In keeping an eye on business in the Washington area, one is struck by the enormous challenge facing the men and women who try to make their enterprises succeed.
Those who make it seem to have several things in common: an aggressive spirit of entrepreneurship, an ability to find new private or public financing when their firms are ready to move to the next stage of development, a willingness to learn from their mistakes and the imagination to look ahead to the business world of the future.
Two small Washington companies that recently went public seem to share many of these characteristics: The Sporting Life Inc. of Alexandria and Rowley-Scher Reprographics Inc. of Beltsville.
The Sporting Life is a mail-order merchandiser of women's apparel. It was started by a businessman who began with a wholly different idea, but was determined to see his company grow and prosper.
Rowley-Scher, on the other hand, was born in Washington 63 years ago, and after a long series of mergers and changes, its officers are ready to take the company into new frontiers in the world of blueprinting and electronic information storage.
When Charles B. Howard II was 34, he decided to give up his job as a stockbroker and open a store in Georgetown to sell wildlife prints and gifts. An avid duck hunter, he called his store The Sporting Life and filled it with decoys and all manner of glasses and ashtrays showing ducks in flight. From that beginning in 1973, Howard added a few items of men's clothing, then some women's clothing, and then decided to promote his business by sending Washingtonians a catalogue showing his wares.
One day a businessman offered him $20,000 for the right to use the Sporting Life name, and Howard started down the road to the franchise business.
In time, catalogue sales of women's clothing began to capture more and more of Howard's time and attention, and he left the Georgetown store in the hands of other managers.
Dependent on private financing, The Sporting Life catalogue business began to grow, but the company's resources were limited, and the road to profitability was a difficult one, recalled Thomas K. Wilcher, vice president for finance and operations. The firm lost $455,000 in fiscal 1982 and $283,000 in 1983, but made $51,000 (12 cents a share) in 1984. Then for 1985, Sporting Life made a profit of $487,000 (85 cents).
And while the company does not make sales predictions, its managers are optimistic that the growth curve will continue upward. "I expect to be a major factor in the catalogue business in the next few years," Howard said.
The firm helped bolster its financial strength by going public in May. The company raised $2.5 million by selling 500,000 shares at $5 each. The stock is now being traded over the counter at about $4.50.
The management essentially sold about 50 percent of the company, if all warrants and options are exercised, and Howard's share of the company dropped from 25.4 percent to 11.5 percent.
The new money will solve a key problem for Sporting Life: the lack of capital needed to create a smoothly running business structure.
For instance, some suppliers want to be paid in advance or on a C.O.D. basis. Being unable to do that in the past meant delays for customers because Sporting Life would not order merchandise until it had the orders and money in hand. Delays then caused customers to cancel orders, causing Sporting Life to end up with excess inventory.
That problem, Wilcher said, has been solved.
Sporting Life, meanwhile, has nine franchised retail clothing stores around the country, including the original Georgetown store, which it sold and then bought back. Sporting Life provides an interesting glimpse into the mail-order business, in which "the list" is a company's most valuable possession.
Sporting Life has a "hard-core" mailing list of about 135,000 individuals, all of whom made recent purchases.
So important is the list that mail-order houses often share lists or rent each other's lists. In a typical mailing, Sporting Life will print one of its seasonal catalogues three times, with different covers. Thus, each of the 135,000 people on the Sporting Life list will get three copies, totaling more than 400,000 copies. Another 1.6 million triplicates will be sent to people on other lists.
The feeling is that if you miss getting the attention of a potential buyer the first time, you might get it the second or third time.
The other theory is that people who buy from mail-order catalogues comprise a limited universe, and so you have to continue to direct your sales to that group.
One way to capitalize on that theory is to develop a new catalogue to be sent to the same group. Sporting Life next year will begin publishing a new fashion book called The Christina Stuart catalogue. It will be distributed beginning in July 1986.
In 1922, several years after he returned from army service in World War I, a young man named Max Scher opened a blueprint and photostat business in Washington. Scher had earlier learned his trade at the old Allen Blueprinting Co. of Washington.
In time, Scher's grandson, John Scher Zeller, went to work at the firm. At first, he worked part-time during high-school and college days.
Zeller then joined his grandfather's company full-time after graduation from Ohio State University. By 1976, Zeller became president of the company.
In 1979, Zeller merged his company with another local firm, Rowley's Blueprint Service. Then in 1981, the company changed its name to Rowley-Scher Reprographics Inc., the company's present name.
Meanwhile, the firm also merged with Allied Reproduction Service, headed by Joel Salus, and then with Heller Reproductions of Washington, headed by Richard Heller.
Today, Rowley-Scher is owned by Zeller, 38, Salus, 38, and Heller, 51. When their public offering is completed soon, Zeller and Salus each will hold 39.8 percent of the company's votes and Heller will hold 5.5 percent.
The three mergers that helped create the present company were followed by several other acquisitions of companies working in graphic reproduction services.
The firm presently operates 10 reprographic service centers, with eight in the District and the others in Baltimore and Norfolk. With the $4.2 million provided by its forthcoming stock issue, Rowley-Scher hopes to open three to four new centers, to find new acquisitions, and to expand its printing business and its sale of supplies. It also plans to conduct research into changing technologies of document storage and retrieval.
Faced with the high cost of modern equipment, many small "mom-and-pop" firms find they can no longer succeed and are willing to sell out. As the nature of the business changes, Salus says, he can foresee his firm becoming one of the major players in the industry.
In any event, the firm will soon have the distinction of becoming one of the few public companies in an industry in which most of its competitors are privately held.
"We wanted to go public for the growth that the money is going to offer us," said Salus, chairman and chief executive officer.
Rowley-Scher will sell 700,000 shares of common stock at $6 each, and the company's three owners will sell another 70,000 shares, raising $420,000 among them.
With corporate takeovers on everybody's mind, Rowley-Scher has adopted two classes of stock: 880,000 shares of Class A, all of which will be owned by the three officers of the company and will be worth five votes each, and 770,000 shares of common stock, owned by the public and worth one vote each.
Rowley-Scher's business has been improving steadily. It had a $234,000 profit (17 cents a share) on sales of $6.7 million for fiscal 1983. In 1984, the firm earned $333,000 (25 cents) on sales of $7.8 million. And in 1985, it showed a profit of $800,000 (84 cents) on sales of $11.1 million. Rowley-Scher does most of its business with companies that are in the design, engineering, construction and real estate development field.
With 272 employes, Rowley-Scher also works for the federal government. Its Norfolk center, for instance, handles jobs related to shipbuilding in the Norfolk area.