Nobody needs to tell you how hard it is to own a business. Its lonely, painful, challenging and often scary. So why would anyone want to own two businesses? Or more?
For some people, nothing else is satisfying enough. For them, the chaos isnt an issue. They enjoy trying to figure out how to organize complex business lives that dont ruin their home lives or their health; that dont interfere with hobbies and outside interests.
It begs the question: Who are these guys?
Nobody really knows how many of these people exist. There is no catalog of them, and in a world that seems to have an association for everything, there doesnt seem to be a group for the committed individualists who are only satisfied when juggling all the variables that come with owning multiple businesses.
SBN collared three peopleKenneth Thompson, Dan T. Moore and Pero Novak, who among them have owned more than 40 business over 36 yearsfor just long enough to get an idea of why they do what they do.
Any revenue is a good revenue
By the time you read this, Kenneth Thompson will be back from running up one side of Mt. Kilimanjaro and down another. If all went according to plan, he got there by hitching a ride on the back of a DHL delivery from Cairo to Tanzania, across the Serengeti Plain.
Thirteen years ago, Thompson picked up long-distance running as a hobby. Since then, he has trekked the first 80 miles of Alaskas Iditarod dog-sled race in minus-65 degree weather; jogged through the jungles of Colombia; survived six days in the Sahara Desert on foot; completed two marathons 500 miles north of the Arctic Circle; and barely outrun Pamplonas infamous bulls.
Thompson approaches business the same way he runswith no discernible pattern but lots of passion and energy.
He buys companies with profit margins that he believes could be improved. Then he develops the business until its ready to sell.
He doesnt do this one company or even one industry at a time. Since the late 1960s, Thompson has bought more than 25 businesses; he once owned 18 simultaneously.
Although hes down to a mere six at the moment, Thompsons been involved with appliances, produce, Christmas trees, cattle, automotive components, motorcycle accessories, computers, credit cards, printed materials and real estate.
Dont worry if you dont know the business, says Thompson, in a blatant defiance of conventional wisdom. Its a couple seminars and a couple key people. The fact that you dont know the business doesnt matter. Youll learn quickly, especially if its an existing business.
Thompsons scattershot approach developed when he was in college at Purdue University. He invested in passive business ventures designed to provide income while he was a full-time student.
These included a Christmas tree business and investments in cattle. Thompson later transferred to his hometown University of Akron, and after graduating, took a job in Chicago with Westinghouse.
That only lasted a few years, until he quit to devote all his time to the businesses hed been running on the side.
In those early years, Thompson learned that it didnt matter what type of business he was in, as long as the company generated steady cash flow. Its just about the only business rule Thompson lives by.
You should always try to buy an existing business, Thompson suggests. I dont care how bad they are. I dont care if they have terrible customer relations or horrible market share. Resurrection is clearly better than giving birth.
An existing company usually also has understated assets on its balance sheet, he says. Theres an established customer base and, perhaps most important, credit from longtime suppliers.
As a beginner, you could never go out and get those credit terms, Thompson says. Cash is vital to the entrepreneur, especially in a start up.
But why several companies at a time? Flexibility.
If theres trouble in the industry of your only business, Thompson says, youre stuck riding out the fluctuations. But several businesses in different industries means security in everything but the worst recessions.
Today, Thompson owns three printing-related businesses and three real estate ventures, and emphasizes that the current lack of diversity is mere coincidence.
Always on the hunt, Thompson could discover an undermanaged box maker tomorrow, or a telecommunications company thats looking to sell. The best businesses are never in the paper, he maintains. Theres never a sign out.
Im an opportunistic entrepreneur, the 61-year-old continues. If you ask a guy what business hes in, hell tell you something like, Im in seeds. Well, I take the position that Im in business.
Thompson occasionally lectures for university-level business courses, but he doesnt offer the kind of advice that makes academic publishers smile.
When I look at the management textbooks, I feel like theyre doing something wrong because they try to force organizations into structures, he says. I know theres a group that says [what I do] is not really the proper thing to do, but I like to measure results. You need to see results.
When he attends social events with corporate executives, Thompson refuses to talk business philosophy because, Ive got nothing in common with those guys.
In pursuit of newness
Dan T. Moore is an engineer in an MBAs body. Accompanied by an advanced degree from Harvard Business School, his fascination with how things workalong with an artists inflexibility about finding the solution to a problemhas driven him from one company to several.
More than 20 years ago, Moore quit his job at Sohio after an unsuccessful effort to push the petroleum giant into the then-experimental credit-card business. At the time, he believed executive management lacked vision and courage.
And in the early 80s, when he was an investor in A. Malachi Mixons acquisition of ailing Invacare Corp. (hes since been elected to the board), he helped his friend by helping to design a better wheelchair.
Since 1969, Moore has founded or bought more than 10 companies. He advises or sits on the board of a half-dozen others, and owns the rights to more than 100 patents.
Today, he operates six businesses. Four of them develop, manufacture and sell impact- and heat-absorbing materials for the auto and other industries.
He set up another to handle acquisitions and oversee research-and-development. The last is real-estate development. Over the past few years, Moore has either started or bought a new company every year, and hes always on the prowl for a sense of innovationsomething he categorizes as newness.
Most of my time is spent on newness, he explains. The change is where the value is. By change, I mean new products and new ideas. The real way to do it is to create something brand-new, where theres no market for it, no one to compete with and no one to suggest what the price should be.
The beauty of that is when youre done with it, you can sell it. Newness is the key to a higher return.
Despite the scores of patents that hang on his walls, Moore never received any formal scientific training. But he was raised in an environment where people did what they wanted to do. That meant exploring his interests and seeing where they led. You have to have a passion for what you do, he says. The old, dull, buy low, sell high gets kind of boring after a while. If you have passion, it leads you into different areas and different businesses. When you do a lot of different things, it makes it very exciting. Sc ience was a field I didnt know much about.
After leaving Sohio, Moore worked as a manufacturers rep in the auto industry and realized he knew nothing about the engineering of the products he sold. I was a little insecure about my job, he admits. So he spent weekends at the library, learning all he could about science and engineering.
Armed with an expanded understanding of the industry, Moore founded the first of several small manufacturing companies, which developed polymers used to rustproof vehicles. As these companies grew, Moore sold them off and used the money to fund new ventures. And each time a groundbreaking technique or product was developed at one of the companies, Moore would proudly add another patent to his collection.
Today, Moores more concerned about big picture issues, but hes still interested in product development. I like to get involved with these inventions, he says. I have a lot of inventions. Even with all the businesses that are running now, I am still constantly involved on the technical side from the beginning.
Moore leaves the operations of each business to hand-picked, aggressive young executives who buy into his vision of constant innovation. He keeps tabs on his companies through regular forums, where department managers meet with Moore to compare notes. The meetings are either weekly or biweeklyeach company gets the level of attention it demands. Its sort of where are we now, what we have to do and whos responsible for it forum, he explains. But its very specific. For example, if sales arent where they should be or if we havent gotten information we need from a department such as R&D, Ill stop a project. It drives them crazy, but we need to know all the details.
That quest for detail is, no doubt, what will lead Moore into his next new venture. Or perhaps hell stumble upon another scientific process that interests him. Either way, its unlikely hes bought or built his last company.
Want it done right? Do it yourself
Everyone who works at Air Technical Industries can recite a story about its owner, Pero Novak:
During ATIs first year, Novak didnt have enough cash to maintain inventory of his only product, a collapsible floor crane. So each night, he would build one for a prepaid order, deliver it first thing the next morning, and then ask if he could borrow it to show to some new prospects.
At the end of the day, he would return the crane and, if hed received an order, build another for delivery the next morn
This continued for almost a year.
In the first three years, the company didnt make one dollar of profit, Novak says. Every buck we got in went right back into the business to buy tools, paint and parts. I did everything myself. I used to build and promote the crane every day. But before I went out to show the crane, I would screen the customer and see if they really needed it. And, if they could pay me.
More than 30 years later, Novaks hands-on approach hasnt changed. His desire to ensure that the machines are sold to the right customers has led to his founding four other companiesall complementing ATI.
Novak just doesnt like to rely on outsiders who may not look out for his own best interests. One thing just kept leading to another. We always have something on the drawing board.
This sense of self-reliance is consistent with Novaks past. He left his native Croatia in the early 1950s and arrived in in Cleveland unable to speak English. He ended up in the military, serving as a pilot in Korea. It was during that timeafter his car broke down somewhere between Cleveland and his military basethat he thought up the idea of a low-cost, portable hoist that could be wheeled into position to lift an engine out of a disabled car.
Today, ATI has more than 1,600 specialized products for moving heavy loads in tight spaces.
The second company, Agile Equipment Co., was founded out of necessity in 1968. Novak was frustrated with distributors who said they were having trouble selling ATIs lifts and cranes.
So he founded his own distribution firm, Agile Equipment, which he now uses to benchmark the effectiveness of other independent distributors.
If it works for us, why isnt it working for them? Novak asks, rhetorically. Probably because theyre not doing it right.
When ATI got large enough to consider international sales, Novak didnt want to hire an import/export firm that wouldnt be loyal to ATI. So he founded his own, ATI International Inc., in 1972. The company ships ATI products overseas and markets them to foreign manufacturers, and represents products from outside companies as well.
When Novak tuned into the amount of money ATI was spending to design and print its extensive product brochures and catalogs, he founded Kingsville Global Advertising Corp. to handle promotional advertising for ATI and other clients.
When he realized the vast financial potential for owning industrial land, Novak founded the Kingsville Global Holding Co. and snapped up several parcelsincluding those where his business were located.
While he admits that owning five related business is time-consuming, Novak says its simply a matter of knowing your objective and determining how to do it effectively. For each company we have a goal, a plan, a set of rules and procedures, he says. I put good people in charge. I encourage them and motivate them and give them a tap on the back.
Meanwhile, Novaks most recent venture is an anomaly; it has nothing to do with ATI. It grew out of Novaks nationalistic pride.
Three years ago, he led an investment group in buying and renovating a hotel in the Croatian city of Zagreb during the governments sweeping privatization effort. The $8 million renovation included 45 ground-level retail spaces and 269 guest rooms.
In the groups first year of ownership, business increased 35 percent; profits, 428 percent. Novak says the turnaround hasnt been an easy job and theres more work on tap. Its been an adventurous thing, he says. But full of trouble. Theres lots of red tape.
But hes still enthusiastic about injecting new life into the war-torn city. In a lot of ways, its an issue of home and country. In others, its the compelling mission of solving a new set of business problems.