How My Cousins Have Built A Business...

It started out as a machine shop back around 1930, working mostly with metal products. They really didn't have a product line of their own but like most machine shops made or configured metal parts based upon their customer's wants.

In the 60's they seen possible growth in plastic furniture using metal legs and framing (remember the plastic shelves that would go in bathrooms that utilized metal legs?). This went on for a few years and was profitable. This portion of the business was eventually sold off.

Then back in the 70's they started seeing the popularity of "knock-down" furniture (also known as "Ready-to-Assemble"). Essentially particleboard wood products covered in a wood grain veneer.

They caught the 'wave' so to speak. A lot of good things happened that they had absolutely no control over such as:

-The explosion of new retail construction. Wal-Mart, K-Mart and other discount chains expanded all over the U.S.
-The growth of specialty 'big-box' type stores like Best Buy, Circuit City, Staples and Office Depot. All these businesses put a big emphasis on knockdown furniture.
-The popularity of the home office, which of course was tied to the popularity of the home computer.
-The demise of the console TV, which had its own cabinet. All the new TV's needed some sort of shelving and for most people real-wood shelves was too expensive.
-Traditional knockdown furniture experts like "Gusdorf" were having problems, which allowed the growth of competitors.

The company was soon selling over $250,000,000 worth of knockdown furniture per year. This wave has crested. Now imported furniture is controlling the market and mainland, U.S. companies are having trouble competing. So the company is going to need to change directions again, which they are attempting to do.

There are a lot of lessons to be learned here:
1. No matter what business you are in now you have to be ready to change overnight if you are interested in making money.
2. Many variables of success can't be controlled, heck you can't even "foresee" many of them. These folks will readily admit they never "business planned" things to work this way... there is no way you could. They seen opportunities and instead of spending tons of time analyzing them they went forward, made mistakes as they went and learned lessons along the way.
3. It's good to be in an industry that has a high entrance cost to competitors. This was the reality for the knockdown furniture business back in the 70's and 80's. Now it's not the case. This is a big problem with many business ideas... Competition is the #1 reason for diminishing profits. If you're stuck in an industry or business that offers little in the way of barriers to entry then expect your ability to earn profits to be diminished.
4. It's easy to grow when you sell to industries that are growing themselves. They just sort of suck you up and drag you along. This is probably the easiest way for any business to grow. You don't have to create your own momentum.

Oh by the way, the name of this business is "Bush Industries".

Take care,

Mike Winicki

Hi Mike,

Thanks.... Lots of good lessons here !

> 1. No matter what business you are in now
> you have to be ready to change overnight if
> you are interested in making money.

That's true.... This is often stated to be the advantage small businesses sometimes have over large ones. Some large businesses can be very bureaucratic, and can take a while to change enough to jump in to new opportunities. It's often easier for a small business to beat them there and get a head start....

> 2. Many variables of success can't be
> controlled, heck you can't even
> "foresee" many of them. These
> folks will readily admit they never
> "business planned" things to work
> this way... there is no way you could. They
> seen opportunities and instead of spending
> tons of time analyzing them they went
> forward, made mistakes as they went and
> learned lessons along the way.

Yes! Changes in tastes, changes in regulations, changes in technology can all produce opportunities. In fact, any kind of change is an opportunity for someone.... Not everyone will be in the right position to take advantage of it, but it's good to keep in mind that any change in how things are done is usually an opportunity for somebody to make money from it.

> 3. It's good to be in an industry that has a
> high entrance cost to competitors. This was
> the reality for the knockdown furniture
> business back in the 70's and 80's. Now it's
> not the case. This is a big problem with
> many business ideas... Competition is the #1
> reason for diminishing profits. If you're
> stuck in an industry or business that offers
> little in the way of barriers to entry then
> expect your ability to earn profits to be
> diminished.

Yes, though it's not always easy to get into an industry with high barriers to entry (since often those "barriers to entry" will also apply to you!).

I think the easiest way to have an area of business largely to yourself is to target a niche which isn't yet being targeted....

> 4. It's easy to grow when you sell to
> industries that are growing themselves. They
> just sort of suck you up and drag you along.
> This is probably the easiest way for any
> business to grow. You don't have to create
> your own momentum.

This makes me think of Levi Strauss. He got rich from the gold rush - but not by finding gold.

In San Francisco during the gold rush in the 1850s, he had some canvas which he was hoping to sell to a tent-maker.

A miner approached him and asked him if he had any pants to sell. There was a shortage, since ordinary pants were quickly worn out by the gold prospectors.

Strauss then had the idea to make some tough pants out of canvas - and "Levi's" were born. He got rich selling his product to the "growing" group of gold miners!

Thanks Mike - some great business truths, illustrated by a great true story! I appreciate it a lot....

You can never read too much about these kinds of things. :)

- Dien Rice