Dress for success

A school uniform supplier battles the economic downturn.

CHICAGO (Fortune Small Business) — Even after almost 20 years at the helm of a successful clothing company, Michael Cohen cheerfully admits he does not Fashion Maven. If anything, he is responsible for the squelching Schneider wishes of tens of thousands of the nation of students. Cohen is the king of school uniforms.

His Chicago-based firm, Cloz, sells uniforms to some 200 elite private and boarding schools in the U.S., among them Nightingale-Bamford School in New York City and National Cathedral School in Washington, D.C. Launched in Cohen’s apartment in 1989 with an initial investment of $500, Cloz today is a profitable $10-million-a-year catalogue and online retailer.

Cohen, 42,  dressed, the scions of the wealthiest families in America for nearly two decades. He even supplied the maroon uniforms of the Obama girls wore during the gymnasium at the University of Chicago Lab Schools. Cloz prosperous tykes also outfits for the summer camp, the company has the exclusive for around 100 sleepaway camp sites in New England and the upper Midwest.

Still, Cohen has the tremor. He frets that his business is highly seasonal. Cloz processes thousands of orders per day for storage gear in the spring, then medium and ships crates full school clothes until the end of September. In the late orders slow to a trickle, and the beginning of the winter resort feels like a schoolyard in July. Cohen says he tries to operate as a subsidiary to the downturn in the season slowly.

Despite the downturn, Cohen also needs to make sure his firm is poised for rapid growth once the economy recovers. Currently crammed into small offices on Chicago’s South Side, the Cloz warehouse is an overstuffed jumble. Cohen hopes to streamline production and manage inventory better by investing in additional space and new technology. But his bank is paralyzed by the credit crunch and can’t provide the capital that Cloz needs to grow.

To help Cohen sort through his options, Fortune Small Business recruited three experts for a business makeover. First up is Larry Flinn, chairman of Flinn Scientific in Batavia, Ill., one of the top suppliers of scientific equipment to U.S. schools.

Flinn, 53, urges Cohen to stop worrying about the slow season and focus on winning more of the promising school market. Thousands of U.S. private schools require uniforms. The $490-million-a-year school uniform market is growing at a double-digit clip annually – much faster than the market for camp gear, according to New York City market research firm Stax. But school uniform sales make up just 40% of Cloz’s revenues.

“Jamming some new venture into the slow season just to fill the vacuum is risky,” Flinn cautions. “Don’t take your eye off your core business, especially when you’ve got so much room to grow.”

Instead, Cohen should slow months to prepare for the annual burst of activity in spring. In winter, for example, could Cloz around the time the offer of the school emblems affixed to backpacks, with a conservative estimate of the number that the parents are likely to order.

Flinn reminds Cohen that the school market is a challenge because administrators are slow to respond and wary of change. Cloz could spend three or four years wooing a school before winning it over. “Be patient and wait for the school’s current supplier to slip up,” Flinn advises. “That’s your opening, but you’ll have only one chance to wow them.”

Aggressive sales tactics can offend school officials and teachers, Flinn adds. But these educators are hungry for information that will help engage students in learning. F

linn’s company has fostered loyalty among science teachers with its Fantastic Flinn Freebies, which include newsletters on trends in science education, seminars on safety and videos of award-winning teachers performing experiments. (Flinn even offers a Student Teacher’s Survival Kit, containing safety posters and coupons for equipment.)

Cohen brightens. “We could create a newsletter that discusses how schools are coping with the downturn!” he says. “And in the past we’ve sent a big box of surplus uniforms to National Cathedral School for students who can’t afford them.”

Next expert at bat: Brian Sommer, founder of Techventive, a marketing and technology consultancy in Batavia, Ill. “Clearly, you’ve got space issues,” Sommer, 52, says during a tour of Cloz’s crowded headquarters. “You’re growing like ivy.”

Cohen admits that he’s having difficulty obtaining credit to fund an expansion. Money permitting, he would like to double the size of his 36,000-square-foot facility, which houses his offices, sewing area and warehouse. “Banks are looking for any excuse not to lend to small business,” Cohen complains.

“Your bank has you on a short leash,” Sommer says briskly. “You’re probably getting some business services from them, but you can’t get a loan.” Cohen nods wearily. “This is a fixable problem,” Sommer continues. “You don’t have the right banker.”

Shop for a new one immediately, Sommer tells Cohen. Start by getting recommendations from other small business owners in and around Chicago. (Peer networking groups, such as Young Presidents’ Organization, are good places to meet them.)

Cloz’s Web site is the hot topic for our next expert, Chris Dalton, CEO of Acquity Group, a Web consultancy in Chicago. “How soon will you be a virtual business?” he asks Cohen, who blinks and pauses to consider the question.

“Some camps and schools have eliminated the catalogue completely to save on printing costs,” Cohen says. “But I’m not sure that’s good for us.” He notes that children tend to pore over the printed catalogues, picking out items they want for school or camp and marking pages with Post-its. Cohen says he doesn’t think his company’s Web site is as enticing as a colorful catalogue.

“There are ways to enhance the online shopping experience with enlarged photos of details and so on,” says Dalton, 41. “But you have other, more pressing issues.”

Cloz website also not to stress the company excellent customer service. Cohen should use the site to parents who are concerned about their children to school. “You need to insure that their child is perfectly equipped, when the bell rings on the first day,” says Dalton.

RichSpy  will check in on Cloz and let you know how things turn out for the company.  

Could your business use a makeover? In general, successful Makeover candidates are profitable small companies with at least $1 million in annual gross revenues. To submit your firm for consideration, e-mail the editor here. Please describe your business briefly, provide your most recent and projected revenues, and explain why you think your company would benefit from a Makeover.