COVER STORY

The Blue Mermaid restaurant on The Hill in Portsmouth. Michael McCord photo

Karen and Scott Logan could hold a lengthy and detailed forum on confronting business adversity. In particular they could talk for a while about the importance of reaching out for expert support at the right time.

As owners of the Blue Mermaid Island Grill in Portsmouth since 1994, the Logans have taken a few rides on the industry roller coaster, especially in the past three years. Karen Logan said the couple had made plans to expand their business "" a major renovation at their location on The Hill and a possible second restaurant spot "" until changing market and geographical situations became a hard slap of business reality.

"It was everything but a plague of locusts," said Karen Logan.

First, Logan said they felt the influx of chain restaurants in the immediate Portsmouth area, which hurt the Blue Mermaid's bottom line "" as it did all downtown independent restaurants.

She said that 2004 became an eye-opening "loss year" but that was nothing compared to what happened next "" their location became virtually visually extinct during construction of the Hilton Garden Inn/Harbour Hill condominium project.

During their tenure as owners, The Blue Mermaid had stood as an easily seen blue building on Hanover Street. The Logans accepted the reality that their business would be impacted but they weren't happy; they say the project's planners were less than straightforward with them about construction hassles, the Hilton Garden Inn's food service plans and the struggle for parking next to their business.

When the construction fence went up for the biggest transformation project in the city's north end in decades, the Logans first lost customers, then they lost customer parking places at the adjacent Parade Mall (and needed a judge's summary order to restore the spaces for the Blue Mermaid and other affected Hill-based businesses and residences) and their own bank declined a capitalization loan request because, as Scott Logan put it, the restaurant was no longer a good bet as a money-making business.

"A lot of people had their bets that we wouldn't make it. It's hard to say just what we would have done," Karen Logan said about considering whether to sell out. "The entrepreneurial spirit is strong in both of us."

With declining revenues and facing realization they would never have the same visibility again, the Logans knew the Blue Mermaid's future was in the balance. What they did was reach out for qualified assistance and advice. It was something, Karen Logan said, the couple had never hesitated to do in the past but this time the stakes were higher.

The banker who turned down the before-mentioned loan did offer some advice, said Scott Logan. He suggested they get some professional help in the form of a free consultation from the New Hampshire Small Business Development Center.

They began meeting Warren Daniel, the Seacoast regional manager for the SBDC, shortly after the construction began in the spring of 2005. The Logans said they were able to regroup, rethink and make a realistic plan for short-term survival and long-term growth. The changes required a major overhaul of their personal and business lives but they have succeeded transforming their business to make it stronger.

Scott and Karen Logan, the owners of the Blue Mermaid. Michael McCord photo

Major returns

The SBDC is part of a growing network of business assistance organizations "" such as the federal Small Business Administration, Women's Business Center in Portsmouth, or the retired executive group SCORE "" whose main purpose is to help small businesses get started, grow, transform and, in the case of the Blue Mermaid, survive tough times, with one-on-one confidential counseling and educational programs and resources.

These organizations are public, private or, increasingly hybrid. The SBDC, which is based at the University of New Hampshire in Durham and was started in 1984, is an outreach program of the university's Whittemore School of Business and Economics and the University System of New Hampshire, a cooperative of the Small Business Administration, the state Department of Resources and Economic Development, and the private sector.

"Our unique difference to the state is our return on investment," said Mary Collins, the SBDC state director. And, according to the SBDC, that ROI helps more than 3,000 New Hampshire businesses annually.

With offices in six locations, Collins said her organization has become important to keep the state's small business economy growing because the counselors "" all former business owners with masters of business administration or certified public accountant credentials "" are able to help company after company take steps they could not take before.

The ROI and survival numbers are revealing. According to 2006 figures, each dollar spent on a counselor produces and sustains New Hampshire wages of $225. Or that a recent study found that 80 percent of SBDC-counseled businesses are still in business after five years, compared to a 44 percent survival rate of non-assisted businesses.

"We develop long-term relationships with our clients," Collins said. "We often stop in for one thing and then work with them on a wide range of needs," such as marketing, access to capital, business planning.

"SBA's mission, simply put, is to help small businesses get started and grow. I think we are well known for our loan programs, but there are a lot of other tools that SBA offers to help small businesses succeed," said Witmer H. Jones, acting district director of the SBA office in Concord.

In addition to the one-on-one help from many organizations, Jones said, small-business owners are also able to access more Web-based information than ever before.

"At our newly redesigned Web site, www.sba.gov, we provide entrepreneurs with 24-7 access to online training courses, Podcasts, Web chats and over 20,000 pages of information on starting, financing, developing and managing a successful business," he said.

Transformation

At the Blue Mermaid, SBDC counselor Warren Daniel, a former restaurant owner and industry expert, helped the Logans deal with the ongoing market storm and survive as best as possible.

Scott Logan said that Daniel was "adamant" the couple commit to creating monthly financial forecasts and cash flow projections and setting financial benchmarks.

"We didn't want to lay people off. We didn't want to have Scott become the full-time chef or me the full-time bartender," said Karen Logan. "But we came to the realization that we were going to have to lay people off or have Scott get an outside, full-time job."

Scott Logan did get an outside job, working for 18 months as director of a food services division at a corporate facility in Massachusetts. The couple was raising two teenaged daughters and rather than take a back-breaking work load, she revamped the management system and gave more day-to-day control to the grill's 20 employees and worked with vendors on flexible payment plans.

Though they had to cut back on some hours, they did not lay anyone off. Their cash flow situation stabilized when they won the parking court battle with the hotel project's developers and customer flow increased after the Hilton Garden Inn opened in May 2006.

It was also that month that Food Network celebrity Rachael Ray stopped by the Blue Mermaid for a visit "" that generated plenty of local headlines, reminding their regional customer base they were still open. The celebrity visit brought the Mermaid national attention when Ray's episodes were shown later that year.

Scott Logan returned recently to the restaurant to focus on long-term planning, marketing and revenue enhancement through more catering ventures.

"This is our first full go at reviving this business together," said Karen Logan.

She said the business is stronger because of the "shared management responsibilities." But while the couple still harbors hopes of expansion, they know the lessons learned through this rough sea phase will need to be revived.

"We're gonna have to go through this again," she said, referring to the next phase of major construction at the Parade Mall site, which could begin sometime in the next few years.