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HATTIE: Hi. I'm Hattie Bryant, and this is SMALL BUSINESS SCHOOL. This is not a cooking program. It's about running a business, and today we're in Daytona Beach inside the kitchen of chocolatier, Angell & Phelps. Also, Bruce Camber tells about a viewer coming out of retirement to start a business.

This is a how-to program and we think you learn best from people who are succeeding at what it is you want to do. So every week we take you inside a Master Class. If you studied music or art, you know that a Master Class is presented by a working artist, not a teacher in a traditional classroom.

There are 23 million small-business owners in this country today and each of them is unique. The more of these individuals you study, the greater your opportunity for success becomes. Here's Dr. Alvin Smith, his wife Ann, and his son Al to tell you about how they are keeping alive a Daytona Beach tradition.

(Voiceover) Yes, Angell & Phelps has been making people smile for decades. Give anybody a piece of chocolate and they feel better. They're not making chocolate, they're making chocolates--honeybees, chocolate-pecan brittle, caramels, molasses honeycomb chips, chocolate-covered almonds, cashews, Brazils, creams, and then there's fudge. Since 1925, Angell & Phelps candy has been made by hand using only the very best ingredients.

For the owner, Dr. Alvin Smith, chocolate is much more than a business.

ALVIN SMITH: First of all, when I was a boy, Angell & Phelps candy was the quality gift that the common person could give at anniversaries and things like that. It's always had a high reputation for taste and quality. These recipes have been around since 1925. And, I wanted it made the same way.

While I was growing up, we didn't have any money, so candy was a delight. It was the thing that we looked forward to having.

HATTIE: It was really special.

ALVIN: Oh, yeah. It was always special. I can even remember Christmas, what we got was peppermint candy and horehound candy. And it was looked forward to . . .even the horehound candy even though it tastes funny. It was just something that perked you up. It was something that was special for the day.

HATTIE: People smile when you give them chocolate.

ALVIN: Absolutely. And the other thing is, I'm a cancer specialist. Much of my life is not terribly happy. You can't talk about cancer all the time, so owning a business where you have some other conversational piece was attractive to me. I won't say that it was a major reason, but it certainly was attractive.

As a Christmas gift to all the hospitals, I gave candy to every ward in the hospital. And at times I had difficulty getting enough candy. You had to order it in September and I'm absent-minded so I would forget. So I spent some time with Mr. Reisinger (the past owner of Angell & Phelps), and we had some discussions over the limited candy, and I told him if he ever wanted to sell it, I would certainly like to buy it.

I'd always wanted to own a candy store.

HATTIE: Wait a minute. You've always wanted to own a candy store.

ALVIN: Yes. I love candy.

HATTIE: Let's go back for...

ALVIN: I love candy. Which I can't have. Interestingly enough, my mother, my sister and I all found out within two weeks of each other that we were diabetics. It is, of course, an inherited disease, but nobody really knew that we had it.

HATTIE: So you have to go for the sugar-free?

ALVIN: No, I eat the sugar (My patients are gonna love this).

HATTIE: (Voiceover) Dr. Smith's son Al and his wife Ann keep chocoholics supplied with the very best.

ANN SMITH: (Voiceover) Well, I pretty much took an active part from the very beginning. My brother helped us set up the business, part of it.

HATTIE: Do you like chocolate?

ANN: I love it.

HATTIE: You do?

ANN: Yeah. But I don't take it home.

HATTIE: You don't take it home?

ANN: No.

HATTIE: Oh, because it's too tempting.

ANN: It's too tempting. Too tempting.

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HATTIE: All right, Al, did you study business in school?

AL SMITH: No. I got a degree in social work, and just kind of went from there. Everything I've learned I've learned on the job.

HATTIE: (Voiceover) Al came into the business soon after his father purchased it.

AL: So we've really done a lot with packaging and been much more aggressive in marketing and advertising the product.

Unidentified Woman #1: ...that's our packing station.

HATTIE: (Voiceover) Sales jumped way up when Al turned the store into a tourist attraction.

AL: I mean, I'm in a market where there's 13 million visitors a year here, so we found a way to capitalize on people here for vacation, and so we have a rack card that is placed in all the racks throughout all the hotels and restaurants on the beachside promoting our tours, our free tours, free samples.

Woman #1: Down here our business is definitely seasonal. Our busy season runs from about Thanksgiving through Easter, and during that time we produce about 500 pounds of chocolates per day, and this is where they get packed.

AL: So people will come in and pick up the card and then they come in and do the tours. So we've decreased considerably through that, and it's been a very--on the back of it I have a 10 percent off coupon, so that has really enabled me to track my advertising and see how well it's working.

Unidentified Woman #2: This is too hard a decision. You know what I think I'd like to have?

Unidentified Woman #3: One of everything.

Woman #2: Uh-huh. You seen it.

HATTIE: Have you-all ever had a guy call in like at 4:49 on Valentine's night and say, `Can you get me some chocolate right now?'

AL: Oh, absolutely. Yeah, they usually come barging through the door, and, of course, the biggest sales we have on Valentine's is the day after Valentine's, you know, for the poor guy that forgot his wife. That's how we usually sell the biggest one of the year is to...

HATTIE: Do you mark it up instead of down?

AL: Yeah, right. We don't bring those prices down for a few days, so...

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These nuts will be coated in chocolate and the first step in doing that is to put a bottom coat on.

HATTIE: Oh, all right. So...

AL: And what she's doing here, she's pressing the nut down and it's getting a bottom.

HATTIE: (Voiceover) Angell & Phelps employs 30 people full time and another 30 during the busy Christmas to Valentine's season.

Are these a popular nut in your--do people buy a lot of Brazil nuts dipped in chocolate?

AL: Yes, Brazil nuts are very--well, they're not as popular as cashews or almonds, but they are very popular.

HATTIE: Is this a singular...

(Voiceover) All the candy making is done here in the back of the Daytona Beach retail location, but they sell through the mail and in retail stores located in De Land, Ormond Beach and New Smyrna Beach.

AL: The difference from here to here is that the piece now, after having the bottom on it, will go through this chocolate waterfall. Cindy here is now putting on an insignia so that we will know what the piece is.

HATTIE: (Voiceover) Angell & Phelps has perfected the art of making molded chocolate and they can basically make anything you can imagine.

Unidentified Woman #4: These are marbleized shells that we do.

HATTIE: Marbleized. Now how does the marbleize happen?

Woman #4: Well, we take the milk chocolate, put it in and let it cool and fill it with the white, scrape it, put it on the line, down it comes.

HATTIE: And this...

Woman #4: But see, it's the white underneath.

HATTIE: And how long have you been here?

Woman #4: Going on four years.

HATTIE: It's my understanding that you invented this particular chocolate and the leaves as well.

Woman #4: No, those.

HATTIE: You invented the leaves.

Woman #4: More or less, yes.

HATTIE: Now how did you get the idea?

Woman #4: Just looks like a fall leaf, the coloring.

HATTIE: But you thought of it.

Woman #4: Well, yeah. They had baskets and they needed something to go in them, so that matched the fall baskets.

HATTIE: OK. How did we get this color happening? Is this white chocolate with color in it?

Woman #4: That's food coloring, yes.

Same with the turkey, different colors. We sell a lot of these.

HATTIE: Let's talk about the evolution of what you are making. Why a swan? Why baby shoes? Why the golf bags? Why the golf balls? Talk to me about that.

AL: Right. It--you know, customization is really where I think we're headed with this whole--with business in general and particularly in the molded items, and it allows us to be able to customize things. You know, weddings are--like, the swans are very good for weddings, so we'll be able to go out and market ourselves to the brides that are ready to get married. And other things like that, we're able to come in and customize things that are unique. And we do chocolate business cards.

Unidentified Woman #5: All this frosting is is regular cake frosting and we take a candy color to add to the frosting to match that to the business card they sent us.

HATTIE: So you can match anyone's business card...

Woman #5: Right, to their colors.

HATTIE: You put it down and then you put the frosting through and it works just like ink.

Woman #5: OK. And your frosting--you line up your card, lay it down, put your frosting on your screen--this frosting is kind of thick.

HATTIE: Just like cake.

Woman #5: Then you swipe it off. And it's transparent onto your card, as you can see some of it did.

It's just like ink, but only you're using cake frosting.

HATTIE: I want to make sure before I do this for my company that this tastes...

Woman #5: Right.

HATTIE: Is it OK for me to taste this?

Woman #5: Sure can.

HATTIE: OK. This isn't wax. This is for real.

Woman #5: No. Take a big bite.

HATTIE: It's chocolate. It's too sweet.

Woman #5: It is.

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HATTIE: I notice you have an 800 number.

AL: Yes.

HATTIE: And tell me how that works.

AL: Well, it's quite simple. You call us up on our 800 number and we're able to send you out what other products you want. We can send you a brochure and then you can call us back, or we can fax you a brochure or we can take your order right over the phone. It's a quite a large part of our--probably 30 percent of our business right now is mail, especially at the holiday times.

HATTIE: Really? Thirty percent of your business is 800 number that you mail out?

AL: Right.

ALVIN: This is potentially a business that could be grown a lot more. But you'd have to put preservatives in the candy. Once you put preservatives in the candy, it will destroy the quality of the candy; it will change its taste. One of the beautiful things about Angell Phelps candy is that it's made exactly the way it was in 1925 and the recipes are essentially the same. It has no preservatives and I think it has a wonderful taste and I would not like to see that destroyed.

HATTIE (Lightbulb In the Studio): Growing is not always good and you don't have to grow your business if it means you have to give up what it is you personally love about the business.

Dr. Smith loves fresh, homemade-tasting candy, candy made from the highest quality ingredients with no preservatives added. He grew up on this candy and doesn't want to change the recipes which are now over 70 years old.

To grow substantially, the Smiths would have to increase the shelf life of the product, and to compete on price, they would have to cut back on raw costs. With this retail store plus three others and the mail-order business, Angell & Phelps has found its place in the hearts of plenty of customers. The tours have increased sales and the custom mold making is an entirely new revenue stream.

This family owned and run business is not growing rapidly, but growing is not the goal. The goal is to make the freshest, most delectable candy any customer could find anywhere. And that they do. Want some? You can order by calling them. You'll have it in a couple of days.

If you want to join our cyberspace mentoring program or get on our mailing list, register right here. There's much to learn on this web site or e-mail us: Click here.

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(Voiceover) Some very experienced, long-term employees are part of the Angell & Phelps success story.

How long have you been making candy, Ron?

RON: I've been making candy for 41 years.

HATTIE: Do you like to eat it?

RON: I do at times. I pick away at it. I'm not obsessed with it, but I do pick away at it at certain times of the day.

AL: (Voiceover) A lot of people say, "You're in the candy business." Well, we're really in the people business. Over the last couple of years, we have really put a lot of emphasis on going out and finding the right people and then training them and orienting them to our business and spending the money on the front end to making sure that they are part of our company and that they understand what's expected of them.

HATTIE: Now tell me what you're doing right now.

RON: I'm making cherry cordials. What we do is we start off with what we call an invert sugar.

HATTIE: What is invert sugar?

RON: Well, invert means that it will invert to a semiliquid once it's coated with chocolate. So we start with the invert sugar, we throw the cherries in. We let them snowball a little. They kind of pick up the invert sugar. We spray them with a little bit of cherry juice. We snowball them. Let them roll around till we think that they're the right size. These are about the right size right now.

HATTIE: All right.

RON: Just pull them out. They're coated in chocolate and in a couple of days, they'll start to liquify.

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HATTIE: When you have a job available, what do you do?

AL: When we have a job available, we'll put an ad in the paper, we'll take it--we'll take applications, probably over a 10-day period of time. And from that, we then accumulate a pool of names and then we, by elimination--we know what we're looking for. If it's a production person, so we're looking for somebody with experience in production. Someone who has been able to have a stable job over--of a good period of time and hasn't jumped from town to--you know, from job to job.

And so those are important. And we interview them and I'll have a supervisor interview the person, then I'll interview the person. So we usually get two interviews in there, and then once we decide to hire them, we have an orientation list. So we'll go down that list and make--it has to go in their file. I mean, before it was haphazard, I mean, you'd be real busy--OK, we need three people. Boom, you run out and you hire the first three people that walk in the door and a week later, you're back doing the same thing because it didn't work out. So we have an orientation list that the supervisor has to go down--everything from where to park, you know, where the bathrooms are, to what's expected of you and what your job duties are on a daily basis and who you answer to. All that has to be real clear in the up front and we find that that has been a great help in maintaining and keeping motivated people.

HATTIE: Have you ever had to fire somebody?

AL: Sure. I always feel like people fire themselves. I don't know that I've ever really fired them. But certainly, you know, we've been through that.

HATTIE: Well, it's hard to let someone go. But what we think we've learned--what I've learned myself and what I know from other people is we tend to keep people too long.

AL: Right. Which is--which in the big scope of things and when you sit where we sit--or where I sit, is that you have to realize that if you keep somebody like that on, you know, you're really planting a seed to the rest of the people that that's OK and that's acceptable and so it's really not fair to the whole company when you let someone like that continue to hang on. So as hard as it is to be confrontational, and to let people go, it's really beneficial to everyone and I always find it interesting that when you do those kind of things, employee morale tends to go up, not down.

HATTIE: In terms of your social work, in your training and psychology do you think that you've leaned on that as...

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AL: What's done in this room distinguishes us from all the other candy makers--a lot of people use chocolate and good chocolate, but it's the processes of which we start with in here and then we have someone like Ron with 40--we'll just say 40 years' experience in the business who we are lucky enough who jumped on board with us a couple of years ago and this is his room and he rules in here and just follows the recipes that we've had for a number of years that we know have worked. And he's added a few nice touches that's added to the product line.

HATTIE: I was going to say that when you have a talent, you say, `Hey, what could we do to make it better?'

AL: Right.

HATTIE: And you've done that.

RON: Right. We're very flexible. We try and improve the product.

AL: Cindy is also training under Ron and learning the fine art of candy making, so we do like to cross-train people as much--to as many jobs as we can.

HATTIE: Have you learned anything about making candy that surprised you?

CINDY: Well, it all surprised me, that I could do it.

AL: Yeah.

CINDY: It's quite an art.

Unidentified Woman #6: What I'm doing here is I'm putting it in here, but it's still a little warm, so I'm bringing it to the outer parts which is cooler.

HATTIE: There's really no way a machine could do this.

Woman #6: No. No.

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AL: When I come in, it's either I'm dealing with marketing or advertising or I've got a management problem or a customer on the phone, you know, that--I think I really enjoy problem solving and the ability to think through a problem and think to what I want as an end and hopefully to get people to move with me in that direction. And I think I can--personally, I think I'm good at it and I think it allows me to make a difference. And I think that's what we're all here for is to make a difference. You know, I mean, you could get into making more money and doing other things, but I really enjoy the business. It's a neat business. People come in and they're happy. I mean, it's chocolate. You know, it's--they're gonna give the gift to somebody else and it's a product that they're really jazzed about, so it's a lot of fun.

ALVIN: We've had some setbacks that I didn't think were goning to happen. I tend to be very optimistic and I never think I'm going to lose at anything, and we did have some problems. We went to Orlando and it simply didn't work out, so we had to retract. Of course, that was costly, but we've overcome that.

I'm really proud of my son. This idea to move back to this location was a marvelous idea. I mean, it was totally his idea, andit was the right idea at the right time. And not only did it benefit us, it benefited the Daytona Beach downtown area.

I've paid back to my community something that I owe.

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(Voiceover) This downtown area was once the most beautiful area you could ever imagine. When I was a boy, you could just walk up and down the other side of the street and it was absolutely beautiful.

AL: (Voiceover) We're in the midst of a renaissance and a real growth, and so I've recently been appointed president of the Downtown Business Association.

And feel like it's up to me. I've been down this street for 15 years. There's a lot of new businesses that are just starting, a lot of people are struggling with it, so whatever I can do to help and try to organize things and present our whole area as one will--I think in the long run will help us. The other thing is I have found in a leadership role is it's helped me do a better job at what I do, and I learn something constantly about organizational skills or public speaking or...

HATTIE: This is a family business. What's it like?

AL: Oh, it's great. I mean, as you know, you met my father. He's a very busy man, so he's involved in knowing what's going on but not every detail every day-to-day, and my mom's here on a daily basis and is a lot of support and really enjoys doing her thing, which is being artistic and making a difference, so, yeah, they're great people and they've given me a tremendous opportunity to run a business in the greatest country in the world, so, you know, it's--I feel very fortunate.

HATTIE: So you want other little boys to be able to come in here.

ALVIN: I would like for other people--not little boys, but everybody else to come in here and have a product that really tastes like chocolate used to taste without any wax and without any preservatives and have the unique taste of the chocolate.

HATTIE: (Voiceover) Dr. Smith sums up the truth that can't be told enough. Very small businesses can sustain profitability if they make this the mission.

ALVIN: I like quality, period, and quality will always win if you give it a chance.

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HATTIE: John Wargo, our marketing expert, gives us more to think about.

John, for four years I've been sending this postcard to public television programmers, and in June, at the PBS convention, I was talking with two people and one man said, `Oh, do you know Hattie?,' starting to introduce me, and other guy goes, `Everybody knows Hattie,' because my picture has been on this postcard for four years. But then he said, `Hattie, you should offer a $500 reward at the bottom of one of your postcards and see if anybody calls you.'

He's tired of this one postcard. And in other words, he's saying that we don't read your postcards anymore because you've been sending the same postcard for four years.

So what do you think of this? I started sending postcards from the places where we tape stories.

JOHN WARGO: I think what you've done here is added creativity and variety. The old one worked for you for a couple of years, and then it started reaching a wall of diminishing returns and the fact is that it wasn't creative anymore, it wasn't relevant, so you really did need to do something different. I think your customers told you to change.

HATTIE: So the lesson is if your customers tell you they're tired of something ...

JOHN: Change. You've got to listen to your customer, Hattie. This just requires a little more creativity ... brain power ... it didn't cost you anymore. And you also show them that you care about them and you listen to them. That makes a big difference.

When you listen, it really doesn't take up space, and you are living on the edge. (A reference to the show's byline, "If you are not living on the edge, you are taking up too much space.)

HATTIE: Here's Bruce Camber with e-mail from a viewer.

BRUCE CAMBER: Hi. I'm Bruce Camber out on the edge. I ask everyone I meet who is over 50, `Are you going retire?' It's a loaded question because I believe retirement is an invitation to the grave.

(Voiceover) Here's one of my favorite e-mail messages. `I believe SMALL BUSINESS SCHOOL is an all-inspiring program. I've been retired for eight years from California State University and I've decided to come out of retirement in some way or other thanks to you and KCSM.' Yes, Jose Gonzalez.

We've met a lot of small-business owners in their 60s, 70s, 80s, even their 90s. And they're not working because they have to, they're working because they want to. It defines them. It gives them meaning and value. I think that's the way it ought to be.