Hemphill's Rugs & Carpets has been providing rugs, carpeting and flooring to the waterfront homes, hilltop haciendas and gated communities of Orange County, Calif., since 1995.

After managing Carolina Carpets for six years, Hemphill decided to move back to Southern California to start his own floor covering business. In 1995, he opened 2,700-sq.-ft. Hemphill's Rug & Carpets in Costa Mesa, in the heart of Orange County.

Like everyone else, his business has been challenged by the economic downturn, but things have improved and overhead is in line. "We have seen some of our competitors disappear because they didn't react quickly enough or at all."

Hemphill's is located in Costa Mesa, in the heart of Orange County, Calif.

Hemphill said the most enjoyable part of his job is interacting with people, both clients and sales reps. "Plus, I like finding new and interesting products," he added. "I love the fact that customers come into the showroom and compliment us on the great selection of products that they don't see elsewhere."

Describe your customer: Successful, with disposable income. Neighboring cities are filled with expensive homes, many of them custom. In most cases, the wife does not work. Many are raising families. The husbands provide a lot of input regarding the selections. Probably less than 1% ask about financing. They want reward points by paying with a credit card.

What styles of rugs do you carry? Primarily wool. Our range is from traditional to contemporary — machine-made, hand-tufted and hand-knotted. Plus, we sell a lot of natural fiber area rugs: Sea grass, abaca, jute and sisal.

Describe your display methods: We used to have stacks of rugs; now they're displayed in racks. Most of our carpet samples are displayed in flip boards since they offer the best use of space.

(Besides the economy), the biggest business challenge you face: Last year and going forward, I think the cost of carpet, nylon in particular, has been a shock to the consumer. Keep in mind that they only shop for carpet every seven years or so. They are astounded by the cost to carpet their home. When oil took off to $150 a barrel, the price increases were significant and haven't really come down in line with the cost of oil.

What's hot with your customers? I can tell you that traditional Oriental has been slow. We've had good early success with the Masland Avenue Collection of carpet and rugs. We continue to do well with natural fibers such as sea grass and sisal.

How important is the "green/sustainability/fair trade" factor to you and/or your customers? It is becoming more important. Also, I am noticing a trend toward having products that are made in the USA.

What makes you different? Service, selection and reputation. It has proven to be a key to our success since most of our business is now repeat and referral. Plus, we've built up a nice designer following. I am a hands-on owner and get involved in all aspects of the business. Also, (working) in the community where I grew up and having name recognition carry over from my dad's business, Hemphill's Shoes, has certainly been a big plus.

How do you reach your customers? Internet — it's a great form of advertising that captures our target market. No yellow pages or newspaper advertising. We cut back on local magazine advertising after seeing little in the way of results. In the community, we're involved with the Newport Beach Chamber of Commerce and I've chaired the Newport Beach Christmas Boat Parade three times.

What tradeshows/markets do you shop? Surfaces. I used to go to High Point and Atlanta. Most of our suppliers have great sales reps that bring items to our attention. Plus, I have a small network of other retailers and vendors throughout the United States. We exchange ideas and make suggestions to each other. Having the experience of working in Virginia and making friends with competitors and sales representatives there has really benefited my business.

Estimated annual sales: $1 to $2 million

Product categories: Rugs, pillows, throws, accent furniture

Key vendors: Fabrica, Masland, Karastan, Moda, Stanton, Nourison, Carousel, Woolshire, Bellbridge, Hibernia, Unique Carpets, Prestige Mills, Ralph Lauren, Robertex, Radici, Couristan, Kane, Dixie, Catalina, Design Materials, Fibreworks, Merida Meridian, Natural Company, Rugs International, Obeetee, LR Resources, Safavieh, Lamontage, Innerasia, Tamarian, Ebisons Harounian, Concepts International, Capel

Web site: rugsandcarpets.com