At first, nobody knew what to make of Jennifer Downey’s small Northeast Ohio chain of Ambiance stores.
Despite the company’s profitability, banks were more than a little wary about extending thousands of dollars in financing to a business that counted lingerie and massage oils among its assets.
Over time, though, Downey was able to convince the bankers she worked with that they wouldn’t end up selling the contents of her store from the back of a truck. Four years ago, Downey sat down with SBN to share how she secured the loans that allowed her to grow her chain of Ambiance stores. Today, she operates six locations across Northeast Ohio, with two more slated to open this fall.
But it’s the long-range blueprint for growth that is even more impressive. Downey plans to open 10 stores in the next 18 months and move beyond the company’s Cleveland roots. After that, her only plan is to keep growing — a move that will admittedly require Downey and her husband and co-owner Henry Keiluhn to rely more on outside investors for financial backing.
“We see this concept is not out there yet,” explains Downey, who just moved the company’s headquarters from Parma to a larger building in Middleburg Heights. “There is going to be a market leader in this industry and we want it to be us.”
So, after 19 years of steady growth financed largely by astute cash flow management, Downey is making serious plans to take her concept national. And in the evolution from a small regional company to one with an eye on new markets, Downey has learned how to deal with the inevitable pains that accompany business growth. She offers four ways other owners can do the same:
Spend money to make money
Sure, it may be the one of the oldest business adages in the book, but Downey was reluctant to sink money into an expensive inventory software program six years ago, even though it promised to cure problems she had keeping her stores’ most popular products in stock.
Occasionally, some items would be out of stock for two, three, even four weeks at a time. Downey ultimately decided she simply had to invest in an automated reordering system if she hoped to maximize revenue for her stores.
“I bought this inventory program that was way over my budget,” she recalls. “I couldn’t believe it would bring us any money, but it has. It helped me tremendously increase the turn on my inventory, increase my margins, and I always have things in stock that I didn’t have before.”
Stick to the business plan
To ensure her company’s growth would not be limited by the inability to secure loans, Downey worked hard to build a strong case for why her business concept was a safe investment. When she originally went to the bank for a $225,000 loan to open her fourth store, she was met with some reluctance.
Since then, it’s been easier, not only because the company is more well known, but because Downey can show increased profitability and revenue as proof that her business plan is a viable one.
“They’ve seen us grow, they’ve seen our financials for almost 20 years and they see that we have done what we said we were going to and have watched us increase our business,” says Downey, who notes she and her husband have worked with the same bank for 19 years. “I think that’s why it’s so much easier now.”
Always keep an eye out for good people
Finding workers is hard for everyone today, but the retail sector is one in which the need for dependable help is at an all-time high.
“Not everybody wants to work retail now,” explains Downey.
She has tried to combat the problem by constantly interviewing and meeting with people who express interest in working at one of her Ambiance stores. But, like many of her retail brethren, the tight labor market has forced her to get downright aggressive when it comes to finding workers, especially for open management positions.
“We interview store managers every time somebody sends us a resume,” she says. “We have a sign in every store, in every window, all year long, that says ‘accepting applications, inquire within.’ We also run a lot of classified ads and use cold calls.”
Don’t try to do it all yourself
When there were only two Ambiance stores, keeping a handle on them was easy. Downey was in charge of one, while her husband operated the other. But as the company grew, it was obvious that level of control could not be maintained.
Downey admits she and her husband battled to keep up with all the work for a while, but eventually learned that delegating and outsourcing jobs and responsibilities was the only way to deal with the growth.
“I used to do everything,” she says. “Now we have a bookkeeper, a warehouse manager, we’ve even hired someone to do our windows. There are all these jobs that you have to outsource, because you just can’t do it all.” How to reach: Ambiance, (216) 676-0669
Jim Vickers ([email protected]) is an associate editor at SBN.
