From Working Woman magazine, February 2000

Sweet Taste of Success

A confectioner seeks ways to help her employees dip into profits.
By Amanda Walmac

If you've dined at an upscale restaurant, attended a banquet at a major hotel, or sailed on a luxury cruise ship, you've probably tasted Rena Pocrass's confections. Her company, Chocolates à la Carte, fashions chocolate containers, that chefs fill with mousse, sorbet, and ice cream. Among her notables: chocolate saxophones for one of President Clinton's inaugurations, baby grand pianos for Leonard Bernstein's 70th birthday, and Ray Ban sunglasses for a fund-raiser honoring Jack Nicholson.

Pocrass started her company in 1986 with just one part-time employee; today she employs 200 (including husband Rick, 59, who serves as CEO) and has earned the respect of chefs from coast to coast with her ability to deliver chocolate on demand. "Several years ago", she begins, by way of example, "the chef at the Washington D.C. Hilton asked us to design a rocket coming out of some clouds for guests attending the 20th anniversary of the first Gemini space launch. Basically, we had 48 hours to create something that didn't exist." Yet Pocrass comes through every time. "I use her because no one else can create the designs I want as quickly as I want them" says Sherry Yard, pastry chef at the tony Spago Beverly Hills.
Next on Pocrass's list is to open a new plant in order to quadruple production and help her company go public within the next five years. She hopes her reputation and ability to meet chefs' demands will sugarcoat her path forward.

ASK THE EXPERTS

How can I promise quick product turnaround without burning out my employees?
Nothing happens in production until the people in sales and marketing make the deal, so Pocrass should make strict rules about the lead time needed for custom orders. "She is running against the crush. It can be alleviated if she puts demands on her salespeople," says Joseph DiStanislao, former owner of DiStanislao & Associates and past president of the National Association of Specialty Food Brokers. She should have a powwow with the production team and sales force to hammer out time frames for jobs that require designing anew mold. "She can use past examples of different size jobs and different types of jobs as a reference," he says. Put the guidelines in writing so the sales force can pass them along to customers.
Although it might mean Pocrass has to turn down a new client occasionally, "business owners will respect the fact that she needs the time to do the job the right way," says DiStanislao. Bonus: Letting her employees help create the guidelines will foster loyalty. "She may lose an order or two, but the Pepto Bismol will disappear," he adds.

Is a phantom stock plan a good way to reward employees?
Phantom plans--cash bonuses promised to employees at a future time set by the owner, such as retirement or after a certain number of years on the job--are most often used to discourage employees from jumping ship by those planning to sell their firm, says Genevia Gee Fulbright of Fulbright & Fulbright.
Because Pocrass plans to go public, a traditional stock plan might be a better idea. "She can control how much ownership she gives up," Fulbright says. "And giving employees a piece of the pie will keep them as motivated as she is."
In addition, the accounting required for phantom plans may actually hinder her ability to go public. "She'll want to show big earnings increases to get a company interested in taking her public," says Lee Bloom of Duff & Phelps. "But as phantom stock values increase, companies must take a deduction against net income," he says. Not so with traditional stock plans.

How can we use the Internet to drive more business?
Author Jill Ellsworth suggests that Pocrass add more pictures of her desserts to attract and hold Web surfers' attention. "Visuals will help sell the product," she says. But even a great site means nothing if there is no traffic. One essential in Internet marketing, says Ellsworth, is registering company sites with search engines. Neither of Chocolates à la Carte's Web sites are listed in the top 50 sites in Yahoo or HotBot when searching under the keyword "chocolate." Companies such as register-it.com will help a site show up on a range of search engines.

I've traditionally put my efforts into growth. In order to do an IPO, do I need to show increased profits?
"If you are planning a public offering, it is a mistake to alter your business plan just for the sake of profitability," says SCORE's Don Phalan. "I get suspicious when I see an IPO making a large profit.... If a company has a steady profit [and] then all of a sudden you see a spike, you know something is not right. Anyone who has experience can tell if the extra profit is just window dressing cooked up by accountants."
What is important is having a detailed plan of how the company will use the IPO money to grow and generate future profits. The plan should also include a timetable telling investors when they can expect a return on their investment. Bottom line: Don't place profits before growth at this stage in the company's development.