Local Success Stories Defy Slow Economy
Thursday, February 3, 2011
Two small businesses have not only weathered the recession well but have actually expanded to new locations.
Some economists say the recession is over, but not for the millions of Californians still looking for a job. Unemployment is above 12 percent and the housing market remains sluggish.
But two entrepreneurs in San Diego have gone from strength to strength during one of the toughest stretches in recent history.
Patipan Paktipat and his sister Suri own three Thai restaurants in San Diego. They opened their first restaurant, Amarin Thai, in Hillcrest in the mid-90s.
In the last four months they’ve opened two more restaurants – the Mira Mesa location was launched last October, and a more upscale eatery in Pacific Beach had its grand opening just this week.
“Recession is not a problem or a factor at all. If you are confident in your product, you have certain standard for your product; the market is always going to be there, even in a depression,” said Paktipat, explaining that the economy was not a concern while they unrolled their ambitious plans.
He said he puts the customer first when weighing any decision. “The one key is to listen to your customer, to what they want; improve all the time, find new products, some thing more exciting… basically research the market.”
On a recent visit to Siam Nara in Mira Mesa as the lunch rush began, most of the tables were full.
The rich, artistic décor, the quiet efficiency of the traditionally dressed serving staff and the piped-in music were in direct contrast to the menu prices.
Lunch specials begin at $4.99 and dinner entrees can be had for $8 and up. While Paktipat pays special attention to service and décor, he stressed that good food has to be affordable.
“In terms of pricing it has to be fair - fair to you and to customer. You have to put yourself in customer’s shoes when you go to a restaurant, is the portion fair, is the price fair, is the service and taste fair. If the answer is yes, then you will have a successful business,” Paktipat said.
He said most competitors have higher profit margins, upwards of 20 or 30 percent. But with those margins, people can stay in business for only a year or two. If they decrease the margin, like he and his sister did, rely instead on volume and profits of 5 percent to 10 percent, they can stay in business a long time. “I think we chose the second route.”
Richard Leach agreed that entrepreneurs need to offer customers a strong value proposition. He has a solar panel installation business.
“We try to give the best quality for the best price. We do that by keeping our overhead costs and installation costs low, which is within our control. And we try to keep ahead of the competition,” said Leach, while placing solar panels on the roof of a customer in Alpine.
Leach and his partner started Heritage Solar 6 years ago in Orange County and then expanded to San Diego.
Business took off in 2008, despite the recession. Leach attributed his success to homeowner’s growing interest in saving money with rooftop solar panels. Today he relies a lot on word of mouth business.
“Referral has become more and more important for our business. At this point we’re looking at 20 percent of our customers coming from referrals,” Leach said.
Most of Leach’s initial business came from upwardly mobile, technically savvy customers who were early adopters of solar. But that’s changed.
“It’s getting to where now even the more modest income areas are interested in solar,” Leach said.
For more than 20 years, Ken Clark has advised small business owners in San Diego County. He is with the Small Business Administration program at Southwestern College. He says successful owners have some common traits.
“They know how to use their intuition; they know how to improve their skills and their knowledge of the market place. They don’t stand still,” Clark said.
In fact both Paktipat and Leach said they take a look at how they’re doing on a daily basis. Constant reviews help them catch mistakes and correct course in real time.
Clark has observed some common mistakes new businesses often make.
“First off, they don’t plan and understand what their total capital needs are. Then there’s buying too much inventory, over designing a new product,” Clark said.
Clark explained that most new entrants think they have to figure things out from scratch. But instead of reinventing the wheel, entrepreneurs could look at what has worked for others and tweak it to suit their needs.
He pointed out that people also have problems adapting to a changing market and getting the help they need.
“In the early stages, you need to monitor your progress. You need to be agile. In the later stages, it’s trying to be everything when you need to rely on outside help for some of those things, you need to be tending to your business, focus on sales and marketing,” Clark said.
There are advantages to starting a business in a slow economy.
“There’s good talent available to you because people have lost their jobs, the costs are down and real estate lease holds become vacant. You get better deals,” Clark said.
And restaurant owner Patipan Paktipat had three key tips for starting a new business: Be passionate; be persistent and don’t do it just for the money.