Small firms can’t shrink from risk

Red Bird Ink uses 19th-century technology to make products for the global marketplace, where the tiny company’s work goes up against waves of cheaper, mass-produced competition.

It sells art prints, stationery, coasters and wedding invitations.

And while it aims at high quality and personal service, some potential customers naturally focus on the price tag.

“They’ll say, ‘I saw some a lot cheaper at Target,’” said Julia Farill, co-owner of Red Bird with her husband, Collin. “And I say, ‘Then go to Target.’ We can’t even think about trying to compete on price for wedding invitations.”

As the metro Atlanta economy slogs back toward normal, much of the struggle happens quietly — and often painfully — at thousands of companies like Red Bird: small firms that face daunting competition, big and small, local and across the planet.

In each one, entrepreneurs balance private lives against the insatiable appetite of a startup business, while constantly gauging risk — how much do they want to gamble?

Red Bird, for example, has survived by finding enough people willing to pay more for custom-made. But growth is slow. The Farills think growth would be a lot faster if they could hire a full-time employee.

“Right now, it is not realistic to hire, but we would get a bump [in revenues],” Julia said. “We need marketing, advertising, [sales] repping — eventually. It is a lot of work. Right now, what I’ve been doing is calling Collin to come help, calling friends to come help, calling my mother-in-law to come help.”

The problem is that they don’t have enough cash flow to pay for another employee. So they’d need a loan to pay another salary.

It’s a common dilemma, experts say: Small companies that want to expand faster often have to weigh growth against debt. And small companies that borrow are making a risky trade, said Narayanan Jayaraman, professor of finance in the College of Management at Georgia Tech.

They give a lender power over and, often, scrutiny into the business, he said. “Debt is always a double-edged sword. You have to ask yourselves, are you ready to put the business under a microscope?”

Yet it’s justified if the borrowing is less than the revenues and profits it produces, he said.

Richard Kopelman, a partner at Habif, Arogeti & Wynne in Atlanta, said he won’t give advice to a company until he knows its goals: Is it to have just enough income to support a certain lifestyle? Wealth? And, crucially, do its owners love what they are doing?

“There really is no ‘one size fits all,’” he said.

Yet the stakes are high for each small company. A study of businesses started in the early 1990s found 25 percent failed within a year and half had disappeared by their fifth birthday.

A decade after founding, 90 percent were gone. “Entrepreneurship is hard,” said Chris Hanks, director of the entrepreneurial program at the University of Georgia.

Survival, however, is not just a matter of picking the right market, crafting the right business plan or choosing the ripest sector to attack, he said. “I can find, in every category, people who are succeeding, people who are not. To me, it always comes down to the individuals.”

The Farills’ business is centered around a handful of vintage machines, like the 96-year-old, 2,800-pound Chandler & Price press that the Farills got for free — on the condition that they would truck up to Madison, Wis., and take it away.

After getting it to Conyers, they made some repairs and put the machine to work.

“This does things that modern print methods won’t do,” Julia said. “For example, the embossing, the pressure that the machine exerts on the paper leaves it with a physicality.”

A business card, for example, can be made thick enough to have heft, and it can come out of the press with a design that fingers can feel. In the middle of the last century, off-set printing overtook the letterpress. Then other technologies came along, right up to current computer-driven printing.

“They got faster and faster, but you lost the texture,” said Collin Farill.

But as an industry, cards and stationery are not immune to the trends that have swept across newspapers and magazines, which have seen many customers shift to the Internet for their reading.

Likewise, some people are happy to send digital cards.

The Farills acknowledge the changes, agree that they are in the backwash of the wave and still say they see a way to win.

Increasingly, communication is shifting to electronic devices — phones, computers, BlackBerrys. Digital is everywhere, carrying messages to consumers almost instantaneously.

Yet the Farrills think that to achieve velocity, digital users have traded away authenticity, quality and even respect. E-mail is just not serious enough for some messages, she said.

“We have actually gotten two E-vites to weddings,” she laughed. “To weddings! And I thought, well, you are pretty much getting a crappy present.”

The business depends on having some people continue to see a difference and to prefer products they can hold in their hands, Julia said. “Stationery is a dying industry in some ways. But the more it goes down, the more special it becomes.”

And people do, at least sometimes, pay more for something special.

For six greeting cards, Red Bird charges $16 to $18 retail. For a set of four beer coasters, they charge $10. A 5-inch by 7-inch print of evergreens at night costs $20. Wedding invitations start at $1,000 “and go up from there,” she said.

Yet even a throwback depends on digital tools.

They reach customers via the Internet. And from the Net they can sometimes find the knowledge they need.

For example, when they didn’t know how to oil the machines at first, they found that someone somewhere had scanned an old set of instructions and posted it, said Collin Farill. “You have a problem, you go online and find other people who have had the problem. Otherwise, there is no way we could have done this.”

They discovered Etsy, an online site devoted to hand-made goods. They thought they’d stumbled into the mother lode — a worldwide network of buyers who were already interested in higher-value items.

But it turned out that those customers also often expected personalized service such as hand-wrapped packages and hand-scrawled thank-you notes, he said.

From a small company’s perspective, that service would take too long and cost too much. Even worse was the competition. There is a lot of it, of course. But many other Etsy vendors do not seem interested in making a profit.

It’s hard for a business to compete with someone making things for fun or personal satisfaction, Collin said.

Moreover, getting the attention of buyers also depends on being listed near the top of a search, he said. “It’s a weird game. It’s almost like betting on horses.”

There are other strategies tailored for the online world. They have a Facebook page and a website, and they put a lot of effort into getting attractive photos of their products on their Web page.

“That itself makes people want to blog about them,” Julia said. “We’ve been really lucky having people stumble upon us.”

But Net marketing is not their focus. They set up booths at arts festivals. And they look for ways to extend their name and reach.

For instance, they entered a contest in Garden & Gun magazine and were among the winners featured. They entered a design competition run by Crain & Co., a premier stationery company, and were selected.

The magazine gave them exposure. Crain & Co. gave them another way to reach customers.

“It is all non-traditional marketing,” she said.

Collin is from Atlanta, Julia from Virginia. They met at Virginia Tech, where they were studying landscape architecture.

Entrepreneurialism was not the plan. “I came to Atlanta for what I thought would be my dream job, but I figured out pretty quickly I wasn’t right for corporate life,” Julia said.

While working a corporate job, on the side she designed and made the invitations for their 2004 wedding. She discovered that her friends liked them, and she liked doing it.

“We were at a point where we could both keep working at corporate jobs and buy a house. Or I could start a business.”

And Red Bird was born. Collin has kept working as a freelance product designer, even after Julia quit her corporate job to work on the new company in 2006.

They rented production space in Conyers, doing much of the rest from their Decatur home.

“Neither of us had a background in business,” Julia said. “That has been our biggest struggle — trying to find out what we don’t know.”