The failure rate for new businesses alone is enough to give entrepreneurs pause. But these Eastside small-business owners beat the odds and remained in business for decades. How did they do it? Here are their secrets to success.
It’s no secret that starting your own business can require a staggering amount of time, energy, and money. Perhaps more daunting are the meager success rates for new businesses. The U.S. Small Business Administration reports that on average only half of all businesses survive the first five years, only a third of those businesses are around after 10 years, and only one-quarter of those businesses are around after 15 years. With those odds, it’s amazing anyone chooses to start a business. Is it foolish optimism? Magical thinking? Or something else?
The owners of three Eastside businesses in operation for decades offered their insights into how they beat the odds. To be sure, the owners of these businesses aren’t the same owners who started these companies decades ago — an impressive point of fact, considering the businesses have outlived their original founders. But today’s owners are stewards of a sort, often retaining some of the original principles and ethos. In one instance, the owner of a small computer company he founded well before the dawn — and later rise — of personal computing reinvented his business model five times over the course of three-plus decades to stay relevant.
Another owner recalled how the company’s largest expenses used to be typewriters and file cabinets; the typewriters were replaced by computers, the file cabinets replaced by the cloud.
So what are the secrets to success for these legacy businesses?
For starters, customer service is key. It’s hard to shake the feeling that your next customer could be your last customer. Most of these legacy small businesses work hard to earn customer loyalty and referrals — a combination, they told us, more valuable than any advertising budget. What’s more, theirs is not a world of corner offices, corporate infighting, or power lunches. We spoke to an appliance store owner whose office faces the showroom floor and its flow of customers; the door is usually open, and he’s not above personally answering phone calls on the first ring, or delivering a stove. These aren’t businesses offering shiny tech gadgets. We can probably live without a photo filter for our smartphone, but it’s a different story when it comes to a refrigerator or insurance. Here is a closer look at how each of these Eastside businesses beat the odds.
Redmond General Insurance Agency
Who we interviewed: Walter Brewe, now-retired founder; Keith Brewe, senior vice president; and Nick Brewe, personal lines manager
Background: Walter Brewe was born in 1931 in Pierre, South Dakota. Six years later, the Depression-era “Dirty Thirties” Dust Bowl forced the family off its farm and farther west, to Vancouver. “My folks packed up everything, had a sale at the old farm, and went and bought a new car,” Brewe, 85, recalled. “The day we left South Dakota, everything we owned was either in or on that car.” After high school, Brewe studied business at the University of Washington and supported himself by working odd jobs as a courier for a securities firm and taking orders at a laundry. After college, he worked for Northwestern Mutual Fire Insurance Agency in Seattle and Marshall Paris Insurance in Bothell, and in 1966 took a bank loan to purchase an insurance company in Redmond that would later become Redmond General Insurance Agency. The company started with one employee, and today employs about 30. Brewe’s son, Keith, 62, began to work at the agency in 1978, and is the company’s president; his grandson, Nick, 31, joined the agency in 2010.
Interesting Company History: Redmond General has relocated five times over the course of 51 years, but always within a three-block area of downtown. Walter Brewe retired in 2011, but still arrives at the office on Fridays with bagels for the staff. “We had a (retirement) party for him,” said Nick Brewe. “He has just kept coming in.”
Biggest Opportunity: “In a lot of ways, our company blossomed when Microsoft came to town in the 1980s even though at the time we weren’t even aware of them,” said Keith Brewe. “Their rapid growth has brought an influx of highly educated people from throughout the
United States and the entire world into what used to be sleepy Redmond. Businesses that supported Microsoft’s operations soon followed. Then came other technology businesses. We have been fortunate to work with both individuals and businesses that are closely tied to Microsoft, in many cases because of an informal network of referrals from employees there.”
In addition, Redmond General Insurance teamed with AssuredPartners two years ago (Tom Riley at AssuredPartners is RGIA’s president), which has helped with greater infrastructure, sales support, and connections with other agencies and insurance carriers.
Biggest Challenge: Keeping up with changing technologies has been a huge challenge for the family business. “We’ve had to evolve from a company that used to do all the billing (in-house),” said Nick Brewe. “We used to keep paper files, typewriters were a big investment, and our first computer was a huge investment. Now we are on the cloud and we use DocuSign. Adapting to technological change has been and always will continue to be an issue.”
Secrets of Success: Walter Brewe jokingly credits the company’s longevity to “superstition and dumb luck.” But it really boils down to customer service. “We pay attention to our accounts and try to give them the kind of service they expect,” said Walter Brewe. “If you treat your client properly and pay attention to what their needs are, you will grow with them. It’s about gaining the perspective of your client. If they respect your knowledge and what you do for them, you will grow.” Many clients have been customers for more than 40 years. Nick Brewe says Redmond General spends less than $200 annually on advertising, relying instead on a good word-of-mouth reputation and customer referrals. “The best source of new business is referral,” added Walter Brewe. “If you do a good job for your client, they will mention your name. I would say half our new business is referral business.”
General Microsystems Inc.
Who we interviewed: Earl Overstreet, president
Background: After earning a bachelor of science degree in mechanical engineering
from Case Institute of Technology and an MBA from Case Western Reserve University in Cleveland, Ohio, Earl Overstreet worked for nearly 15 years in manufacturing, sales, and marketing at General Electric and Wyle Laboratories. In 1983, he was replaced as a division manager and offered a position he turned down, choosing instead to start his own computer company. “My first reaction was to go work for Hewlett-Packard or another large company, but I decided to take a step back and think about this for a while,” said Overstreet. “I was thinking about options and choices, and something in the back of my head said, ‘Why don’t you start your own business?’ Maybe part of it was proving to myself that I could successfully run a business, and prove it to my previous employer. I’m not sure how much of that desire motivated me.” Overstreet created General Microsystems Inc. in Bellevue in 1983. Since then, the company has provided IT infrastructure, hardware, software, and services to companies and entities such as Boeing, the City of Seattle, Expeditors International, Starbucks, Group Health Cooperative, and the University of Washington.
Interesting Company History: Overstreet enlisted family members from the Midwest to help launch the company from Overstreet’s home. His mother and his brother, who permanently relocated to Bellevue, helped by answering phones and handling administrative tasks. Eventually, Overstreet’s wife, Barbara, left her real estate business in 1988 and helped run the computer company (she is currently its chief financial officer; Overstreet’s brother, Paul, still works at the company).
“There was no internet then, obviously, so I was going to the library to do research, and then going out to call on customers and find out what they were interested in,” said Overstreet. “Then I would try to find a source to resell to them.” Six months passed before Overstreet made his first sale: a $45 print wheel. Today, the company employs 15 people and has long since moved out of Overstreet’s home and into an industrial park in South Bellevue. “If I had known how hard it was, maybe I wouldn’t have taken that first step,” said Overstreet. “It was a year or a year and a half before I really felt like the business was going to make a go of it.”
Biggest Opportunity: In 1983, the state Legislature created the Office of Minority and Women’s Business Enterprises to ensure that a reasonable amount of the state’s contracts for goods, services, and public works were awarded to minority- and women-owned businesses.
“Having a fledgling PC business and having that program start up at the same time really helped us get the business off the ground,” said Overstreet. “I had easier access to state agencies, which were a little bit more interested in opening doors and taking appointments with minority- and women-owned businesses.”
Biggest Challenge: In 2008, two of Overstreet’s top three customers experienced a wave of setbacks and financial challenges. Washington Mutual collapsed; Boeing reduced its capital spending, and his primary supplier, Sun Microsystems, announced it would lay off as many as 6,000 employees. “We actually experienced a multiple whammy, if you will,” said Overstreet. “We had three things hit us all at one time. In one year, our revenue was cut in half.”
Secrets of Success: Overstreet, 69, pointed to hard work and previous experience in the industry in which you are starting your business as keys to success. But there are other factors, too.
“I think you need a good idea, a good plan, good execution, and good timing,” said Overstreet. “You need two or three of those four for initial success. Beyond that, you have to have sufficient resources: people, money, customers, and suppliers to sustain the business.” He also stressed the importance of adapting your business to changing industry trends.
“It’s amazing how much the business has changed,” he said. “In order to survive for 34 years, we have had to reinvent ourselves five times. We have had to see where the technology is going, or where we think it’s going, and try to figure out how those changes impact us and what kind of service changes we need to make to keep up and stay ahead, if at all possible. If you stop and think back to the number of suppliers and customers that have come and gone over the years, I have to say that I am really thankful that we have been as successful as we have because there are lots of organizations that had better resources and probably smarter people and they aren’t still around.”
Frederick’s Appliance Center
Who we interviewed: Eric Blakemore, president
Background: Fred Habenicht founded Frederick’s Appliance Center in Redmond in 1971, and 20 years later, Eric Blakemore, who started his career driving a delivery truck right out of high school, purchased the business. Blakemore had three employees then, but has a staff of 18 today.
Interesting Company History: Habenicht originally wanted to name the business Fred’s Appliance, but there already was a Fred’s Appliance in Spokane. When Blakemore purchased the business, he kept the Frederick’s moniker. “We liked the name and it had a good following, so why change it?” said Blakemore. Blakemore, 56, was born and raised on Vancouver Island, but moved to the United States in the early 1990s and raised four children with his wife, Margaret. The Blakemores’ son, Ryan, works in the store as an appliance specialist. Margaret Blakemore is the company’s vice president and advertising/marketing manager.
Biggest Opportunity: Blakemore skipped college and went straight into the appliance industry. He worked his way up from delivery driver to salesman to partner for a small chain of Canadian-based appliance stores. When the company expanded to the U.S. and acquired two stores in Washington, he was offered the chance to purchase one of the stores, Frederick’s. “I didn’t set out to do this,” said Blakemore. “It was sheer luck and flying by the seat of my pants.”
Biggest Challenge: Frederick’s Appliance Center has survived four recessions over 45 years. A big challenge came in 2008, according to Blakemore, when the company extended a line of credit to an apartment building developer who didn’t pay on time. “He was supposed to pay in 90 days,” said Blakemore. “He didn’t pay for three years. I had to carry that load. Luckily, we were strong enough internally that a quarter-of-a-million-dollar debt didn’t squash us, but it sure could have.”
Secrets of Success: “In the beginning, one of my wife’s biggest fears was going to QFC, seeing a client, and turning the other way because she worried they weren’t happy,” said Blakemore. “I had to convince her that if they are not happy, I would love for them to approach me, and say so. Let’s figure something out because we want your satisfaction. I think that’s probably one of the main things, treating the customer like they are our only one.” A secret to good customer service is hiring people who care enough about their job and the company’s success as Blakemore does. Of the 18 employees at Frederick’s, six have worked for the company more than 10 years. “It’s way more than somebody coming in, we sell them (an appliance), and away they go,” he said. “We are more about being part of the process. We refer them to plumbers and countertop people because what they need is beyond our scope. At the end of the day, the client has a whole new kitchen with all new countertops and new appliances, and just in time for their big party. That’s kind of a day at Frederick’s right there.”