Sue Burnett, founder and president of Burnett Staffing Specialists, had never heard of a staffing firm doing an employee stock ownership plan until a friend told her about a staffing firm in Missouri that decided to do one. Intrigued by the news, Burnett investigated the possibilities for her and her husband, Rusty, who serves as CFO and executive vice president, to do an ESOP in their company.
“We thought that this was something that might be an option for us,” Burnett says. “Rusty and I really have no plans to retire, and we weren’t looking for an exit strategy because we weren’t ready to exit. At the same time, Rusty turns 70 this year and I turn 65, so our staff — particularly our younger staff — were wondering what is the future of the company.”
Burnett thought an ESOP was the perfect situation, because she didn’t have to leave the company or retire. It was a way to give back to the people who helped her build the $64 million company.
Smart Business spoke to Burnett about what went into her ESOP decision.
What are some of the advantages of doing an ESOP?
I think that the advantage of it is that now my staff knows what the future of the company will be. I think there was a feeling of relief that we were not going to sell the company No. 1, and that No. 2, we were going to continue on with the company. It gave my management staff a real vision to be able to see into the future that they will be able to run the company without us. With a management staff that’s young, it made them feel like there was really something to work toward, because they are now owners of the company. It is definitely a long-term way to retain staff and particularly management staff.
For me personally, it was a tremendous feeling of relief from the standpoint that now I know that the company is in good hands. The people that helped build it will be the leaders of the future for it and I can stay for as long as I want. It was a way for me to ensure that the company will continue into the future and my staff won’t be worried about what is going to be happening.
Are there any disadvantages?
From an employee standpoint, there’s nothing but positives. They are being given stock, and it’s free. It’s a retirement situation for them. As the company continues on into the future for all of these people who are fairly young, when they retire, if the company is still in business or if the company is sold, whatever happens, their stock will be worth a lot of money. There is no downside for the employee whatsoever. ESOPs have shown growth faster than normal companies because the employees become very committed and excited that they have ownership in the company.
Why would other CEOs want an ESOP?
I do think that for the owners, it’s a wonderful exit strategy, but they have to look at it as a long-term exit strategy. If you want to just sell the company and leave, then that would not be the best thing to do. In our case, it will take about seven years or so to allocate the stock, and we will certainly be involved during that period of time. There have been some ESOPs that I’ve heard about where the owners basically did the ESOP and then left. That was not as successful, because the management team could not keep the success going and the owners didn’t get paid off.
How can you tell whether an ESOP is right?
It is an expensive thing to do because there is a cost. You need to make sure that you’re willing to take on that cost. There are a lot of attorneys involved and a team of people that work on it. You have to have the financial ability to be able to do the ESOP. Also, you have to recognize that the money of the ESOP really just comes from the profits of the company.
I think that if you’re too young and you want to continue to own the company, you shouldn’t consider it. I see the ESOP as more of an exit strategy for people who want to transfer ownership and perhaps stay involved in the company but maybe not for 20 years. The ESOP decision is an owner’s decision.
HOW TO REACH: Burnett Staffing Specialists, (713) 977-4777 or www.burnettstaffing.com
Thompson Hine LLP has always been a law firm focused on client service, but Jim Aronoff says that if you go back about seven years, the firm decided to develop not just a strategy but rather a culture of client service to differentiate it from the competition.
Aronoff, now partner-in-charge of the Cleveland office, was part of a small pilot group that got together with about a half dozen of the firm’s most significant clients from around the country to talk about their views, concerns and hot-button issues. They also discussed how the firm could better partner with them, and they ultimately developed a client service pledge that the firm would serve the clients the best way it could. Fast forward a few years, and now that client service pledge is the culture of the organization and guiding the firm into the future.
“It’s one thing to roll it out and get the buy-in, but then it’s conducting it day by day,” he says. “As time goes along, no one thinks about what it was like before we had a client service pledge and before we had client service teams.”
Additionally, the firm has been recognized as one of the top two firms in the country for client service.
Smart Business spoke with Aronoff about how to create a customer-first culture in your organization.
How do you create a culture focused on customers?
From my perspective, there’s nothing proprietary about it. It is common sense. It’s how everyone and how our clients should be treated and how they should expect to be treated.
You need to find ways to communicate with and, most important, listen to your clients, your customers. There is this natural inclination to sell and to market. To truly be effective and successful in client and customer service, you have to be able to listen to and understand the particular needs of your particular client or customer and focus your efforts in that way. That’s really step one.
What’s the next step?
It is essential that each component of your business and all of the employees who are going to be involved in delivering the service in whatever way it is, there has to be effective buy-in and training. Essentially, it needs to become part of your day-to-day culture.
We spent a great deal of time getting comfortable internally that we had effectively trained and had the right orientation internally to execute on our program before we were prepared to roll it out, because we take our commitments very seriously.
How do you get the buy-in across the organization?
It was somewhat methodical. It was a firmwide initiative. You’re talking about a firm of 400 lawyers. We started with the partners, and we had a number of sessions where we did stand-alone in each office and then by videoconference amongst the offices. It ultimately culminated in conjunction with our annual partners’ meeting where all of our partners were together, and we spent the better part of a weekend retreat focused almost exclusively on client service.
As we got the partners buy-in, it was a process of rolling it out to our nonpartner lawyers through developing an implementation plan and understanding the little things and the big things — from answering your phone, or if you’re not in your office that your phone is forwarded to your assistant to cut out the number of rings before a client would get a live person. Our nonprofessional staff had to be part of that equation because each activity that goes on in our office, whether it be our senior-most partner, any of our secretarial staff or our other support services — everybody is, in some fashion, contributing to the delivery of our client service, and if we fall down at any level, then we can’t deliver the level of service that we have committed to deliver and that our clients are entitled to. That’s why it took as long as it did. It wasn’t like we got a small group of people together and they agreed, ‘Yeah, this makes sense,’ and just put it out there. It was a very organized program over a decent amount of time.
The bottom line is you have to live it every day because you can undo a lot of goodwill very quickly.
How to reach: Thompson Hine LLP, (216) 566-5500 or www.thompsonhine.com
Darron Burke’s picture is on the front of every bag of coffee he sells, a testament to the fact that he is always standing behind his product. When Burke launched Café Don Pablo as a specialty coffee roaster in 2004, he spent as many as 10 hours a day on his feet handing out samples of the coffee at Costco and sharing the company’s vision with anyone who would listen. As president and CEO of Café Don Pablo and its parent company, Burke Brands LLC, Burke has doubled the company’s product sales on average every year since. By embracing every opportunity to engage customers in the story and the mission of Café Don Pablo, he spearheaded the company’s tremendous domestic and international growth to $12 million in 2010 revenue.
Smart Business spoke with Burke about how he spreads Café Don Pablo’s mission of quality and value to get buy-in from customers and employees.
How have you set your company apart from competitors?
I wanted to give people an honest deal, and I wanted to produce the best of the best for a very good price. In other words: value. I don’t think that value ever goes out of style. … We wanted to give people a fair deal, a great quality coffee at a fair price. When somebody gets something that’s really special, if the quality of the product is such that it’s outstanding and you can tell that it’s different and better, people tend to want to share that with their friends and family.
Whenever we’re at Costco or Sam’s Club and we’re giving out samples and people walk by with another brand of coffee in their hand, they drink ours. They put theirs away immediately.
How does setting up sampling booths help communicate your value to customers?
We’ve spent a lot of time and a lot of money educating the consumer, and it’s worked. I make sure — and this is with everybody I come in contact with that has an interest in the business — I always try to share the vision and direction with them and try to get them to buy into it, because if they do, that just makes us stronger. For the last five years I’ve been standing out there myself on weekends giving out literally 1,000 little 4-ounce cups of coffee to people and giving them my little spiel and telling them why, what sets us apart. We’re the No. 1 selling coffee in Costco, and it’s because of that, because I’ve literally given tens of thousands of people, handed them a cup of coffee personally and told them about our company. There’s a lot of brand equity that’s been built up.
Where does customer feedback come into play?
You try to glean any piece of information that you think is going to be helpful to you. Obviously customers are a wealth of information. All kinds of people write in and give suggestions and it helps quite a bit to see if you are on track. If you screw up a bit, and sometimes we do — maybe you’ll burn a batch of coffee and they’ll put it in a bag instead of throwing it away — we hear it from the customers. So that just helps us to realize that we may have some concerns and we need to address them.
What can a leader do to communicate the vision to employees?
You need buy-in from the people. People have to believe you. You have to be honest and credible and transparent. They have to know that you have their best interests in mind. Everything you do has to be with a win-win mentality. I’ve always tried to put myself into the shoes of the other person, whether it’s somebody that works with us or our customer or our potential customer or vendor. And that I’ve found has helped quite a bit. What I try to do is seek first to understand and then to be understood. If you really get to understand somebody else’s point of view and then work from there, they’ll really appreciate that and they’ll help you achieve your goals.
HOW TO REACH: Burke Brands LLC/Café Don Pablo, (877) 436-6722 or www.cafedonpablo.com
Pierre Panos has created a new niche in dining. As the founder and CEO of QS America — short for Quality Service America — he oversees restaurant operations for Atlanta’s Brookwood Grill as well as more than 40 Papa John’s locations, but he also created the fine fast-dining segment in founding Fresh To Order restaurants.
While he strives to create a niche, he also aims to provide, as the name implies, the highest levels of service at all of his restaurants. His efforts combined have allowed the company to earn more than $40 million in sales last year and a 30 percent growth rate for the past 10 years, even during the recession.
Smart Business spoke with Panos about how to set your business apart from the competition.
How can leaders distinguish their businesses?
Don’t follow the pack. When everyone zigs, you zag. You’ve got to swim up river a little bit and do something different. You have to create a niche product. You have to find a niche that has not been developed yet or is just starting. If you’re not the first in the space, do it very, very well because the No. 1, 2, 3 guys can all do it well.
The No. 1 thing is find something you absolutely love doing, stay in it long enough to become the absolute best at it, and that’s when you make a lot of money. People tend to hop around too much today trying to find the next big thing.
How do you know if you’re doing the right thing or if you need to search for the next thing?
Something my dad told me a long time ago that’s an old cliché but it’s so right: The greatest mistake is to give up. With Fresh To Order, in the first year, we never made money. I knew we wouldn’t. We went through it because we had faith in the concept, faith in ourselves, and we knew the business well, and we knew at some point it would kick in and it has.
Sometimes you just beat your head against the wall and you’re not getting anywhere. Unless you’re in an industry that’s literally going away, if you’re very good at it or one of the best, the weaker players will go out of business. The market then is far bigger for far less players, and you can come back strong.
I wouldn’t try to get into something else you may not know as well because you’re not going to be as successful. If you’re an entrepreneur and you’ve tried something that’s not working and it’s a start-up, I wouldn’t tell you to keep on going, bashing your head. Look at what’s wrong. Try to figure out what the issue is. If you can’t figure out the issue, then move ahead. If not, go a little bit to the left and right in the same space and see where the next opening is. It is a hard thing, but don’t carry on forever. At some point you have to pull the plug.
How do you recognize opportunities that could move you forward?
If you know the industry that you’re in that well, you’ll see it. Read as much as you can. You have to be a voracious reader — see what everyone else is doing well and what they’re not doing well. If you have a good peer group of people to talk to in the industry, you’ll find that niche.
A lot of people don’t see it because they don’t read enough, they don’t network. If you do know your space, the niche will show itself, but you have to be aware and have your eyes open. A lot of people are [inwardly focused] — you have to work on your business, not in your business. You have to be out there. If you’re working day to day running the nuts and bolts, you’ll never see the niche. It will just never show itself. If you have people that take care of the nuts and bolts in any business and you’re out there working on your business seeing what the next river of cash will be, it’ll happen because not enough other business entrepreneurs out there are working on their business. They’re working too hard on the day-to-day and trying to find a way to save a few dollars here.
How to reach: QS America, (770) 594-8644 or www.qsamerica.com
More communication with employees wasn’t possible for Tom Baugh at Marketplace Events. When the downturn hit the home and garden show company, rumors swirled.
“We didn’t pull punches,” the CEO says. “We let them know when we had challenges. We encouraged them to keep things in the family. That’s hard. We knew there was a risk in that, because we were sharing more financial information than ever before, but they responded very well. Since we asked more of them, they gave more to us out of respect.”
Smart Business spoke with Baugh about how he built trust with his team during tough times.
What advice can you give to build confidence with employees?
There is a huge difference between earning, what I would say is, compliance and commitment. When leadership actions and leadership communications fall behind leadership promises, then there’s a credibility gap.
We work really hard so our communications are authentic and that they’re consistent. For example, every Monday morning for the past five years, I send a message to the business. The message is varied. When we’re in our show season, here’s where we stand with sales, here’s what’s happening with our people, etc. When we don’t have shows, I’ll talk about what we’re doing with growth opportunities, things I read or just a view point I found of concern or encouragement. The one thing that they can count on, no matter what — whether I’m traveling, busy or the power goes out in Cleveland — they know that every Monday morning there’s going to be a message about the business. When I’m on vacation, there’s other people that give guest versions.
The consistency and authenticity of our communications separate us a bit from other companies in the fact that we share a lot of information with our people, and we trust them to keep it in the family.
How do you trust people to not share that critical financial information?
I think we’d be naive if we thought some of it didn’t get out. I will say, since 2003, there have been two situations where professionally I’ve been really disappointed by breaches in that trust, but that’s only twice in that period of time. The benefits we get by treating people with this kind of professional courtesy is, frankly, enormous. Despite the worst economy in anyone’s memory, over the past three years, we’ve grown our business. I find that to be extraordinary.
There are things that bind people together, and people intrinsically want to believe that they are trustworthy, so we choose to go that direction. The opportunity for trust is greater when you know that you’re in tune with your people. At the end of the day, people can tell if the leader means what he or she says, if they’re really trying to understand employees and if they’re in touch with the business or not. People want one of two things — they either want to be the leader or part of the leadership team or they want to be led. People want to be led, but that can only happen when there’s enough trust built up.
What else has been critical to building trust?
This organization isn’t afraid to make decisions and move. It surprised all of us.
It’s always helpful if you let the person in the best position to decide actually decide. Let them make the decision. We have 12 offices and 100 people throughout North America. If we have a particular weekend in March, we could have five shows running. All of those shows on that particular day might put through 75,000 paying customers. You might have 10 different media experiences by the show’s managers, you might have to make hundreds of decisions about parking or concessions or safety or the general appearance of the show. If we try to too closely grasp the decision points with just a limited number of people, it really slows down the business.
We consciously said we’re going to work really hard to share the best practices, not so you’re hemmed in, but it’s more like bumper bowling. We say, ‘Guys, here’s best practices, we know things that work and we know things that don’t work, so let’s do things that work, so it’s like bumper bowling — you can’t throw a gutter ball.’ It’s not that you’re not going to knock some pins down — it’s how many can you pin down if you take the best practices and put your individual flare on it?
How to reach: Marketplace Events, (866) 463-3663 or www.marketplaceevents.com
For Charles Schreiber, finding the best talent is only the tip of the human resources iceberg. At KBS Realty Advisors, that talent needs to be trained and prepared to jump directly into their new jobs.
KBS has a work force of 200, and Schreiber wants any new hires to be able to assume their full job responsibilities with 60 to 90 days of coming aboard. In that two- to three-month window, new hires need an education in the culture and structure of the real estate and investment firm, which CEO Schreiber co-founded in 1992.
Smart Business spoke with Schreiber about identifying and grooming top performers.
What are some of the key factors that you want to see in someone you employ?
An overused term is looking for the self-starter, but we are looking for people who are really thinkers. We give people a lot of responsibilities and the ability to grow in their job. So the people within KBS are problem solvers. They’re looking to improve not only their performance, but the performance of their whole team. We’re looking for leaders who not only finish their tasks by the end of the day, but sometime during the day and week, they take time and focus on how things can be improved, how things can be changed.
Another big one is integrity. That is our whole culture here. We work as a team, so we’re accountable to each other, so for example the performance in our reporting group and the fact that they’re completing their reports on a timely basis will have an impact on our reporting group. So if the accounting group is late, the reporting group is going to have trouble getting their reports out and distributed within a time schedule. They have to work evenings or weekends because the accounting group didn’t get their work done. So that is critical, the effort each group puts into their job and working as a team.
How do you identify a self-starter?
Sometimes it’s really simple. It’s something we’ve embraced and done for 20 years. All of the leaders in our company, I request that when somebody within their team comes to them with a problem, don’t bring the problem to them without bringing a recommendation along with it.
That is a fundamental step. If I have to solve the problem, I don’t need that employee. I just have to go do it myself. The positive is it requires everyone to think. The negative is that if somebody comes in with recommendations and you’re the supervisor, you really don’t want to say no. You want to encourage their ideas. So you need to manage that appropriately. So I think that it is a fundamental trait within a company like ours. Everybody at every level is solving their own problems, coming up with recommendations, and having the approvals that allow people to solve their own problems.
In the recruitment and interview process, how are you getting a feel for whether a person will be the right fit?
You have to be fairly challenging in the interview process. If I’m interviewing the person, they’re going to come in and have a key role within the company. I’ll go through at least two, if not three, meetings with them, and I’ll challenge them on their business skills. On the skills of etiquette, timeliness and just the fundamentals of being a good business person. I’ll challenge them on their dedication to their career, on their priorities, not only in their career but their life. You want people who are going to be successful not only in their business, but in their entire life. Hopefully by working with KBS, they’re going to have the tools where they can pursue personal goals. Those personal goals are really of interest to me.
How to reach: KBS Realty Advisors, (949) 417-6500 or www.kbsrealty.com
Jerry Williams thought it was going to be a good thing when the firm that provided software services to Schuylkill Valley Sports Inc. sold its business to a larger software firm.
“We thought that the larger software company was going to take the aspects of this other company, integrate them and make it a more solid system,” said Williams, president of the $25 million sports equipment and apparel company.
Last year, Williams needed software to support the retail and wholesale aspects of his business, so to save money, he agreed to let the software provider try a beta version of a new management software system. But Williams and his staff quickly found out that the system wasn’t ready for use. As the holidays approached, the staff at Schuylkill Valley Sports was flying blind, unsure of how much money or inventory the company had. Williams and his leadership team were thrust into crisis management mode.
Smart Business spoke with Williams about how to manage through a crisis and how to stay prepared for when things go wrong.
How did you react to that situation?
The biggest thing is it completely stressed out every employee. They basically had to do their job blindly, based on experience, and as a result, some can handle the stress and other people can’t. A lot of what I had to do was deal with people, calm situations down. A lot of it was just sitting with people individually and try to get them to not panic. Take it one day at a time and get them to do their best. For some it worked, others were ready to jump ship. It depended on the person. Some people thought the sky was falling, some held it all in, even though they were equally frustrated.
How did you start to dig the company out of the crisis?
The biggest thing was to pressure the software company, to let them know the effect it was having on us. At the same time, they knew if this system doesn’t function, no one in the industry is going to purchase it. So I had let them know that without threatening them and try to work on it in a way that was mutually beneficial.
However, as I ratcheted it up with the president, their reaction was kind of acting nonchalant. They told me that they always have problems when they roll out something new, and it was going to take six to 12 months.
But there was no point in getting angry with them. The same sales task you had with your employees, you had with the software company. You had to sell the software company so that they would understand that they had something riding on this, and it wasn’t just all our problem, but do it in a way that wasn’t threatening.
We began to see improvement probably at the beginning of March. Our people knew they went through the worst part, several were still sarcastic, but the key people were starting to realize it was a work in progress and these things can’t be corrected overnight.
What would you tell other CEOs about managing a crisis like this?
Well, first off I’d tell them never to do a beta test. But really, I’d tell them to prepare mentally for the worst, and I think that was the biggest challenge. Our people didn’t know how difficult this was going to be. We weren’t prepared for the all the challenges. The only thing you can think of is to prepare for the worst-case scenario, not having information, not being able to do a sale or a return or a credit card sale or paying invoices. If you prepare for the worst case scenario, as challenges come up, you will be better prepared for the difficulty.
How to reach: Schuylkill Valley Sports Inc., (877) 711-8100 or www.svsports.com
As the founder, president and CEO of TradeFirst.com, Fred Detwiler maintains an organized bartering system among his client businesses. His clients offer their services to the TradeFirst.com community, and accumulate points that they can use to purchase services from other members.
But the system wouldn’t work without building and maintaining customer relationships, both between TradeFirst.com and its clients, and between the clients themselves.
Smart Business spoke with Detwiler about how he maintains relationships at his $40 million company, and how you can do the same.
How have you addressed building and maintaining client relationships?
As a bank, which is what we sort of are, working with our clients to help them is one of our biggest challenges. If you’re a bookseller or a printer and somebody doesn’t pay you, barter is never more than two to five percent of somebody’s business. It’s the gravy part of it, but they still need to make sure they have cash flow. We have been able to assist companies to stay in business, because a lot of the overhead expenses can be converted into trade. That saves cash in their checkbooks.
We started in 1978. So right after we started, we had hyperinflation and oil embargoes. We’ve been through a fair number of cycles, and what has been interesting is the nature of business, people dealing with each other through our system, they use our services and sell products on a daily, weekly, monthly basis — but in the latest economic downturn, there are companies going out of business.
Somebody starts up, they’re going, somebody doesn’t pay them and suddenly they go out of business. So we tend to lose accounts, but we’ve also been able to continually grow and expand, so that has more than made up for it.
What would you tell other business leaders about staying close to customers?
How can you stay close to your customers if you don’t stay close to your customers? You know what I mean? You need to have a dedicated staff to do it, you need to review it, you need to make sure you’re getting to all customers.
We try to use technology to assist customer service people, so that no one is being left behind. What I tell my staff is if you’re a school teacher and have 40 people in your class, and you have your 10 people who are in the front and always raising their hands, it’s easy to focus on them and forget about everyone else. So you need to make sure you’re bringing out clients who may not have focused on what we’re doing. They may have joined because they thought it was a good idea, but they never put the understanding into how it works. They never educated their staff.
How do you educate your staff on customer service?
Our customer service brokers, the goal is to give those people the tools so they know that all clients are being serviced. We have members that start out with us, they get business, they spend it — life is good. Then we sort of have people who don’t get business and everyone forgets about them. They don’t get business because they may have given us the wrong information. They may be a print magazine but somehow put on their application that they’re an online publication. Because they didn’t fill out their application right, they weren’t marketed properly.
So how do you do it? If you don’t create opportunities for face time, to get out and visit with your clients, you have problems. In this digital society, everyone wants to do everything electronically. But I do know that people still like to do business with people. If you are not personally involved, you’re leaving money on the table and your long term relationships aren’t formed.
How to reach: TradeFirst.com, www.tradefirst.com or (248) 544-1350
Since founding the company that is now Outdoor Hub LLC in 2007, CEO David Farbman has been in growth mode. His efforts have paid off, as the online platform for outdoor enthusiasts generated $10 million in 2010 revenue.
But growth can be a dou
ble-edged sword, providing challenges along with opportunity. Farbman has had to keep his leadership team a step ahead of growth, by structuring the organization to better react to the needs of growth.
Smart Business spoke with Farbman about how he’s maintained room to grow and how you can stay ready for growth at your business.
How has your company’s management structure positioned it for growth?
Historically, as we were starting to kind of grow the business, people were wearing multiple hats on a regular basis. As we were growing the business, we did get recapitalized in April 2010. After that, we really started to staff up and hire more experienced, specialized talent. So the weight of the management structure is set up today, it’s actually unlike anything I’ve run in the businesses in my career. We have people that are what we call a T1 and T2 responsibility.
T1 implies our leadership team, and that leadership team meets on a weekly basis with a very strong cadence that is focused on doing that every Monday, first thing before the day kicks off.
We have seven people on that leadership team, and each person is responsible for what we call T2, which is essentially their pillar of the business. It could be metrics and financials. It could be sales, it could be trafficking and ad operations, it could be new revenue, it could be content. Those people report up to me.
How does that setup help things run more efficiently?
It does two things. It creates an allegiance at the T1 level that basically says to someone on the T1 team, your first allegiance is to this leadership team, there is no ego on this leadership team, there is an ability to make decisions as a team and push things forward. It allows for us to work in a cohesive way on a regular basis, where synergistically we can take an issue to the other people on that team and get a technology perspective, get a marketing and research perspective. It allows us to be able to hash out an issue and then keep moving.
How do you foster a collaborative mindset within a team?
It has to start with the person at the top of the organization. You have to believe in a very authentic style of leadership with a lot of transparency, and you can’t believe ego is very productive for results. It does start there.
You’re looking for people that want to work toward a greater cause and put their energy toward creating something great, and not looking for self-fulfillment at each turn. At the same time, it always has to be regularly coached, and you have to have a very open table. If someone has an issue with me, they can just about tell me to ‘F-off,’ and I wouldn’t care, as long as it was moving the company forward. We try to clear issues quickly, and having that T1 level allows you to clear issues quickly.
What would you tell other business leaders about managing a high-growth company?
No. 1 is, providing you can afford to do it, you need to staff slightly ahead of the growth. You need to begin to do your all to specialize people more, so that the company becomes more scalable and areas can be molded as the company grows. You need to upgrade your systems, both from a technical level as well as a procedural level. We’re trying to do that each day. By no means are we in a perfect place, but we always have a constant desire to try and improve that.
How to reach: Outdoor Hub LLC, (248) 663-4440 or www.outdoorhubmedia.com
Like most business leaders, Frank Napolitano Jr. has a recession story.
His company, Global Affiliates Inc. — which does business as GlobalFit — saw a decrease in the number of consumer products sold. So the $20 million fitness solutions company, which Napolitano heads as president and CEO, needed to pull back from the consumer market and find new ways to provide fitness-oriented services.
Natpolitano’s company didn’t completely reinvent itself, but it certainly developed a new perspective on driving revenue.
Smart Business spoke with Napolitano about how to get creative when it comes to finding customers in a challenging economic climate.
How did you minimize the negative effects and capitalize on the positives?
The only thing you can really do when outside forces are driving prices down is sell fewer of those products and more of the others. We certainly worked to expand the number of gyms we worked with that gave us an opportunity to sell more, even though we were making less on each.
That is the way we mitigated the negative. On the positive, consumers were not so excited about spending money, and while prices on consumer products were largely declining, we found that companies were more interested in buying programs for their employees. We shifted our focus toward getting companies engaged in buying products that would help prevent employees from getting sick, injured or overweight in the first place.
What would you tell other business leaders about mitigating the negative and focusing on what the business does well?
The lesson every leader learns is that when you’re in the middle of battle, when things like a major recession occur, sometimes it’s hard to think strategically because you’re just trying to keep your head above water. If you do look at any of those situations from a strategic perspective, there is pretty much always something good mixed in with all the bad. The key is to find it, grab it and make the most of it.
How do you scan the market to figure out the best way to serve it?
Accumulating information about what is going on in your market is absolutely critical. It is important that you never lose sight of the competition, but it’s also important that you don’t let them drive your strategy.
You can’t put your head solely in your business. You have to be out there participating in the community, and in the community of your business. There are a fair number of organizations that bring together industry leaders trying to establish what they want and what they need, to help their employee populations and their insured populations be the healthiest they can be. It’s by participating in those outside activities that you learn a great deal about what they want and need. From there, you develop products and programs to meet those needs in order to have the greatest chance of success.
But you don’t want to be a lemming. Just because everyone is heading in one direction doesn’t mean it’s the right one, and it’s usually the creative idea, the one that is not the same as everyone else’s, that produces the greatest return on investment.
How do you lead the market instead of following?
That has to be the hardest question in the history of the world. The reason why there is always one person that has to end up making the final decision when the many options are presented to them by their senior staff is because part of that decision is made based on the facts available. But part of it is always based on your instincts, and you rely on your instincts. As imprecise as that answer is, it’s probably as good as it gets.
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