Winter 2004 Enterprising Guy
If Tim Runner were to write a book, he’d call it Businesses I Have Failed At. Talk to this extremely knowledgeable yet self-deprecating entrepreneur, and you see why this makes perfect sense. After all, failure’s silver lining is learning from the experience. And learn he has—he’s been an entrepreneur since age 19. Today he’s 60.
Awesome Specialties International (Mission Viejo, CA) has products in 240 malls across the country. While Runner doesn’t divulge sales figures, he does say, “Our growth rate averages well over 65 percent, compounded annually.” This has been consistent since ASI’s first year in business. And that’s only one of his businesses. How does he do it?
For one thing, Runner likes to know what’s going on. He’s a self-professed magazine junkie: the man reads something like 150 periodicals a month on everything from world news to automotive industry news. “You never know when you’ll pick up a tidbit that will come back to help you out along the way,” he says. He mentions a recent article about problems at Polaroid, and how it’s tough for big companies to respond to problems quickly. “That’s where we little guys come in.” He takes the information he reads and translates it into action.
“[Runner] thinks about things before he does them,” says Pam Hoffman, ASI’s HQ office manager. (She would know: they’ve worked together since the trade-show days.) “He realizes he has to be one step ahead of the competition, so he’s always researching.” It’s also clear Runner likes to take chances—calculated chances. Entrepreneurism isn’t what people think, he says. “It’s not typically a one-shot thing. We have successes; we have failures.”
Beyond the basics
Runner takes care of people. That’s at the heart of his business philosophy. Call it “customer service” and it sounds familiar enough, but the difference between him and the next guy is the intensive market research Runner does to learn exactly which services his customers and owner-operators value most. “It’s imperative to service your clients well and understand their unique needs,” he says. For Runner, that boils down to three main components: respecting his operators’ specific requirements; trying to maintain competitive prices; and selecting products that are exciting.
There’s no doubt that the requests of cart and kiosk retailers are unique. For starters, they have very little storage space and need their re-orders quickly. This is often trickier than it sounds, especially when products are imported from China. “Our lead times from China are long, [so] we have to take a certain amount of risk [stockpiling products] because otherwise there are shortages.” He mentions the just-in-time methodology Japanese auto manufacturers use. With just-in-time ordering, supplies are shipped on an as-needed basis, so they get tomorrow’s supply of, say, door handles, today. Many US businesses have adopted this, and Runner says ASI does it on a smaller scale. “We try to supply our clients with smaller orders quickly and efficiently.” If ASI receives an order by 10 a.m., they make every effort to ship it that day. And if they can’t? “We’re honest. We’ll ask our clients, ‘Do you want to wait, or do you want a substitution?’”
Runner also services his customers by offering products that provide high markups. “We try to achieve a markup of 300-400 percent on all our products. We can’t always achieve this, but we try to,” he says. All the while Runner is aware that consumers are making impulse purchases, and so he doesn’t want to cross the “magic” retail price line. Ideally, he says, the retail price will hover around $20, with a $5-$6 wholesale cost.
The right stuff
Product selection is something Runner does extremely well. What’s the secret of his knack? Remember, he stays on top of what’s happening. In addition to his voracious reading, he visits numerous trade shows, and closely watches what’s on the market. As a result, people come to him for insight into what will sell, and his company has developed a reputation for that. Some products he owns; others he distributes on a large scale. His most popular product line, which débuted last fall, is the Kids’ Juke Box, a line of personalized music CDs—burned right at the cart—for children 7 and under. The songs on 10 different CD albums promise to educate as well as entertain. And they’ve been very successful.
“[This] is a new product for us—I think it has real staying power,” Runner says, referring to the new, faster CD-burning software (average burn time: two minutes) and a more extensive library of songs. With as many as 1,600 names on each album, you can be sure names ranging from Abigail to Zack will be there, interspersed with positive messages like “It’s going to be a great day!” and “Let’s go outside and play!” Grownups are as tickled as the kids are when they hear their child’s name sung. “The music helps [children] learn their ABCs and counting. And it makes them feel good about themselves,” says Wendy Hardy, co-owner of J & W Promotions (Kennewick, WA), who retails the CDs.
And the beat goes on. A Spanish CD was recently added to the mix; a personalized CD “book” for the computer is being released; and CDs of personalized love songs for women will be out in time for Valentine’s Day. The CD storybook not only “reads aloud” and uses the child’s name, but also features images to click on—the dog barks, the chick cheeps, and here’s your little one’s name again.
In case you haven’t noticed, Runner is big on personalization. He explains that technology has evolved to the point where it makes very good sense. Customers want instant gratification—in other words, personalized products on the spot—and today they can have it. “I think we’ll see a lot more personalized stuff coming,” he says.
But that’s not all. There are Spinning Tops, Micro Radio-Controlled Vehicles, Puzzle-Track Vehicles (the original plus the new Pull-Back type), and Yo-Yo Balls. And they’re all appropriate for year-round sales. “My main evolution is that I’ve realized we need to hedge our bets by having a variety of products, particularly in the toy realm.” But not only does he need to stock a variety, the stock needs to change—constantly. He can’t simply select a few bestsellers and sit back, not when the life expectancy of most toy products is three to four years at best. “We have to replace those things quickly,” he says. “The onus is on us to find new products and beat everyone to market; enjoy the fruits of our success and then find something else. That’s how the game is played.”
Runner credits advances in technology for a lot of his new products. “The remote-control cars would have cost a couple of hundred dollars 10 years ago,” he says. (They now retail at $19.95-$24.95.) “I think that’s going to accelerate, high-tech capabilities brought to low-tech products. There are more and more developments in high technology that can be applied cost-effectively.”
Runner indeed has a playful side, reminiscent of the image of Tom Hanks in Big—a big kid playing in a world of toys. In fact, Runner admits to sitting around with the family last Christmas—all adults, all racing his RC vehicles for hours. And one recent evening, he had dinner with a group of singles, and brought his love song CDs to test-market on this group. But most of the time, he doles out ASI’s toys to kids and watches what happens.
Runner doesn’t limit himself to toys, though. He also sells Sal del Mar Dead Sea Salt Scrub and Body Oil. Is there a the common denominator for toys and bath-and-body? Indeed there is:”demonstrate-ability.” Runner says “I’ve always felt carts and kiosks are best suited to sell products that can be demonstrated… [so] when I look at a new product, that’s the first thing I’m concerned about.”
“[Stores] can’t afford the staff and time to demonstrate their products. This is where the cart and kiosk operators can blow them away. Demos offer the best opportunity of beating back the competition.” So you won’t see ASI’s CDs or Puzzle-Track Vehicles in the back of a store, on a shelf and in a box. You’ll hear them, watch them, even play with them somewhere in a mall’s common areas.
Beating back the competition also requires staying focused. “One of the most common mistakes I see is a cart operator trying to operate too many different products,” he says. “It’s difficult for the consumer to ferret out what’s going on.” Not to mention having any room left for demonstration. While there’s certainly the opportunity to combine a toy or two, Runner recommends that Kids’ Juke Box CDs be on their own, since it takes two computer systems at each cart—one to burn CDs and one for demonstration—and they tend to hog space. He suggests adding the interactiveCD books and personalized love songs, once they’re available, rather than a different type of product.
From cars to carts
Once an entrepreneur, always an entrepreneur. Runner graduated from the University of California with a major in mathematics. He’s held quite a number of positions since then, mostly his own job creations, including a computer consulting business (which he started in college) and a business in which he and three partners tested auto emissions. Almost all of his enterprises centered on his passions: cars and computers. When he finally decided to stay a while—18 years, in fact—it was in a company he established that produced trade shows across the country, focusing (largely) on the automotive industry. And yes, somewhere in the middle of all this, there were some failed businesses along with his successes.
So how did he land in specialty retail? “I stumbled into it. I went into business with a friend [as a silent partner], starting a cosmetics business on a cart.” Once his partner expanded into wholesaling, Runner saw the market of his future: cart and kiosk operators. Here he saw an opportunity to distribute products to retailers. “I did some demographic studies and learned the limitations, such as storage.” And, of course, he was reading everything he could get his hands on.
“What intrigued me about the specialty retail field were the similarities between running booths in a trade show and running carts in a mall. You’re on an aisle, trying to get the attention of the people passing by. You have 10 to 15 seconds to get their attention or you lose them.” Which is why demonstration in a trade show is key, he says. And so he took his trade-show expertise to cart and kiosk retailers by offering demo products.
In 1999, ASI was up and running with its first product, the Puzzle Track cars, on just one cart. And then there were two, three, four… and by the end of that year, there were 60 carts in malls across the country. “I’m hoping to have more than 300 clients by the end of 2004,” he says. Runner expects the introduction of his interactive CD books and personalized love songs to boost the growth rate even higher in the coming year.
Currently, Runner has three businesses. In addition to ASI, he owns GT Products, Inc. (manufacturing and selling car-care products), and Car Stuff, an extensive reference Web site for car buffs that lists 3,500 car-related Web sites (and which also covers ASI products). How he’s able to fit in his reading and the occasional tennis game is anyone’s guess.
But busy as he is, Tim Runner is generous with advice. For start-ups: “All of us underestimate the capital and time required to get a business off the ground. Work up your plan, and double it… More businesses fail due to under-capitalization.” For any specialty retailer: “You’ve got to understand the marketplace, your competitors, your clients. This is just Retailing 101, but not everyone does it.” And for anyone: “Treat your people well. You can’t be a one-man band. Have fun. Do things you enjoy doing.” Any other trade secrets he’d care to share, any other gems in his treasure chest? “Wait for the book!” he says with a hearty laugh.
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