JANE APPLEGATE

Three years ago, after a decade as the editor-in-chief of a computer industry magazine, Lisa Bearnson had grown bored and burned out with her job. She still loved magazine publishing but not the highly technical topics covered by her magazine.

At home, the young mother of two had been absorbed in cataloguing family photographs and documenting her family life in elaborate scrapbooks. As her interest and involvement in the hobby grew, Bearnson realized she did not have the time to track down information on the latest products, techniques and trends evolving in her craft.

“I needed ideas on how to put pages together, and there was nothing out there like a scrapbook magazine,” said Bearnson, whose scrapbooks were much admired by her co-workers. “I realized that scrapbookers needed a publication that came to the house.”

Bearnson shared her idea with her magazine’s art director, Don Lambson, whose wife was also an avid scrap-booker. Lambson said he knew there was plenty of technical and design information that this group of hobbyists could use.

“I knew the importance of acid-free, safe environments for photographs,” Lambson said.

He began paying attention to the ways in which the technical details of archiving were being communicated to the public. He was not impressed with the style and flair of what was on the market. He listened to Bearnson’s idea for a scrapbook magazine and concluded: “I knew the idea would catch on.”

Meanwhile, Bearnson and Lambson gathered statistics: Americans take 16 billion photographs a year. The International Hobby Association ranked its “memory” category, which includes scrapbooking, pressing flowers and making collages, its most popular in the United States. And the Wall Street Journal said domestic sales of scrapbook products in 1996 totaled $200 million.

The two asked other magazine-industry experts about their idea not all of the feedback was encouraging and finally, with both of their spouses’ support, they quit their jobs, mortgaged their homes for $50,000 each, and founded Creating Keepsakes, a bimonthly magazine headquartered in Orem, Utah, targeted exclusively to scrapbooking enthusiasts.

Bearnson, now the magazine’s editorial director, and Lambson, the creative vice president, produced their first issue for $40,000, sinking most of that money into buying the customer mailing lists of crafts stores across the country and sending out a top-of-the line direct mailing.

The mailing received a 20 percent response rate, an unheard-of rate of return in direct mailing, where a 5 percent response is considered positive.

“We had 20,000 orders before the first issue was out,” Bearnson said. Alerted to the buzz about the new title, one of the largest magazine distributors in the country, Independent Direct Distributors of Batavia, Ill., placed an order for 10,000 copies.

“We were really surprised at how it took off,” said Susan Soderberg, publisher relations manager at IDD, which targets the fabric, craft and home-decor market. Soderberg said memory is IDD’s hottest category, and the company was looking to broaden its product mix, which includes Memory Makers Magazine in Denver, also a basement start-up, founded by its current publisher, Michele Gerbrandt.

“Generally, a first order for a new magazine is 2,000 to 4,000, but we went with 10,000 right away,” Soderberg said. “We took a gamble because the category is so popular.”

The first issue’s 68 pages contained a respectable 20 pages of ads, with most advertisers paying upfront for a full year.

Why? The concept was an advertiser’s dream: Much of the information Keepsakes’ readers needed was product-oriented, from glues and scissors to fabric and stencils, and the advertisements were as useful to the readers as the editorial content. “We’ve found our readers look at every page,” Bearnson said.

For vendors and suppliers, the magazine provided a vehicle for reaching a new target market. “Our advertisers were thrilled for an unbiased source that was editorial and not just a catalog,” Lambson said.

Creating Keepsakes earned the two founders their $40,000 back within months without Lambson and Bearnson ever having to dip into the rest of their $100,000 seed money. The magazine has grown to 190 pages and a circulation of 250,000, with IDD distributing 65,000 copies.

The publication has segmented into special issues on wedding and holiday scrapbooks, and with “The Joy of Scrapbooking,” a book co-authored by Bearnson, in its fourth printing, the company has invested in a book-publishing division, Porch Side Publishing, which will publish two books a year on the subject.

Bearnson now promotes the company’s products each month on a two-hour cable program and serves as a spokeswoman for 3M, Kodak and Johnson & Johnson. The privately held company’s earnings exceeded $5 million last year, and it has been nominated for the Ernst & Young Entrepreneurial Company of the Year Award for the state of Utah.

Not bad for an idea that was rather rudely dismissed by magazine-industry experts when Bearnson and Lambson presented it at the Folio Conference, the major magazine publishing symposium, during their research phase.

“We were laughed out of the room,” Bearnson said. “We had all these industry experts telling us that it takes at least $1 million to start a magazine, and that you need one year of market research. But we had an intuition that this would be a go. We both knew how to publish a magazine and how to cut corners.”

In typical entrepreneur style, spouses and friends were put to work, and a small loyal staff worked for little or no pay.

One of the keys to Creating Keepsakes’ success has been to stay focused on its strengths. “The one thing that made us really successful was spending many grueling hours creating a mission statement,” Bearnson said. “We know what we’re good at. You can’t be everything to all people.”

Early on, Bearnson and Lambson realized that while they were very good at the creative end of their business, they weren’t enjoying the business end. They decided to hire someone to take on the duties of chief executive officer and publisher, and brought on Mark Seasprand, an entrepreneur who had already been through the process of starting his own company, and had been advising Bearnson and Lambson on start-up issues.

“I was able to help them facilitate their idea with what I’d learned,” said Seasprand, who joined the company a year and a half ago.

Another element of the company’s success is its strategy of outsourcing many of its operations. With a staff of only 23, including six writers, most production work, such as film processing and printing, are outsourced. “We let other companies do what they do well,” Seasprand said.

Jane Applegate is a syndicated columnist and author of “201 Great Ideas for Your Small Business.” For more resources, visit [email protected].