How’s this for a sign of the times? Studies show that the number of 25-year-old and younger Americans planning on entrepreneurial careers has dipped below the levels of previous generations. And the downward trend continues despite a rise in the population of this age group.
Apparently many of our best and brightest young people are convinced that the current recession makes starting a business—or anything else that’s new, improved or innovative— too risky.
Risky, yes. Too risky? Not for Mike Shenk, who has been there and back and finds himself there again, trapped in a recession with the rest of us.
Shenk owns Watsonville, California-based Seascape Lamps, a thriving upscale lighting company offering modern, contemporary, retro style lamps and custom shades at his retail website. Seascape’s wholesale outlet meets the needs of a long list of business clients. These include hotels, designers and firms that serve production companies in the film and TV industries.
Not the best timing
Shenk opened his business in 1980 at age 24. Less than a year later, the country was mired in a recession that plagued us from July 1981 to November of the following year—a relatively short time but long enough to do some serious economic damage.
Holding things together required a combination of smart selling techniques, business know-how, and aesthetic sensitivity. Shenk measured up on the first two items thanks to on-the-job training at his uncle’s Long Beach, California waterbed store. The aesthetic part came naturally.
“I’ve always thought of that store as sort of a business school as well as a workplace. I learned a lot there, like different approaches to selling and marketing strategies, things I apply to my business even today,” Shenk pointed out.
Weekend work pays off
Added experience gained as a waterbed bedding salesperson at a weekend swap meet helped, too. More significant is the fact that this job provided a starting point on the way to establishing his own business.
It all began when he became friendly with a neighboring swap meet entrepreneur who was selling his own handmade ceramic-cast lamps.
Their meeting coincided with Shenk’s decision to move to Northern California. He appreciated the artistry his new found friend brought to lamp designs and decided to buy some, hoping to sell them in a flea market in San Jose. The plan was a success, and Shenk’s lamp-making friend joined up as Seascape’s regular supplier of lamp bases.
A do-it-yourselfer does well
To obtain lamp shades, Shenk hired a Los Angeles designer; an arrangement that lasted until he figured out how much overhead could be reduced by doing the job himself. So the firm’s self appointed shade-designer-in-chief set up shop in the garage at his home in nearby Santa Cruz. He later moved into a quonset hut.
When more space was needed to accommodate his growing business, Shenk re-located to a small shop where he offered custom designed lamp shades separately as well as complete lamp-and-shade packages. His client list included stores and other lamp designers who favored his custom shades.
Topping the list was a Chinese lighting company that signed on with Seascape in 1991. This bit of good fortune was worth sales of up to 1,000 shades per week.
Boss plus lamp maker
In the following year, the artist in Shenk surfaced again. Besides designing shades, he took on the job of making lamp bases. In the process he became a leader in the revival of the retro look. Soon Shenk was turning out about 30 designs a year while maintaining an inventory of up to 130 different styles.
If you’re thinking he held a non-stop ticket to success, don’t. This master of multi-tasking was forced to navigate some pretty big obstacles. For example, after the first nine years of operation, Seascape was found to be a stagnant no-growth company. And its founder could not figure out a way to turn this unprofitable situation around.
In desperation he raised all prices 12 percent. “I figured the way things stood, I would probably go down anyway. And I had nothing to lose.” Actually he had plenty to gain. By hiking up prices he burnished the image of his lamps to the point where the Seascape brand became more desirable than ever. Business picked up, except for Shenk’s retail store in San Jose. It closed after three years.
A big “ouch”
These weren’t the only hits Shenk took. In 2002 he bought a second lighting business, one that dealt in imports. “Four years later I was on the verge of bankruptcy. For the first time in my life I had to borrow money. Eventually I managed to sell the import business and pay off all my debts.” Such is the life of the entrepreneur.
Today, the wholesale operation is by far the larger part of Seascape. Hotels and design firms make up its top tier of clients. Luxury hotel chains such as Marriott, Hilton and Four Seasons offer selected guest rooms enhanced by custom-designed Seascape lamps. Some Seascape creations were seen in the motion picture “Legally Blonde” and ABC-TV’s “Extreme Makeover: Home Edition.” Among earlier wholesale customers were Neiman Marcus and Crate & Barrel.
All things considered, Shenk can point with pride to his company’s track record. But how does the future shape up? “It’s a good news, bad news situation,” he said. “On the good news side I look for a 10 percent increase in our business in 2012. And I think fabric lighting fixtures will repeat as our most popular product.”
Good news…sort of
“Why the optimism? Because we’re among the very few lighting companies in America that still provides custom-designed lamps, which are highly popular. And that, in large part, is where most of the extra ten percent will come from—this year and for the foreseeable future.” That also leads him straight to the bad news.
“Customizing is fast becoming a lost art because the U.S. lighting industry as a whole is shrinking,” he stated “The problem stems from a growing demand for lower priced foreign-made lamps—particularly the ones coming out of China.”
“Globalism and recession are key reasons why our economy is on the ropes,” he continued. “But I didn’t laugh all the way to the bank in 1981, either. In those days, Globalism was more a topic of conversation than a reality. And, along with plenty of other people, I somehow muddled through that recession and prospered.”
American entrepreneurs—the real ones—have a knack for doing just that.