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Business Makeover

Family enterprise wants to expand to next level

August 16, 2007|Cyndia Zwahlen | Special to The Times

Patricia Kelly isn't kidding when she credits some Irish luck for putting her Burbank business, Limerick Inc., on track to reach $1 million in sales this year.

After all, just 3% of women-owned companies ever make it to that level. And Limerick faces some entrenched competitors as it tries to win new customers for its products: breast pumps and workplace lactation programs.

At Limerick, named for the Irish birthplace of Kelly's mother, the latest lucky break came last year when the company won a package of loans, mentoring, marketing and technology tools through a national business competition. Kelly also landed a scholarship to attend UCLA's entrepreneur training program.

Happy chance also seemed at work in 1995 when her daughter and co-owner, Joan Ortiz, met an accountant at a Rotary Club luncheon who pushed the team to develop the comfortable breast pump being demanded by the working mothers in the lactation programs they'd run for three years.

The pair refinanced their houses to cover the $200,000 cost to launch PJ's Comfort pump. The soft-cup, hospital-grade product, now in its third generation, met with solid success.

"We were very lucky," Kelly acknowledges.

The entrepreneurs know they can't rely on good fortune alone to help their company meet its next goal. They want to tap new markets, including hospitals, baby boutiques and online retail sales that could boost revenue 20% a year.

They've already approved their first professionally designed marketing and branding program. Next month they'll unveil a revamped website that features the new look and online ordering for the $595 pump.

This week, Kelly and Ortiz will get their first feedback from potential customers when they launch the latest version of their lightweight pump at a trade show for lactation consultants.

"We are holding our breath," Kelly says. "In fact, sometimes I can't breathe."

Ortiz puts it this way: "It's exciting -- an exciting but scary time."

Part of their nervousness stems from uncertainty over how and when to add the inventory, people and money to fuel a smart growth strategy. Their dream is to build the business, then pass it on to Ortiz's daughters, Kristina, 17, and Ashley, 15, who already help out at the company.

It's a big step for Kelly, a registered dietitian, and Ortiz, a registered nurse, who have been cautious about expansion.

Overcoming that caution, common to small operations, is Limerick's initial hurdle as it goes up against some big name-competition known to new mothers around the world, including Medela Inc., Philips Avent, Evenflo Co. and Hollister Inc.'s Ameda line. In addition, Kelly and Ortiz must take a close look at inventory and cash-flow issues and invest in technological help.

"They are talking about really dramatic growth, so that means they need to create some systems and become a more professionally managed organization," business consultant Andrea Garfield says.

Garfield advises small businesses independently as well as through the UCLA Anderson School of Management's Management Development for Entrepreneurs program, which Kelly and her daughter attended. She is also a partner at software developer Startech Global Corp. of Los Angeles.

Limerick's owners should start by calculating their minimum inventory needs and determining the payment cycles appropriate for each of the new distribution channels, Garfield says.

That information will help Kelly and Ortiz identify periods when cash flow won't cover expenses. Mapping out these numbers for an 18-month period will be crucial to securing the financing the company needs to pay for its growth, she says.

Kelly and Ortiz also will want to negotiate better pricing from current suppliers, the consultant says. The larger orders they expect could also lure new suppliers who may offer better terms and services.

Finally, they need to create or buy software systems to handle advanced inventory tracking, online ordering tracking and, possibly, cash-flow analysis.

"You can only grow so far without getting some systems in place and doing some planning in order to take your business to the next level," Garfield says.

To determine how much cash they will need and when they will need it, the owners must figure out how many breast pump parts they need to order and have on hand each month.

To do that, they will have to learn the delivery requirements for each of their new markets. Retail shops, for example, are likely to order small quantities but want them faster and more frequently than a large buyer such as a hospital, Garfield says.

Limerick buys parts from suppliers and assembles the final products in-house to protect its proprietary pump microchip technology.

Because inventory can be such a drag on the bottom line, the goal of inventory management is to keep levels as low as is practical. In addition to the cost to store and insure parts and assembled pumps, Limerick will have to pay interest on money it borrows to buy the inventory.

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