CNN: El Paso Business Gets National Attention
By Mina Kimes Last Updated: April 24, 2008: 10:52 AM EDT
EL PASO (FORTUNE Small Business) — In the cutting room of a footwear company called Caboots, Arturo Estrada, a 70-year-old master craftsman, labors over a swatch of calfskin leather. As Estrada incises a delicate rose into the boot’s vamp (the piece that fits over the top of the foot), Caboots CEO Joey Sanchez looks on with pride.
“Arturo has been doing this for decades,” says Sanchez, 42, who runs the El Paso-based firm with his wife, Priscilla, 43.
Sanchez is familiar with the artisan’s tradition. As a kid, he scampered around the factory of his parents’ custom-boot company (which Caboots acquired this year after Sanchez’s parents retired). The family shoemaking legacy dates back to Joey’s great-grandfather, a Mexican immigrant who did repair work for major companies such as Justin Boots.
Today Joey and Priscilla don’t see their boots strutting through music videos, but they have appeared in movies such as the sequels to Pirates of the Caribbean. Sales rose from $160,000 in 2000 to $2.3 million in 2006, thanks mostly to Caboots’ Internet success (e-commerce now makes up almost all of its revenues).
But 2007 sales dipped to $1.5 million. The Sanchezes blame the decline partly on a flood that damaged the firm’s office and sapped morale.
But they also suspect that product variety – some 500 boots are listed on the firm’s website – is limiting growth.
“We’re spread out like an octopus,” says Joey. “We spend so much time on production that we can’t focus on a business strategy.”
The Sanchezes want to hire operations managers, but they worry about cash flow. Plans to find investors, boost marketing, and improve the website have remained just that – vague plans. Which is why Joey wrote to ask FSB to help him spur change at Caboots.
When the first consultant enlisted by FSB, David Thomson, a business advisor and the author of Blueprint to a Billion (see our May 2006 cover story), arrives at Caboots headquarters, Joey and Priscilla bound out of the stucco building in jeans and boots.
“We’re not quite a billion-dollar business,” begins Joey, but Thomson, 53, who owns Blueprint Growth Institute in Overland Park, Kan., cuts in: “The same essentials apply to you.”
As the Sanchezes lead him into the Caboots warehouse, Thomson’s animated voice fights with the sound of sewing machines. He’s amazed by the huge variety of boots lining the shelves.
“Those styles” – he points to a pair of $80 storm trooper shoes and a pair of $1,000 custom alligator boots – “are quite different from each other.”
Cradling a storm trooper boot, Joey says, “These babies paid for this building!”
The owners and Thomson sit down in the lobby, which doubles as a showroom filled with boots. Thomson whips out a stack of paper and starts scribbling.
“Caboots is so diverse, I’m having difficulty understanding it,” he says.
He asks the Sanchezes to break down their inventory, which ranges from one-of-a-kind cowboy boots to clown shoes, into four distinct product lines. The couple settles on custom-made boots, boots crafted from templates, custom-made costume boots – such as those seen in movies – and costume boots formed from templates.
When Priscilla says she wants to hire managers for each line, Thomson agrees.
“But we don’t have the money,” she notes. “For the first time, we need an investor.”
“Before seeking investors, you need a simpler story to tell,” says Thomson. Is Caboots about making top-quality cowboy boots or creating finishing touches for Halloween getups?
To find out, Thomson asks the couple which lines are growing. It’s clear that they haven’t mulled the question before. So he has them split sales by product and then rank each line’s growth potential. After a bit of quibbling, Joey and Priscilla create a list.
Thomson also pushes them to describe each line’s benefits. The Sanchezes say customized boots (both costume and noncostume) are their flagship products. But their less expensive, template-made offerings could drive growth by selling in greater quantities than the costlier products. Thomson advises the Sanchezes to keep all the lines, but tie the company’s image and story to the pricier, custom-made boots.
Next Thomson asks the Sanchezes to identify their “marquee customers” – those who are the business’s elite clientele.
“We have more than 100 who buy from us repeatedly,” says Joey. “They’re doctors, lawyers, CEOs.”
When Thomson hears this, he tells the owners to use these regulars as the faces of the business – put them in advertisements, hold social events for them, ask them to form a customer advisory council.
“Eventually,” he says, “that could become an advisory board – then a board of directors, which every business needs if it wants to grow.”
Such a board could offer Caboots objective opinions, valuable connections, and varied expertise. Thomson isn’t sure the firm needs venture capital, but if the owners choose that route, he suggests they turn to their top clients for funding.
Phil Morabito, CEO of Pierpont Communications, one of Houston’s largest marketing and PR agencies, arrives the next day. During a factory tour, Joey leads Morabito into a room where the boots’ uppers are soaked in hot water and hammered onto lasts, or pre-sized soles used for fitting. The entire process can take more than a month, says Joey.
“This is wonderful,” notes Morabito. “You must show this to people in your marketing campaigns and at trade show demonstrations.”
When he asks what kind of marketing Caboots does, Joey says the firm’s efforts are mainly Internet-based, with the exception of a recent direct-mail campaign that pulled in several new customers. Joey admits that he has no formal marketing plan.
“First,” says Morabito, “you need help.”
He advises Caboots to pluck a marketing coordinator from the University of Texas at El Paso, and then have the new hire execute regular campaigns to maintain communication with customers.
“Send them postcards four times a year and e-mails four other times,” he says. “You’ll see bumps in business.” He also says that the coordinator should oversee promotions, which should occur randomly, “so customers don’t anticipate a pattern and wait for a sale to buy boots.”
When Morabito, 50, hears about Caboots’ star-studded past, he says the firm is not tapping its publicity potential. “Outsource PR to a qualified publicist,” he says.
Morabito brainstorms stories that will help Caboots make news. The firm could try to create trends, such as wedding boots, he suggests. “Or send boots to the presidential candidates – they’re for kicking butt, right?” When Morabito dreams up an “iBoot” for Steve Jobs, Joey jumps across the table and gives him a high five.
By Mina Kimes Last Updated: April 24, 2008: 10:52 AM EDT
Like Thomson, Morabito wants to showcase Caboots’ high-profile customers. “They’re wealthy, well-traveled types? Hold a contest for the best international photograph of your boots, and then publicize the entries on your website,” he suggests. Joey and Priscilla love the idea.
“That’s your story – rich history, global reach,” says Morabito. “Actually, that’s a great tag line,” he laughs.
As Frank Farris, CEO of Atlanta Web design firm Deep Blue, sets up his laptop in the lobby and showroom, an older couple browses nearby. The wife beams as she pulls on a pair of white cowboy boots.
“These make me feel like a little girl again,” she laughs.
“That’s how you need to make people feel online,” says Farris, 36. The current website features few images of happy people – or any people at all – wearing boots. Instead, it offers a dizzying array of boots, and buries the firm’s rich history in a hard-to-find link. Farris points out the disconnect between Caboots’ website and the realities of its brand.
“You need this site to tell your story – there are lots of conflicting messages right now,” he says. Confused shoppers will wonder what makes Caboots special – is it the firm’s show-biz ties or its long history and high-quality work? Farris votes for the latter. As he scrolls down a lengthy sidebar, Priscilla agrees that the website, which mixes Caboots’ buttons for cheaper costume footwear with ones for custom-made boots, has a diluted feel.
“Either segment the brands using separate links on one central site,” advises Farris, “or break them off into different sites.”
Before Caboots launches a new site, says Farris, the Sanchezes need to decide how they will use it. “The website is just one part of a larger Internet marketing plan,” Farris notes.
The Sanchezes already pay for Google (GOOG, Fortune 500) AdWords, but Farris has other ideas. He proposes that they set up keywords (used by search engines to hunt for relevant pages) and translate them into foreign languages. That way, Caboots will also pop up in international searches. And the firm must consistently create new content to boost placement.
“Form strategic partnerships with complementary companies – you link to my site, I’ll link to yours,” he says. A cowboy-hat company might be a good one, notes Caboots’ IT head, Irwin Alvarado, 24. Priscilla admits that these are ideas they’ve considered, but never put into practice.
After FSB‘s experts leave El Paso, the Sanchezes are raring to implement their suggestions. Armed with Thomson’s strategies, the owners have a stronger sense of how to market their company to both investors and prospective customers. They plan to strengthen their network of high-profile clients and form a board of advisors. Although they recently began rebuilding caboots.com, Farris has persuaded them to start fresh. And they can’t wait to begin issuing press releases.
Joey hopes that added publicity will draw more boot buyers not just to the website, but also to the factory, where they can watch his employees in action.
“This type of craftsmanship is a dying skill in America,” he says.
We will return to Caboots to see how they’re keeping the tradition alive.
First Published: April 23, 2008: 9:16 AM EDTCould 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 FSB makeover 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.
