"Listen to your customers" may be a clichÃ©, but for Sharon Newman it was a godsend. Her company, Action Envelope, fell into her lap 17 years ago after her husband died. Newman -- who had zero business experience -- faced an uphill battle against big, entrenched competitors. Her response: She started paying close attention to clients' wishes, and catering to them -- and revenue grew 12-fold in a decade.
In 1993, Newman was working as an English teacher in New York City when her 51-year-old husband died suddenly of a heart attack, leaving behind a small business that specialized in printing envelopes. Newman knew her teaching salary wouldn't put her three teenagers through college -- but taking over the enterprise was a terrifying proposition. "I didn't know how the business would survive," Newman says.
A few days after her husband's death, Newman started receiving calls from competitors. They told her that this was a tough business -- not one for a woman -- and encouraged her to sell. It was then that Newman decided to take over the company; though she loved teaching, she didn't want her husband's hard work to die.
"That bolstered my resolve," she says. "I couldn't give up something my husband had created and was so proud of."
Surviving a nosedive
Action Envelope took a nosedive shortly after Newman took over. The business, started in 1971, had revenues just under a million dollars and 200 local customers. All those customers knew about Newman was that she lacked experience. Revenue sank to $750,000.
"That was a scary time," says Newman, CEO of the company. "But I had made my commitment -- I had resigned from teaching, so this was my only option." She cut expenses to the bone and worked tirelessly to build clients' trust: checking every order for accuracy, learning the ins and outs of the industry -- and never letting on that she didn't know what she was doing.
"One of my husband's best customers called to place a re-order," she says. "Most of what he said sounded like gibberish. But I pretended I knew perfectly well what he meant, hung up and immediately called our paper merchant and asked for a translation. My vendors were wonderful that way, coming to my rescue and educating me."
The next year revenue rose to $850,000, and by 1999 they returned to the million-dollar mark.
Feedback turns to gold
That year Newman's son Seth graduated from college and joined the business. He brought the company online, and Web sales boosted Action Envelope's growth. More important, the Internet offered a new way to listen to customers.
At the time large printers dominated the market; they sold a few standard types of envelopes at huge quantities that made up for their small margins. Newman knew a small business without high-volume sales couldn't compete at that game, so she set out to find a different way to goose profits.
She decided to ask customers what they wanted. Action Envelope prominently displayed a 1-800 number on its site, solicited input, and dedicated staffers to manning the line. Customers -- mostly small businesses -- started calling all day long, and they had a lot to say. Why were envelopes sold only in packages of 2,500? Why was it so hard to get non-traditional sizes and colors? "The phone line cost a lot, but it allowed us to collect priceless market research," says Newman.
She discovered that the larger printers weren't meeting small business owners' needs, including smaller shipments and specialized types of envelopes. Action Envelope started offering envelopes in packages of 50, and gradually added sizes and colors they heard small businesses asking for.
Their customers went wild. In 2001 the company's revenue hit $2 million; in 2002, $3 million; and in 2008, nearly $12 million. Even better, the company could build in a higher margin on specialized products, so those sales translated into major profits.
"I felt like I had a tiger by the tail and it was whipping me around," says Newman. "We were constantly scrambling to keep up with the growth in demand."
New directions for growth
The recession took a toll: 2009 was the first year with flat revenue since 2000. Still, certain new product lines performed well -- particularly letterhead -- offering more hope for the future.
Teaching English used to be Newman's passion, but today she's driven to think up new ways her company can expand. She plans to broaden her company's offerings to encompass everything that goes in and on an envelope -- addressing, sealing, posting, even printing invitations that go inside them. "After my children and grandchildren, the company is the most important thing in my life," she says. "I'm unhappy with the fact that we didn't grow last year: We are not going to just accept that we won't continue to expand."