Lindsey Grant

Thursday, 30 March 2006 10:04

Douglas Freeman

Newark-based MedBen was innovative, profitable and growing quickly. To many CEOs, that might seem like an optimal situation, but not to Douglas Freeman.

Freeman, president and CEO of the $47 million benefits management company, was concerned that MedBen’s fast growth was hurting its quality — something he was determined not to lose.

But Freeman was having a tough time defining quality — what might pass for quality according to one of his employees might not seem like quality to him. To create a uniform definition of quality, Freeman decided to work toward the company becoming ISO 9001:2000 certified, uncommon in the service industry.

Three years of hard work later, MedBen is certified and Freeman has a system in place to define, create and maintain superior quality.

Smart Business spoke with Freeman about the importance of corporate values, how he maintains quality as the business grows and how he measures performance.

On measuring performance
As much as we wanted to be great, we didn’t really have processes that created the framework to make sure we were doing the right thing and correcting mistakes and finding problems. [Now] we have daily performance measures for anything that we consider part of our core business, which are functions that are critical to our clients. Everything we do now, because of ISO, we do in the pursuit of customer satisfaction.

We have a metric that is what percent of our customer service calls we resolve on the first call. And we monitor things like call abandonment, which is if we leave people waiting on the phone too long and they hang up. That’s a key measure of whether someone is going to get angry with you .

They are posted on boards. They are updated throughout the day. They are also logged on our intranet.

We have other metrics that we measure on a monthly basis. That might be checks issued in the accounting department or mail that goes out or other kinds of things that are not key daily issues.

On client satisfaction
We do client satisfaction surveys ... about every six months. It’s one thing to say we are great and we think we know what we are doing, but the next thing is, how does your client feel about it? That is what this is about.

We have regular dialogue with our clients. Each of our clients that is on our self-funded side, which is most of our business, has a team of two people. They are in constant contact with the client by phone and by e-mail, and then we conduct annual reviews where they go out and visit and look at their experience and what they are doing.

On corporate values
We didn’t have much in the way of a corporate values statement. We had corporate values, but it was kind of instinctual as opposed to structural. We tried to create a statement that gave our corporate values and create some guidelines and working doctrine.

The way that (Cindy Steen, MedBen’s VP of marketing) approached it was to come up with this icon (FRED — Flexible Respectful Empathetic Dependable), which is a way to remind our employees what they have to do in order for us to provide customer satisfaction. It gives somebody the opportunity to grab on to something and say, ‘This is what MedBen is all about.’

We have FRED certification, which is a test you take to make sure you understand what FRED is about — that it is not a joke, that it really means something. It’s not uncommon to hear people say ‘that’s not very FREDlike.’ It’s become kind of an icon for the way we want to deal with each other and with our clients.

On maintaining quality
Growth is about new business and new products, but a huge part of our growth is also not losing the base we are growing on. We put a huge emphasis on retention. The ISO process and everything we do puts a great deal on retaining the clients that we have. We have to continually evolve in order to retain clients.

The way that we grow and add services while maintaining quality is by using careful planning and involving every department. ... We follow standards for design and development in much the same way an auto manufacturer would follow them to develop a new model of cars — years and years of planning go into testing before it ever hits the streets.

We have clearly defined what attributes we are going to incorporate into a new product or service, and we make sure that those attributes have a solid rationale and are what the customer wants. That part is validation.

We do all the research — research the software, research what’s out there and research how it’s priced — and determine whether or not it makes sense for us to go into it. Then we have to prove that it actually meets what the customer wants.

As we do that, we are taking care of a lot of the issues of quality before it ever hits the street. Once it hits the streets, then you go into the whole cycle of the continuous improvement process.

HOW TO REACH: MedBen, www.medben.com

Monday, 20 March 2006 19:00

Finding your assets

Some people refer to Richard L. Jackson as a serial entrepreneur. And the founder of more than 10 companies doesn’t mind this — he enjoys starting companies and finding ways to stimulate their growth.

“My philosophy is, the way to get big is to get small,” says Jackson, who divided his latest entrepreneurial venture, Jackson Healthcare Solutions, into six distinct business units that are run as independent companies. “The key is, we give equity to the senior management of all those subsidiaries so that they have a stake in what’s going on. We act like a small business in every category. ... As you create new entities, it is easier to run a small, focused, specialty niche business. If you put all of that together, it adds to pretty significant revenue growth.”

This approach has worked well for the $135 million company, but Jackson says that his employees are the real driving force behind Jackson Healthcare Solutions’ fast growth.

Smart Business spoke with Jackson about how he attracts quality employees and creates a good working atmosphere.

How do you attract and retain good employees?
We treat people like people. I recognize that our asset walks out every day at 5 p.m. The business we are in is the people business.

When I say we treat people like people, what I mean is, they are not numbers. In fact, we don’t even refer to them as employees. We refer to them as associates.

To me, if something is important, like finding good people, then somebody’s livelihood should be dependent on that. So we hired an inside recruiter from Day One to do nothing but make sure we recruit the best candidates.

Finding good people is easy; keeping good people is the challenge. That is what we excel at. People generally don’t leave us just because of money or other items. We have a very low turnover for our industry.

In the personnel and staffing business, you will find 100 (percent) to 200 percent turnover each year. It’s a high turnover business. Companywide, we are around 12 (percent) to 15 percent.

We try to create an atmosphere and environment for people to be the best that they can. Our culture revolves around respect for the individual and not creating a class system. In every company, you have some politics, but I prefer that we be honest with each other.

I don’t like a class system. I treat the receptionist the same way I do the president of a division because I think we are all equal.

How do you limit politics in the workplace?
You create a fail-safe environment. If you make a mistake in a lot of companies, you are really chastised and you may not get promotions. Therefore, you start telling people what they want to hear.

Our focus is hopefully the opposite. We enjoy innovation, and the only way you can innovate is to make mistakes. If you want people to go beyond, they are going to make mistakes, so you have to have a forgiving environment. All we ask is that when somebody makes a mistake, they learn from it, correct it and move on.

I think the strength in people is in their differences. We try to make it not necessary to be political. In fact, you don’t get a long way in our company by being political. When they start telling people what they want to hear and they’re not being honest, that does not go over well here, and they’re pretty much weeded out.

In a lot of other companies, if you comb your hair the wrong way, say the wrong thing, dress differently or something like that, you get terminated without any notice. We try to make sure that it is never a surprise when someone is terminated.

We would prefer to be three months too late than a day too early in trying to work with people. We don’t see hiring someone as a transaction but as the beginning of a long-term relationship.

In a relationship, it is the responsibility of both sides to work things out. You are always going to have problems and conflicts, but basically, we just want an environment where we can work things out and develop a long-term relationship.

How has having a good work environment contributed to your growth?
Without good people, it would be impossible for our business to grow, because most of our business is selling a service, and it’s highly people-oriented. A lot of our business is actually finding other people for our clients, so investing in your people is a very good investment. The best return on investment is your main asset and that is your people.

We would never want to lose somebody just for compensation. I’m not saying it never happens — some people get offers they can’t refuse. We try to be very competitive from a compensation standpoint.

However, our sense is that compensation is not why people stay or leave. It’s usually because they are not listened to, they don’t have input, they have lack of direction and they are just not fulfilled in their job.

HOW TO REACH: Jackson Healthcare Solutions, www.jacksonhealthcare.com

Tuesday, 31 January 2006 08:33

For sale?

As a business owner, choosing to sell your company is perhaps the most important decisions you will ever make, and one you will likely make only once. Your decision impacts the strategic direction of your company and your long-term goals.

Smart Business spoke with Bob Baltimore, managing director of new business development at Harris Williams & Co., about important things to consider along the way.

How do you know when it is a good time to sell your business?
Throughout a company’s life cycle, there will be numerous reasons and opportunities to evaluate its sale. A sale can facilitate management or shareholder transition, provide capital for growth, or afford liquidity to owners on a mature investment.

Two keys to maximizing value are to sell when industry trends are positive, and when your company’s finances and operations are strong. Positive trends will impact the company’s story to potential buyers.

You should understand what is going on in the public markets and your competition. How high are multiples trading in your industry? Is the current M&A market active in your sector? Are current valuations relatively high compared to historical trends? Furthermore, is your own company’s performance showing historical and projected gains?

If industry and company performance are in an upswing, and a sale fits with your personal objectives, you may want to consider selling your company at a premium valuation.

Who should you include in the process?
During a sale, information should be controlled from start to finish. Generally, this includes limiting the number of advisers and people internal to the company, and controlling the information that is sent to the marketplace.

However, the active involvement of the senior management team is critical. Work with your investment bank to determine when to involve others. Because it is imperative that you understand potential pitfalls upfront, consider involving legal counsel early in the process, as well.

Based on your company’s specific situation, tax experts, accountants or other advisers may be beneficial. For example, if a company has a number of potential financial add-backs, an accountant could do some preliminary due diligence and provide an opinion on the potential earnings base a buyer may determine is sustainable. Work upfront helps prevent surprises on the back end.

How can you find potential buyers?
Generally, there are two types of buyers — strategic and financial. To find strategic buyers, take a look around your marketplace. Broadly speaking, companies who you compete with and those that touch your clients could be great buyers. In the last year or so, we have seen strategic buyers become increasingly active, and they will often pay a premium over other buyers for the right strategic asset.

Another universe of very active buyers is financial buyers, largely represented by private equity groups. Financial buyers have tremendous access to capital, and are experienced at helping management teams refine their business operations. However, access to this group can be very challenging for individual business owners.

A well-established investment banking partner, with a strong network in your industry and the financial community, can help you reach both audiences and the right buyer for your company.

How can you make your business more attractive to potential buyers?
Begin by getting your house in order. By making small improvements to your company’s assets, the whole package becomes more attractive. Step back from your business and evaluate potential concerns a buyer may have, which may include competition, sourcing, strategy, pricing trends or operational issues. Your investment bank can help develop a cohesive response to these concerns before contacting prospective buyers.

Additionally, point your sights to the future. Buyers pay for projected performance, not past performance. Prepare a well-thought-out, strategic plan for the next 24 to 36 months that clearly demonstrates your company’s growth potential. Buyers will respond positively to tangible demonstrations of your company’s growth opportunities and financial goals.

While you can’t change what a business does or how it operates overnight, you and your management team can put together a cohesive story that highlights your strengths and the positive prospects for your company.

This was prepared for general information purposes only and is not intended as specific advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk.

Bob Baltimore is managing director of new business development at Harris Williams & Co. Reach him at bbaltimore@harriswilliams.com. PNC offers expanded M&A advisory and related services through Harris Williams & Co., one the largest middle market M&A advisory firms in the country. Harris Williams & Co. is the trade name for Harris Williams LLC, a subsidiary of The PNC Financial Services Group Inc. Harris Williams LLC is a broker-dealer registered with the SEC and NASD and a member of the SIPC.

Friday, 27 January 2006 06:05

A unique twist

Fifteen years ago, Kim Holstein was obsessed —with chocolate chip pretzels. The problem was that chocolate chip pretzels were hard to come by.

Holstein’s solution? Create a company that offers a variety of flavored pretzels not offered by most pretzel chains.

Holstein soon learned that starting a company was not going to be easy. But things started to look up when she met Scott Holstein, her future husband, at a book signing 12 years ago. He helped her get her idea off the ground and, in 1995, Kim & Scott’s Gourmet Pretzels was born. Shortly after, the couple got engaged.

The company grew at a modest pace but really took off after its products appeared on QVC home shopping network. Today, the pretzels are sold at a variety of locations, including bookstores, airports and coffee shops. Sales increased 468 percent from 1999 to 2003.

Smart Business spoke with Kim Holstein about how she turned her obsession into a career.

How did you and Scott start your company?
We started making pretzels in a studio apartment and came up with some different flavors and took them around to get feedback from coffee shops, bars, grocery stores and places like that. One thing just led to another.

How did you finance the company?
We started with a credit card and then put a business plan together and raised some financing from family and friends. Having the capital to grow has been a challenge.

We have been lucky that we’ve had products that people are really excited about and want to get. There is huge interest in our products, but it is really critical that we have the resources to expand to service our customers.

How do you get those resources?
In the past 10 years, we have had to be very creative. I think that having a can-do attitude and having a vision for growth ... is instrumental.

We have a wonderful banker who has supported us, and I think that is a critical component of building and expanding. We have also networked and really tried to seek out people who could support us, whether it’s getting leasing support, terms with our vendors, etc.

How did you expand your staff as you began to grow?
It happens over time. It’s getting the support we need to get the equipment in place and to get the people in place and being smart about it. It’s not hiring too many people. It’s hiring the right amount of people to get the product made that we need.

How did you get stores to agree to sell your product?
It has been pretty easy. The product sells itself. People are always looking for a unique alternative to a bagel or even a sandwich.

We used to just have different flavors inside the dough and on top, and then we started (filling) them with a stuffing in the middle of the pretzel. It really created a meal out of the pretzel. We compete against sandwiches and other meal options. They are a great alternative.

How did you get onto QVC?
QVC found us through a product search. It started when the Illinois Department of Agriculture sent us a letter saying that QVC was looking for products if we wanted to fill out an application. We did that and then QVC called us to the Mall of America in Minneapolis to show our products.

It turned out it to be an event called a product search where they get thousands of people to come and show their products and do a demonstration. We did that and they loved our products. Probably six months after that, we were on the air.

How did that appearance influence your business?
It’s had a huge impact. Before QVC, a huge percentage of our business was with one customer doing more private label business. We transformed our business to be more diversified with more branded business.

QVC sells to individual customers on TV, so it has had a huge impact on building our brand and helping us as we position ourselves as a national consumer product brand.

In what other ways are you building your brand?
We just opened our first caf, our own branded caf. It’s called Kim & Scott’s Pretzel Bakery and Twisting Caf. It’s at the Kohl Children’s Museum.

It’s a great opportunity for us to offer our pretzels, and we also introduced PretZiolas, which is a pretzel sandwich. We have signature salads and pretzel croutons. Kids can twist their own pretzels.

It’s really taken our brand and our products to another level.

HOW TO REACH: Kim & Scott’s Gourmet Pretzels, (800) 57-TWIST or www.kimandscotts.com

Tuesday, 27 December 2005 06:53

Healthy returns

With more than 20 years of IT experience — mostly at Fortune 500 companies — James Giordano is no stranger to the information technology industry.

And for the past seven years, he has used that expertise to grow CareTech Solutions, a leader in health care IT and health information management solutions, to more than $100 million in revenue.

When Giordano joined CareTech Solutions in 1999, the company had about 20 employees and operated regionally level. Today, its 700 employees serve health care organizations across the nation.

Giordano believes the key to his success is doing whatever it takes to satisfy customers, because if your customers are completely satisfied, they will never leave your company.

“It’s the focus on the customer and the focus on making a better health care system,” says Giordano.

Smart Business spoke with Giordano about how he grew CareTech Solutions and the strategies he uses to manage more than 700 employees.

How did you double revenue between 1999 and 2002?
What we were able to do was use health care IT as a differentiator for updating health care systems. Our value proposition was that we would help them attract physicians and have a better patient experience, and also assist with their administration relative to IT and business systems.

We were successful. We were recognized by our clients and by the hospitals that we were doing business with. They have been a great source of advertising for us. We have been able to use our IT offerings and our health information management offerings as a competitive advantage for them.

They’ve been able to use that in a way to make the hospital a better place for both physicians and patients.

What were some of the specific issues you faced during that time and how did you deal with them?
It’s a difficult marketplace out there. We faced all of the challenges of rapid growth, including increasing the size of our building and infrastructure.

We decided early on to size all of our systems to be able to triple the size of the company in two years. Once we overcame that challenge and prepared the company to accommodate that kind of growth, things became a lot easier.

You don’t have this kind of growth without some problems. The assimilation of staff members into our organization was a bit of a challenge; however, we successfully overcame that. As we got a little bit larger and technology became more complex, we were able to offer more, which caused a faster growth rate, which caused us to have to assimilate even more people.

How did you maintain your corporate culture as you added new employees?
The first thing we do is have a full day of orientation to talk about our vision and our values. Ultimately, I think any company’s values are how they act and how they treat their people.

We have a full day of training. We started with the management of the organization and we made sure that they understood what CareTech was all about and how customer service is our focus.

We [instructed] all the new employees coming in to do whatever it takes to serve the customer. And that has become our CareTech motto — ‘We do whatever it takes.’ And then we provided the tools and the training, so that even at the individual performance level, they can effectively do that.

We have a policy here called the open door. If (employees) see something where the customer is not being satisfied, then they are authorized to go to any level of the organization to get that problem solved —including my office.

How do you manage and guide more than 700 employees?
It all centers around communication. We make sure that the senior leaders of the organization get out there and talk to them, and we really do try to focus them on customer service. In today’s economy, we all know the bar on customer service gets continually raised.

Most people (know someone) who has been downsized out of an organization. My challenge to our folks is, let’s not let that ever happen to us. Let’s make sure our customers are so happy, so satisfied with our service and that we are bringing value to the health care organization that they don’t even think of looking anywhere else.

To put our money where our mouth is, we measured that. We measure and survey our customers to ensure that we are delivering on our promise of customer service. Again, it goes back to doing whatever it takes to make sure our customers are satisfied.

How do you do that?
Early on, we were having a lot of successes with our customers, and it was a real challenge to be able to communicate effectively back to our clients exactly what we were doing for them. Many times, we found that we were doing these things and they were very ho-hum to the staff, but they were really extraordinary achievements for the health care organization.

It was a challenge to capture those ideas and go back to the organization and make sure that they were using that as a marketing tool to attract more patients and to attract the kind of caliber of physicians that they were looking to find.

The way we have overcome those challenges and the way we have been able to keep the organization together is the belief that we are in the services business. The mindset that we try to impart to everyone is we are CareTech.

There is not a product you can point to. There is nothing tangible you can point to. At CareTech, we are the sum total of everything we say and do at the end of every given day.

We have client executives at the site that are the chief of information officers for the health care systems. We started to hold monthly meetings where they would point out from a business perspective the successes that they were having with the clients.

We were able to share this across the different health care organizations. We found that not only did the communication become effective, but we were able to leverage some really good ideas across different health care systems.

How do you get employees to buy into your vision of customer service?
I talk to them personally. I talk to every new person that comes into the company. It starts with me.

When they are introduced to the firm, I like to spend some time with them and share our vision with them. I am a big believer that a corporation’s values are how it acts. I ensure that our top level leaders buy in and [that we] continually refocus and educate ourselves on what our customers’ wants and needs are.

We work very hard to satisfy them.

HOW TO REACH: CareTech Solutions, (248) 233-3000 or www.caretechsolutions.com

Wednesday, 02 November 2005 07:11

Against the odds

Most men wouldn’t think of quitting their job to start their own business when their wife is five months pregnant.

But Fernando Crosa did just that when he learned that the national petroleum services corporation he worked for was about to be acquired.

“My experiences with these types of acquisitions are that they (larger companies) come in and say, ‘Don’t worry, you and all your people will be taken care of,’” says Crosa. “But in reality, what happens is they come in and once they understand the business, they cut it down. I decided to prepare for that.”

By prepare, Crosa means he quit his job and used his savings to start a consulting company for underground storage owners out of his home in Austin, Texas. But although he resided in Texas, most of his business was in the Midwest, and when his customers told him he could get more work if he were closer to them, Crosa and his wife moved to Columbus.

The company took off, and it was soon too big for Crosa to handle by himself.

“I reached that wall that most small business owners reach where they have to choose between growth and profitability,” says Crosa, who chose growth.

He hired employees, bought equipment — and began running out of money. He met with bankers and venture capitalists, but bankers wanted nothing to do with him and venture capitalists wanted 55 percent of his business.

In 2001, Crosa solved the problem by merging with a company that performs testing and cleaning services for underground storage tank clients. But he didn’t give up his dream of owning the business himself - in 2004, he bought out his partners to take complete ownership of US Tank Alliance.

Today, the company employs about 50 people in five regional offices and grossed $4.2 million in 2004.

Smart Business spoke with Crosa about the challenges he faced buying the company and how he moved it from Massachusetts to Columbus.

How did you deal with having a growing business but not enough capital to support it?
I had been corresponding with a friend who used to work at the environmental company with me. He started a small testing company in Massachusetts. Basically, I said, ‘Hey, I know you are getting some tips from some larger companies who may have some gas stations out here. I would love to be your subcontactor.’ He said, ‘Vice versa.’

He started his company with the assistance of a larger $25-million-a-year environmental company. He had a salary, he had insurance, he had an office with human resources and accounting. I had none of that. I didn’t pay myself for the first year.

I went up there and met with him and his two business partners. At the end of the day, it made a lot of sense to take on the industry together. We combined both testing entities into one and it became US Tank Alliance.

When you were approached to sell your share of the company to a larger corporation, how did you switch the scenario ?
I sent an e-mail to everyone (with a stake in US Tank Alliance) and said, if anyone is interested in selling some equity, I would be more than willing to buy. I was looking to have more of a stake in the thing that I was running and pretty much carrying.

So Joel, my colleague and president of the company, called me up and said, ‘Are you serious about wanting to buy some equity?’ And I said, ‘Yeah, is anyone interested?’ And he said, ‘Yeah, me.”

When he threw his shares on the table, the other two, who were really in it for him, did as well.

What challenges did you face buying the company and how did you overcome them?
There are three phases. The first phase is convincing them to sell it to you. They wanted to buy me out. When I first went out there, they said ECS (Environmental Compliance Services Inc.) is going to buy US Tank.

I only had 15 percent equity — they could have done whatever they wanted to do. I said that was fine, but then I am out. I have worked for a bigger company and I didn’t want to do it again. I didn’t want to have to work and make a bunch of money for someone else when I was carrying the company.

I played the card that I thought would be the right card. I represented 65 percent of the revenue and 85 percent of the profitability. I believed that they thought if I walked and ECS were to buy US Tank, they would be buying nothing, because the work would go with me or it would go away. And that is what they thought.

Phase two was getting the deal done financially. The banking and the relationships with different insurances and accounting were all in the Northeast. I needed to move it all to the Midwest. First, I had to convince a bank to do it.

A lot of people think that just because you are a minority or just because you have a great business plan or you are a small business that SBA (Small Business Administration) and other agencies are going to throw money at you. SBA will not back any loan that they don’t believe they can get their money back on.

That’s what happened to me five years ago. Now the picture was better. We had five years of experience and were profitable. We finally got a bank to do the deal, and that was the most difficult part of it.

Phase three was building the new organization. I had to move all of the corporate functions from Massachusetts to Columbus. I had to go protect all of the sales. I had to get more sales.

What business strategies are you using to increase your sales?
My business strategy is to market to the major oil companies. We are a multiregional contractor. The majority of our competitors are regional. In other words, if the company is in Cleveland, that’s all they cover. They don’t have hotel costs or gas costs, but it limits their ability to work for larger companies.

Fuel basically has doubled since I have done my budget. Our costs are rising and my focus is to get more sales, specifically sales from the majors. It’s easier to work for one company that has a thousand gas stations than a thousand companies that have one gas station each. These larger companies pay electronically within 10 days. I am not chasing money.

We will and do service the smaller players, but our focus is the larger marketers, like Speedway. I can build a business around good companies like that because they’re strong, financially sound and there’s always a new project.

HOW TO REACH: US Tank Alliance, (614) 923-0154 or www.ustankalliance.com

Monday, 10 October 2005 10:16

A desire to excel

Dion Deloof left his job at a large, stable company to start Anteo Group — named for the Latin verb for “to excel” — and that’s exactly what he and his partner James Yeagle intended to do.

“We left relatively comfortable jobs to pretty much betting the farm,” says Deloof, president of Anteo Group, an information technology staffing and consulting firm launched in 2002. “It was a leap of faith.”

The leap paid off. Anteo Group has grown to $10 million in sales and the company, started in Deloof’s basement with just three employees, now employs 80 in offices in Atlanta, Dallas, Los Angeles and London.

Deloof’s goal is to grow Anteo Group to $50 million in sales and open offices in New York and Chicago. And he believes his employees — his biggest asset — will help him reach that goal.

“If we keep our eye on the goal of making sure every employee is pushed and has lots of runway in front of them to get better, then we will continue to grow,” Deloof says.

Smart Business spoke with Deloof about the challenges of gaining new clients and of seeking out the best employees during a period of rapid growth.

How is Anteo Group different from its competition?

We only work in the software sector. We look and feel like a true consulting company, but we do it at staff augmentation rates.

For example, one of our clients is The Weather Channel. If they want to hire two software developers and they get a normal recruiter, they will see about five to 10 resumes, conduct five interviews and try to narrow the list down. That is pretty time-intensive.

We meet with them and understand their technology better than our competitors more often than not. We then come back and suggest one or two candidates. Ninety percent of the time, one of those two candidates is going to get hired.

It’s really understanding who truly is going to fit in the role and making sure who we present is truly qualified.

What challenges have you faced as your company has grown, and how have you met them?

No. 1 is hiring great people internally — and we are recruiters. We’ve been fortunate in that 90 percent of our employees have been referred by other employees.

We historically don’t hire people who have experience in our industry. Our view is if it takes us four months to get someone up to base level but they have great character, great motivation and great drive, I would rather take those four months and train them and have a great employee for the next five or 10 years than take someone who knows the industry inside and out but I am not convinced that they are an exceptional person.

Operationally, at our rate of growth, it’s been a challenge to make sure we have credit lines and credit facilities in place, which, as a small business, if you try to start in the middle of a recession or down times, is very difficult.

I must have met with 10 or 11 banks or similar financing companies. Even if you’re a 12-month-old company doing $3 million in sales, getting a bank to actually give you a credit line is a great challenge when you are asking for a $2 million credit line.

We hit one point when we went from $2 million to $8 million in sales last year. I was on the phone with the bank begging them to increase our credit line by $500,000 just to meet payroll because we were growing so fast.

Also, when we get an opportunity to get in front of a client, they see the difference that Anteo brings to the table, and we almost 100 percent of the time get a shot at that business. But getting a chance to get in front of that person, and I’ve been in this business for about 13 years, is harder than it’s ever been.

You just can’t cold call a manager anymore because nobody answers their phones. Getting access to those senior people when you’re not a name brand is extraordinarily difficult.

How do you get that access?

It’s partly on the marketing side. We sponsor software user groups. We sponsor other events, like Women in Technology.

We also ask our consultants and current clients outwardly for their help. We basically say, ‘Hey, if we’ve done a great job for you, please refer us to anyone you know in other companies or within your own.’

In the past, we would not be asking that, but now we are pretty open and we try to be close with clients. Referral is pretty much the only way we can get in front of new clients. Even with our growth rate, and we are growing pretty fast, it’s still difficult to get in front of a decision-maker.

What has been the largest contributing factor to your growth?

Without a doubt, it’s our people. We’re in a very mature industry (where it’s) hard to differentiate yourself. Recruiters have been around a long time, and there are lots of them.

We like to think that we hire great people with great intentions. They’re the ones that clients know, love and trust, so they always come back to that person they had the relationship with. HOW TO REACH: Anteo Group, http://www.anteogroup.com

Thursday, 01 September 2005 06:03

Moving on up

Joseph B. Richey II was already established in the medical world before he and Malachi Mixon bought Invacare in 1979. Richey had engineered the first tomographic CAT scan machine, which scans slices of the entire body, and also developed the technology behind MRI machines.

At Invacare, Richey focused his innovative thinking on helping the disabled. As a result of his innovations, the disabled can be more self-sufficient and their lives have become a little easier.

“When I got to Invacare, all we had was a chrome-plated wheelchair,” says Richey. “There was not much else to sell. It was pretty obvious that we needed more products.”

Richey adapted microprocessor technology to apply to controls in power wheelchairs. This new technology revolutionized wheelchairs. People no longer had to use a screwdriver to adjust the speed and direction of their chair. With this new invention, all they had to do was touch a button. But Richey didn’t stop there. He continued to enhance power wheelchairs by creating the first gearless-brushless motor. This motor is quieter, lasts longer and is 45 percent more efficient than the typical motor.

In addition, TrueTrack driving technology allowed users to navigate a wheelchair on uneven terrain, as well as slopes. Previously, most wheelchairs could not handle these conditions.

“I started to see that this is a fertile business for innovation, because no one has really innovated,” Richey says. “They [competitors] threw some stuff out there for these disadvantaged people to use, and they really didn’t think very hard about how these things could be made.”

Richey realized that one of the problems with wheelchairs is that they are difficult to maneuver and often get stuck in corners or between pieces of furniture. Consequently, he developed the Invacare HMV Highly Maneuverable Vehicle, which allows users to make a 360-degree circle in a small space such as a hallway or elevator.

When Richey joined Invacare, its competitors owned 90 percent of the domestic wheelchair market. His unique ideas are a large part of the reason Invacare has grown to become a $1.4 billion company.

“I just like to look at better ways to do things and do it,” Richey says. “And along the way, it has made the company very successful.”

How to reach: Invacare, www.invacare.com

Friday, 28 October 2005 12:16

Team work

In 1997, Bruce Robbins founded TruStar Solutions, previously IIRC, and his brother, LeRoy Robbins, later joined the company to help grow it.

“My brother got the company going and got the concept up and running but needed someone to bring it to scale,” says Leroy Robbins of TruStar, a provider of customized recruiting solutions. “What he needed was exactly what my background was. He needed someone with leadership skills, had my HR experience and also my process skills.”

When Robbins joined TruStar in 2000, annual revenue was $1.3 million. By 2004 it had grown to $4.7 million — a 37.7 percent compound annual growth rate. The company is on track for its 2005 goal of $6.9 million, and Robbins is confident that there is more growth in TruStar’s future.

“We believe we can grow faster,” says Robbins, president and CEO. “There are some windows of opportunity in a couple of our markets that we want to take advantage of.”

Smart Business spoke with Robbins about the importance of a team environment and how he instills his core values in his employees.

What is the biggest obstacle that you have had to overcome as leader of a fast-growing company?
The biggest challenge is just keeping up with bringing in the talent that you need to have to be successful. Obviously, we are good at that because we work with our clients on that.

It’s also just challenging to have enough quality people as you grow. All of our growth has been internal. It’s been very measured, and we’re really beginning to pick up steam. The challenge now is to make sure that as we grow, we maintain those very strong core values that made us successful.

What are those core values?
One of the most important core values is being passionate about our clients. We ask everybody here, from myself all the way through the organization, ‘How do we operationalize being passionate about clients? What does that mean in the person’s role or my role? How does that manifest itself?’

In my situation, if I am really passionate about our clients, I need to have good relationships with most of our big clients. But everyone in our organization has to look at that and say, ‘So what does that mean for me?’

The next core value is being nimble and innovative. This recruiting space has grown so dramatically in terms of not only how people do it but what their needs are, how they change year to year and our ability to meet their needs all up and down that recruiting value chain.

Our goal is to customize. That’s one of the reasons we are able to get the business that we do.

What do you look for in employees and how do those characteristics benefit the company?
Talent is critical. We put people through a very stringent process that enables us to assess core values. Are they really resonating with our core values? Is their DNA similar to ours in terms of high integrity, being passionate about their client, being nimble and innovative, driving to succeed and wanting to grow their career? If they can resonate with those core values, then that is a good start.

We work within a team concept. If you can’t work within the team, you really can’t work at TruStar. The sum of our parts is always greater.

We have to have that synergy across people. The way we are able to do that is to make sure that people understand that during the selection process, we are evaluating them, but they need to know as much about us as they possibly can. It’s a two-way process.

Our way of thinking is that this is a covenant position. In this day and time, when people are leaving jobs left and right, we don’t want them to do that. We want them to want to stay.

I’m not nave enough to think that we are going to keep people for 20 or 30 years — that just doesn’t happen anymore. But while they’re here, we want them to be fully engaged and going all out in terms of applying their talent.

You have to give them meaningful work and a good relationship with their peers. Otherwise, you can’t keep them.

How do you communicate your team vision to your employees?
We try to live it. On the leadership team, it is a part of all of our evaluations.

Also, if someone is going out of their way and going the extra mile for a client, we want to recognize that in a public way. If someone is out there and does something that is nimble and innovative in solving a problem, we make sure people see that and they know that it is important.

We will walk away from business if we feel that integrity is a questionable issue there. If we feel that we can’t do the best job for them, then we won’t take it. We want their business, but more importantly, we want our clients to be successful.

HOW TO REACH: TruStar Solutions, (888) 547-4472 or www.trustarsolutions.com

Thursday, 27 October 2005 20:00

Think like a customer

Ron Blake, president and CEO of Rewards Network, joined the company in March with an important mission — return Rewards Network to consistent profitable growth.

During the past year, the company had experienced a decrease in the number of customers, which resulted in decreased sales.

Rewards Network offers members cash back or airline miles when they register their credit card with the company and visit participating restaurants and hotels. But the company ran into problems when its restaurant base began to decrease — in 2004, Rewards Network lost approximately 300 restaurant merchants because they were either dissatisfied with the results or because they went out of business. And as Rewards Network’s restaurant base began to decline, so did its sales.

For Rewards Network to be profitable, consumers must join the network and visit participating merchants. And for consumers to be interested in the Rewards Network, there must be a variety of merchants where they will save money.

Blake joined the company at a critical time, and his first task was to find a way to retain merchants. Without them, Rewards Network would lose members and sales would further decline.

The concept seemed simple enough — if you improve the company in one area, it will improve in the other. But where do you start?

Learning the company
During his first eight weeks on the job, Blake followed account executives and conversed with clients. He learned about the products and services the company offers and then learned about his customers’ problems and their issues with those products and services.

“With any business, when times are challenging, it’s very difficult to take that time out and go invest that time in the field,” says Blake. “One of the advantages of coming in as the new CEO was the ability to take that time to listen to move the organization forward with a coherent plan.”

After listening to his customers and learning about the company, Blake came up with a phrase that would become the driving force behind his turnaround plan - “Think like a customer and act like an owner.”

“You have to satisfy customer need to be successful in the marketplace,” he says. “You have to understand your customer and you have to listen to your customer.”

The restaurateurs Blake talked to had different problems and needs, but they all had one thing in common — they wanted someone to listen to their problems and help them solve them. And they didn’t feel that Rewards Network had listened to them in the past.

“You have to know what their language is versus your own internal language,” says Blake. “We, as a company, have grown over the years talking about our products and services in ways that are somewhat foreign to the restaurant owner. When he thinks about how much money he wants to spend on marketing and advertising, he doesn’t want to hear some fancy term for how our product works. He wants to know, ‘Is that going to be 4 (percent) to 6 percent of my cash flow a month?’”

With valuable information from his customers, Blake began to develop and implement a turnaround plan for Rewards Network that centered around communication.

Selling the Rewards Network Way
Blake realized that everyone in the company needed to know everything there is to know about the products and services offered. They needed a uniform selling plan that everyone could follow and understand.

“There was a very strong need to get some commonality and focus in terms of how we presented our product and service to the customer,” says Blake. “As a result of that, we have instituted a companywide training program that is very customized to us. It is called Selling the Rewards Network Way. It’s the approach to selling and servicing our customers that we want everyone to use.”

At the end of the training process, there is a certification program, and all sales associates and managers must be certified in Selling the Rewards Network Way.

And what exactly is that? It’s Blake’s philosophy that Rewards Network must become a customer-first company. Employees must put themselves in their customers’ shoes, listen, understand their customers’ problems and service their customers the way that they would want to be serviced.

Rewards Network employees learned firsthand from Blake what it means to be a customer-first company.

“I had a companywide conference call scheduled to make some rather significant announcements a couple months ago,” says Blake. “I was actually with a customer listening to their concerns and needs, and it went longer than it should have. I sent my administrative assistant a note on my Blackberry that said, ‘Put the company call on hold for 30 minutes. I am not leaving this customer.’ It was one of those days when small things make a big difference.

“Interestingly enough, when she sent the note out, she said ‘Ron is with a customer. This is what it means to be a customer-first company.’”

That made it clear to everyone that the customer comes first, no matter what. Then they also needed to understand how they fit into the company’s bigger goals.

Upon his arrival, Blake provided all employees with a one-page plan for the company. It listed 10 objectives for the next 18 months. Those were only shared with Rewards Network employees, who then had to write a one-page plan that tied in with what their function and responsibility are and how they fit into one of those 10 objectives.

“I told the employees, ‘If you find yourself doing anything other than these 10 objectives, then stop,’” says Blake. “It’s our roadmap.”

Blake saw a need to restructure the sales compensation plan. He wanted a plan in which people are compensated based on the profit of the deals they sell.

“We needed to focus on a sales compensation plan for our associates that clearly aligns their interests with the shareowner,” says Blake. “Our (new) sales compensation plan is tied to gross margin. They know by selling the right product and the right service that they are going to do well in their business and that the shareholder will do well over time as a result of that.”

Blake started working on changing the sales compensation plan immediately upon arriving at Rewards Network, and the new plan became effective July 1. Now employees who make a more profitable deal receive a better reward than those who make a less profitable deal.

The company is also focusing on the retention of merchants, so employees are rewarded for renewing business. The result is an employee incentive to sell the more profitable products first and renew current merchants, which is crucial to profitability.

Employees responded positively, perhaps because the plan includes provisions that keep employee compensation consistent through the end of the year.

“If they need to retool their portfolio of restaurants, they have time to do it without taking a hit personally,” says Blake. “We wanted them focused on the market and our customers and not their paycheck. So we made sure our people had a minimum level of compensation that they could expect from here until the end of the year.”

After employees have had time to complete their training and build solid relationships with their clients, they will return to a plan that has a fixed and variable component.

“I would call what we have right now a floor to ensure that as people transition to the type of customer relationships we want to build and to have more one-on-one contact that they will not be hurt by that,” says Blake. “We have given them six months to retool things so that when we hit the ground running in 2006, they should be able to make or exceed what the current minimums are.”

Moving forward
Blake’s turnaround plan is geared toward achieving long-term results. He has faith that by forming closer, more personal relationships with clients, he can return the company to profitable growth and keep it there.

“One of the things you hate to see in this organization is not increasing our restaurant base,” says Blake. “And one of the reasons for that — to be honest — is we didn’t spend enough time working with our clients after the initial sale. With a little more focus and a little more attention, we can increase the retention of customers and help grow our customer base as time goes on.”

Blake plans to take on a lot of that responsibility himself by making sure that he meets and talks with as many customers as possible.

“Selling and servicing companies is a very one-on-one experience,” he says. “Customers buy from people, they don’t buy from companies.”

And that is why he is spending so much time training and communicating with his employees. He encourages them to continue contact with customers by picking up the phone and calling them after the initial sale, by stopping in for dinner to see how things are going. Blake wants to implement a more consultative selling process than what was used in the past.

“The challenges this company faces really revolve around our ability to execute,” he says. “The market is there. The question is, will we be able to do it in a fashion that is consistent with our customers’ needs and meet them?”

Blake is right — the market is there. Dining out has become a way of life in America. Rewards Network has a 20-year track record and a long history of success. The company still has more than 10,000 restaurants and 11,000 hotels in its portfolio, as well as 4 million members.

And Blake is confident that the future of Rewards Network is bright.

“We’re a $300 million company with plenty of room to grow,” he says. “The opportunity out there is quite huge for us.”

How to reach: Rewards Network, www.rewardsnetwork.com or (877) 491-3463