THE BEAUTY OF SUCCESS; MAN FORSAKES RETIREMENT TO GET BACK IN BUSINESS.

Byline: Enrique Rivero Staff Writer

While still in his 40s, Paul Diamond found himself in quite an enviable position. He was able to sell his share of a successful beauty products-related business and retire to a mountaintop in Boulder, Colo.

But there was only one problem: retirement drove him batty.

So in 1997 he did what any self-respecting, bored entrepreneur would do: He climbed down the mountain, bought a $12 million-a-year beauty supply distributor in Chatsworth, and in two years nearly tripled its sales.

Diamond, who turned 51 on Thursday, is president and chief executive officer of Mercury Beauty Co. Inc., a rapidly growing company that the entrepreneur has built up through a careful series of acquisitions to achieve annual sales of $35 million.

His secret for success is simple: ``It's perseverance and surrounding yourself with good people and getting up every morning and looking forward to going to work,'' he said.

Diamond became a banker after graduating from the University of California, Los Angeles, in 1969 with a degree in business. But the bankers' three-piece suits, white shirts and red ties were stiflingly conformist.

``One day I looked around and saw that everyone looked that way and, being a product of the '60s, said, Nope, that's not for me,'' he said.

So in 1977, he went to work as a branch manager for western operations for Los Angeles-based Morris-Flamingo, one of the nation's largest distributors of beauty supplies.

``I was looking for a situation that allowed me both physical and mental work,'' he said. ``It was much more entrepreneurial and the bank was much more restrictive.''

He didn't stay a branch manager for long. ``Within a year I screwed up and became vice president,'' he said.

He eventually rose to president.

In 1989, Diamond left to co-found Diamond-Kirschner, a beauty products manufacturer's representative that he said grew into a $60 million-a-year business by the time Diamond left it in 1993.

It's Diamond's high energy, plus his ability to communicate with and inspire others, that has made him such a successful businessman, said former partner Harlan Kirschner, now president of the renamed The Kirschner Group Inc. in Valencia.

``He's an overachiever - he's a very hard worker,'' Kirschner said. ``He kind of lives and breathes and eats the business.''

Mercury is now one of The Kirschner Group's two biggest customers, the other being San Francisco-based West Coast Beauty Supply.

From Diamond-Kirschner, Diamond moved to that Boulder mountaintop - and heard the tell-tale flapping of bats' wings in his head.

``After three years I went batty,'' he said. ``I became a great tennis player and a marginal golfer and decided that I missed the interaction with all my business associates in the professional beauty industry.''

He contacted Mike Nave, an acquaintance who owned Mercury Beauty and who later asked Diamond to become a partner in the company, which at the time was in the redistribution business.

``I said, `I don't want any partners, but I'll make you an offer to buy you out,' '' Diamond said.

On June 30, 1997, he did just that.

Nave, who has known Diamond nearly 15 years, said he valued the latter's experience and contacts and ``really felt I needed to have some new blood in the business.''

Nave subsequently sold the business to concentrate on other efforts. Besides, he had his fill of the distribution business.

``I'd been doing it 37 years - I'd been tap-dancing on the same dance floor - and I had trade publications that I was doing on the side that I wanted to devote more time to,'' Nave said.

Besides increasing Mercury's annual revenues from $12 million to $35 million, Diamond has grown the company into three divisions: DSC SalonConcepts, which provides exclusive professional products - that is, shampoos, hair dyes and the like - to salons in California; BeautyTime Sales, a national distributor of professional products to beauty supply stores; and TraffiCreators, a provider of promotional products to retailers.

Since buying the company, Mercury has acquired six smaller distributors from Lake Forest in Orange County to the south to Watsonville in Northern California - acquisitions that have given Mercury access to the 8,300 or so professional products that it now distributes.

And there is more in store for Mercury, whose staff now numbers 140.

``Right now we're involved in (an acquisition) deal that hopefully we'll close within 60 days, and we've just spent $600,000 on a new Y2K-compliant computer system that allows us to continue to expand,'' he said. `It will take us well into the new millennium.''

The company's rapid growth has been noted with approval by none other than Nave, who mentioned it in the May issue of The Beauty Industry Report, a newsletter he publishes - from an office in Mercury's headquarters.

Nave said he does not have a professional relationship with Mercury.

``The only thing they rent me is an office - and toilet privileges - for $1 a month,'' Nave said.

Mercury is now one of the industry's largest distributors of open line beauty products - that is, arrangements under which the distributor can sell anywhere within the professional beauty industry - as opposed to exclusive lines, in which distributors are restricted to selling with a defined territory, Nave said.

He's impressed with what Diamond has done with the company he once owned. ``He took it as a base and is reshaping the company,'' Nave said.

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Photo: (Color) Paul Diamond displays some of the beauty supplies Mercury Beauty Co. distributes from its Chatsworth base.

Evan Yee/Daily News