Clodius & Co. begins an expansion project (First in a series)

Six months ago, Clodius & Co. was the model of a successful, small, independently owned jewelry store. Today, it’s poised to take the risk of a lifetime, one that could either cement that success and spur more growth or that could set its owners back a chunk of money and a year of their time.

Husband-and-wife owners Mark and Monika Clodius are planning to double the size of their store with a complete remodel and expansion. 

The Clodiuses fostered every step of growth of their 6-year-old Rockford, IL, business: They had created a downtown store unique enough to attract the notice of INSTORE‘S Cool Store feature in February 2003; they had later recognized an area of town with more market potential and found a high-profile property to buy. By the summer of 2006, they had even re-landscaped. 

By any account, they were sitting pretty. 

So who in his right mind would want to upset that balance? Why, for instance, would they decide to put it all on the line, so that they might face six months of upheaval, dust, noise, headaches and, yes, debt, to renovate and expand? It takes a certain type of owner to give up rightfully earned complacency, and Mark and Monika Clodius are that type of owner. 

In less than six months, the Clodiuses came to the conclusion with the help of a group of advisers they like to call their INSTORE team, since many were found in the pages of this magazine, that not only was now the time to expand, but if they did not take the risks involved in doing so, it could imperil their future business, leaving them open to competition by the big guys. 

Clodius & Co. is now set to embark on that journey of expansion, and INSTORE will be with them for the ride, providing updates of their progress and highlighting the ups, downs and considerations of a major store-construction project. In July, building will begin to double their current 2,000-square-foot showroom. By September, they hope to have the project completed. Before then, they have their work cut out for them. Already, however, they have come a long way. Here’s a look at where they are now, and what they’ve achieved so far: 

THE CURRENT STORE

In mid-2003, the Clodiuses had noted the exodus of shoppers from their downtown location to the strip malls of suburbia. When what Mark calls a ?very ordinary,? 1970s-era, poured-concrete, former bank-branch building came up for sale, the Clodiuses jumped at the chance to buy. 

The location has this viability because of the high traffic counts, Mark said.  

Moving to the new site gave them much-needed breathing room 3,200 square feet. 

Inside they gave the store the Clodius treatment, with striking colors, blonde wood showcases of their own design, as well as additional cherry cases. Monika’s talents for design have attracted the notice of the local college, whose art department brings its design classes to visit. 

From a business standpoint, the existing site is doing well, averaging 20 new customers a day, 80 percent of whom are referred by other happy customers. 

From a tiny, mainly custom shop, Clodius & Co. has been able to expand its merchandise and clientele to be accessible to a larger market. 

We have a lot of people who spend $100 to $200 a year, and then every few years spend quite a bit more, Mark said. 

The store recently added a manager, bringing the staff to 12. 

All in all, business was great in the new location, albeit in a building whose exterior design and overall curb appeal comes from the big-box school of architecture in a slightly smaller form. 

THE OPPORTUNITY 

While the Clodiuses were happy with their business, forces in their market would prompt a rethink of their contentment. 

If you talked to us last fall, we were happy with our size and with our growth, Mark said. 

Around that time, the Clodiuses attended a regular Financially In Tune (FIT) Group meeting of business peers.  
After that meeting, Mark and Monika began to see their market and situation in a different light. 

What I saw when we visited them last year was an opportunity, said Abe Sherman, an INSTORE contributor and CEO of Buyers International Group, a consulting company that specializes in inventory analysis, management and planning. K’s Merchandising was shutting down, creating several million dollars in additional sales potential. Also, and the biggest factor by far, Jared had recently been in the marketplace, visiting all of the local jewelers.? 

Sherman said it’s about being able to see the opportunity. Most of us tend to view things from the inside of the store, while when we are visiting we start with the big picture, trying to absorb the marketplace itself.

The Clodiuses, for example had recently done some re-landscaping, indicating they were satisfied with their building and location. They are seeing the trees, but not the forest, Sherman said.  

In a few short years, sales had increased substantially after they made their move to a much larger space and better location, he said. While incremental sales increases would have likely continued, they have already maxed out the available showroom space and therefore will have created a ceiling for revenue. 

The key, Sherman said, is knowing what the competition is doing, planning how best to position oneself and then deciding where to go from there. 

This is the genesis for our thought process, Sherman said. And one more thing: The quickest way to a slow, steady decline is to be content. 

This thought process left the Clodiuses with two important considerations: 

One, here was an opportunity to acquire more business, because that money that people are going to spend has got to go somewhere, Mark said. And two, it put them in a place to better position themselves in the event a jewelry chain did come into the market. 

In short, it left them with one revelation: The time was ripe to expand. 

Monika and I looked at each other and said, are we crazy Mark said. 

We were sort of in limbo land, Monika said. 

I think the time to do this is now, Mark said. If you’re going to do it, you need to proceed quickly, because the market is going to dissipate.

THE DECISION

Larry Rickert is the facilitator of the Clodiuses’ FIT Group. He also owns Jim Kryshak Jewelers in Wasau, WI, which recently underwent a similar store construction project.  

Our big thing was pulling the trigger, Rickert said. Usually it’s not the fact of the matter that makes people hesitate  it’s the lack of facts. 

And so Mark and Monika began to gather their facts to see whether it was really viable. They spoke with their accountant, their banker and the Small Business Administration loan people. While they did not seek or get firm commitments initially, they did get unofficial nods of encouragement. 

That led them to a general contractor in order to get a rough idea of the costs. 

At each step, the answers they were getting kept pointing them forward. 

INSTORE columnist and senior vice president of Business Resource Services Laurie Owen said there are a number of questions a business should ask itself when weighing such a decision. 

Why are you really doing this? What’s the market really telling you Owen said.  

Business owners do not always remember that having a nicer store does not necessarily mean there will be customers to fill that store ? or to pay for the new store. Additionally, they sometimes are not taking everything into consideration. 

These are very personal decisions that have much to do with the life stage of the owners, clues from the marketplace, the jeweler’s tolerance for risk-taking and his or her long-term plans, Sherman said. For example, I would not make the same recommendation to someone who is 60 years old with no succession plan. Also, not everyone is suited for taking on a project such as building one’s own building, and many people simply do not have the resources to handle these kinds of expansion plans without subjecting themselves to intolerable financial risk. I have witnessed people grossly overextending themselves who suffer for years in debt or wind up closing due to the significant increase in overhead. 

Owen has several specific recommendations: 

Talk to as many people as possible who have gone through such a project.  

Match the life of your loan to the life of the asset. If you have a four-year lease on a store, you shouldn’t be getting a 20-year loan to remodel. 

Build in one-third more cost and one-third more timeframe than your ideal estimates. 

Have three scenarios in mind for what your post-expansion sales will be: 1. The sky’s the limit ? you just can’t keep in enough stock to meet demands; 2. Up 20 percent ? what you’d ideally and realistically like to see; 3. Doomsday ? No one pays much attention to the improvements, and maybe all that construction dust scared away some customers. 

THE QUESTIONS 

No. 1 is to decide to do it, Mark recounted their decision-making process. Two, can we do it financially? 
All systems seem to be go. They’ve budgeted $500,000 for the project and have pre-approval from the bank. 
And three, the consequences of that are a zillion questions, Mark said. 

No. 1 of that zillion: What’s it going to look like Mark and Monika have been dealing with two local architects, who have come up with four very different concepts. 

Both Mark and Monika are in agreement that looks are the priority, but cost is a close second. A third factor is how the new exterior and interior showroom space will interface with the existing interior. 

The Clodiuses are currently weighing their four choices: 1. A modern, geometric design with clean lines; 2. A generic 21st-century outparcel look, which resembles a chain store; 3. A Frank Lloyd Wright-inspired design that suits the heritage of the area; 4. A really hip and cutting-edge modern design that makes an impressive statement today but that may say, What were you thinking? 20 years from now. 

Rickert offers this advice: You’re not building a Taj Mahal to charge admission. You’re building it to suit your customers. We’re just trying on mentally the different looks, Monika said. We’re really torn about which way to go. 

For now, though Mark and Monika are still in the beginning stages, and they are bracing themselves. Rickert warns them it’s a big job ahead. 

It was the most fun and the hardest I’ve worked in my life, he said of coordinating the construction of his store. ?You just don’t notice what gear you’re in.? 

Mark and Monika say they’re ready for it. 

I don’t know that I’m really up for the ride, but I’m certainly strapped in the rollercoaster and ready to go, Monika said. 

BREAKOUT

A few facts about Clodius & Co.’s upcoming expansion project:

Budget: $500,000 
Timeframe: A finish date of Sept. 10 is the goal.  
Interior goal: Double size of showroom to 4,000 square feet. 
Exterior goal: Give a 1970s poured-concrete featureless building the character it deserves.