products through gift-trade shows.
The company is represented at 19 shows in the United States every year. And year after year, Katherine’s Collection is recognized by savvy purchasing agents from niche catalog companies to upscale department stores like Neiman Marcus.
Katherine travels a minimum of six months a year-mostly to trade shows and to visit the overseas manufacturers who produce the dolls, decorative eggs, ornaments and other collectibles.
“It can be gruelling,” Katherine says of the trade-show circuit. “We build very elaborate displays for the shows ourselves. We’ll ship 8,000 to 10,000 pounds of product to a show.”
It takes 30 hours to set up the displays, When a four-day show is over, Katherine and her crew tear everything down, pack up and ship the equipment to the next show.
“We’re usually the last ones out of a trade show,” Katherine says. “Our booths are crowded because participants know we don’t produce a catalog or have salespeople calling them. It creates an excitement. People know they can’t buy our products later.”
Ninety percent of the company’s designs are exclusive Wayne now works with a team of designers and also spends much of his time overseas meeting with potential import companies.
“An average day for us is 10 hours, plus we work weekends,” Katherine says. “You have to love what you do to keep up with that kind of schedule and stay happy.”
Be a model bank client
Katherine’s Collection has been referred to as a “financing wonder” and a “model bank client.” That’s quite a compliment, given the source, the Klesky’s loan officer at National City Bank.
Katherine credits her financing success to being well-organized and always prepared.
“We’ve had a business plan from the beginning,” Katherine says. “You must be organized enough to know what direction you’re going in.”
The business plan included a three-year sales projection and a market analysis that explained why the gift industry remains strong even during a recession.
“During rough times, people may not be out buying furniture, but they’ll always buy a gift for their mother or their child,” Katherine says.
Isabell Moses, assistant vice president for National City, says Katherine’s knowledge of the gift industry and the import business cycle impressed decision-makers at the bank. But the bank bought more than Katherine’s message.
“Why we, as a bank, took faith in Katherine went beyond the unique designs,” Moses says. “She is intensely hard-working and knowledgeable. We looked more at her as opposed to just the hard-core financial numbers. Banks don’t usually do that.”
When Katherine’s Collection hit sales projections consistently, Moses says the bank’s collective belief in the Klesky’s company was cemented.
“We made our final lending decision based on the company’s historical performance,” Moses says. “The company is in a position where they’re growing 30 to 50 percent a year, but Katherine has an extremely slow cash flow cycle and must 100 percent prepay for product.”
By clearly explaining the company’s ordering and cash-flow cycle, Katherine convinced Moses and others.
The company must prepay overseas manufacturers for all merchandise ordered. Several quarters can pass before product is delivered and Katherine’s Collection is paid.
“We had to understand that her merchandise is already sold because she’s taken orders at trade shows,” Moses says. “What we really had to come to grips with is understanding that she has control over what she orders and she only orders what she needs. The risk from our standpoint is not that she will have merchandise left sitting on a shelf-the selling is done. The risk from our standpoint is whether or not the manufacturers come through and that the boat doesn’t sink.”
The Klesky’s formulated a strong marketing strategy that did not include a sales staff or advertising, thanks to the trade-show circuit.
Katherine says she monitors the company’s finances weekly-not quarterly or even monthly. She relies on an accountant for advice and works to cultivate an even stronger relationship with the bank.
“When you’re in a new business, the most difficult thing is just getting someone to believe in you,” Katherine says. “It’s important to keep the bank well-informed and have a relationship with your bank and not just see them when you need something.”
The bottom line from the bank is understandable.
“We felt comfortable loaning her money,” Moses says of Katherine.
How to reach: Katherine’s Collection (800) KC-GIFTS