Randy Hampton created a very profitable monster. A small job he landed to design tiny medical implants at Astro Model Development quickly took on a life of its own. Some would have looked at the surge of new work as a blessing, but the machinist had mixed emotions.
The problem was balancing the influx of new work with orders he needed to fill from Astros long-time customers. Hamptons struggle did not go unnoticed by Mike Watts Jr., owner of the Eastlake manufacturing operation.
The work just kept growing and growing, he recalls. We just couldnt keep up with it.
Instead of reorganizing the department or adding workers, Watts chose a different path. He called Hampton into his office and made him a business proposal.
He said, Why dont we open a medical division? remembers Hampton, a loyal 10-year employee of the company. Hampton was blown away by the offer to go into business with his boss, and quickly snatched the opportunity.
One day youre a shop foreman with a dream, says Hampton, who last spring celebrated the first anniversary of Astro Medical Devices. Then, the next day, youre living your dream day to day.
For Watts, the decision was not exactly revolutionary. He had already helped start three other spinoff companies with former employees, beginning with the 1984 opening of AMD Fabricating.
We knew he wanted to start his own business someday down the road, Watts says of his decision to propose a partnership with Hampton. In the family business, you get to know the people, and you want to help them make it go for them.
Its safe to say there are those who would view Watts crusade to help employees launch new companies, which in some cases provide 100 percent competition to Astro Model Development, as an odd business decision.
George Qua doesnt. The owner of Qua Buick in Shaker Heights has helped 15 of his employees graduate to owning automobile dealerships during his 40 years in business.
When the towering Qua, who stands more than 6 and a half feet tall, begins talking about the reasons, his voice takes on a philosophical air.
Social commitment is a many-headed figure, he says. In part, it means being fair and equal with the people you employ, and providing opportunities for all concerned. One of these things that has changed in the 40-some years Ive been in business is this social contract, if you will. Its not considered today.
In his office, Qua keeps a box of index cards with an employee name written at the top of each. He records personal information about his workers, such as their birthdays, names of family members and anniversary dates with the company. He also includes a space for short- and long-term goals, which he discusses at least once a year with each employee.
Essentially, the idea was to know what it was your fellow employees wanted to do, and to assist them if you could, along the way, financially. Plus, the training that they would need to open their own business, says Qua.
Unlike Watts, Qua has never had much interest in retaining an ownership stake in the new dealerships. He simply earmarks a pool of money, which he loans out to finance the start-ups, and employs one basic rule: Get the money back as soon as you can. That allows you to put it into someone elses hands so they could go do it, too, he says.
Qua can take credit for establishing automobile dealerships in several cities, including Lorain, Mansfield, Ashtabula, Bedford, Painesville, Columbus and Alliance. He quickly dismisses questions about whether hes worried that by creating a legion of car dealerships, he is, in essence, building competition which could potentially divert business away from him.
No one should be afraid of competing against anybody, he says. Competition, as long as its clean, is fine. Thats what made America work.
In exchange for financing the start-up businesses for his employees, Watts keeps at least 50 percent ownership in each venture. The percentage his former employees own depends on how much capital is required to start the business, and how much money the employee is able to provide.
Ownership stakes range from equal 50-50 partnerships to 10 percent. And Watts stake ensures he has a vote in large business decisions. For the most part, though, hes satisfied leaving his former employees in charge of the day-to-day operations.
Watts is modest when it comes to discussing the success of Astro Model Development. He downplays the risk involved in growing the 22-year-old company through its business ventures with employees and the success of its spinoffs.
I think its getting the right people involved in the partnerships, he says. It really is.
He finds those right people by keeping a keen eye on his work force. Since his employees also double as sales representatives to the companys customers, he watches for those who bring in new business or show an aggressive spirit before entertaining the thought of launching a new venture.
A lot of our growth here is employee developed. We werent out there pushing at (Hampton), telling him we need more sales or have to grow. He did it on his own, says Watts. When you have people like that who want to go in and start their own business, those are the people you really want working for you because they are aggressive.
Watts track record with spinoff businesses has energized his work force. It is not uncommon for employees to strive to bring new work into the company. They also arent afraid to approach him to give him their own sales pitch.
Theres always something going on, he says. Every once in a while, an employee will come up to you and say, Ive got this idea.
And who knows where that idea might lead.
How to reach: Astro Model Development (440) 946-8171; Astro Medical Devices (440) 269-6984; Qua Buick, (216) 721-6000
Jim Vickers (email@example.com) is an associate editor at SBN.