Local Companies' Success Stories Earn National `Blue Chip' Status - - Lessons Learned Lead To Recognition

Not many business management students would think to study a massage school, a beauty salon and a human resources consulting company for valuable lessons. But they should.

For persistence, ingenuity and creative use of resources, three Seattle businesses in those fields have been named "Blue Chip Enterprises" by the U.S. Chamber of Commerce, Connecticut Mutual Life Insurance and Nation's Business magazine.

The owners of the three businesses - the Seattle Massage School, Studio 904 and InnoVision - are happy to share some of the lessons they learned while overcoming such tough odds as running out of cash, facing competition from deep-pocketed national chains and needing to build a client base from scratch. These are their stories:

"Groovy businesses don't work"

Paul Rerucha said his Seattle Massage School used to be a "groovy business." A licensed massage practitioner and registered nurse, he bought the school in 1986 and expanded in every direction that looked interesting. He added more medical training to degree programs, offered continuing education classes and opened a student clinic. "I thought we could do everything," he said.

But in 1989, he suddenly realized the business was about to run out of cash. That's when he concluded, "Groovy businesses don't work."

Rerucha cashed in his IRA to get the business through the crisis, quickly made a strategic plan and took a crash course in cash management.

"I made a choice that I was going to embrace business with the same enthusiasm that I had for teaching," he said. The Green Lake area school became recognized as one of the best in the country, and sales zoomed to $2.8 million last year from $65,000 in 1986.

Rerucha also lobbied lawmakers and worked with the local vice squad to shut down massage parlors that were fronts for prostitutes. By changing the way massage therapists were regulated, they were classified as health-care providers and could be reimbursed by many insurance plans.

"In some ways our business is very unique, because we teach people to touch people in a therapeutic way to reduce pain," he said. "But in some ways our business is just like any other."

No more bad hair days

Managing a traditional beauty salon was not Kay Hirai's style. Eight years ago, the owner of Studio 904 abolished commissions and implemented a no-tipping policy, almost unheard of in the industry.

She was convinced that paying her stylists a stable salary of $16,000 to $28,000 would reduce turnover and encourage them to work together to bring customers better service.

Staff members at her Pioneer Square salon also receive at least four hours of education each week - on company time.

"If (a client) is the least bit unhappy with what we have done, we have them come back for free service and we work on this person's hair together," Hirai said. "The staff learns to give you what you want."

Hirai said that approach has enabled her to grow the business despite an emergency relocation in 1987 caused by construction of the bus tunnel downtown and growing competition from national chains such as Supercuts and Hair Masters.

She opened another branch on Mercer Island in 1991 and expects revenues for the two salons to reach $500,000 this year.

The salon keeps in touch with 4,500 clients through newsletters, mailers and surveys. Salon promotions are coupled with service projects and fund-raisers such as a "cut-a-thon" to benefit the Northwest AIDS Foundation.

Last year, the salon also received a $12,000 grant from the city of Seattle to educate other salons about recycling and disposing of toxic materials. The salon had reduced its own waste to two bags a day from six by recycling everything from plastics and glass to foil used in highlighting.

The woman with the hat

When Alice Snyder-Hunter came to Seattle in 1989 to launch a human-relations consulting and training company, she had no contacts, no family in the area and no understanding of the Pacific Northwest. Her only hope, she said, was "guerrilla networking."

Armed with a master's degree in counseling psychology plus experience as a therapist and trainer, she started working the town.

She pushed local publications such as the Puget Sound Business Journal to publish pieces she wrote about diversity in the workplace. She joined commissions and business associations and offered to speak to community groups.

She turned heads by dressing in tailored black suits, carrying gloves and always wearing a hat, earning a reputation, she said, as "the woman in the hat." She invested in a high-profile downtown office in the Key Bank Tower on Second Avenue.

Within three years, she was elected president of the Seattle Women's Commission, a group that advises lawmakers on women's issues, and her start-up was one of the largest training companies in the state.

Snyder-Hunter's firm, InnoVision, works with companies to develop customized employee training programs in conflict resolution, mediation, diversity and sexual harassment. The InnoVision staff might show videos, lead role-playing workshops and facilitate small discussion groups.

InnoVision has helped educate 3,000 Navy sailors on sexual-harassment issues, trained 1,500 employees of Washington State Ferries in work-force diversity and worked with 25 Microsoft employees on team building. More than half of her clients are in the public sector, Snyder-Hunter said.

After Anita Hill accused Clarence Thomas of sexual harassment in his well-publicized Supreme Court confirmation hearings in 1991, demand for training on the issue increased threefold. Revenues rose to $400,000 last year from $12,000 in 1989.

InnoVision aims to go beyond traditional employee seminars that can be didactic and boring, Snyder-Hunter said. And with 75 percent of her clients returning to hire her again, it appears to be working.