Though he had promised to stay out of the day-to-day operations, the partner’s decision to renege nearly cut short the life of the company and forced Ahuja to make tough choices that have since defined his business principles.
Ahuja founded Delta Automotive on April Fool’s Day 1975, shortly after he was laid off from a previous position at a rival transmission parts firm. The India native was just a few months shy of completing his MBA at Cleveland State University when, on the advice of his entrepreneurism professor, he turned his class assignment into a real life business plan.
With a $10,000 bank loan and a partner who agreed to provide a $40,000 loan in the form of inventory in exchange for two-thirds of the company, Ahuja was on his way.
“(It was) not a very smart deal,” he says. “But who was (I) to argue, considering what I had going on at the time.”
Perhaps an argument early on in the partnership could have helped him avoid what nearly became Delta’s end.
“The major threat turned out to be the mentality of my majority partner,” explains Ahuja. “(He) seemed to have his own plans for our business. Unfortunately, he expressed his thoughts to a common friend who alarmed me of his intentions that he planned to pull the rug (out) from under my feet once the company got to a certain level. Needless to say, I wasn’t going to work my ___ [sic] off and be left on the block again.”
A litany of discussion, threats and counter threats followed before the one-time partner agreed to sell his interest in the company for the “unimaginable sum of $250,000,” plus the initial investment. He accepted $100,000 cash and a note for the balance, which was to be collateralized by the 100 percent stock of the company, Ahuja says.
“His clear expectations (were) that neither could I raise such an amount of cash nor sustain his payment schedule, thus giving him the opportunity to repossess the business.”
But steadfastly confident in both the business and his ability to make it succeed, Ahuja forged ahead.
“I was willing to bet my life and everything else I had on this business,” he says.
With a track record reflecting a profit in Year One, Ahuja convinced a junior loan officer at Ameritrust to approve a loan. He used it to pay off his partner and, in late 1978, gained full control of the company. To underscore the change, he switched the name from Delta Automotive to Transtar.
“I’m glad it happened at that early stage,” Ahuja says. “It allowed me the opportunity to own the business myself and take it in the direction I wanted to take it and not have to worry.”
A difficult partner was only one of the problems Ahuja faced in his struggle to succeed. Like most entrepreneurs, he dealt with limited funds, labor issues and attacks from competitors. In fact, his former employers made it their mission to crush his budding business.
For 25 years, Ahuja, president and CEO of Transtar Industries, has blended creative problem solving skills with a healthy dose of perseverance to beat the odds at every level. And, though he’s no stranger to the business elite in Northeast Ohio, he remains one of the most successful entrepreneurs in Cleveland with a seemingly low profile. But, as Transtar continues to grow, eclipsing the $150 million mark last year and closing in on $200 million in revenue, that anonymity won’t last much longer.
Survival of the fittest
Like hundreds of others, Ahuja fell into the role of entrepreneur by chance. He was working at a transmission parts firm when his boss died, creating a leadership vacuum. In the ensuing power struggle, Ahuja was forced out because he was seen as one of the deceased man’s proteges rather than as an ally of the new leadership group.
“Following his death, there were a lot of internal company politics that became pretty ugly,” Ahuja recalls. “There were people who didn’t see eye to eye with him (the former owner). They saw me as one of his men, and he was gone.”
The rude treatment served as a wake-up call and taught Ahuja a lesson he would never forget. It was such a powerful experience that it continues to influence his approach to business today. It should come as no surprise, then, that when Ahuja started his own business, his former employers viewed him as a threat.
“When I started the business, they really came after me with a vengeance,” he says. “(They) tried to intimidate me. We steadfastly fought that.”
Instead of being cowed by his former employers’ tactics, Ahuja used their aggression as a source of inspiration and competition.
“For many, many years, we always compared ourselves to them,” he says. “There was a strong inner motivation to outdo them.”
Ahuja’s perseverance paid off. While Transtar showed continuous growth in an industry in which most others faltered, those bitter competitors closed their doors five years ago.
“I’m not ashamed to tell you that was a great sense of accomplishment that they did not survive in this industry,” Ahuja says. “It’s a sense of accomplishment that we not only survived, but we became the largest in the industry. And, the company that tried to put us out of business is out of business themselves.”
He may have taken a measure of satisfaction in the demise of that business, but Ahuja felt no such glee that its closure left people without jobs. He clearly understood the political nature of his release and, where another might have held a grudge, he hired the man who was forced to hand him the pink slip. That employee retired from full-time duty about a year ago, but continues to act as a consultant.
Even with the battle won, it took five years of sustained growth before Ahuja felt his company had become successful.
“We had a plan to be a $10 million company after 10 years,” he says. “Considering the company that I used to work for (at the time the largest in the area), how long they were in business and knowing the industry at the time, that was a reach. But based on the success that we were enjoying, I kept changing the target every six months.”
Transtar reached $10 million in revenue after seven years.
The role of fate
No matter how many honors are heaped on Ahuja, and there have been several, he’ll be the first to tell you that fate has as much to do with his success as any of his decisions.
“If I had not gone to Ohio State, I would not have come to Cleveland,” Ahuja says. “If I did not come to Cleveland, I wouldn’t have ended up with (my first job). If I hadn’t ended up in that company, I probably wouldn’t even have thought about transmission parts. It’s a series of incidents and fate that brings you where you are today.”
That includes the company’s current structure, which differs drastically from its inception. Four business segments comprise Transtar: Transtar Industries Inc., Transtar Autobody Technologies Inc, Atec Trans-tool and Nickels Performance Warehouse.
With 23 locations scattered nationwide and in Puerto Rico, and a joint venture operation in Mexico, Transtar has grown through a combination of acquisitions and expansion. Of those 23, 15 are the result of acquisitions or mergers.
In January, the Association for Corporate Growth honored Ahuja with a Deal Maker Award for those acquisitions and how they’ve helped build Transtar’s value. The notes on his award spell out why: “For developing a distribution system in the U.S. through ‘new start’ or acquisition in order to effectively service the national market with prompt delivery service ... It’s obvious that the philosophy worked very effectively as Transtar continued to prosper every year since its start, while the entire industry suffered setbacks and turmoil.”
Despite the accolades, Ahuja deflects responsibility for the growth of his company, saying he’s benefited from good timing.
“It’s not just a stirring thing that just happens once in awhile,” he says. “I think it’s more common than people recognize, especially for an entrepreneur starting something small. This is fate. Fate is being in the right place in the right time with the right people.”
Ahuja may not like to sing his own praises, but others are quite willing to give him the credit he deserves.
“I remember Monte because he stuck out,” says Jeffrey C. Susbauer, professor emeritus at CSU’s James J. Nance College of Business Administration. “He was dedicated. He was driven. He was a good student. Monte was obviously diligent, and I thought his plan was a good concept.
“Unfortunately, there are more good business ideas than there are good businesses.”
That’s why Susbauer, who still teaches the entrepreneurism course, uses Ahuja as an example in class when people tell him that developing a business plan as a project is too complex a procedure to complete in the time allotted.
“Back in those days it was on quarter (system), which was about 10 weeks,” Susbauer says. “He (Ahuja) finished his plan in about six weeks. Somebody who’s motivated can get it done very quickly.”
Power of the entrepreneur
While it’s said that luck brings opportunities to your door, it takes a lot more than luck to carry those opportunities over the threshold and make them work.
“Every time there was a wall in front of me, I could have stopped and said, ‘It’s over,’” Ahuja admits. “But maybe the key to being an entrepreneur is that you really don’t accept the wall to be an end. You see it as a challenge and say, ‘Well, how do I penetrate this?’
“As you begin to think creatively about some idea or plan, whether you punch through it, crack it or climb it, it seems that if you are a truly motivated entrepreneur, you will find a way to get through.”
Ahuja readily recalls a half-dozen or more hurdles he’s faced in his life, and says they’ve occasionally slowed him down.
“But deep down, I have a determination that if my fate is with me, I’m going to overcome that,” he says. “That is the strongest factor in making me a success. Today, I feel that no matter what the challenge is in business, I don’t see it as a major problem. (I say) ‘Let’s find what we have to do.’”
Proof of that ability to face adversity head-on came in 1994, when Ahuja earned Entrepreneur Of The Year recognition from Ernst and Young in the wholesale/distribution category. He went on to impress the national judges and walked away from the national conference as a runner-up.
It’s impossible to hold a discussion with Ahuja about Transtar without his repeated references to the employees and management team which helped him
steer the company through the rough times.
“The most crucial part of running a business is your people,” he says. “And I don’t think any business program that I’ve seen teaches you the business of managing people. They teach economics and accounting, and finance and marketing, some labor law and all those fancy things.
“But the success of any business, especially a small business, is people management.”
And that, he says, is something that takes a while to grasp.
“I don’t know what it is, but you learn that while you’re working, while you’re doing it,” he says. “As you learn, you also have to learn how to apply what you learn. It’s kind of self-growth, growing from your own experiences.”
The link between Ahuja’s experiences and his approach to people management is clear. It was favoritism that led to his firing 25 years ago, and he refuses to let anything similar seep into his own ventures.
“People who apparently resented my boss considered me their enemy and a total outsider in their clique,” he says. “It was truly disappointing. I was beginning to feel very passionate about the business, and looking forward to helping the company grow out of its complacency and old mindsets, but it was clear I couldn’t fight this battle.
“I had no choice but to accept the fate. I will never allow any kind of a clique, not in my company. They (employees) know my tolerance for that. On a scale of one to 10, it’s zero. And I have taken action when I found out a clique developed in my company.”
That was several years ago, when a small group began to form at Transtar. Some of the mid-level employees began to show favoritism toward a few employees. When it was brought to Ahuja’s attention, he confronted everyone involved. Today, none of those employees are with the company. Some left on their own, others were let go.
“I neither condone that nor accept it,” he says. “I’ll sacrifice some good people and not regret it. At any cost I want to maintain the culture of Transtar.”
Like any owner of a successful privately-held business, Ahuja has been approached numerous times about selling the company. He’s turned down all offers.
“I’ve looked at that and decided that I’m too young to sit in my rocking chair and look at my bank balance,” he says.
His goal is to have the company continue to grow but to step away from the daily operations and let the team he hired make it happen.
“I have clearly chosen my path to grow the company, not necessarily being involved in running every company myself to the extent I have in the past,” he says.
As the company gets larger, Ahuja continues to adjust the numbers.
“My mental target, by the year 2005, I want to be a $500 million company.”
A lofty goal, for sure. Reachable? Ahuja certainly thinks so.
In some small part, he has ensured that no matter what happens, future Cleveland business leaders will remember his name. In 1999, Ahuja donated $2 million to CSU for the construction of a building to house the James J. Nance College of Business. In gratitude, university trustees agreed to name the building Monte Ahuja Hall (although insiders prefer the affectionate Monty Hall).
Perhaps the best way to sum up the life of Monte Ahuja comes from his former teacher. Says Susbauer: “He disproves the adage that nice guys don’t always win.”
How to reach: Transtar Industries, (440) 232-5100
Daniel G. Jacobs (firstname.lastname@example.org) is senior editor of SBN.