Creating a sustainable company is a top goal for any business leader, and for Charles Schugart, it’s no different. Yet for Schugart, leading his company to sustainable growth started with digging it out of a hole.
As president and CEO of U.S. Legal Support, Schugart spearheaded a 180-degree turnaround of the company, from its sales strategies to its service offerings, that has turned it into a leading provider of legal services. Coming into the company in 2004, Schugart knew that the business was in bad shape. If U.S. Legal Support was going to avoid bankruptcy, he’d need to roll up his sleeves and make some changes.
Learning the company’s business inside and out, Schugart helped develop a new business strategy and balance sheet that was restructured for profitability. The company was also missing key areas such as IT and human resources departments, infrastructure and strategic sales strategies, which he and his team built from scratch.
Getting the company back on track also meant focusing on finding and keeping the right people. To create a culture of teamwork and high expectations, Schugart put together his own management team of “go getters” to pursue the task of completely reinventing the company. Over the last eight years, he’s also taken steps to make U.S. Legal Support the employer of choice, from increasing community involvement to emphasizing a companywide mission to be the best in customer care.
By developing a comprehensive business strategy of aggressive growth and a culture where employees refuse to fail, Schugart has rebuilt a litigation support company with a fresh approach and clear vision for the future.
“When I look back at our operations in 2004, I can’t believe how far we’ve come,” he says.
How to reach: U.S. Legal Support, www.uslegalsupport.com
When Michael Uckele began negotiations to take over his family’s nutrition supplement business in 2005, it was a troubled time for the company. Uckele Health & Nutrition Inc. had just been hit with a large lawsuit settlement and sales had plummeted 50 percent to $1 million. Uckele negotiated a purchase of the company from his father and his uncle and set to work turning the company around.
Uckele put in a great deal of time and effort in the early stages of building up the company but eventually realized he could work 24 hours a day and never complete all the tasks needed to grow the company, so he began hiring a team to share the workload.
Among the new team members were an operations chief and a team of nutritionists to create the detailed formulas used in the company’s products. Uckele says the best advice he received was from one of his mentors: “Don’t overload your superstars.” Today, Uckele’s leadership style is a collaborative one. He recognizes that his forté is working with customers to develop concepts for products that will meet their needs. He works with his executive team to brainstorm the details of the products, and then they turn it over to their staff to carry out the production. Uckele de?nes success by how innovative his people are working together, how well the products they develop meet their customers’ needs and how happy his employees are.
Since Uckele took over the company, things have fallen into place. Uckele Health & Nutrition has quadrupled its staff, boosted its revenue and now ships its products to more than 40 countries worldwide.
HOW TO REACH: Uckele Health & Nutrition Inc., www.uckele.com
Even the most daring entrepreneurs wouldn’t consider the midst of a recession to be the best time to start a business, especially one in which they had no experience while using their entire retirement fund to do so. But that’s just what Pam Turkin did in 2009 when she launched Just Baked, a Livonia, Mich.-based cupcake bakery.
Without experience in the culinary arts, Turkin began learning everything there was to know about the baked goods industry by researching existing companies, studying numerous recipe books and reading Internet blogs. She spent her weekends trying out cupcake recipes, and a year later, she opened her ?rst bakery selling wholesale to local stores. After selling excess cupcakes from an order to the public resulted in a high return, Turkin quit her job in marketing and dived into the bakery full time, selling to the public.
Just Baked has since grown into a 12-store chain throughout metro Detroit. The company has investment to expand the franchise nationally and into approximately 10,000 grocery stores, already selling to The Kroger Co., Meijer Inc. and within Detroit Metro Airport.
Despite its rapid growth, Turkin has maintained a high level of personal involvement in her company. She often places orders, personally delivers cupcakes and even makes an effort to work a full day in the bakery so that she is familiar with both her product and her employees.
All of Just Baked’s cupcakes are made fresh daily using the highest-grade ingredients, with time put into presentation. The company offers more than 50 different ?avors of gourmet “jumbo” cupcakes, as well as “mini” cupcakes, homemade brownies, cookies, scones, granola, decorated layer cakes and more.
HOW TO REACH: Just Baked, www.justbakedshop.com
Ryan Blair’s life is an open book, literally. His story of graduating from the life of a gang member to that of a millionaire is portrayed in The New York Times best-seller titled, “Nothing to Lose, Everything to Gain: How I went from Gang Member to Millionaire Entrepreneur.”
Blair is the co-founder and CEO of ViSalus Sciences, a marketer and distributor of health and wellness products. He founded his ?rst company at the age of 21 and started and sold two others before he helped found ViSalus. The company employs thousands of people and has more than 60,000 distributors worldwide.
ViSalus grew quickly, and in 2008, it was sold to Blyth Inc. A few months later, the economic recession hit and ViSalus was left one month away from having to declare bankruptcy. Blair and his co-founders invested all of their savings to give ViSalus one more month of operating capital to test an idea they believed would save the company — the Body by Vi 90-Day Challenge. In July 2009, the Body by Vi 90-Day Challenge was launched with little response. The move was a total corporate transformation and a huge risk, which looked as though it would result in failure. However, Blair’s industry disruptive business model of acquiring customers by leveraging mobile and social technology started to gain traction. That year, the company’s revenue tripled, and in 2011, ViSalus saw sales increase sevenfold, and they haven’t slowed since.
The new business platform leveraged the primary strengths of network sales: momentum and social marketing. ViSalus continues to gain customers through a customer-?rst approach and a focus on customer acquisition and retention. In February 2012, the company added 113,000 new members and currently boasts an 8-to-1 customer-to-promoter ratio.
HOW TO REACH: ViSalus Sciences, www.visalus.com
Business Services, Finalists
Antonio “Tony” Grijalva and John W. Allen experienced a lot before joining together to lead G&A Partners.
Grijalva arrived in the United States at 19 with $25 in his pocket and a desire to become a self-sufficient individual. Allen spent two years in South Korea on a mission trip for his church and returned to the U.S. with a passion to help minorities, especially those who wanted to start their own businesses.
Each got a chance to fulfill their dreams through G&A. The company evolved from a CPA firm to a professional employer organization that provides a variety of staffing and HR services to its clients.
Both men say the key to making it work is developing and maintaining a corporate culture that is centered on ethical and professional values. The culture has got to permeate through every level of the organization and be something that employees believe in.
The growth of G&A did not come without struggles. Grijalva, chairman and CEO, and Allen, president and COO, were not always confident enough in their instincts and that occasionally got them into trouble. They hung on too long to employees who couldn’t do the job and ended up hurting the organization.
But they learned from their mistakes and built the company into a success. They’ve stayed in touch with their people and work hard to make sure employees have what they need to do their jobs.
It’s a philosophy that makes for productive employees and happy clients and keeps the company poised for even more success in the future.
How to reach: G&A Partners, www.gnapartners.com
As president and CEO of Plex Systems Inc., Mark Symonds has high standards for his company and his employees, but he also works hard to create a culture of fun and creativity. Symonds knows a major leadership challenge is putting the right people in place at a company to allow for growth while also keeping the culture protected. At Plex Systems, a developer of the Plex Online cloud and SaaS ERP solution for the manufacturing enterprise, he has put in place a culture that helps employees feel like they are part of important decisions at the company.
In addition to hiring the best people with solid work ethics, Symonds makes it a point to cultivate trust with employees. It’s why he decided not to cut any employees during the recession.
The fact that one of Plex Systems’ core values is meritocracy, eliminating seniority, also opens the culture up for idea sharing. Symonds doesn’t just expect managers to come up with new ideas for innovation and growth; he wants ideas from every employee. Building break and game rooms throughout company facilities is one way he fosters an environment of collaboration and openness among employees in all areas of the organization.
By building employee trust and collaboration, Symonds has led the company to increase its revenues while competitors’ decreased. He makes it a priority to keep rolling out new ideas and improvements for software that provide value to the company’s customers in real time. The company’s Plex Online system for manufacturers has been recognized with numerous awards for its innovation and technology, which is a testament to the company’s culture that allows employees to feel valued and makes them always want to produce at a higher level.
HOW TO REACH: Plex Systems Inc., www.plex.com
Businesses often need to evaluate where they are in order to decide where they want to go, and sometimes the best way to do that is by comparing themselves to a standard.
“In today’s world of sharing information, companies can now drill down to specific cost drivers within workers’ compensation, direct medical care, direct pharmacy source and litigation management, to name a few,” says Daniel Slezak, vice president at ECBM. “Benchmarking has proven to be a most valuable process for identifying performance improvement areas. Once the information is shared in scale, you can identify the best-performing companies, which leads to the identification and implementation of best practices.”
Smart Business spoke with Slezak about how to benchmark your risks and lower your costs as a result.
What are some risks that companies need to manage?
If you start with the premise that an organization needs the commitment of top management, other risks come into play when the doors of the business first open. Some risks to keep in mind are:
- Employee hiring and screening practices. Without proper personnel, you cannot grow your business.
- Safety education, orientation and training. Once you have a trusted employee base, you need to have a constantly evolving safety message.
- Worker involvement. When you allow employees to buy in to your message and take ownership, performance improves.
- Recognition and rewards.
- Accident and incident investigations. When a problem occurs, you need to determine why and then take corrective measures.
- Drug and alcohol testing can enhance your positions and mitigate ultimate cost.
Once a company has addressed these basic risks at its foundation, it can move on to more specific areas, depending on its operations. Some examples include personal protective equipment, IT backup and security, and having well-maintained vehicles.
What are the benefits to benchmarking risk management costs?
Every business faces the possibility of accidental loss of property, income, liability and injury to its employees. If you are committed to minimizing those losses, insurance brokers and risk managers have the resources to put in place a plan that will possibly engineer solutions or effectively educate employees on a strategy you can enforce. The ultimate benefits are safe, healthy employees who are more productive with their working activities.
What are some examples of best practices?
The concept of benchmarking in insurance is simple — provide guidance to a company that will be shared with management and show them that the terms of coverage and cost are reasonable relative to other similar organizations.
You also can dig into the elements that make a program successful. For example, in workers’ compensation, you need to know your medical versus indemnity split of claims. The more claims you keep as medical only, the more the total cost of claims drops. As you measure your company against others, determine what program you could have in place to achieve the best practice. Then ask if it is something that is manageable.
You also can look at the closure rate. How long are your claims staying open? Are you getting employee back to work? Best efforts are not acceptable; your company needs to strive for best practice as the goal.
By drilling down within your vendor costs, you can eliminate extra expenses by knowing best practices before implementing them. Medical bill repricing can vary greatly by vendor. As an example, a risk management consulting firm recently effected a simple change in a client’s program that is projected to save it millions of dollars, in a client’s program that is projected to save it millions of dollars, which we personally just achieved with a client.
What pitfalls do companies encounter when benchmarking?
The most critical concern is choosing the correct peer group. Your broker will align you with the same industry and company size, but the geographical footprint also needs to be considered. For example, if you have a retail operation with stores located in mostly urban areas, you can’t expect the same results as someone with a high concentration in suburban areas when it comes to general liability or workers’ compensation claims. Another pitfall is failing to engage top management. The team has to be on the same page throughout the process so that expectations are set, measured and supported in a timely fashion.
How can you compare risk management practices and costs to other similar companies?
Risk management consultants constantly use benchmarking to determine adequate limits and pricing models. The data available today allows you to determine if you are carrying adequate directors and officers limits and what terms and conditions are available. This type of measurement can be used on other lines of coverage as well. It starts with having credible information about your own company. Most actuaries want to look at 10 years if you are trying to establish your own triangle of losses for a workers’ compensation rate. However, if you have at least five years, the actuary can identify trends and cost drivers. Keep in mind that some benchmarking, such as policy terms conditions and pricing, is a snapshot view of one year comparing your company to the ‘pool’ at a point in time.
With your data in hand, contact an insurance broker. Most quality brokers have the ability to access databases, such as RIMS Benchmarking Survey, NCCI and Advisen, for comparisons. Tillinghast Towers Perrin D&O Survey is universally regarded as an excellent source of information on D&O. Then, by implementing best practices for managing risks, you can lower costs, increase productivity and make top management smile.
Daniel Slezak is a vice president for ECBM. Reach him at (610) 668-7100, ext. 1323, or email@example.com.
Insights Risk Management is brought to you by ECBM Insurance Brokers and Consultants
Recovery continues to be slower than most businesses would prefer. Part of the slow growth is due to concern from many business owners regarding whether they can trust some of the leading economic indicators released in the past few months.
On a positive note, recent trends have shown that unemployment is being reduced overall. The National Association of Manufacturers also reported that more than 31,000 new U.S. manufacturing jobs were created in February. This increase, however, is tempered with the belief that many unemployed individuals have simply given up on job searches, as they have now been out of work for an extended period. The end of their search effort causes many to fall off of the tracked statistics. This may be causing some lower-than-actual unemployment numbers to be reported. In addition, a recent University of Michigan study showed consumer confidence figures have fallen slightly due to weakening perceptions about the economic environment.
Two other areas facing business owners have caused them to move at a slower pace when considering expansion, acquisitions and hiring of additional employees. These two areas are taxes and the looming health care changes. With the potential for higher taxes and higher health care costs on the horizon, many entrepreneurs are taking a wait-and-see approach. Thus, the reports of companies continuing to pay down third-party debt and stockpile cash still exist.
It seems businesses have returned to profitability as a result of their concentrated efforts implemented to endure the economic downturn. The threat of losses, liquidity issues and, in some cases, covenant violations forced many businesses to lean up operations, challenge spending and do more with less. As a result, many are producing more with fewer resources and have improved their processes. Earnings levels have improved, but most results are still below the levels experienced in the mid-2000s.
Also of concern is uncertainty in foreign markets. While we have had a credit and debt crisis here, overseas trouble has many business owners contemplating international business relationships and opportunities. In the mid-2000s, many production jobs were moved overseas to benefit from inexpensive labor. With the current domestic economic conditions and the lack of stability driven by the uncertainties in the Eurozone, there are rumblings that U.S. companies may work to grow domestic manufacturing and pull jobs back to the U.S. Innovations also are occurring in certain niche areas, and the shrinking cost advantage of outsourcing production is becoming more evident. Job growth continues to be a major focus domestically, and labor negotiations of major industries, such as auto makers, have demonstrated the desire for large companies to guarantee sustainability and promise to keep jobs in the U.S.
There is also concern regarding the stability of the buying power of foreign markets. U.S. companies have continued to expand their penetration into foreign developing markets. The ultimate results of the various national debt issues in the Eurozone could create an economic ripple effect that could affect demand for U.S. products in many foreign markets. Also, the continued political changes and instability in eastern countries can create swings in energy prices and product demand in those markets. This creates difficulty in planning for growth and expansion — and correspondingly a fair amount of caution when it comes to the timing of capital investment and business expansion.
Merger & Acquisition Activity
While the aforementioned factors have slowed down private business owner activity related to expansion and acquisitions, another business segment seems to have picked up. Private equity groups and private investors have been much more active in recent months. There has been significant public discussion in the past 18 months regarding cash that is on the “sidelines” waiting to be invested. We have seen that as the economy begins to expand and smooth out, more M&A deals are being contemplated. Also, business valuations are returning to more normal and expected levels driven by those wishing to market their businesses, and banks are becoming more willing and involved in financing such deals. We view this as an encouraging sign and an indication of continued movement in the right direction.
Each business faces unique challenges, but all ultimately need to consider, plan for and execute a succession plan. Whether the plan involves selling the company to an unrelated third party, transitioning or selling the company to the next generation, an ESOP or some combination of these, this issue has to be addressed. The recent increase in merger and acquisition activity has been driven in a number of cases by exit strategies employed by many business owners. As the baby boomers continue to exit the workforce and leave their businesses, we will see more and more movement and opportunity in this M&A wave. When these decisions are made and the process starts, planning can have a significant effect on the company’s valuation and the ultimate profit realized by the owner. This truly is one of those areas where “an ounce of prevention (of negative results) is worth a pound of cure.”
Here are a few planning ideas that can be game changers when an owner is looking to improve value:
- Perform due diligence on your business and your business processes and activities. Many sellers believe the diligence process is the buyer’s responsibility. While buyers will spend a great deal of time and effort on due diligence, performing self due diligence can overcome a number of surprises, allow the seller time to position its operations and activities to provide the greatest advantage and better prepare the seller for questions asked during the process. Being prepared when soliciting bidders also will likely increase the number of bidders you may be able to attract.During this process, you should consider reverse due diligence, or preparing the data that will likely be requested during the due diligence process. These are standard documents requested in most diligence engagements. Having this information ready on the front end adds value and helps move the process along. Delays in outside or third-party diligence have been proven to affect deal values.Also, have your company’s financial statements audited by a firm that potential buyers consider reputable. Audited financial statements provide immediate credibility.
- Make sure you impress upon buyers the value of the company you are offering to them. Build a business case for why the company will continue to prosper and grow and what positive effects the existing infrastructure will have on such growth.
- Document agreements with employees and third parties. It is important for buyers to mitigate the unknowns when buying a business, so the more documentation for contractual arrangements, the better.
- Be proactive relative to unresolved or potential litigation. Review pending or threatened claims with your attorneys and be honest about what situations exist. Resolve issues as diligently as possible. Make sure to include all potential human resources issues that may exist.
- Avoid accounting discrepancies, unusual transactions and changes in reporting methods. An audit, as discussed above, can assist with this. However, remember that any such instances will need to be explained and will be challenged by a buyer. Clouding facts will lead to more questions and may ultimately impact the value of your deal.
When it comes to the value of your company, you can never be too diligent. For more ideas on how to enhance value, contact a BKD advisor.
Scott L. Fields is a partner at the Houston office of BKD, LLP. Reach him at firstname.lastname@example.org.
Article reprinted with permission from BKD, LLP, www.bkd.com. All rights reserved.
For The Ritz-Carlton, Cleveland, every guest that walks into the hotel is considered a VIP. This exceptional treatment of its guests is standard practice and Joseph Mattioli, general manager, makes sure that level of service is consistently being offered.
In fact, customer service is woven right into the hotel’s credo, which reads, “The Ritz-Carlton is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.”
Every employee of The Ritz-Carlton uses the credo as a guide to providing top-level service. Each employee is empowered to make a guest’s experience special in a personal way. For instance, by noticing a guest’s interest in music, an employee can arrange for Rock and Roll Hall of Fame tickets to be delivered to his or her room or if a guest has obviously had a rough travel day, a glass of his or her favorite wine is sent to the room.
The anticipation of needs also plays into how the hotel recognizes guests. If a guest only orders Diet Coke while dining in the hotel, wait staff will have a Diet Coke poured and brought over to the table prior to the request or even have a personalized beverage amenity in their guestroom awaiting their arrival. Even children get special attention and are offered toys during the check-in process. For guests that frequently stay overnight, milestones are recognized by the staff through cards signed by staff they have been in contact with.
The customer service provided transcends the physical product of hotel guest rooms and meals. The Ritz-Carlton strives to deliver a unique, memorable and personal experience to people visiting the hotel, making them Ritz-Carlton guests for life.
How to Reach: The Ritz-Carlton, Cleveland, (216) 623-1300 or www.ritzcarlton.com
“Do unto others as they want you to do unto them,” is a rule that has become integrated into the fabric of Zinner & Co. and the way Managing Partner Robin Baum runs the accounting and management consulting firm.
When dealing with clients the firm is always conscious of the fact that not every client is the same and the natural or normal way of doing things may need to be altered to the various styles of different clients. The firm’s focus is to make clients as comfortable as possible in order to ensure they are happy with services and how they are provided.
While Zinner aims to treat every client as a VIP, there are always some that require a greater depth of business relationship in services provided because of their size or the volume of business they do. In addition, the firm understands that when a new client relationship is started there is only one opportunity to make a first impression. Therefore, Zinner strives to provide exemplary service right out of the gate.
The ultimate goal of Zinner & Co. staff is to connect with clients in a more meaningful way by finding out what is most important to them. This is accomplished through reaching out to clients frequently using books, literature, cards, personal communication, and gifts based on their personal interests. Whether it’s a season subscription for regional theater at the Cleveland Play House, a suite at Progressive Field to enjoy a night of baseball with clients, or a table at various not-for-profit events and benefits, Zinner wants to engage with its clients while taking in the best of local culture.
Zinner & Co. staff members also adhere to rigorous standards and undergo on-going training to maintain not only the highest possible level of technical skill, but the most satisfying client service experience possible.
How to Reach: Zinner & Co., (216) 831-0733 or www.zinnerco.com