PLEASE NOTE: Part of the legacy of business is that they are often sold. Buckeye Beans was sold in 1999, then the new owners liquidated the assets. The lessons that Jill and Doug share will always have value as a slice of business history and American life.

This business was selected because they were the Small Business Person of the Year from State of Washington.

HATTIE: Hi, and welcome. Today's program was taped in Spokane, Washington. It's the `Jill and the bean stock' story, seems like an American fairy tale. With $1,000 invested in beans, bags, ribbons and labels and working from a basement, Buckeye Beans was born in 1983.

Buckeye Beans is selling its fun and food all over the US, and even has entered some international markets by way of its award-winning catalog.

As a music student, I had teachers that, once in a while, a professional musician would come to campus and conduct a master class. Teachers will give you the nuts and bolts, but master classes are taught by professional musicians who really bring in the heart and soul. You are now going to meet two master small-business owners. Jill and Doug Smith started Buckeye Beans in Spokane and have grown it from nothing to over 50 employees. Join me now in the Master Class to learn how it feels to be a master small-business owner.

She believes families should eat together, she doesn't wear a watch, and she never intended for her bean soup to turn into a business. She's Jill Smith, the founder of Buckeye Beans & Herbs. She is the Bean Queen, and her company is full of `human beans.' With 50 employees and about $8 million in sales, this hippy-artist-turned-entrepreneur sells smiles. This may look like beans, spices and pastas, but the corporate mission is to make people smile.

JILL SMITH (Founder, Buckeye Beans & Herbs): Our belief in cooking is that cooking should be fun ... Oh, boy, that's gonna be a winner ... So many people go and they work all day and they go home with the drudgery of having to go home and make dinner. And we believe that the--the experience of cooking itself can be an escape, a let-down at the end of the day, something that can be a good--a good experience. And so everything that we do tries to prepare people for that. That's why our first ingredient on our product is a cup of good wine for the cook. We want them to smile before they even start the cooking process.

And the new sauces are light like this. I mean, in the old days, we never thought of putting orange juice or something like that as a dressing on pasta.

And as you can see, it really comes out quite delicious.

So our product goes beyond just a bag of beans. It goes to the concept of entertainment. Sometimes I think we're as much an entertainment company as we are a product company.

HATTIE: Eighteen months into the bean-soup experience, Jill hired her husband, Doug.

Is that what happened?

DOUG SMITH: That's exactly what happened, and I've been waiting for her to fire me ever since. No problem.

HATTIE: No. You've have a mission statement to make people smile?

DOUG: You bet. But there's...

HATTIE: OK. And, you have a strategy to make that happen?

DOUG: Well, the rest of the statement really deals with what we're interested in, and we call it the HEHE principle. And HEHE stands for humor, education, health and the environment. And that's really the rest of our mission statement and what we want to do.

We're really niche marketers. That's really what we're about. We just happen to have a bean-soup product. But we were looking for niche markets to sell it in, different channels of distribution and different places in the marketplace where we can take what we do well and put it out there, and make more people smile. So the next place we looked--and we said, `You know, there's a lot more people going in and out of the grocery store than there is in--in and out of specialty food stores.' And so, not wanting to compete with our specialty food product, we developed a whole new line called Aunt Patsy's Pantry.

She's my favorite aunt. She lives in southern southern Oregon, still waiting for royalties. But we used her as somebody that we could laugh at and, actually, she's delighted. She has a great sense of humor. But our first statement is, `Aunt Patsy can't cook worth a darn.' This is more of what people in the supermarket are looking for. They were looking for alternatives to--to meat and potatoes that tasted good, that were easy to cook, but they didn't really know what--how to do it. So Aunt Patsy said, `Well, I don't know how to do it, either, but--but we came up with these products, and these fit the bill.'

We started with one product, and then we developed the bean-soup line into bean soups and chilis and some lentil products. Then we did bread mixes, because the consumer said, `Well, couldn't we have a wonderful bread mix to go with the soup?' We said, `Sure, we can do that. We're innovative here.'

And then along came the Washington centennial and--a 100-year centennial--and we said, as a Washington company and as a food company, we really wanted to do something special. So we developed and found out that we could do a noodle in the shape of Washington state. And along with it, we added a little fir tree 'cause this--I don't know if you've seen the state of Washington, but as a noodle it isn't really exciting. It was a total failure.

So we took it to the Fancy Foods Show. And this is where listening to your customers is totally important in small business. And we took our centennial pasta to the s--the s--Specialty Foods Show in New York, and I stood there in the booth and we laid it out on the counter and had these little Washington states and these evergreen trees from Washington and people came by and said, `Oh, that's a wonderful little Christmas tree.' And being a very patient person, I said, `No, that's not a Christmas tree. That's the Washington state evergreen tree.' Well, it took me about four or five customers before--I'm a slow learner, but I do get it--and I said, `We shouldn't be selling evergreen trees; we should be selling Christmas trees.'

And I turned to Doug and I said, `Doug, we're going back and we're selling Christmas trees. We'll get them on the market in time for this season.' And that came from listening to the customer.

HATTIE: So you rescued the Christmas tree mold. Did you toss out the state?

JILL: So we rescued--we ditched the state.

HATTIE: You tossed out the state.

JILL: We do still sell the state, but we tossed it out.

Put the Christmas trees together in a package and hit the market that fall, and it was a phenom--we couldn't keep it in stock. Then we added a heart, we added a bunny, and then we added a dolphin.

HATTIE: We have a bunch of grapes. We have a leaf. We have the baseball scenario.

JILL: And it's always a challenge to find out what new ones--like this year we aud--we added golf pasta. And the golf pasta has a little bag, it has a--the club and it has the green, but you have to supply your own balls.

I'm a trend follower. That's--I go to New York a lot. I try and keep my--my hands on what's happening nationally in food trends, what--food trends usually start in restaurants, but that's a whole nother story. We can talk about that later. But what we do when we look for a new niche is that I look at where we can sell it first before we develop the product. And I think that's an important concept, because lots of times you get so wrapped up in product development that you forget that you have to sell the product.

We have our catalog department, and we do everything here in-house. This is Robert Johnson; this is Jill's brother who came up from California to run our graphics department.

Mr. JOHNSON: People buy a lot of our products because of an impulse. I mean, they see it, they go, `Oh, that's great. I'll buy it.' And when they see it on the store shelf, it's not surrounded by a--a story and a color and a--and in a--in a--in a whole ambience of environment the c--the catalog offers them. After all, our products are, like Jill has said, just either beans in a bag or pasta in a bag. But we try to romance that product and add value to that simple product to the point that it's a very attractive, whimsical, fun thing. You're not just buying a soup, you're not just buying a pasta; you're buying into a whole story, a whole image.

You can create a catalog and test that catalog with a small number of people and see if it's gonna work.

This is our best one right here. It tells a story. I think it really does all that we want it to do in romancing our products and telling the story about Buckeye. We have two characters that run through our little story thing called Black Bean Bart and the Pinto Kid. And this page here--in this story up here, these are about that strange pasta fields, where the pastas grow in different shapes, and you just--we just go out and harvest then and just cut them right off because they're all in these great shapes of bicycles and trees and baseball mitts.

HATTIE: Don't you--don't you wish it was that easy, huh?

What can we learn from Buckeye Bean? Is the catalog for everybody?

JOHN WARGO (Sales and Marketing Adviser): The catalog is for everybody that has more than one product. If you only have one product, you don't need a catalog. If you have multiple products, catalogs work. People love catalogs. Catalogs today are like magazines. The key to a catalog is more than just a listing. For example, look at this. Great cover. Great cover. I mean, it's compelling to open and read.

And you read in here, they got stories.

They talk about their product. The catalog is a way to say more than, `This is the list number. Here's the price.' What does that tell you? It tells you the list number and the price. Four color, it's appealing, a little story, it's interesting. A small-business person has the opportunity to take a catalog and create their company personality around it, so what happens is every time somebody sees it, they know the personality of the company.

And here's what a small-business person does that a big person, a big company, can't do. It gets this personality. It gets this rapport with the individual. When they pick the catalog up, they think they're talking to the company, they think they're working with the company.

HATTIE: Right, 'cause here's Jill and Doug smiling at the camera.

JOHN: Right.

HATTIE: And they--they look just like that.

JOHN: Yeah. It's great.

DOUG: We looked at international trade as the way to go, but we also found that working on the--working on a commodity product like beans and lentils and so forth, almost all countries have some sort of tariffs or tariff barriers against importation. When we started trying to go into Japan, there were bean quotas, for example. We had to find--to take our bean soups into Japan, we had to find somebody who had the bean quota and get him to substitute our beans for somebody else's beans in order to get them into Japan.

HATTIE: Did you do that?

DOUG: We--we tried. We were not successful.

HATTIE: Sounds like finding a needle in a haystack.

DOUG: I--it really was. So we fought that for a number of years. Finally, an organization from Japan called JETRO, which is a Japanese Export Trade Association, which is a quasi-government organization came over here looking for more products to take into Japan. And that--we were one of 28 companies that--that showed them products here in Spokane; they made their choice. We were one of six companies from the Northwest that they bought product from. They--we started this process in August of 1994. We--they finally brought product in January of 1995 took it to a trade show in February, I believe, of '95.

We had contacts from Japan by May, and it took us a full year from that time in order to send our first half a container into Japan. So anybody who thinks this is a quick process, I--I'd like to know--I'd like to see it go faster than this, because...

HATTIE: But you're not gonna let go of this vision.

DOUG: Oh, no. No, no.

HATTIE: You think there's growth there.

DOUG: Oh, very definitely. They've got a lot of people...

HATTIE: They love--they love your stuff.

DOUG: They do. They love the--the--the funny-shaped noodles. We have kind of a corner on the market in Japan. Where our exports are going up, we hope to--well, we'll try and double them this year, for example. And we're having a lot of fun with our--with our crazy-shaped noodles in Japan right now.

HATTIE: So you would encourage a small-business owner to pursue international opportunities.

DOUG: Well, I think they have to pursue them, but I think they have to wait until they're ready. So many small companies don't even know how many cases go in a container, much less it's gonna ta--that's six months' worth of production for them. They don't have that kind of time; they can't take that long to fill an order. So the company really does have to be ready before they--they tackle the international market. I think one of the things we've seen in small business in a lot of the small food companies here, they all want to go international--they all want to sell international. They're not ready to sell international on their own. If they can find an exporter or a trader like we did to start with, where they can take a pallet at a time, two pallets at a time, wonderful. Go for it.

BRUCE CAMBER (Executive Producer and Business Strategist): The world wants American products. They want to buy American products. And the experience of Jill and Doug at Buckeye Beans verifies it. With just one article in a Japanese publication, they opened up their Japanese market and sold $400,000 of product; $400,000 of product in their first year; $800,000 in their second year.

What's going on here?

Jill and Doug have defined themselves in an extraordinary way. They have looked at what their special gift is, and they have capitalized on it to the highest degree.

What's their special gift? They conceived of these very specially shaped pastas. The Japanese love baseballs and bats. And where better to sell your specialty products worldwide than through the Internet? . . . the lowest marketing and sales costs equal the highest possible margins. And,the Internet challenges you to really look very carefully at how you're defining yourself to the world. What is your unique and special gift?

HATTIE: Advice to the all of us entrepreneurial couples. `Expand your management team. The more key members a venture has, the better its performance. If you're too small to add another key person now, develop a board of advisors.'

JILL: And one of the things that I've always believed is--is you don't sell just a product, you sell a concept. And when I sold pottery, I sold the concept of buying from an interesting person, of buying a nicely, well-crafted piece of pottery that you knew more about. And when I came to business, I brought that same idea.

HATTIE: You just heard Jill say she doesn't sell a product, she sells a concept. When she started making a living as an artist, she sold her handmade pottery. She would explain to customers that they were purchasing a one-of-a-kind piece of art. She was not selling a product, she was selling a concept. The same thing has happened with her bean-soup mix. She never thought she was selling a bag of beans. She always thought she was selling the aroma in the house that comes from the beans simmering on the back of the stove all day, the family sitting down, eating together. Don't you see? She's not selling a bag of beans, she's selling a concept.

Stop selling a product and create an experience for your customers. Create a mystique around who you are and what you do for customers, then capture that mystique in your print material, in your location and in the people you hire.

DOUG: Somebody, I'm sure, is gonna tell me what this is all about here, or I'm gonna have to duck real quick to find out; one or the other.

Let me put it this way, this target better not be for me.

I don't want to be a doom and gloomer, but I think you need to understand that competition is stiff and serious business out there. I want embrazed on everybody's little forehead, `I am here to service the customer,' because that's what will make us succeed. As we talk about time and how we need to use our time more efficiently and as other businesses are going (shakes stick that makes noise) so to speak, down the tube, we don't want to be one of the businesses that (shakes stick) goes down the tube.

Unidentified Woman: Well, we know that you have both won a lot of awards recently, and on behalf of all the company, in our own special way, we'd like to thank you; we'd like to toast you. We'd like to....

(All employees throw paper at Jill and Doug)

Mrs. SMITH: Target. Target. Food fight! Food fight!

OK, now, Doug, you--you know what this--you know what this means is now we have all the ammunition.

Everything that--that business said you shouldn't do.

HATTIE: What do you mean?

JILL: Well, Doug and I are married and we work together as business partners. Both of Doug's sisters work for us. My brother works for us. We've hired half of our soccer team--work for us. We figure that if they can make it on the soccer team, they'd--no sweat in small business, especially a grou--you're playing over--over-40 soccer.

HATTIE: You're saying friends and family.

JILL: We developed our business on friends and family. That can be a tremendous negative or it can be a tremendous positive. One of the reasons we feel it's been a positive for us is that we all share li--like values. And we like to say that besides being a value-added product company, we're a values-added people company. And the people that we have here all have kind of the same value system that we do. We all kinda believe in the same types of things.

Everybody who's got a relative working here, stand up, if you would, please.

Unidentified Man #1: We've been referred to as a family or a small community of people, and we--we get to know each other and personality traits and everything like that. But, yeah, it's--it's really nice to be able to talk about personal stuff, and, you know, she is--she's my mother, but I refer to about five different ladies as my mother, you know? I--I'm mothered by a lot of people, so it's not just her.

HATTIE: When Doug came to you and said, `Would you be willing to come to work for Buckeye Beans?' what was your first thought?

Unidentified Man #2: My--my first thought was, `Yes.' I've known Doug his--and I think you know this--I've known him for 30-something years, and I thought we could do something together. I felt like I could contribute. And I'm a free thinker. I like what they do. I liked the idea that it was gonna be exciting and that we--we were gonna build something that hadn't been done before, and it was--I was flattered, frankly.

HATTIE: All the key people at Buckeye have been involved with one another for a long period of time---your sister your wife of t--28 years, your friend of 30-something years Jill's brother. So is this a piece of advice we could give to people?

DOUG: I don't think it'll work for everybody. I think, really, a--again, it comes back to: What are your basic values? What are you trying to accomplish with your company? What kind of a company is it? What kind of a company do you want? You know, if I were out in--maybe in telemarketing, where it's a little more hard-core, where we have to be a little more hard-pressure, high-pressure sales, it--I don't believe it'd ever work with friends, family and relatives. But we're trying to--to create a different type of company.

HATTIE: Do you think this is a new model?

Man #2: I think so. And--and I do because businesspeople run on relationships and trust and confidence and loyalty and dedication and--and all these big words. They don't run on balance sheets. They run on working together to get a job done. And I think it's important. And it's easier to work in a philosophy like that, and it's easier to work hard.

HATTIE: So don't you think it starts with the mission that you want the customer to have a smile on their face and that people here want to have a smile on their face and you just create all that joy?

DOUG: Oh, I--I think so. And I think it took us a--we--we always knew we wanted to do that, but it wasn't until about three years ago that we started to formalize and really preach and--and really try and--and impress and instill that in our people and--and use that to our advantage in--in marketing.

HATTIE: Mm-hmm.

And I love your dress code. No dress code.

Man #2: Dress code is good. Dress code is good.

HATTIE: No dress code.

Man #2: You have to be dressed, that's it.

DOUG: You have to be dressed, that's it.

JILL: I believe in doing good work. I think that's what artists and what the creative mind is all about. When we talk about work as an artist, we talk about the thing we have a passion for--the work that we do, how we represent ourselves, what we create. That's an artist's work. And they'll talk about their body of work, the work that they do. And people are always asking artists, `Well, what kind of--what--what is your work?' Businesspeople talk about going to work. It's a very different concept. And I think the two can mesh very well. So we've tried to make the work that we do here at Buckeye good work, and we've tried to make it ethical work, and we have a great reputation as doing good business. We take care of the people that we work with. We entertain them, also. We make them smile. We also take care of our employees. We believe that if you have a good--good work starts at home, and if you have a good work base o--of good people--and we have astounding people here. We really do. We have the cream of the crop of a work force that are dedicated to Buckeye in ways that make other companies drool.

HATTIE: Give me an idea of how you think about the benefits--not just their salaries...

DOUG: Mm-hmm.

HATTIE: ...but how you put together a benefits package.

DOUG: Well, it's good you mentioned the salaries, because we don't pay the highest; we aren't able to pay the highest salaries in the industry, or e--even in Spokane, although we r--are well--we start well over minimum wage, so that--that's not really a question.

But I think probably it's very telling that we have people here who've been offered jobs elsewhere at a higher salary that would rather work here. One is our flex time. We put ourselves in the position of our employees. If they've got sick kids, they better stay home with their kids. If they've got Cub Scouts or a den leader, they'd better have the time off to go be a Cub Scout leader or a soccer coach or whatever. We're gonna make it up; they're gonna make it up. So it's--it's the ability to--to control their own lives and have more freedom in the way and when they come to work and--and put what's important to them first.

HATTIE: And then you've established a 401 plan--a 401(k)?

DOUG: Yes, and for--for retirement we have a 401(k) program, where we have some matching funds going into it. We've also started a profit-sharing plan that'll go into effect this year based on profits of the company, that everybody will share in. So we really have two different programs going on at the same time there. Plus, we provide medical insurance for all of our employees.

HATTIE: If I walked up to you at a party...

JILL: Mm-hmm.

HATTIE: ...I said, `Gosh, Jill, I want to start my own business'...

JILL: Uh-huh.

HATTIE: ...what piece of advice would you give me?

JILL: I would probably say, `Know what you're going to do. Be excited about it. Live it with a passion,' because if you don't have the passion for what you're doing, nobody else will have any interest in it. And know what you want to sell and who you want to sell to and how you want to live your life, because that all ties together with running a small business. That's what I would tell somebody, to start with. But then beyond that, I'd probably give them reams of information.

The Closing of the Show.