Fast growth almost crushed me Featured

10:06am EDT July 22, 2002

On the surface it looked like Bob Juniper, the tenacious, audacious president of Three-C Body Shop, had struck pure gold.

A highly controversial advertising campaign hurled his stagnating collision-repair business into the limelight in 1993, giving both him and his Columbus-based company instant notoriety. Within the next two years, Three-C's sales grew 110 percent to $6.1 million-a jaw-dropping 5,765 percent higher than the $104,000 the company had been grossing when Juniper bought the business from his father in 1984. As if that wasn't enough, by 1996, Three-C had earned its second consecutive appearance on the Inc. 500 list of the nation's fastest-growing private companies.

Juniper should've been on top of the world. Instead, he was hanging by a thread. Three-C's aggressive growth, and the unforeseen costs that went with it, had gotten out of control.

"I got 120 days behind on all our bills at one point," Juniper says. "I remember a time when my balance was $200,000 negative in my bank account and I was cutting checks for a $30,000 payroll that day.

"I can't tell you how we made it ⊃ I never sat down and planned this out. It just sort of happened. Somehow I kept all the balls in the air."

Be careful what you wish for

Juniper admits he asked for a lot of the growth that came his way at Three-C.

"I was always on my dad to expand the business," Juniper says. "So I saw potential at an early age. But he really wasn't interested in growing the business."

In fact, on days when the Southwest Columbus body shop got too busy, his father would routinely post a "No estimates today" sign by the road.

"He would run the customers off," Juniper says, marveling briefly at the thought. "Dad kept a steady, even flow to the business."

The younger Juniper had a different philosophy. When he took over Three-C, the "No estimates" sign went out with the trash. Let the customers come; there's no such thing as too busy, he figured.

"If it took 18, 20, 24 hours to get it done, that's what we did," Juniper says.

The move pushed revenues up almost 600 percent in the next six years, sending Three-C's annual gross past the $700,000 mark in 1990. When the business plateaued the following year, he started dabbling in radio advertising.

A "generic," name-awareness campaign boosted business approximately 10 to 15 percent, he says. Then Juniper copped an attitude.

Sore that Three-C had been shut out of a couple direct-repair insurance programs-ones where agents refer customers to body shops that charge only preset, discounted rates-Juniper started writing radio ads blasting the insurance industry. His reasoning? Direct repair was siphoning business away from Three-C. Now it was payback time.

The ads were a hit with consumers. By the end of 1993, the first full year the campaign ran, Three-C's revenues had hit $2.9 million-a staggering 141 percent higher than the 1992 gross.

"That was our biggest percent growth year ever-and it almost crushed the company," Juniper says.

When revenues grew another 55 percent the following year, he knew Three-C was in serious trouble. He just didn't know how serious. His award-winning sales figures hid all the red ink. And he was running too fast to notice.

"I had money in my pocket; bills were being paid; I figured it was OK," he explains. "I had a hunch [we were losing money], but no proof."

Losing control

Juniper clearly wasn't prepared for Three-C's eye-popping growth spurt. In fact, he was hardly prepared to be a full-time businessman. His forte was knowing the collision-repair industry-not understanding the bottom line.

He hadn't a clue how to measure the financial success of his business. He knew little about building a management team. He didn't understand how to control growth-he just hung on as it happened.

As Three-C's business accelerated in the early '90s, Juniper hastily added staff to keep up. That pushed his company's infrastructure beyond its limits. He needed more phone lines, a second fax, more bathrooms, a new computer system.

"We outgrew everything twice," Juniper says. "It wasn't just once. We spent so much money on those things."

Three-C's overhead was mushrooming out of control.

"When you're growing rapidly, you don't pay as much attention to the expense line as you should," Juniper admits. "You kind of throw money at problems."

That habit threw Three-C into a dangerous cycle in which Juniper was borrowing from next month's cash flow to pay this month's bills.

"As long as you're growing, it never catches up with you," he says. "You're always paying your bills with the bigger cash flow."

When Three-C's sales started flattening out again, however, reality caught up with Juniper and delivered a stinging slap in the face. Three-C's highly acclaimed revenue figures weren't telling the whole story. The company was losing money.

"We ran losses in '92, '93 and '94," he says. "'94 was the big loser," pushing the company more than $200,000 into the red.

It was a rude awakening for Juniper whose business success was still being lauded by the local and national press. Problem was, no one had really been tracking the company's financial health until Juniper hired an accountant in 1995. By then, a lot of the damage had already been done.

"I robbed Peter to pay Paul and hoped it all worked out," Juniper says. "The increased cash flow helps you survive it, but I clearly rolled the dice."

"There was no sense of accounting cutoffs, accounting procedures, nothing," says CFO Norm Hicks, who spent nearly 10 years as controller of the Credit Bureau of Columbus before wading into Three-C's financial quagmire three years ago. "Through '94, Bob was growing and operating Three-C without the information he needed. All the accounting work was being done out of a CPA firm in Youngstown and the communication was not there. The financial information was not timely and the quality was poor. I told him he'd been operating from the gut and from the heart."

Looking back, Juniper knows it's true.

"When you have rapid growth, you're never quite sure if you're making money or losing money," he says. "You're just so focused on surviving it."

Not a moment too soon

Borrowing money to pull through his financial crunch was not an option for Juniper.

"I ran red ink for several years, so it was hard to go to the bank and show them those massive losses," he explains.

Looking internally for ways to cut costs and better control his cash flow seemed his best bet.

"I had to become a better businessman," he says.

Juniper began by negotiating 60- and 90-day extensions with some of his suppliers to help him through the months ahead. Then he worked with Hicks to convert Three-C's commercial checking account into a sweep account so the company could earn interest on it.

Staffing was another issue. After seeing his workforce swell from 11 employees in 1992 to more than 65 just three years later, Juniper knew there were "some bad eggs in there. A lot of times you can't do a lot about it because you're growing so fast you can't afford to let anyone go," he says. When Three-C's growth diminished, however, so did Juniper's tolerance. He cut roughly a dozen slackers from his payroll and instituted a regimented, three-tiered training program for his remaining staff to step up productivity and lessen mistakes.

All the while, Hicks was setting up a financial information reporting system for Three-C and teaching Juniper what the numbers meant.

"With as fast as Bob was growing, he really needed to have a handle on cash management," Hicks says. In addition, Hicks emphasized the need to get Juniper's entire management team into budgeting.

"Bob was the only one in the company that knew what it was costing-somewhat-to operate the business," Hicks says.

The discipline paid off. In 1995, Three-C turned its first profit in three years. It was less than 1 percent of gross-a "pittance" by Juniper's measure-but it was a start.

Next, Juniper did some thing he once thought unthinkable. He began turning away work. Specifically, he dropped those jobs he determined to be less profitable. A computer program helped him analyze job profitability based on any number of factors including the type of repair needed, the size of the repair and the source of the referral. He actually turned the tables on two insurance companies as a result, deciding not to repair cars from their policyholders unless the customer was willing to pay some additional out-of-pocket costs. Three-C's profit margin jumped from 41 percent to 47 percent as a direct result of that decision, Juniper says.

Just because Three-C was doing more profitable work didn't mean the company was getting paid for it any faster. So Juniper instituted a collect on delivery policy with all insurance companies.

"They screamed and yelled," Juniper recalls, "but we won't release cars until they pay."

That little accounting trick paid off big, too.

"We had $400,000 in accounts receivable at that time and I was writing off $2,000 to $3,000 per month in bad receivables," Juniper says. Within 90 days, he had less than $30,000 in outstanding customer bills remaining on the books.

By the end of 1996, the company was making roughly $500,000 in profits-a record year, according to Hicks. Now, Juniper says, banks are beating down his door.

"We're pretty strong now financially," Juniper says, adding that Fifth Third Bank has expanded his line of credit to $200,000, though he draws upon it "very sparingly."

"It's a 150 percent reversal," agrees Hicks. "We knew the potential was there. We certainly had the volume ⊃ It was just a question of how quickly we could turn it around."

Back in the driver's seat

Three-C's brush with financial ruin may have scarred Juniper a bit, but it hasn't suppressed his passion for growth. Not by a long shot.

He has reassessed his financial goals, but they remain far from modest: $10 million in sales by the end of this year and $20 million three to five years from now.

"I want a nice 25 to 30 percent gradual, smooth increase," Juniper says in all seriousness. Perhaps his idea of comfortable growth remains helplessly warped from the fast-lane mentality to which he became accustomed. Then again, perhaps it's the adrenaline rush that drives him.

"Maybe you kind of get addicted to it," he concedes. "Maybe you think you can do it a little bit better the next time around."

The next time has already begun. In the last year and a half, Three-C has expanded into Westerville and Reynoldsburg, added a production site in Lancaster, started construction on another site in Chillicothe and has plans to roll out a new claims-center prototype in Polaris, Easton or Tuttle Crossing. A fourth production site is also in the works for Delaware.

As if managing Three-C's growth isn't enough, Juniper partnered this year with Dan Schmidt, president of Infiniti of Columbus Inc., to open a separate business called Schmidt Collision Center Inc. It's a venture that could see explosive growth, too, as more car dealerships look to outsource body shop repairs. So far, three local dealers have signed up to channel work to the center, but Juniper is proceeding with caution. He's learned from his mistakes at Three-C.

"We want to grow Schmidt in a more controlled way," he states.

As for his main business, Juniper says he's better equipped to control growth there, too, now that he finally understands the type of work he really wants to attract.

"The first time around we didn't have the infrastructure and the information," he points out. "This time, we do. If it gets a little uncomfortable I can go into pick-and-choose mode and slow it down a little.

"I'm going to make sure I can turn it off this time," he vows. "Last time, I literally couldn't stop it. But I'm a smarter business person for it. I got an education you can't buy ⊃ Maybe it just has to happen this way."