DECEMBER 24, 2003

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ENTREPRENEUR Q&A


The Hottest Thing in Ice Cream
[Page 2 of 2]

Q: You've done a lot of things the right way. Did you do anything wrong -- anything that would serve as a warning to other entrepreneurs?
A: Oh, sure. With the first store we opened, I think we did just about everything wrong. It was in the wrong location, for one thing. There were 20,000 cars that went by every day, but what we needed was foot traffic, not automobile traffic.


Also, I was 28 and I didn't have much entrepreneurial experience when I hooked up with a guy who said he would build out that first store for us in Lexington, Ky. What he said sounded real good, and not having the experience, I didn't check him out very much. I just gave him a check for half the amount we had agreed on.

After seeing him every day, I started to see him every week, then every two weeks. About two months before we were scheduled to open, I started getting calls from subcontractors who were not being paid for their construction work. I came to find out that this guy had had a pattern of doing this. Thankfully, we caught him before he got out of town, but I learned that you can't trust everybody. By the time we opened that store, we had used up all our budget and we didn't have any money left for advertising. So we really scraped by during that first year.

Q: What was your first big success?
A: We opened a "Space Dots" kiosk at the Kennedy Space Center in 1992, and that was the first place that really took off right away. We were in a great location and we started by giving away free samples, but we found out that customers wanted to buy -- they didn't need samples. That gave us a lot of confidence.

In fact, knowing that consumers really liked our product was the thing that helped me the most during those early years. No matter how bad things got, I knew we had a unique product with good quality and I could rely on the hope that the customers liked it.

Q: Once you became successful, you decided to franchise the Dippin' Dots concept. What prompted that decision and how did you pull it off?
A: We started out by having dealers selling Dippin' Dots, but about 1999, we started considering a different way of doing business. The dealers were getting into conflicts -- and we wanted to control the logo and the look of the product. So, we converted the dealerships to franchisees. We had about 105 dealers that converted and we grandfathered most of them in, making it advantageous for them to switch. About eight decided not to convert and aligned themselves with our competition, so there were some lawsuits that ended up being time-consuming. But overall, the franchisees that converted were happy with their decision and the business has continued to grow.

Q: Is there any big principle that you learned that you could share with other inventors and entrepreneurs?
A: I guess it would be to focus on the present. When you're starting out, you tend to be in two worlds, thinking about the future of what your business could become, but also caught up with all the things that are going wrong, day to day. The important thing is to stay focused on your idea and not worry about yesterday-- but, at the same time, to keep the big picture in mind.

Editor's note: When it comes to marketing, Corporate America bandies about big words -- branding, product launches, value-added -- and backs them up with bigger bucks. Meanwhile, small-business owners implement huge marketing efforts on tiny budgets. BusinessWeek Online's SmallBiz would like to share these successes. So, if your marketing drive put some runs on the board, send an e-mail to Karen@KarenEKlein.com and tell us what you're doing. We will choose the most interesting submissions, interview the business owners, and have a marketing expert comment.

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Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.
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