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Tuesday, Nov 28, 2023

Owner’s Experiences Reveal Hurdles for Small Companies

Gerri Schmidt is a walking illustration of the challenges that face manufacturers in California. Schmidt is the owner of Incolay, a San Fernando business that makes replica antique jewelry boxes and other gifts. The business is over 30 years old, but Schmidt worries that without a revival or some outside assistance, it may not last through this year. Several years ago Schmidt bought a jewelry box for her mother at JC Penney made by the company. Over the years she bought several more similar boxes for her friends until the store stopped carrying them altogether. Schmidt, a former employee of the City of Torrance, decided to try to find the business that made the boxes and learned she didn’t even need to leave the county in order to do so. After meeting the owner Sharane Gordon Bright, whose husband and business partner E.M. Bright had passed away a few years before, she realized the business was on the brink of closure. Schmidt decided she wanted to take over the company, and officially took over in the summer of 2004. She cashed in her retirement account, used personal savings and borrowed money from others in order to re-establish the business and distribute the company’s products at gift shops throughout the country. “Making something in the United States was really important to me, and it’s something a lot of people don’t appreciate as much these days,” said Schmidt. “The products were very high quality, not like a lot of things you’ll find that are made overseas.” Schmidt was about to learn how difficult it is to run a business. Her first order of business was to find Incolay’s former employees. “I hired everybody back from collecting unemployment. I gave them all raises, which I probably shouldn’t have, but I looked at what they were making and I just thought, you should be able to make a decent living after working here for so many years,” Schmidt said. Incolay’s history may have given a more seasoned businessperson an alert of what to expect after taking over. In the 1980s, Incolay employed about 200 people, some of them in a manufacturing facility in Puerto Rico. The company couldn’t compete with overseas manufacturers and it lost clients, like JC Penney. As she’s stepped into the role of a business owner, Schmidt says she’s learned that not enough gift shop owners or their customers are concerned enough with well-built products to pay more money for Incolay products. The company’s history has made it difficult for Schmidt to get financing. When she’s approached banks she’s been told that the last several years’ financial history makes her ineligible for a loan. Her lack of equity in the business has not helped the situation. Schmidt’s materials costs, like the resin required for man-made stone for her products, have shot up along with the price of oil and added to the burden of workers’ compensation and general liability costs. She also realized too late that the company could be operating out of a smaller facility and saving money on rent costs. Her commute is a surprise to her as well. When she took over the company, Schmidt imagined that she’d do most of her work from her Torrance home and make the drive to San Fernando a couple of times per week. “I was pretty naive,” said Schmidt. “But when I was planning to take over the business I talked with (San Fernando City administrator) Jose Pulido he was excited, he said, ‘you have to stay here, this is a Hispanic community. I was just under the impression that there were all kinds of resources available,” said Schmidt. Vladimir Victorio, director of lending for the Valley Economic Development Center, said he works with people like Schmidt all the time, helping them prepare loan applications that will be well received by lending institutions. “What she needs to come up to us with is how she competes and how she will be able to differentiate her project and be able to take it to the next step,” said Victorio. Without a way to repay a loan, he said, Schmidt is going to have a difficult time at any bank. The VEDC can also help businesses like Incolay determine how much money they really need, and how much a bank is going to be willing to give, to help improve the chances of a loan approval. While she’s trying to keep Incolay afloat, Schmidt has also developed some new business plans. She’s talked to several mortuaries about offering her company’s boxes along with traditional metal urns, and many of them have said they’d like to be customers. Schmidt is also considering selling Incolay products direct from the company’s Web site, but said she has conflicting emotions about cutting the gift shops that distribute Incolay out of the picture. Whatever the future holds, Schmidt says she needs a solution before it’s too late for her and Incolay. “I’m not 30,” Schmidt said. “I can’t just start over.”

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