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Surviving a crummy time to be a start-up

John Seelmeyer

You did your homework, and you combined

your vision of a better life for your

family with a detailed business plan.

You devoted three years to setting up

your move. You even accounted for the

weakness you saw beginning to develop in

the economy.

You sold the house.You moved the family.

You opened shop.

The dot-com meltdown of which you

saw hints developed into a full-scale rout of

the industry. You didn’t foresee the events

of Sept. 11 who did? and you didn’t

foresee the boardroom scandals of the summer

of 2002 or the stock market swoon.

So how’s it going?

If you’re Dan Kahl, it’s been a highly

instructive 16 months, one whose lessons

are likely to stick with the 40-year-old

entrepreneur the rest of his business life.

Kahl and his wife, Suzy, opened Kahl

Commercial Interiors in Reno in May

2001 just in time to catch just about

everything the economy could dish out.

They reflected a few days ago on the lessons

they’ve learned:

Lesson No. 1:Watch your costs.

“It’s teaching us to be very lean in our

operation,” said Dan Kahl. “It’s almost like

growing up in the Depression.”

Lesson No. 2: Maintain your relationships

with suppliers.

Kahl distributes office systems made by

Teknion, but the collapse of dot-com companies

dumped untold numbers of used

desks, chairs, file cabinets and the like on

the regional market.

Kahl brokered a little of the used equipment,

but decided his loyalties needed to be

with Teknion. The manufacturer began

cutting its prices to meet the competitive

threat of used equipment, and its dealers

such as Kahl took smaller margins. The

combined effort helped dealers and manufacturers

alike weather the storm.

Lesson No. 3: Don’t count on making

your revenue targets when the economy

goes south.

In its first year, Kahl Commercial

Interiors Inc. posted 80 percent of the revenue

it targeted in its business plan, but still

managed to scrape out a profit. The average

order handled by the company was smaller

than Kahl projected, and the company

needed to handle far more orders than

it planned.

And that brought Kahl to Lesson No. 4:

Be ready to think very hard before you hire

anyone. Suzy Kahl expected she’d be working

from home, keeping an eye on the couple’s

four children as she handled financial

matters. Instead, she’s working long hours

at the office and that meant a stressful

period of making sure the children were

well cared-for while she was working.

The company now employs four, and

Dan Kahl said the decision to add an

employee was among the most difficult

he made.

While an employee adds costs, Kahl

Commercial Interiors’ business model calls

for extensive customer service lots of

communication about every detail, for

instance that requires adequate staff.

The company doesn’t have a sales staff.

Instead, its principals each follow their

projects through from start to finish.

And those staff members aren’t just taking

orders from the customer to be placed

with the manufacturer. Kahl said they usually

are working closely with the customer’s

architect or interior decorator, or even

occasionally hiring a space-planner on

their own.

While Kahl may be chief executive officer,

his title also carries the phrase “project

manager.” Ditto for his wife, the chief

financial officer. And ditto for Gabrielle

LaPointe, the employee the couple hired as

showroom manager.

The term “showroom manager,” however,

is something of a misnomer. In his

desire to control fixed cost, Kahl hasn’t

invested much in a fancy showroom.

Instead, the company’s office is dominated

by suppliers’ catalogs.

“You really have to watch your fixed

costs,” he said.

The lessons of the last 16 months come

after the Kahls made a move they’d

planned for three years. They wanted to

leave their former home in Lafayette in

California’s East Bay region, largely

because they wanted to raise their four

young children in northern Nevada.

Dan Kahl, then in his late 30s, was

experienced in office interiors and carefully

crafted a business plan. The couple used

the profit from selling their house in

California as well as some personal savings

to launch the business in Reno.

In their first months in business, the

couple won contracts from organizations

such as National Judicial College, Krump

Construction and Great Basin Internet

Services.

Despite the challenges, the couple continues

to draw inspiration from the

thought that the business and their relocation

to Reno was the right thing for

their family.

“We want to buildi something to leave

to our kids,” said Suzy Kahl.


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