Happy Customer Saves Mont. Video Store

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Customer Lance Smith was so happy with the service at the Crystal Video in Missoula, Mont., that he gave owner Tim Huffman a loan that saved the business. Smith said he didn't do it just to be a local hero, but expects a return on his investment while helping the community.

MELISSA BLOCK, host:

With all the news about businesses going under, we're happy to talk today about one small business that just got a new lease on life. Crystal Video, a favorite indie video store in Missoula, Montana. It opened in 1987, was bought by a former part-time clerk there, Tim Huffman, in 2003.

Last Friday, Mr. Huffman announced he would sell his 12,000-film collection and shut down for good. But over the weekend, he found a savior in a local small business owner, Lance Smith.

And both men are joining us by phone from Crystal Video in Missoula.

And, Tim Huffman, let's start with you. Why were you thinking you'd have to shut down?

Mr. TIM HUFFMAN (Owner, Crystal Video): Well, we were having serious cash flow problems. I had debts that had gone unpaid for a few months, and it didn't look very positive for paying them in the month ahead, and it didn't seem honest to continue business still.

BLOCK: And what's been going on with your customers? Has that been dropping too?

Mr. HUFFMAN: Over the past several years, Netflix and Redbox and some other technological innovations have taken away the mainstream part of our business.

BLOCK: And Redbox, these are those vending machines where you can rent a DVD right from the machine?

Mr. HUFFMAN: That's exactly right.

BLOCK: And this is where Lance Smith comes in. And, Mr. Smith, you were, I gather, a customer of Tim Huffman's. What's special about his store?

Mr. LANCE SMITH: It's got a really funky feel to it. His two dogs are always here. And he's got paintings of movie reels on the floor, and it's a really old space. A lot of what's special about it is Tim. He's sort of a local warehouse of knowledge concerning movies, and he really helps out.

BLOCK: And when you heard that Tim was going out of business, you went in and started talking about a loan.

Mr. SMITH: Actually, I was renting a movie and I heard him talking to a customer - another customer - about the fact he's going out of the business. I approached him after watching four or five other people come along and give him a hug and say they really wish something could work out.

BLOCK: And what made you decide that maybe you could help here?

Mr. SMITH: Well, initially, I thought Tim is a person that I could work with and would enjoy working with. And we basically figured it out over fish burritos at lunch.

BLOCK: And you have come up with a loan for the business. Do you think actually you will get your money back? Or is this a generous gesture on your part?

Mr. SMITH: No, I'm not a philanthropist. I'm a business person. And I definitely expect to recoup my capital and make a profit.

BLOCK: And how do you think you're going to turn it around if it's been sort of struggling up 'til now? Does there need to be a different business model there?

Mr. SMITH: Well, I think in normal times, Tim would be able to go to the bank and get a short-term loan or a line of credit, and he would be able to restructure things himself. But given the state of the economy - I recently went to the bank myself to work on a big deal that I was trying to do, and the bank is not loaning money the way the bank used to loan money. So that wasn't an option for Tim.

Yes, I think we'll be able to bring it back to a positive cash flow by some basic changes in some of the operating procedures, cash flow procedures, and definitely some inventory updating.

BLOCK: Tim Huffman, now that you have this loan, you think you can get back on your feet. What are you thinking going forward?

Mr. HUFFMAN: One of the things I was struck with when I closed it was how disappointed and saddened and just sort of a wailing and gnashing of teeth in the community about the Crystal Video closing, and I think maybe I had lost sight of that, you know, struggling with the books for the past several years and sort of watching revenues decrease.

I had begun to think the community had abandoned us, in a way. And so, there was a lot of community concern about it closing, and Lance was sort of the instrument to that concern in approaching me with some financial restructuring. So I kind of have faith that the community is going to support us. And I kind of count on the town.

BLOCK: Hope the town doesn't let you down.

Mr. HUFFMAN: I don't think they will.

BLOCK: Well, Tim Huffman and Lance Smith, thanks so much for talking with us.

Mr. HUFFMAN: Thank you very much, Melissa.

Mr. SMITH: Thank you.

BLOCK: That's Tim Huffman, the owner of Crystal Video in Missoula, Montana, and Lance Smith, the customer who bailed him out with a loan.

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