When it comes to running a family business, some decisions can mean the difference between running the company for a few years before selling it and keeping the business in the family for generations. Kirk Zehnder stood at that crossroads a few years ago with Earnest Machine, and it took some critical decisions to find the long-term path.
Earnest Machine is a 65-year-old, family-run, industrial distributor of nuts and bolts with 75 employees. Zehnder, whose grandfather started the business, is president and CEO.
“We stepped back and said, ‘We can probably run this business for five or 10 years and have a good lifestyle business, or we could make some hard changes and focus on the long-term,’” Zehnder says. “We decided to focus on the long-term and so a lot of family exited the business.”
Some family members took over a main part of the business while Zehnder and other family members retained the distribution side of the business.
“We are selling 2,000-year-old technology,” Zehnder says. “Yet, we embrace change pretty well and we mitigate the family madness that comes with family business.”
Zehnder has been CEO for five years now and his biggest challenge has been changing the focus from the business to the customer and looking at the industry in a bigger perspective.
“We really had to broaden our perspective of the industry and what we do in the industry, and then focus on creating the best customer experience we can,” he says.
Here’s how Zehnder is making the tough calls to keep Earnest Machine running strong.
Make critical decisions
By pausing and thinking about where you want your business to be in the future, you’ve taken the first step to go in a new direction.
“Five to 10 years is a realistic number,” Zehnder says. “Most people can see where they’re going to be in five years. When a company or a family wants to sit down and truly design where they want the business to be in five years, those things start to highlight the weaknesses and the threats start to become apparent.”
Looking out long-term for Earnest Machine helped to address some of the family dynamics that were influencing decisions.
“It’s never easy having some of these discussions,” Zehnder says. “It’s kind of like the credit business — you pay now or you pay later. Sometimes people’s feelings get hurt and people disagree. But you know that’s short-term versus the long-term unwinding of a family business.”
Make the customer count
To keep Earnest Machine growing and in a strong position, Zehnder knew the focus would have to be on the company’s customers.
It seems obvious to have a focus on the customer rather than on the business itself, but in an established family business, the managerial attention sometimes gets paid to things that are less relevant to the business.
“Industrial distribution is five to eight years behind other trends,” Zehnder says. “People aren’t thinking any differently about their nuts and bolts purchases than they are about their coffee. So by focusing on that, we think we set ourselves apart to be different.”
One of Earnest Machine’s recent investments has been its website. Customers can now log in and manage their own accounts. The company can also create custom shipments for customers such as putting their name and logo on the box.
“We have seen over the last five to 10 years that the customer’s expectations have changed pretty radically,” he says. “We took the approach that we are competing with the best retail organizations out there creating a customer experience — that’s who our real competition is, it’s not the people selling nuts and bolts. A little shift in the perspective of the customer gave us a boost that adds value to the company and to our customers.” ●
How to reach: Earnest Machine, (800) 327-6378 or www.earnestmachine.com