The First Step to Million-Dollar Revenues: Know Your Weaknesses

Last Updated Aug 25, 2010 1:17 PM EDT

By Caitlin Elsaesser
Heather Wiese-Alexander in 2004 started her first business: Bell'Invito, a Dallas-based custom-made stationery studio. The very next year she bought and remodeled a second company, a home and gift boutique called Nest, also in Dallas.

They were ambitious moves considering she was a 28-year-old and had no business experience. She quickly realized she was in over her head.

When Wiese-Alexander served as a successful art director at Neiman Marcus, she loved her position and had more opportunities than most her age. But she wanted more -- in fact, she freely admits that she wanted it all. "I compared myself to my friends who were traveling the world, and I thought, 'I can do better,'" she says. "I wanted to be able to work from Europe for a few weeks if I felt like it. I had this sense of entitlement, even though I had no experience. Maybe I had a big head."

Maybe so, but she was honest enough with herself to identify her weaknesses -- finance, law, and human resources -- and seek help from others in those fields. Five years later, her businesses together bring in $2 million in annual revenues combined.

Hiring a legal guide
Early on, Wiese-Alexander discovered that she lacked an understanding of legal issues that business owners deal with on a regular basis, such as the laws governing hiring, leasing, and firing. She decided to partner with lawyer and friend David Denney. In exchange for his advice, she gave him five percent of the business and paid him a monthly retainer.

Wiese-Alexander credits this relationship with helping her avoid costly legal mistakes in the early going. "I see so many business owners -- especially in the creative fields -- get burned on employee law, lease negotiations, and basic contractual obligations," she says.

Wiese-Alexander learned the value of her lawyer-partner's advice the one time she ignored it. In 2008, she let an employee go for poor performance. Denney advised her to contest the employee's unemployment claim (to avoid paying unemployment claims, companies in Texas must prove in a hearing that an employee was released for cause). Wiese-Alexander demurred on the grounds that the employee had been with her a long time and was a single mother.

What's more, she didn't clearly document the reasons for the dismissal. The result: Wiese-Alexander's unemployment insurance premium increased by $6,000. Trying to do the nice thing meant she couldn't give her six employees their Christmas bonuses.

"I made a decision that made me feel less like the bad guy to someone who was unwilling to perform a job," she says. "I ended up penalizing the great people who were still dedicated to our company. I learned from that."

Wiese-Alexander says she's now much more likely to take her lawyer's advice in complicated legal situations.

Experienced employees bring greater freedom
Another early misstep: "I didn't have a lot of work experience, and I was intimidated to hire people older than me," she says.

The strategy worked at first. Wiese-Alexander's first store manager at Nest was young and had little experience, but was a fast learner. But when the first manager left after two years, Wiese-Alexander tried to repeat her strategy -- finding another young manager she could shape -- and went through two managers in quick succession. "After that, I was worried my employees would never trust me again," she says.

Desperate, she pursued Donald Fowler, a candidate she knew would be good -- and had two decades of experience in store management. Fowler managed a competitor's store but carried some of her stationery products. Wiese-Alexander asked if he would ever consider changing companies. He came on a few months later.

"Fowler is the caliber of person who could come and take over everything," says Wiese-Alexander. "Hiring him changed the course of the company."

Hiring a great manager for Nest freed Wiese-Alexander from running the company day-to-day -- and allowed her to get some perspective on her businesses. "I now have time to understand the potential of both Nest and Bell'Invito as individual, competitive brands," she says. "We are clearing both financial and branding hurdles because now that I have more distance from the day-to-day operations, I have the freedom to have a broader vision for the companies."