June Ressler was looking over the financials of her company a few years ago that had grown past $20 million in revenue, and she was more than a little shocked. The workforce solution company that she founded in 1996, Cenergy International, didn’t have enough money to meet its payroll.
The recession hadn’t hit yet, there was no apparent theft under way, and no one had hacked into her accounts. And frankly, it wasn’t the first time the problem had occurred.
“We would absolutely run out of money,” says Ressler, president and CEO. “Our bread and butter is making our payroll and making sure that we make it every week. If any of our consultants ever thought that their paycheck wasn’t going to be good, they absolutely would go join our competitor.”
It all came down to her bank’s position on her company’s line of credit. The situation was so tight that Ressler had to personally pay for the wages at times.
“There were some days, I would have to take money out of my personal savings account to be able to make payroll,” she says. “I finally was able to figure out that I needed the ability to have a relationship with a banker who you can call on Friday afternoon and say, ‘Hey, I am going to bump up against my line of credit. I’ll come in Monday, and we’ll negotiate a higher limit. And they’ll say, ‘That’s fine, I am going to make sure that we take the cap off and you go for it,’ you know?
“That’s instead of a banker saying, ‘Oh, I’m not going to allow that, and you have to stop growing.’”
Ressler decided that it wasn’t the circumstances that were causing the wrinkles in her bank books but the size of the bank. She was thinking anyway of expanding overseas and that would involve money exchange and other matters. She knew she needed a larger bank — and now.
“I was originally with a regional bank,” she says. “So I found a larger bank. I just happened to find a great team that is really there for me and very supportive.”
Call it a cash flow problem, liquidity drought, temporary problem or whatever, but it has to be reckoned with because it’s just one of many growing pains companies in the energy growth center of Houston may have been experiencing.
“We just continue to grow like crazy and I guess for me, understanding what the next level is when you start to have a little bit of growing pains,” Ressler says.
Incidentally, she paid herself back.
Here’s how Ressler, a self-taught entrepreneur who has law and bachelor of fine arts degrees, handles company growing pains and drives her company beyond $250 million in annual revenue.
Give credit to the credit line
Rapid growth will almost always trigger growing pains. It may well depend on how you look at the bigger picture that influences how much those pains hurt.
Ressler started her staffing company in her own home office in New Orleans with one consultant. Some dramatic growth occurred after a series of circumstances including Hurricane Katrina when she doubled her employees from 50 to 100.
Once Ressler moved to Houston and drilled down into the foundation of standard operating procedures at her company, she understood what was going on.
“The way our business is, we get invoices from our consultants, and we pay them within five days,” she says. “We then invoice our client, and we don’t get paid, in the best terms, for 30 days.”
The longer the time frame stretches the more problems it can cause.
“If there are issues with the invoice, or whatever, sometimes it becomes 45 days, sometimes 60 days — so you can see we need our line of credit,” she says.
“Even in 2009 we grew by 5 percent when everybody else was hurting. Things were hot, so we were growing all the time and when we’ve got these explosive years where we are growing by 30 and 40 percent, we really need that line of credit because we are paying people like crazy.”
Ressler says it is never a cash flow problem as long as your line of credit stays out in front of you. With a satisfactory line of credit from your bank, you can meet your payroll and keep your employees from deserting you.
Cenergy now has grown to 1,400 consultants, and operations are managed by an office staff of 65.
See the forest
Once a new bank starts to plug the hole in the payroll dike, the spotlight will then turn to your staff levels. Do you need more employees? More managers? Where? How many?
“I have to sit back and say, ‘OK, I think I need to hire a manager for this area,’” Ressler says. “It is just kind of sitting back and thinking about what do we need for the next couple of years, you know?”
The scent of midnight oil burning starts you thinking about workforce levels.
“I worry because when I am in my Houston office, and I see some of my staff staying until seven and eight at night, that is not alright with me either. So then I’ll say to myself, ‘OK. We have a lot of people staying late now; I think I need to hire another manager.”
Ressler anticipated a lot of growth for a couple of years and assembled her managers to discuss solutions.
“I said, ‘I need you guys to make sure all of your staff and your teams are all well-oiled machines because, hey, hold on to your hats! I think we are going to have a couple of good years of growth here, and we can’t have holes — we can’t have balls being dropped,’” she says.
Ressler and her team devised an equation that they use to calculate staff levels.
“We do have kind of a rule of thumb, depending on the different areas — if we have grown by so many consultants, then we know we need to add X amount of new invoice people and additional recruiters — it all depends upon the opportunities that we are getting.”
Hovering overhead, however, is the matter of profit margins. You have to take that into account because it differs from industry to industry. Those industries that operate on volume have other concerns than those that don’t when it comes to adding personnel.
“Because we are a provider of personnel to the oil folks, and there are lots of competitors out there, when we are negotiating our global contracts, our profit margin is based on volume,” Ressler says. “It is not a typical profit margin as it would be in other industries. It is a very small profit margin. So as a result, we have to run lean, very lean.”
That means no padding the payroll. Every staff addition has to be justified, even more so in a lean operation.
“What we kind of do here is, ‘Pile on the work until there is enough to hire three more people and then hire one,’” she says.
Be honest and transparent
Every company has its own take on how to hire the best people. Ressler learned early that she couldn’t be involved in the hiring process because it may be tough to deal with and understand people — and that set the pace for the process.
“I learned early on that I am not a great person to hire people because I am the type of person that … I just love everybody I meet,” she says. “I find something great about everyone, and then I’ll hire the first person.”
Ressler delegated the hiring of her office to a lot of others, specifically the HR team and managers.
“We’ve got now a great thing where we have different levels of interviewing to make sure that the person who is being interviewed is touched by different managers on our team,” she says. “We get feedback from all sorts of levels before we actually hire. Because you think that a person is good doesn’t mean they are good.”
Transparency is of immeasurable value if you think your company differs from the average one. Ressler says candidates are told that they should be ready for something of a maverick.
“It’s a very tough thing to get the right people on your team to fit our type of culture,” she says. “Our company culture is very different from a lot of companies because we’ve got to run lean, and we are more like a renegade company where you might be hired to do a certain job, but you’re not going to get a lot of training because nobody really has time to train you.
“You are expected to come in and run with the ball. Also, you might end up having to do things that you didn’t early anticipate because somebody else might have left and that portion of their work might be swinging over to be under you. That’s just how we are.”
Ressler says, nevertheless, working for a maverick company in growth mode is kind of exciting.
“Our office… I love all people who work here,” she says. “We have a close-knit kind of family atmosphere. Sometimes it is hard to make a decision to let somebody go because it is not that we don’t like them as a person but everybody here is so wonderful — but it has got to be business. If they are not performing the job we need them to perform; you can’t keep them just because they are really nice. It is a hard lesson for me and my managers to continue to learn. But the short learning curve can give you a quick look if the person is going to work out or not.”
Takeaways
- Find a solution to banking woes.
See the forest, not just the trees.
Be honest and transparent when hiring.
The Ressler File
June Ressler
Founder, CEO and president
Cenergy International
Born: Pittsburgh.
Education: I went to the Hartford Art School at the University of Hartford so I have a bachelor’s degree in fine arts. Then I went to Pitt law school so I have a JD from the University of Pittsburgh School of Law.
What was your first job and what might you have learned from it?
I came out of art school and was lucky enough at the time to get a job as an art teacher in Pittsburgh. I really learned a lot then. I really didn’t know myself at the time. I had no idea that I was a serial entrepreneur. So I started my job as an art teacher and immediately hated it. I would find myself crying on Sunday nights because I was so bad. Then it occurred to me that it was because I was in a box. As a teacher, I knew exactly in five years how much money I was going to make, when I was going to have a lunch, what my schedule is going to be, and that was way too confining for me. But I stuck with it for four years, and learned that I need to be able to do something that allows me to have my freedom and kind of run with it. So after that, I bought a gourmet food store and ran that for a while. That was the beginning of my entrepreneurship, and I realized then that I could never work for somebody again.
What was the best business advice you ever received?
Every bit of business advice that I received has been good. I evaluate it all. I use what I can. It’s pretty crazy. I really never had a mentor. It’s funny because I really haven’t worked for anybody. I never worked in the corporate environment. My father was a dentist. My mother ran his office, and maybe I grew up seeing how they were a well-oiled machine and it worked great for them. Maybe I inherited some of that from my mother but maybe it is being a woman; I am kind of under the radar.
Who do you admire in business?
There are a lot of very good business people out there that I admire but the thing that I get disgusted with is the competitiveness and the cutthroat nature of business. What I really admire are the business people that I run into who are more concerned about their environment and their staff and taking care of their people because I know whenever you take care of your people, the money follows anyway. I enjoy sharing stories about people that are environmentally safe, that encourage staff to be extremely safe and giving perks to staff and treating them the way they want to be treated is essential.
Ressler on what’s ahead for Houston employment:
I think a lot of our clients are getting smart and realizing that there is a lack of expertise. Clients are creating a lot of training grounds now where they are bringing people in that are just graduating and getting them out and training them so that they can learn quicker and become the types of people that they need a job, which is a great thing to see. I know a lot of our clients are just hovering over the engineering schools, waiting for these young engineers to come out and just get them started. To be graduating with an engineering degree right now is an amazing thing to be. You’re in high demand.
