SMALL BUSINESS : LEARNING CURVE: Business Lessons From Southern California Entrepreneurs : Enthusiasm Is Good; Research Is Better

Working on the cutting edge of technology for more than 15 years, Dick Amtower, chief executive of CR Technology, has seen ideas bright with potential go out the window and markets full of promise dry up overnight. He has had to reinvent his company from the business plan up a couple of times and says the first rule is to not panic. The small manufacturer of X-ray and visual inspection systems has grown by 50% in each of the last three years and recently merged with a fast-growing public company. Amtower was interviewed by freelance writer Karen E. Klein.

When I was brought in to run this company, they had just raised $2 million in venture capital, moved to California from Illinois and were riding on a burst of enthusiasm about some new products. We had super forecasts about all these sales that were going to come in, but within two months our orders dried up to nothing.

The business plan we were working with had to do with selling components for computers, software, cameras and optics and giving the customers the job of putting the raw materials together. Very quickly, we were burning through our money, no new money was coming in, and we had to find smaller quarters and downsize.

The first thing I did was to evaluate our strengths: a fully organized business, good technology with working products and talented employees. In order to restart the company, I had to get control of the cash flow by downsizing and relocating, then I secured the key employees and developed a new business plan. We went out into the field to the customers and asked them what they wanted.

They told us they didn’t want to buy components and have to assemble them and write code. Our customers were looking for a turnkey solution, but we were selling building blocks.

We changed our product focus and began lurching along, not really making any money but able to stay in business and add to our product line. Along the way, we found that we raised money to develop new technology but didn’t have enough funding left over to market it. We missed a lot of opportunities that way, because we were years ahead of the curve on some products.

We learned to get incremental funding from our investors and we bootstrapped as much as we could, running a lean organization and asking our customers for incremental payments whenever we could. We really hit our stride about four years ago.

As we struggled along, I learned never to mistake an initial burst of enthusiasm for the whole growth curve. In technology, it’s always possible that what you think is an exponential growth curve is really a little bump. It may be a long while before the real payoff. You need to keep a strategy in mind for how you’ll get your product across the chasm to the big market of users.

I’d recommend you do as much research as you can to avoid a lot of mistakes. “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers,” by Geoffrey Moore, is a book I’d recommend to anybody starting a technology company.

The other research to do is to talk to your customers. You don’t have to be a guru or a genius to figure out what they want to buy. If you talk to enough customers and listen to them, they’ll tell you.

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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or at [email protected]. Include your name, address and telephone number.

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AT A GLANCE

AT A GLANCE

* Company: CR Technology Inc.

* Owners: Hall Capital Management, Inco Securities

* Nature of business: Manufactures X-ray and visual inspection systems

* Location: 125 Columbia Ave., Aliso Viejo

* Founded: 1983

* Web site: https://www.crtechnology.com

* E-mail: [email protected]

* Employees: 46

* Annual revenue: $8.6 million