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Wee Care Academy: the challenges and triumphs of launching Birmingham's first Afrocentric day-care centers.

Location, location, location! Any business school professor will tell you those are the three most important building blocks of a new business. In most cases, they are right. But when Gaynell and Elias Hendricks started their first business, what happened was more reminiscent of that immortal line from the movie Field of Dreams. "If you build it, they will come."

In 1988, the Hendricks launched Wee Care Academy Inc. out of a closed schoolhouse in a down-on-its-luck Birmingham, Ala., neighborhood. Location was clearly not part of its draw. What was, though, was the product - child care - and the couple's novel approach to this modern day dilemma. They created a nurturing, educationally progressive center that emphasizes not only reading, math and language skills, but also Afrocentric culture for children ages six weeks to six years.

Like most small businesses, Wee Care was launched with personal savings and high hopes, and grew out of the couple's own needs and experiences. Like most entrepreneurs starting-up in a predominantly black neighborhood, they withstood countless rounds of rejection at the hands of lending officers. Undaunted by rejection, they kept on improving their product, marketing their service and making the connections that could make all the difference between success and failure. And they succeeded, beyond even their own wildest dreams.

After just six months in operation, Wee Care's enrollment jumped from six to 40 children, and that pace has not slowed. Today, the academy and a subsidiary, Wee Manage Inc., teach and care for some 775 children. The Hendrickses, who plan to open their fourth private center early next year, anticipate 1993 sales of $1.9 million.

Their story provides valuable lessons for any aspiring entrepreneur in how to tap into a need, develop a concept and build a thriving business.

Birth Of A Business Concept

The first Wee Care center opened in 1988, but the partnership that led to this successful venture began 14 years earlier in Memphis, with the marriage of the Hendrickses. At that time, Elias, a Clark Atlanta University graduate, was working at Bell South Corp. in Atlanta, after a Peace Corps stint in Ghana. Gaynell was working for IBM Corp. while attending graduate school at Memphis State University.

They had their first child in 1975. Four years later, Elias was transferred by Bell to AT&T headquarters in New Jersey. Meanwhile, both of them pursued their MBAs and moved back to the South in 1983 following the divestiture of Bell. Gaynell gave birth to triplets in 1987. Two of them - Shia and Elias III - survived.

After a short leave spent tending to her then 12-year-old daughter and infants, Gaynell hired a nanny and returned to her job as a management trainee at Metropolitan Life insurance Co. But the nanny did not work out. "The woman was doing a capable job," says Gaynell, but that meant keeping to a dull routine: "Dry, feed, clean. Dry, feed, clean. There was no stimulation. I would come home and she would have a baby in one hand and the TV remote control in the other."

The couple looked at other alternatives, but they held little appeal. "It's not like in the old days, when you just took them to Grandma's," says Elias. "Grandma has her own life today." Finally, Gaynell quit her job, but the search for a better solution continued, It didn't take long for them to realize they needed the flexibility that comes with being your own boss.

The Hendrickses immediately put their MBA training to work. They went to the Birmingham Chamber of Commerce to scan the city's demographics and 10-year plans. "We saw Birmingham becoming more of a white-collar town, with more people coming in from other cities with the same child-care needs we had," says Elias. "In New Jersey's bedroom communities, child care had really been explored and it was available and the quality had been there. With our experience with our older daughter, we knew what it should be like. And we knew that for a price, it's possible." Child care was the inevitable solution for their personal and professional needs.

The Hendrickses quickly refined their vision of the ideal child-care center. It was integrated in terms of students and management. "We didn't want to reinforce the idea that all of the janitors and workers are black and the owners are white," says Elias. "We knew how those subtle cues become ingrained in children early on." It also contained a strong multicultural component, with special emphasis on African-American art, music, literature, history - all but ignored in most school curriculums. "Cultural education is a very big part of self-esteem," explains Elias. "If black is indeed beautiful and every picture in your house is white, then something doesn't ring true."

The Hendrickses looked but didn't find a center that duplicated their vision. It was apparent that there was a vacuum waiting to be filled. They called the state Department of Human Resources to find out the requirements for operating a center. They learned that the state regulations were unbelievably detailed, specifying not only how many teachers were needed (one for every six infants under the age of three), but the number of soft toys and sizes of balls that must be available for play.

The extent and expense of meeting such mandates was daunting. But another tidbit of information lightened their mood: a closed elementary school might be available as a site.

It was the old Thomas Furnace School, built to serve the mostly black community that grew up around a now abandoned steel mill. The Birmingham Board of Education was willing to charge them a mere $400 a month to lease the building. They were happy to have a tenant who would use the building for educational purposes, and would include in the lease an option to buy.

Despite its affordability, the Hendrickses were apprehensive, since the Thomas Furnace School isn't easy to find if you don't live in the neighborhood. But Gaynell looked on the positive side: "Parents will travel great distances to make sure their children are getting quality care. Although the school was not in a great neighborhood, it was easily accessible from most of the routes blacks in more affluent areas would take to work."

Deciding to go for it was easy, but getting financing was not. "We knew that starting a day care with no prior history of experience in that area was something a bank would not look favorably at," says Gaynell. So, the couple used personal savings and credit cards to come up with $20,000 to pay for new equipment, fresh paint, flowers, a security system, even salaries and insurance for the first months of operation. The Hendrickses also did a lot of talking to vendors, begging their indulgence until they could be paid. And they made a point of working with other small businesses, establishing relationships that benefited both parties.

One such outfit is Factory Warehouse, a discount supplier of everything from cots to toys to carpets. Owner Rodney Smith credits the Hendrickses with fueling his company's growth. "They started out spending maybe $100 or $200 per month. Now they buy $15,000 to $20,000 a year from us. They've told other day cares, and now they buy from us," Smith says. "We owe a lot to them. Of course, we give them discounts."

The Wee Care Academy name was Gaynell's idea. The motto, "We care about the care of your child," was the brainchild of their then-12-year-old daughter Daagye. Her father came up with the company logo, a circle with a heart; inside the heart is an Akwaaba doll, the Ghanaian symbol for welcome."

The center opened in March 1988, three quarters into the school year, which is generally considered a bad time. There were six students, including the Hendrickses' twins. Unfazed, Gaynell and Elias seized the time to improve their product. They carefully studied the early childhood education techniques of a University of Alabama professor, Dr. Paul Weisberg, who took a personal interest in their plans. "We worked on our strategy for the fall," recalls Gaynell. "We worked on our academic program, attended workshops, started trying to find quality teachers who could do what we wanted."

The next step was to get the word out. Gaynell wrote her own ad copy and, for about $1,200, purchased well-planned time slots on local radio during the pre- and post-school rush hours. "My target was the working moms, dropping their kids off and picking them up, hopefully, from a place they were not very satisfied with," she says. "We knew our market would primarily be black because of the location of the center."

The 30- and 60-second ads began running just before the start of the school year, in August 1988. Instead of hiring an announcer, Gaynell read them herself: "Are you satisfied with your present day-care situation? Is your center clean? Does it have culturally stimulating activities and trips? Does it teach a foreign language, piano, ballet? If not, you need to call Wee Care Academy!"

The response was tremendous. By 8:30 a.m., the phone was ringing off the hook, Gaynell recalls. Women claimed they could tell she was a real mother, not some radio announcer reading ad copy. In September, Wee Care's Akwaaba doll welcomed 40 children, more than the Hendrickses anticipated.

"We had to hire people quickly," says Elias, who maintained his full-time job, marketing manager at Bell South's Birmingham office, as a fail-safe. "I was the janitor; Gaynell was the cook. We had bought the whole nine yards from business school that it's going to take three to five years before you reach the top of your form. We were not prepared for immediate success."

"That's one of the things I make a point of when talking to business groups," Gaynell adds. "You always plan for failure. But you've also got to plan for success. Because it could happen quickly and you've got to be ready when it does."

Constructing A New Day-Care Model

Ironically, the Hendrickses, who relied on their managerial experience, may have benefited from not having come from academic backgrounds. They treated teachers like valued professionals, not baby-sitters. They used corporate models to generate personnel policies and, although salaries were modest, ranging from $10,000 for aides to about $30,000 for directors, they structured jobs so there would be upward mobility. "We wanted people to feel like this is a career," Elias explains. "Some of these people will retire with us."

To refine Wee Care's curriculum, the Hendrickses called on their experience as parents. "We thought of all those things we did with our older child that took away from quality time together," Elias declares, "and said, 'wouldn't it be nice if all that happened at school.'" Thus ballet and piano lessons became a part of Wee Care's offerings, for an additional $5 per lesson. They also invited other professionals into cooperative ventures. Dr. Paul Amamoo, a pediatrician, started a column, "Doctor Care," in the Wee Care newsletter. "I wrote about childhood diseases, bed-wetting, insect bites, when to call the doctor," Amamoo says. "Some of the children were patients of mine and this was a way to disseminate information to their parents."

Amamoo had an even greater vested interest in Wee Care: His 9-year-old son, Amartei, began attending the center five years ago. Amamoo says he knew Wee Care was the right choice when four months later he stopped by the school and found the boy reading from a nowspaper. "It was thrilling," Amamoo says. "I know from our experience with our other two children that would not have happened if Amartei had been at home. Wee Care pushes children to excel early."

By December 1988 - just nine months after opening - Wee Care had a waiting list for students, even though the Hendrickses had purchased a house next to the school, expanding capacity to 100 children. Despite the apparent success of Wee Care, banks were loathe to underwrite any expansion. "Basically, what they were saying was, unless you have been in business and have a track record for at least three or four years, we can't help you," says Elias. "And we got that all over town. We were always told to go to the ASBIC (Alabama Small Business Investment Co.)."

ASBIC was formed in 1987 when 17 private corporations put $1 million into a loan pool matched by federal money (the SBA contributes $4 to every $1, depending upon need). It was created in an effort to improve Birmingham's dismal record as a city with few black-owned businesses.

ASBIC did help the Hendrickses purchase the $63,000 Thomas Furnace School, which they had been renting. They were glad to get the loan, but criticize ASBIC's interest rate, which they say was about two percentage points above the prime. Harold Gilchrist, whose investment firm, Gilchrist & Co., manages ASBIC, says its rates do vary between one and four percentage points above the prime interest rate. But, he adds, "with the degree of risk involved, we can't [always] compete with the major banks on interest rates." Elias rejects the high-risk label, noting that Wee Care never asked for more than $100,000 from ASBIC at any time, "and our books were in perfect order and we were profitable."

In 1990, when the Hendrickses entered into another lease/purchase agreement to buy the old Patterson Elementary School (also in a predominantly black neighborhood), ASBIC was still the only helpful lending agency in town, doling out most of the $86,000 price tag. "Buying old schools is a wonderful way for this business to grow because you don't have to come in and make them child sized," says Elias. "It's already got the little water fountains and everything." Unlike the first center, Patterson's location was a plus. "It's right off the interstate," Gaynell says. "You couldn't miss it."

Larry Thornton, a McDonald's owner with advertising experience, suggested turning a wall of the building into a giant billboard that could be seen from the interstate. The idea worked, and Wee Care's second center was soon at capacity, with about 120 students.

In 1992, the Department of Housing and Urban Development ordered the Birmingham Area Housing Authority out of the child-care business due to the expense. A window of opportunity had opened up for the Hendrickses: A three-year contract was up for grabs. "We thought it would be a shame for a white center to get the housing authority contract," Elias comments. "We had developed a program with a self-esteem module and a cultural component. We felt our learning system was something all black children should be exposed to." The contract would enable families, previously unable to afford the program, to participate in Wee Care.

But Wee Care was not in the best financial position, either. The preparations to open a newly acquired storefront center in downtown Birmingham had them strapped. This first nonschool building required a dizzying $350,000 to renovate. Still determined, the Hendrickses formed Wee Manage Inc., a subsidiary that in July 1992 began operating eight child-care centers in Birmingham's housing projects.

This time, they had a new financial source. Through networking, Elias had met Benny La Russa, an officer of the small First Commercial Bank. They met through Leadership Birmingham, a program that brings professionals together to learn more about the city and each other. The ensuing relationship with First Commercial Bank is the type "that bankers should have with everybody," says Elias. "We can walk in and tell them our problems, and they will help us. We're not asking for special favors; we're just asking for a fair audience. And the only bank in town that was able to do that with us - and I went to them all - was First Commercial."

The bank provided a $90,000 loan and other credits that helped to take over the housing authority centers and make necessary improvements. But Wee Care Academy was still forced to streamline staff in order to help meet costs. The company saw its 1992 gross sales shoot to $948,092 from the previous year's $420,192. But the additional overhead reduced pretax profits to a meager $2,584, compared with $44,641 in 1991.

Eleven Centers

And Counting

Now in its second year, Wee Manage has 66 employees and serves 523 children at eight housing authority centers. The three private Wee Care Academy centers have 43 employees and 273 students. While the downtown center, with about 45 students, is only half full, it is expected to reach capacity by year's end. Meanwhile the school board has approved the sale of another closed school, Eagan School, to Wee Care for $165,000.

The downtown center, which opened in last April, has enabled Wee Care to attract some of the suburban market south of the city and a more diverse clientele. But even that center is only about 5% nonblack. "We're good. We're graduating students who are tearing them up in the school system," brags Elias. "But we're still in the South. There's a large body of people out there who absolutely won't send their children to anything associated with blacks, no matter how good it is."

The Afrocentric emphasis clearly overshadows the downside, however. Leah Lester, a white parent, acknowledges that "there's not a good mix at the center" her daughter Drucilla attends, but adds that "to find a day care that is developmentally as good as this one would be hard."

With the child-care industry expected to grow as fewer mothers stay home, the future looks bright for the Hendrickses. They have bold dreams, including the possibility of franchising, but they are ever mindful of not over extending themselves. Currently they owe about $500,000 in mortgage debt and facing a major renovation of the Eagen building. But, they are focused on their mission: "to take what has benefited our children and benefit other children," in Elias' words. "Our measure of success is how many children we have made effective learners," he continues. "The money will come."

Their first location may not have been prime. Nor did they bring the usual background to this field. But the Hendrickses applied market principles to a basic family problem, and ended up with a solution that has benefited hundreds of children and their parents. The old microeconomic equation of supply and demand never worked better.
COPYRIGHT 1993 Earl G. Graves Publishing Co., Inc.
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Title Annotation:B.E. Report on Small Business; Alabama business started by Gaynell and Elias Hendricks in 1988
Author:Jackson, Harold
Publication:Black Enterprise
Date:Nov 1, 1993
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