When Dave Moroknek first started nine years ago as president of MainGate Inc., the event retail and merchandising company had one customer, and that company accounted for 80 percent of its revenue.
Moroknek knew putting most of your eggs in one basket wasn’t a safe thing to do. Not only could that practice punch holes in MainGate’s business success, it could deliver a knockout blow if the main customer left or went broke.
This was Moroknek’s chance to diversify MainGate. Before joining the company, he was senior director of marketing and consumer products for the Indianapolis Motor Speedway. He had also worked for the National Basketball Association where he increased licensed children’s products from 2 to 10 percent of the overall NBA licensed products business. And he had begun his career in the marketing department of the New Jersey Nets basketball organization.
Moroknek, thus, was no stranger to exploiting a niche.
“Since then, we’ve gone on a major diversification program, so when we look to grow, we look to see what area might be lacking a little between our e-commerce business, our event business and our wholesale business,” he says. “We want to make sure each of those represents about 33 percent of our revenue. We utilize that when we are sitting in there and discussing, ‘OK, who are we going to pursue? What area of business?’
“That’s not to say other opportunities may not pop up during those times that are still a good fit,” says Moroknek, who a year later also became CEO. “But when we sit there and strategically plan where our next million dollars of revenue could come from, we try to see which one of those areas needs a little more of a boost to maintain that diversification.”
But while that may sound a simple thing to do, there is much to do to accomplish it. The road takes you through discipline in your choices, company culture, technology advances and leadership development.
Here’s how Moroknek takes advantage of his company’s niche and builds success to the tune of $56 million in annual revenue.
Find what fits best
In finding an opportunity to grow and diversify, probably the most important strategy is having the ability and determination to say no when it’s not the right opportunity. The temptation to add to your revenue may be hard to resist. But in doing so, you may be fragmenting your business when you want a strong, united presence instead.
“You could add to your top line by diversifying but it has to be core to what you are doing,” Moroknek says. “Having the discipline to understand where you want to be and stay on that path while you are in the growth mode is one of the most important things you can do. It’s just so important to stay on that strategic mission as you are going through that growth phase.”
Discipline is not a case of being born with it or not; it’s something you can learn.
“I think you can honestly learn it like anything else in business,” he says. “You learn from your mistakes. If it sounds good, you take it on until you see it’s pulling people in the wrong direction and it’s being counterproductive to that vision you have of where you want to be.
“After a couple of those miscues, you learn discipline, and you realize it’s OK to say no because the one thing you learned in business is that opportunities are bountiful. They are not limited.”
You don’t have to grab on to every opportunity that comes your way. There will be others.
“You have to make sure the business is right, the partner is right and it’s going to be a good long-term program for you and the company you are partnering with because it has to be great for both parties,” Moroknek says. “It’s unfortunate that discipline is often learned after a couple of mistakes.”
The road to discipline has to go through mistakes, but when these are chalked up as learning experiences, they take on a new light. Making good growth decisions comes easier with experience.
“A lot of it is intuition, however,” he says. “When you sit in a presentation or you meet folks and talk to some of those business partners, I think you get a good feel if your companies can work well together.”
When you work with a company that is one of your customers, it is in close partnership, so your visions are aligned in terms of what is the common goal for both entities.
“If those aren’t aligned, I think both companies are better off walking away and finding someone who is a better fit for them philosophically,” Moroknek says.
“You have to find that common goal, that common mission. If it’s not syncing up, again, there is plenty of business out there. Find the one that’s right for your company.”
When reviewing potential partners, don’t throw away all your work; it might be of use down the road.
“There have absolutely been those times when we said, ‘You know what? We like where you guys are headed, but right now, the timing is not good for us; either you’re not fully developed in your brand or we just took on another really major big brand, and we don’t want to bring you on and make you feel like you’re not our most important customer,’” Moroknek says.
“So don’t do something that’s going to hurt what you’ve already developed by not giving the customer the service you’ve come to be known to offer.
“You learn from mistakes like those; sometimes saying no is going to grow your company faster than saying yes.”
Stay on top in your niche
Once your company has become a leader in your niche, that edge can be easily lost. Knowing your niche and remembering the core principle that brings you sales are important for success.
“We impress upon our associates that we can never lose sight that we don’t sell anything anybody needs,” Moroknek says. “So we better make sure they want it.
“If you look at the businesses we’re in — for the most part, the entertainment and sports industry — these people are choosing to spend their disposable time going to a sporting event, shopping for that item online or spending their weekends or nights with us. We need to be part of that entertainment package, and we need to make sure they’re having fun and that we can get them to spend their hard-earned money on something that, again, they don’t need.
“You have to make it look good. You have to make it seem like a fair value, and you have to make them have fun while they are shopping with you.”
Fun on the job doesn’t happen spontaneously. It appears that way, but it takes a commitment to happen.
“We have a whole program that is instilled from the day you walk in here called TCE, total customer experience,” he says. “It deals with everything the customers see, feel and touch during their entire interaction. If you’re a fan going to a football game, we might get 10 minutes with you while you are shopping in one of our stores — but we make sure our employees have fun facts they can share with the masses shopping.”
Most everyone likes to know some interesting trivia. Those little bits of knowledge that are footnotes in sports and entertainment can be like gold.
“Like, ‘Hey! This is the hat that Andrew Luck is going to wear this year,’” Moroknek says. “Or, ‘Hey! Did you see that this is the shirt that Reggie Wayne wore at the press conference?’”
So how do you get them to spend and still walk out with a smile on their face?
“It’s everything from the music that’s playing to the clean atmosphere to the friendly nature of your customer service people,” he says. “You want to be helpful; you don’t want to be overbearing. Customer service is where the core values of your company are on stage. Show them you offer the best customer service in the industry.”
Word of mouth is by far the best marketing tool you have, and your goal is to maximize that to its fullest. Take, for example, phone orders.
“You can even hear somebody smile on the other end of the phone. You know when they are in a good mood or not in a good mood,” he says.
Another key to staying on top of your niche is investing in technology. In today’s economy, not investing in technology can bring about serious setbacks.
“We’re investing a lot of money in not only technology for our e-commerce system, which is the fastest growing part of our business, but for how we transact sales faster inside a stadium, how we do things better on mobile applications, how we take orders on tablets and iPhones — all the things that continue to change in the world have a very strong application to our business,” Moroknek says.
“You need to have a very strong technology group, a very strong e-commerce group that’s challenged every day to find out what is the next thing and make sure you are ahead of the curve and not behind it,” he says.
Develop your leaders of tomorrow
If you are a niche business, it’s not like you can go to any street corner and find a great candidate to be one of your managers. You’re looking for specialized skills. A better source is to look internally, find the talent and develop its leadership qualities.
“Part of your business strategy and planning is to make sure you have succession and growth plans where your people can step up,” Moroknek says.
“One of the great things about our base of 242 employees is we are constantly filling leadership positions, showing them growth as we grow, and that they have a chance to step up. We spend a great deal of time with our middle management team, training and developing them so when a new piece of business comes on board, they are really ready and trained to step up to that management role.”
One of the more effective methods is to choose a select group of middle managers and train them in all areas of the company so that they will get a comprehensive background.
“We have a corporate trainer who handles the majority of the training, but then we have special disciplines,” he says. “There’s a person appointed in each area of expertise to assist those individuals and help them grow into the roles and have the experience we want them to have to be well-rounded managers.”
It’s the role of the executive leadership to make sure the managers are on the same page.
“We are very hands-on with our directors and meet with them on a weekly basis not only from an operational standpoint but also as to how are they fitting in, what challenges are they seeing,” he says. “We really try to create a mentoring and coaching program for those business leaders.”
One caveat, however, your managers may feel they are being overwhelmed by such a comprehensive training program.
“What you have to do is instill a culture that makes them feel their work right now will pay off in the long run and that they are getting more opportunities to do more things early in their career than they would have with most companies because you are growing so rapidly,” Moroknek says.
“You see the cream rise to the top in a lot of those situations. It’s easy to pick out who are your future leaders. You have to be very cognizant of not making it an unreasonable workload. The thing I was always taught was that you always tend to rely on the people who you think of as stars and you wind up letting the non-stars get away with more. So you have to make sure everybody is an equal playing field and feels just as important.”
What may be the toughest challenge to leveling the playing field as you are growing is to enlist your managers as agents of change.
“You’ve got to be flexible and teach your people not to be afraid of change,” he says. “So many people are afraid of change, and growth is scary because it is ever-changing and evolving. Adapting to a culture that change is good, that we are going to make mistakes but we are going to learn from them along the way, being flexible, making the best decisions possible and sticking to your long-term strategy of knowing where you want to be – that’s how things are going to turn out OK. So, absolutely, not only do you not want them to be afraid of change, you want your people to be change agents.”
How to reach: MainGate Inc., (317) 243-2000 or www.maingateinc.com
The Moroknek File
Dave Moroknek
President and CEO
MainGate Inc.
Born: Suffern, N.Y. It’s in Rockland County about 30 miles from the George Washington Bridge.
Education: Undergraduate degree from Hartwick College, Oneonta, N.Y., and I actually wound up going to graduate school at Indiana University. I studied business administration, and received an MBA in sports marketing from IU.
What was your first job?
I remember it well. I had a shoe-shining business. I used to go door-to-door with my shoe-shining kit, and then I would set up shop outside the Thrift Drug Store and shine shoes for people who were coming out of the store. I charged $1. It absolutely was the beginnings of being an entrepreneur, understanding the customer and just going after business.
Who do you admire in business?
There are a lot of people I admire. I think the person I tried to learn the most from was my father, Stan Moroknek. He owned the Thrift Drug Store. It was kind of a neighborhood pharmacy for all the years when I grew up. He taught me many lessons, but two were most valuable: the first one was just to work hard. The hours that he put in were incredible, running his own business, his own pharmacy. Along with that was customer service. My dad knew 80 percent of the people who came into his store. He knew their spouses, their kids. He knew what medications they were on. But the thing that really stands out to me, this was before the day of the 24-hour pharmacy, is at least once a week, my dad would get a call at 2 or 3 o’clock in the morning — some family had just left the hospital and their kid needed a cough medicine or something. My father would open the store and get that family the medication. From a business perspective, from a customer service perspective, from caring about people and hard work, that will never, ever fade in my memory.
What’s the best advice you ever received?
I think the other best advice I got besides that from my father was from someone who once told me, and I tried to live up to, to surround myself with people who were better and smarter than I was. And don’t be afraid to let them be the success that they can be. I’ve really taken that to heart.
What’s your definition of business success?
I would define business success as the growth enthusiasm of each of our team members. If each of our team members is enthusiastic and growing and successful, then our company is going to be successful. So I do my job as I give everyone the tools they need to be successful. I guide them along the way, and then at the end of the day, it’s going to roll up into one big success story.
