Recipe for Success

Chris Gigley -- Casual Living, 2/1/2012 2:00:00 AM

Patio Palace plates up outdoor living rom soup to nuts.Steve Gilboe, who co-owns patio palace with long-time friend Paul Fanson, feels the same way about their business as a chef feels about recipes. Sometimes, you need that extra little ingredient to make it better.
     These are not words to take lightly. The first time the Canadian retailer felt that way, he and Fanson added patio furniture to their inventory of grills and the business nearly doubled. The next time Gilboe went searching, they opened a second store in London, Ont., two hours west of their original store in Windsor.
     Gilboe now manages the London store, while Fanson mans the store in Windsor. One thing is for certain. They won't be opening a third store. But it's just as certain that Gilboe and Fanson will find some other ingredient to add. They have a knack for spicing up their business whenever it turns bland.

RIPE FOR BUSINESS
     Gilboe and Fanson became best friends in the fifth grade, but their Once Gilboe and Fanson got cooking with grills, patio furniture, hearths and accessories galore were added to the menu.relationship as business partners began in 1982. They were business school students at the University of Windsor, and they had just collaborated on a practical case study for one of their classes. They chose an outdoor living retail store because Gilboe was working part-time at a propane business that had just added grills.
     When they finished, they realized their case study was a pretty solid business plan. That spring, they scrounged together what little money they saved from summer jobs and part time work during the school year and started looking for store locations.
     "We found a landlord who was willing to take a chance on us," Gilboe said. "A couple of Italian fellas who had built a shopping plaza out of cement blocks in their free time took a liking to us."
     Gilboe and Fanson had $2,000. The landlords asked for a $1,400 deposit to cover the first and last month's rent for a 1,200-sq.-ft . space, and the rest is history. The childhood friends were in business.
     They bought a modest inventory of grills, and in advance of their March grand opening ran an ad in the local paper touting a package deal - $269 for At Patio Palace your table is ready — not to mention your fi repit, umbrella, deep seating, lighting, rugs, dinnerware, grills and anything else on your casual living list.a grill, rotisserie cover and tool set. They sold everything they had.
     "For the rest of the spring and summer, we would sell during the day and build barbecues and deliver them at night," Gilboe recalled. "In some cases, we would build barbecues on our customers' kitchen floors. We tried to add a service level that didn't exist at that time."
     Then, they got their first tough lesson in the outdoor living industry. The good times don't roll all year long. Business drops off when the season is over, which in their case was August.
     "We thought we would be fine since we stayed in school, but we still had rent to contend with," Gilboe said. "We tried winter products to keep things going."
     Kerosene heaters seemed like a good idea until a rash of house fires generated enough negative publicity to kill the business. By the end of the year, Patio Palace grossed about $400,000 in sales. After expenses, they pocketed just $10,000.
     "We were more broke than we had ever been before because we had all the inventory," said Gilboe.

SETTING THE TABLE
     Gilboe and Fanson knew their business plan had worked, just not well enough. Gilboe and Fanson eschew favorable terms and other vendor perks in favor of furniture lines that have the right colors and price points for their clientele.They thought about getting out, but then they considered an option that changed their fortunes for good. They decided to sell patio furniture.
     The addition of furniture almost doubled the store's sales, but the change didn't happen overnight nor without a few hurdles. Mainly, Gilboe and Fanson had trouble convincing the furniture manufacturers they wanted to do business with that their store could handle furniture.
     Once again, they got a break from someone who wanted to give them a shot. In this case, Cecil Bockner, the patriarch of Cana-Foam Products, insisted on taking Gilboe's $10,000 order.
     "Cecil basically grabbed me on my way out the door and said to come back in his office," recalled Gilboe. "He explained to me that I was going to get my $10,000 worth of furniture because he believed in me."
     The furniture arrived at the Windsor store on Thursday, Gilboe and Fanson ran an ad on Friday, and they sold out of the furniture by the end of the weekend. They have since become good friends and customers of the Bockners and other furniture vendors.
     "They're good people to work with because they know their market and tend to be loyal to the people they work with," said Rick Causton, the Telescope Casual Furniture rep who covers the Ontario region and works with Gilboe and Fanson.

TASTE FOR GROWTH
     Even with furniture in the mix, Gilboe and Fanson weren't sure they wanted to stick with Patio Palace after they graduated college in 1984.
     "I thought maybe I'd make enough money to get a new car out of it," Gilboe said. "Maybe it would be a great feather in our caps for our resumes. But I didn't think we could survive doing just this."

Gilboe (pictured) and Fanson are hands-on owners who work six or seven days a week. "We have found that once you take your foot off the gas, things change dramatically," Gilboe said. "We can't afford to mail in an effort."

     Once again, they decided to try anyway, expanding the business in 1985. This time, they added a store in London and another in St. Catharines, two hours east of London.
     When the stress of running three stores became too great, they scaled back, selling the St. Catharines location in 1989. That move freed up the money to buy the 17,500-sq.-ft . London store 10 years ago, a move that paid dividends when the economy started to go south in 2008.
     "We love owning because we've had no rental increases in London in 11 years," Gilboe said. "Owning has also let us do things that maybe a landlord wouldn't have allowed. We can put an outdoor display out front every day because there is no other tenant we have to deal with."
     But as the economy remains sluggish in Canada, Gilboe and Fanson know that won't be enough to keep them satisfied.
     "We need to come up with something to reinvent the company and continue to buy it years of future success," Gilboe said. "I don't think you can continue to do the same thing year after year and expect growth."
     It's impossible to say what the new ingredient will be, but it's a good bet Gilboe and Fanson will pick just the right one.