Sanner, now president and CEO of Indiana Lubricants Inc., says the stores' 60 employees were more knowledgeable about the business than he was, but he didn't let that intimidate him.
"I'm 6'4" and weigh 230 pounds," Sanner says. "No one would mess with me."
But it was more than Sanner's size that helped him grow those original nine locations to nearly 50 today. It was his belief in franchising and his determination to learn about the business as quickly as possible. The three partners' original plan was to start with one location. But when the opportunity arose to purchase nine stores, the partners didn't hesitate.
"The seller didn't want to wait for bank financing," Sanner says.
So Sanner called Jiffy Lube's corporate office, and within hours, the company sent him $1 million for the transaction via private jet. That, he says, is one of the advantages of franchising.
Sanner and his partners were no strangers to franchising when they partnered with Jiffy Lube. Each had some experience with McDonald's and was successful. But Sanner and his partners wanted to try a franchise that offered more entrepreneurial freedom.
"With McDonald's, you sign a 20-year lease," says Sanner.
He says this doesn't allow the franchisee to own anything or build an asset base. With Jiffy Lube, the franchisee owns the stores, and has more flexibility and a lot of corporate support.
"You don't have to reinvent the wheel," he adds, saying that the mistakes have already been made and corrected. But he cautions that not all franchises are as worthwhile as Jiffy Lube and advises potential franchisees to only go with companies that are operationally strong and have been in business for some time.
Smart Business spoke with Sanner about the benefits, drawbacks and challenges of franchising.
Why did you choose Jiffy Lube as a franchise?
We bought nine locations when I was 25 years old in July 1985. We built three more, which opened in April, May and June of 1986. The original plan we -- my two partners and I -- had started when we went to Jiffy Lube's headquarters in Baltimore (the corporate headquarters is now in Houston) was to find out what territories were available. We planned to eventually have hundreds of locations and take the company public.
We were looking for large territory in Michigan, Indiana and Kentucky. In 1985, I moved to Indiana to find locations. I was to run the first location in that state, find a second and train an assistant. I planned to learn the business from the ground up, and we hoped to expand as fast as we could.
Then we learned about nine 10 Minute Oil Change stores that were available, five in Fort Wayne, the rest in Lafayette, Kokomo and Lexington, Ky., and we felt it was a great opportunity. The owner didn't want to wait for bank financing, so I called Jiffy Lube and explained the situation.
I was told to go to the airport, that they were sending a jet and I would have a check for $1 million in my hands. We consummated the deal in 45 days, got our bank financing and sent back the money to Jiffy Lube. That's one of the reasons we are extremely loyal to Jiffy Lube; they got us into the business.
But it shifted from me managing one location to having nine locations and 60 employees. All of them had been in the business for some time, and I walked in and changed the way they were doing everything. We offered more services and did things differently.
They were all better than me at the mechanics -- I had no mechanical background. They all knew more than me. But my size helped me.
My two partners were older than me and were McDonald's franchisees. In 1983, I made a concerted effort to go after some McDonald's locations. There are a lot of similarities in the two businesses. They basically use the same work force and have the same challenges. It's a joy to take those young kids and move them up, watching them start their lives.
Both businesses offer fast service, a clean store and are service-oriented. Really, they're not that different. The big difference, however, is in building equity. With McDonald's, you're not building an asset base. McDonald's owns the building.
With Jiffy Lube, you own the real estate. And the other thing that is appealing is that you enjoy a real entrepreneurial spirit with Jiffy Lube. With McDonald's, over time, they really lost that entrepreneurial spirit.
In your opinion, what are the pros and cons of franchising versus starting a new company?
There's some safety with a franchising system in place. We know if we follow the plan, we'll be successful. Others have already made mistakes learning the business. And there's a network of franchisees as resources.
At Jiffy Lube, we are a very active group, meet regularly and share information and ideas. Everyone I talk to values the relationship we have with Jiffy Lube International. We work together with International on marketing, training and procedural issues.
I've heard horror stories of good people franchising with a company that only has five locations and in business two years. They couldn't possibly have learned an effective formula. The franchisor has got to be operationally strong and in business for awhile, or it won't have the needed financial or operational strengths.
The con is that, financially, you pay a royalty. We're paying $1 million a year in royalties to have the Jiffy Lube name and services. Sometimes I say to myself, 'Hey, I spent $1 million, do I get that money's worth from them?'
That's a huge amount of money. But we'd never have gotten where we are without them, and that's just 4 percent of sales. Some franchisors get 10 to 12 percent in royalties right off the top, so the Jiffy Lube situation is much better. And franchising can be like having Big Brother watching you.
I've heard that some franchisees have had ideas and didn't get support from the franchisor or even were penalized. For the true entrepreneur, franchising can be restraining, but from my experience, it's been a good thing.
Do you feel you are given enough freedom to effectively operate the business?
One of the things we purposely did was buy a large geographic area so as not to be part of a co-op but call our own shots and be fairly autonomous. There can be conflicts with other franchisees. We're not allowed to be within three miles of each other, and in a lot of markets, there are stores within three-and-a-half miles of each other, and they are competing with each other.
Before Pennzoil -- the parent company of Jiffy Lube -- merged with Quaker State, we were the only franchisor in the state of Indiana. After the merger, several Quaker States opted to operate as Jiffy Lubes, so that is not the case now.
What makes Jiffy Lube different from its competition?
What's made us successful is we've developed a real passion for the business. We take pride in developing our people, and we have a family environment. We work hard to satisfy customers.
I once counted 760 places to get an oil change in the Indianapolis market. Most of those places charge far less money. No one can do it faster or use better products. We have to be better, quicker and take care of the little things, like vacuuming the interior and washing the windows. That has been the key to our success for 19 years.
Has the negative Primetime episode, which aired Feb. 19, impacted your business? Have customers voiced concerns?
You know you've become a strong brand when the national media are out to make an example of you with hidden cameras. The show was about a Jiffy Lube location in North Carolina. They [Primetime's staff] went to quite a few locations. They didn't report how many were doing it right.
One guy sold a fuel filter but never actually replaced the filter on the car. Our annual award banquet took place two days after the show aired, and we watched it before the banquet. We were appalled. We are putting procedures in place to make sure it can't happen at our stores.
But across the country, sales went up; it didn't have a big impact. What we're going to approve in Indiana is we will take some black plastic trays and everything we take off the car will be placed on the tray and shown to the customer.
What are the biggest challenges of managing so many locations?
We have good people. We have a director for every seven locations and a vice president of operations. I believe in regular meetings. And I e-mail all the time. If anything, I'm guilty of overcommunicating.
The frustrating thing for me is that when we had 20 stores, I knew every manager, his wife and kids, and most of the technicians. I can't be in all the stores anymore, so that is not the case now.
Communication is the key. We try to keep it fun and keep everyone pumped up. We take a lot of pride in our people.
It's not easy to get a job here. We're tough -- we have high standards. We drug-test everybody. The message is, you need to be serious when you work here. We want you to come here serious about building a career.
What areas/processes are you working to improve?
We have instituted a change in procedures designed to give us better definition of duty and more focus on our guests. Prior to the change, our technicians interacted with the guests. Now, some employees work strictly on the car, others spend more time with each guest.
The guests have a better understanding of our services and feel they are taken better care of. This change increased labor costs because we had to hire additional staff but speeds up the service and gives our guests better experiences. We started this new procedure in all 49 locations.
This will take us to the next level if we can speed up service. Nineteen years ago, if we had three cars in the bays and six cars outside waiting, when the 10th car pulled up, we'd run outside and let him know he had an hour-and-a-half wait. The guest was OK with that then because the alternative was to drop it off at a dealer for a day.
Now, if there isn't an open bay within five to seven minutes, the guest doesn't wait. We created our own monster. How to reach: Indiana Lubricants Inc., (260) 483-8518 or www.jiflube.com
"We wanted to bring back the game, bring back the professionals to the city of Columbus and do something special for the people and sports fans in that area. That's what we wanted," says Nicklaus, reflecting on the origins of the Memorial Tournament at Muirfield Village Golf Club.
So Young and Nicklaus set out to make that dream a reality. Nicklaus identified land in Dublin where he had hunted as a boy, and then-PGA Commissioner Joe Dey walked the property with him " ... in the mud," says Nicklaus.
The tournament, dubbed the Memorial, was created around the theme of honoring players and others who contributed significantly to the game, says Nicklaus. In its first year, 1976, the Memorial broke new ground in more ways than one.
"We wanted to create a golf course that would allow spectators to better watch the golf action during a tournament," says Nicklaus. "It was actually the first golf course done, from inception, for tournament golf."
Because of this, the course was designed with galleries in mind.
"The Masters was accommodating for tournament golf, but we really built Muirfield from the start with an amphitheater setting in mind," Nicklaus says. "We wanted to make sure people were treated properly and the players were treated properly. We wanted to create something very special, and I think we did that. We created a place where the people love to come watch the game. The players love to come, because it's a good golf course, and they are treated wonderfully."
Nicklaus is gearing up for the 2004 tournament, which will be held June 3 to June 6. As part of the overall celebration, which begins May 31, Nicklaus will hold his annual golf clinic, just one way the golf legend gives back to the region where he was raised.
And, if you ask him about the impact the tournament has had, he'll say, without hesitation, that it has met his expectations.
"I believe the Memorial Tournament has done very well," he says. "We've tried to keep it as noncommercial as we can, which is hard to do in this day and age, and still be able to compete with the large purses out there. We've done that pretty well, and here we are, 28 years later."
It's not just the players and the tournament's charity, Children's Hospital in Columbus, that reap the rewards (last year's winner, Kenny Perry, took home $900,000). The Memorial also has created a significant financial impact on the community.
Recognizing that it draws visitors from all over the country, in 2002, tournament Executive Director Dan Sullivan commissioned a survey to quantify the economic impact on Dublin and the surrounding Columbus region since the tournament's creation.
The results were eye-opening. Says Sullivan, "About $356 million was plowed into the community."
It still takes practice
Despite their success, Nicklaus and Sullivan agree that keeping the Memorial relevant and successful requires continuous improvement. Both the course itself and operations have evolved over the years to meet changing needs and a changing economy.
"We've made adjustments and improvements to the golf course almost every year, listening not only to the players but to the [Muirfield Village] membership who has the course for all but one week out of the year," Nicklaus says. "We've adjusted to technology and the way the game is played today. We've also adjusted in ways to benefit the gallery and our patrons. The few decades have been a time to grow the Memorial Tournament.
"Even after doing this for 27 or so years, we were making significant adjustments to the golf course before last year's tournament."
Among the changes was the total redesign of the 17th hole, creating what Nicklaus calls the strongest two finishing holes in golf, and adjustments to every green on the course.
"All of these decisions we see as improvements to the golf course, and, in turn, the tournament," he says. "The players and fans have responded well to every change we've made."
Sullivan has also done his share of tinkering on the business end.
"Over the last few years, like a lot of other entertainment venues, we've seen a downturn in sponsorships because of the economy," Sullivan says.
While the tournament still boasts a corporate retention rate of more than 90 percent a year, these companies are participating in a smaller fashion.
To combat this nationwide trend, Sullivan began offering a broader range of corporate sponsorship opportunities.
"Now companies can entertain as few as four, six and up to 10 people at a table in a tented area on the golf course," he says. "It's a unique option; they can choose the 14th or 18th hole. That option didn't exist three years ago."
And, of course, companies can still entertain on a larger scale.
The new, smaller packages were a direct result of listening and paying attention to the needs of corporate clients.
"We do a great job staying in touch and maintaining relationships," Sullivan says.
It is Sullivan who maintains these relationships, working with the tournament's full-time sales representative.
"I try to be out in front of as many people as I can be," he says.
He also keeps an eye on what other entertainment venues and tournaments are offering.
"We pay attention," he says. "And we spend a lot of time listening to clients, understanding the market and building off ideas that are out there. The benefit of being a PGA tournament is the association. We share ideas, and the association provides a platform for generating new ideas."
Mutual dependence and benefits
With all its glamour and glitz, it's easy to overlook the impact the Memorial Tournament has on the community and Greater Columbus region. But a mutually beneficial relationship has formed over the years.
"The tournament is extremely important," says Gary Houk, vice president of information technology and business integration at OCLC in Dublin and president of the Dublin Chamber of Commerce. "The hotels and restaurants do very well -- it's probably the biggest week of the year."
Houk says the golf focus also spreads outside the Muirfield Village golf course.
"A lot of people like to spend a half day watching golf at the tournament, then play golf at other courses the other half," he says. "The golf industry does well that week, not just the hotels and restaurants."
But the community isn't just on the receiving end, says Sullivan. It takes a lot of community support to pull off a smoothly run tournament.
"It takes 3,000 volunteers to staff the tournament," Sullivan says. "They come from all over, not just Central Ohio."
But the majority, about 2,000, come from Columbus, through Children's Hospital. Other community groups that volunteer at the tournament include the Aladdin Shriners and local Lion's Clubs. These volunteers do everything from making sandwiches, manning concession stands and posting scores to providing child care for players' families.
It's a lot of work for a seven-day event.
"Other sports venues have a longer period of time, an entire season, to get it right. We have seven days," Sullivan says. "We have to have the volunteers lined up and ready to go, with no lingering questions. It's a monumental task."
But after more than a quarter of a century of practice, Nicklaus and Sullivan are satisfied with the tournament's status.
"We're happy with the current structure," Sullivan says. "We're always focused, though, on the spectator experience, and are always improving and tweaking it."
And Nicklaus says that these days, putting on a world-class tournament has become an easier task. In fact, he believes the Memorial is just hitting its stride.
"I think you find that with anything you want to do better, it's more challenging," says Nicklaus. "The older I get, the worse I play golf; thus, playing the game is more challenging to me. As the Memorial Tournament grows, matures and gets better each year, the easier it has become.
"I guess things have worked in reverse. Playing golf was far less challenging for me at one point in my life than putting on a world-class tournament."
HOW TO REACH: The Memorial Tournament, (614) 889-6700 or www.thememorialtournament.com
Born: Evansville, Ind., Dec. 4, 1945
Education: Bachelor of arts in chemistry, Indiana University; MBA Indiana University; four honorary doctorate degrees
First job: Test chemist at the Linkbelt Facility, Indianapolis
Career moves: A sales position with Procter and Gamble in Cincinnati and a promotion to account manager; market planning at Eli Lilly Co.; assistant to the president, Cummins Engine Co., Columbus, Ind.; president, Specialty Chemicals, Indianapolis.
What has been your biggest challenge in business?
The greatest challenge I had in the beginning and even now is attracting, retaining and motivating good employees. Many business owners would talk about access to capital or getting sales opportunities. While these are sometimes a challenge, they don't consistently impact [the company] like the people challenges.
Past or present, whom do you admire most in business and why?
I have several people that I have admired from the business world; Madame CJ Walker's super success as a black female entrepreneur in the early 1900s. I have watched John Johnson of Ebony Magazine as he created and developed a business empire that includes publishing, cosmetics and media interests. He now has very successfully transitioned this thriving empire when he turned over the CEO reins to his daughter.
I have the utmost respect for Robert Johnson of BET because he found a niche within entertainment which ultimately would allow him to become the first African-American billionaire.
What is the greatest lesson you've learned in business?
The greatest lessons in business that I have learned are to always treat people the way you would want to be treated, and that success is measured in more ways than how much money you have.
What is the greatest business lesson you have learned?
It's all about people. Business organizations will only be successful if the entire team is motivated and committed to serving the customer.
What has been the greatest business challenge you have faced, and how have you overcome it?
Being able to change our business practices, both internally and externally, as industry as associate needs change. We embrace and celebrate change. We make change a positive organizational experience.
Whom do you admire most in business, and why?
Our fathers and uncles who preceded us. They mentored and trained us. They managed the business through some of the most difficult economic times in this country and, with hard work and commitment, survived. Their example of hard work and caring for people is the keystone of our corporate culture today.
The Wasserstrom Co. is considered a giant in the industry. Here's why:
Foodservice Equipment & Supplies Magazine's 2003 Distribution Giants
Co. Name Headquarters 2002 Sales No. of employees
1. Edward Don & Co. N. Riverside, Ill. $395 million 980
2. The Wasserstrom Co. Columbus $277 million 1,150
3. Franke Contract Group LaVergne, Tenn. $225 million 480
4. QualServ Corp. Kansas City, Mo. $210 million 1,000
5. Strategic Equipment
& Supply Co. Dallas $200 million 460
6. TriMark USA Inc. S. Attleboro, Mass. $200 million 400
7. PrimeSource FoodService
Equipment Dallas $139.9 million 145
8. Hubert Co. Harrison, Ohio $ 98 million 300
9. The Boelter Cos. Milwaukee $ 89.0 million 210
10. Concept Services Inc. Austin $ 73.8 million 55
"We had a lot of retail experience with Foot Locker," says Campbell, executive vice president and general merchandise manager of the nearly 3,000-employee company. "We noticed a lot of people came in and asked for hats. But we never envisioned what we have now."
What Campbell and Molander, executive vice president of real estate, have is a 468-store chain that has achieved an amazing 1,312 percent growth rate over the past five years. They have been so successful that on Feb. 5, Hat World announced it had signed a definitive agreement for Genesco Inc., a marketer of branded footwear and accessories based in Nashville, to acquire Hat World for $165 million.
It's a far cry from the company's humble beginnings nine years ago, when the two recognized that carrying a small selection of hats was not profitable for specialty sporting goods stores such as Foot Locker.
That Christmas season, they took a chance. They rented floor space at a local mall and stocked it with hats. When the mall's management heard they had sold more than 6,000 hats in six weeks, it offered them permanent retail space.
Within a year, Campbell and Molander had launched five Hat World stores.
"All of them were within a three-hour drive of us," says Campbell.
The pair kept costs in check by managing the stores from Campbell's home, where his garage became the company warehouse. And he delivered the inventory himself.
"The managers would meet me halfway (between the stores and my house), and I'd buy them McDonald's," he says.
Looking back, Campbell admits their "fly by the seat of their pants" style was a little too casual. "We didn't think of the dangers," he says. "We didn't have time. We should've been more selective where we located, but we just kept opening stores. Many things could've happened, but didn't. It's a small miracle that we pulled it off. What we did right was surround ourselves with good people."
One of those was Bob Dennis -- who, along with Campbell and Molander, will stay on following the sale to Genesco. He joined Hat World after it acquired its financially troubled competitor LIDS Corp. in the spring of 2001. At the time of the acquisition, LIDS had 266 stores -- Hat World had 157 -- and had just filed for Chapter 11 bankruptcy protection to reorganize. Campbell admits the purchase was risky.
"It was the scariest decision I ever made," he says. "I knew I was putting the company on the line. We were either going to make it happen or go down in flames."
More important, with the acquisition and the corporate expansion that accompanied it -- the size of Hat World more than doubled with that one transaction -- Campbell and Molander knew it was imperative to bring someone in to strategically lead the larger organization. "We knew we needed someone that had a different skill set than we had," Campbell says. "Bob (Dennis) had a great background and was a fit for our culture. Bob is Wall Street savvy -- he's dealt with boards and investors."
Dennis arrived with restraint, Campbell says, refusing to step in on Day One and begin spouting orders. "He didn't come in with an iron fist," Campbell says. "He listened. We made the right decision. Thank God we made the right decision."
The hire allowed Campbell and Molander to manage Hat World's day-to-day operations, while Dennis focuses on developing and implementing long- and short-term corporate strategy.
Inside Bob Dennis's world
When Dennis, a Harvard Business School grad, stepped in as Hat World's chairman and CEO, his first order of business was to integrate the stores and employees of LIDS into the Hat World family.
Dennis brought with him a strong leadership background, including stints with Asbury Automotive, a $4.5 billion retail auto group that he helped build, and McKinsey and Co., an international consulting firm. This experience helped him through the process of merging two companies, and by January 2003, the integration was complete.
They cut the fat from the LIDS organization, closing 100 unprofitable stores, and developed a more organized plan for growth than Campbell and Molander had previously been able to envision.
In November 2002, Hat World acquired Hat Zone Inc., and last February, it acquired Cap Factory Inc.
"We have a very ambitious plan for growth," Dennis says. "(It) calls for adding 50 stores a year in the next five years."
To do this, they've identified more than 400 potential locations.
"A lot of the growth is in nontraditional spaces," Dennis says. "We are targeting airports, which are underpenetrated, college campuses and tourist destinations."
Tourist destinations are a relatively new -- and successful -- market for Hat World. The company's five locations in Hawaii are doing well, says Dennis, and "the tourist angle is one we really want to develop."
This expansion is the result of in-depth market research, which identified who Hat World's best prospective customers are and where they're located.
"Most are between 15 and 25 years of age," Dennis says. "Another big segment of our business is the dedicated sports fans. Their ages vary widely."
But even with the targeted marking, the company's aggressive growth plan is tempered with caution.
"What we don't want to do is lose our discipline," Dennis says. "We have a very disciplined approach, and we watch trends carefully -- what's working and what isn't. When a store isn't working, we get out."
Because Hat World's fortunes are dependent on its locations, store placement within malls, airports or shopping centers is crucial.
"We know that when we get our desired location, we are successful," Dennis says. "All stores opened in the last 18 months under our location guidelines outperformed our expectations."
And because the company does not invest heavily in advertising and marketing, its desired locations -- close to heavy customer traffic and usually close to food and beverage outlets -- carry even more weight in the company's formula for success.
"The most highly trafficked areas of a mall or airport are off the food court or anywhere there is food and drink, with the emphasis on drink," says Dennis.
Buying into the dream
Hat World's next goal is to build an international brand; it established the first of five locations in South Korea in September, and has a licensing agreement to open at least 75 more in the next five years.
"We chose Korea because it is a country that embraces U.S. fashions and has a good economy," Dennis says. "We've been approached to do other Asian locations, but we are keeping them on hold. We're using Korea as a test lab to see how it (international expansion) works."
In the meantime, Dennis, Campbell and Molander are working to further define the corporate culture. And a big part of that are the people who work at Hat World.
"At the end of the day, it's the people working here that have made the difference," says Campbell.
In the beginning, he and Molander were able to hire high-quality people, even though they couldn't pay them much. "We sold them on a dream," Campbell says.
That dream has come true, even more so than the sales pitch offered. But the company's leaders still remember where they began, how far they've come and the importance of maintaining a sense of humor.
"Every time we start getting too serious, I say, 'Hey, we sell hats,'" Campbell says. "Let's keep it simple. Let's keep it fun."
And don't look for other sporting goods or accessories to show up in the stores any time soon. "Never say never," Dennis says. "But we're sticking to the name. Headwear is our category, and we will maintain that focus." HOW TO REACH: Hat World Inc., (888) 564-HATS or www.hatworld.com
Wilson, who had left a prestigious post as president of Western Auto Parts America, a company that was purchased by competitor Advance Auto Parts, was no stranger to rolling up his sleeves and working hard. He received valuable tutelage under Sam Walton while working as hardlines merchandising director for Wal-Mart, where he was responsible for developing the retailer's hypermart project.
Following Wilson's arrival, Safelite filed for Chapter 11 bankruptcy protection on June 9, 2000, and Wilson and Barlow spent the next few months analyzing the company's operations and restructuring its debt. The company emerged from bankruptcy on Sept. 2, 2000, and by year's-end, the public firm went private.
That began a litany of changes, the next of which occurred in May 2001, when the company consolidated its operations into the Farmers Insurance building.
Barlow and Wilson also looked at more efficient ways to operate the company, including informally restructuring its operations into three separate divisions. But it wasn't until October 2003, when Barlow announced his retirement and Wilson's promotion to president and CEO, that this phase of restructuring became official.
As one of his first acts as CEO, Wilson formalized the three-division structure and renamed the company Safelite Group Inc. Today, barely five months later, he says restructuring at the $611 million company is complete.
"Our new organization better reflects the diversity of the operation more than the glass company did," says Wilson. "It communicates every aspect of our business in a clear fashion, externally and internally."
The organization incorporates the company's three business units -- its retail installation and wholesale warehousing division, its manufacturing operations and its strategic account services.
Wilson says the new vertical alignment is the company's greatest strength. Essentially, anything an automotive glass business can do, Wilson says, Safelite does as well. The company, the largest auto glass firm in the nation, manufactures 80 percent of the glass it uses for installations.
It operates a retail installation business and a wholesale business. And it coordinates claims and installations for more than 80 insurance companies.
Explains Wilson, "The new structure puts us in a better position for growth and lets each division better focus on their customers."
Even though the company loosely operated in these divisions before they were formalized, the structure provided Wilson with the opportunity to establish clear leaders of each division. For example, he created of the position of executive vice president and chief client officer of the strategic account services division, filled by Thomas Feeney, who managed the division's sales efforts.
"Knowing he was responsible for the entire division gave it more cohesiveness and has created better team work within it," says Wilson.
He says getting the right leadership in these important positions was no easy task.
"These were critical positions, and I had to make some difficult decisions," he says.
When the dust finally cleared, 15 people had been promoted, creating a feeling of goodwill throughout the company.
Now that the organizational overhaul is complete, Wilson is looking at other areas for improvement, including plans to grow each of the divisions.
"We have about 15 percent of the market on the fulfillment side," Wilson says. "That means 85 percent that we don't have. We have the biggest opportunity for growth there."
The insurance solutions division is also primed for expansion.
"The solutions side is a business in its infancy right now," says Wilson. "It can provide a lot of value to the industry, and it is growing by the fastest percentage."
To achieve that growth, Wilson says Safelite must continually improve efficiencies and convenience for customers. One way he's trying to achieve this is through a transition to more mobile-based solutions rather than simply bricks-and-mortar operations.
In the 1980s, the company operated small glass shops, and customers had to drive their vehicles to them for glass repair and replacement.
"Basically, you had a building, a manager and technicians to run the store," Wilson says.
Today, the company stores glass in its regional warehouses. Technicians pick up the glass and their orders and drive to the customer at work or home. That adds up to a lot of glass when you consider that Safelite's call center receives an average of 8 million calls a year, operating 24 hours a day, seven days a week.
Some technicians even work from home, and the glass and orders are delivered to a nearby storage unit.
Part of Wilson's strategy involves making Safelite a cutting-edge business, and that means integrating new technologies into existing operations.
The company is piloting a handheld computer system in Columbus for its mobile units, which should improve technicians' speed and service to the customer. The unit includes a global positioning system (GPS) that helps drivers and dispatchers pinpoint arrival times.
"With a click, the dispatcher can see the speed the driver is going and tell the customer that he will be there in 10 minutes," says Wilson.
The system can save driving time because the dispatcher has specific information on where the car is parked and can call the driver and pass on the information.
"If the customer is at work, there could be 400 cars in the lot," Wilson says. "Now the dispatcher can call the customer and let him or her know when the driver will arrive, find out where the car is located, and have the customer ready and prepared when the driver arrives."
Other divisions are undergoing technological improvements as well. The company is converting its computer system from mainframe-based to server-based. Wilson has purchased and implemented new customer service management software and instituted Oracle-based software in its supply chain.
"The customer service software is the next step toward providing more customer satisfaction," he says. "It keeps a record of each phone call and issue, and we can relate to you in more specific terms. You'll know what to expect through your policy, and we can set up the appointment as quickly and efficiently as possible. It's one way of providing continual improvement in the processes we generate."
The new computer and software systems also help the company measure and track performance.
"Every technician and every location is measured by our customer service index," Wilson says. "We know very quickly which aren't performing to standards. It's a continual improvement process that wasn't there a few years ago."
Investing in people
Wilson isn't focusing the company's resources solely on technology. He says he never forgets that it's the employees who use the technology and who are best positioned to get the most out of the changes.
"I don't lose sight that the people side is very important," Wilson says. "They have to be familiar with it all so they can use these tools to the best advantage."
The company makes crucial capital investments in its people through Safelite University, an associate development and training program that is also intended to motivate employees.
Motivation, Wilson says, is an essential ingredient in the company's success. Accordingly, he measures every aspect of the business to assess whether the programs are having the intended effect.
"We have key performance indicators and score cards for every activity," he says. "We align those with our objectives and measure the checkpoints to make sure we're on track."
It all boils down to clarity, something Wilson feels the company lacked before he undertook the massive organizational changes.
"I need to make sure that our objectives are clearly understood and give people the right opportunities to make a contribution," says Wilson. "It takes the right settings to motivate people to make a contribution, and it's up to leadership to clearly define these settings for people to be successful."
And, Wilson adds, when people are successful, it translates into corporate success for Safelite.
How to reach: Safelite Glass Corp., (800) 800-2727 or www.safelite.com
The Wilson file
Born: Marshalltown, Iowa, 1951
Education: Bachelor of science degree, business administration, Drake University
First job: I grew up on a farm. Dad had me working when I was 10.
Career moves: Developed hypermart project at Wal-Mart; president of Western Auto Parts; executive vice president and COO Safelite Glass Corp.
What was your greatest challenge in business, and how did you overcome it?
My biggest challenge has always been the continual motivation of people. I have never overcome that challenge, but I don't think anyone does. You just keep working at it.
Past or present, whom do you admire most in business and why?
There are a lot of people that I admire. But I'll pick as No. 1 Sam Walton. He took average individuals and provided them with the tools and the motivation to make them successful.
What is the greatest lesson you've learned in business?
Make decisions, provide leadership, be balanced and maintain high ethics.
"We posted a very aggressive enrollment increase of 21 percent in the third quarter," he says.
Champagne attributes ITT's success to its size, depth of programs and customer service.
"We have 76 colleges in 29 states," he says. "That means we are reaching a significant percentage of the American population."
ITT Technical Institutes offers technology-related degrees but has broadened its scope to include an online MBA program. ITT has also added degree programs in design and drafting, and electronics.
Champagne says his biggest operational challenge is staffing, a major reason ITT isn't expanding at a faster rate. He says there are numerous markets that are right for new schools, but hiring and training staff significantly slows the process.
"Each candidate talks with multiple people, and no one person makes the hiring decision," Champagne says.
The process is slow, but it ensures a quality staff, he says.
ITT plans to add three to four campuses a year, primarily in high population centers. Champagne talked with Smart Business about the company's business model and its plans for growth.
What do you feel makes the company successful and gives it a competitive edge?
Several things. We have a large number of colleges. ... Our array of programs and depth of courses offered are attractive to potential students. And we deliver education in a convenient and flexible manner.
Our typical student is a working adult between 20 and 35 years old, maintaining a full-time job. We require students to attend just three days a week, four hours each day. We also offer small class sizes and a student-teacher ratio of about 25:1, so our students get more personal attention.
We also offer other services that assist the student. If the student needs help to find employment, we have career services that helps. Our graduate work placement rates are attractive. In 2002 ,73 percent of graduates were placed in technology-oriented jobs.
The slower economy has had an effect on that number. In 2000, we were as high as 90 percent, but we feel 73 percent is still very good.
What policies or initiatives have contributed the most to your growth?
We have three areas that contribute to our growth: quality, compliance and customer satisfaction. We try to bring quality into everything we do, from the furniture in the buildings to class presentations.
If we see a problem, it is quickly corrected. Education is not inexpensive, and we feel this is one way students can see their investments or justify the tuition.
And that carries into the people we hire. We hire well-qualified and trained people. We devote a lot of time and attention to recruiting and training people.
Quality is reflected in the content and method of delivery. The equipment used in the classroom is reflective of what is used in the employment market, so they are very well versed in it before becoming employed.
Post secondary education is very regulated by state accrediting commissions and congressional laws. We are governed by the Department of Education, and as a public company, we also follow the New York Stock Exchange and Securities and Exchange Commission rules and regulations. So compliance becomes of the utmost importance.
We have many groups that we consider our customers. Our primary customer is the student. The second customer group is the employer hiring our graduates. We have strong working relationships with employers, and we want to keep them happy.
Those are the areas that we work at on a daily basis. Every existing and new employee knows this philosophy. We survey our students every quarter and survey employers of graduates. We generally receive high marks.
If a survey turns up negative comments, we feel it is good to know and correct it before it blows up.
How do you choose campus locations?
We choose locations in metropolitan, high population centers. Generally, we choose cities with a population of 1 million or more.
We look at the demographics to see if our target market, the 20- to 35-year-olds, is growing or shrinking. We also look at the state and local regulations. It's important that we can accommodate them before putting up a new school.
We also look at what the employment environment is for potential graduates. We encourage students to relocate, but 75 percent prefer to stay local, so there do need to be career opportunities there. We do look at the competition, but there are few schools that offer the kind or quality of curriculum that we do, so if all the other factors are positive, competition would not cause us to avoid that location.
Are there plans to add new campuses in the next five years?
We intend to grow at the rate of three or four new campuses a year. Our ultimate objective is to increase from 76 locations to 200 or more. We know the locations we wish to be in; it just takes time to develop the staff for each location.
This year we opened a school in Dayton, and we're opening another in Minneapolis. In 2004, we're opening a location in Baltimore. Then we're looking at Kansas City, Mo., a second location in Atlanta, a location in Long Island, N.Y., and Landover, Md.
Do you plan to offer degrees in other academic areas?
As of September this year, we introduced a fully online master of business administration program, which has been very successful. Business is one arena for expansion for us.
We also started a school of electronics and design and drafting. But we'll never become a school that offers hundreds of degrees. We are seeking a much narrower market. We want to be a leader in the content we choose to offer. Health care and life sciences are growing career opportunities that we might turn our attention to as well.
A work force shortage is predicted by the end of this decade. How does ITT plan to help fill this gap?
We believe there will be a shortage, and it will be quite severe. This was caused due to the birth rate, which slowed remarkably following baby boomers. There was almost zero population growth in the 10 to 15 years following baby boomers.
When they retire, it will create dramatic shortages. We feel our degree programs will help train people to fill that gap.
What are your biggest operational challenges and how do you meet them?
Our single biggest challenge is in the form of a human resources need -- finding the right people to train. We look for people that are passionate about helping other people. Not everyone is cut out for the job. Finding the right people to staff our locations restricts how fast we can grow.
We have the money to enter new markets; we just don't have a bench of people ready to start work. We go through a rigorous screening process. Multiple people are required to interview and evaluate the individual. No one person makes the hiring decision.
It takes a lot of time and effort, but it produces the best result.
How to reach: ITT Educational Services Inc, www.ittesi.com
Recently my sister and I placed a classified ad on a Web site seeking to sell a car we jointly own. The one and only response we have received to date has been a scam. The person e-mailed me expressing interest in buying the car as an anniversary gift for his wife.
The implicit message in that e-mail was that this was a person of financial substance. After trading e-mails a few times with more details and a history of the car, the person offered to buy it, sight unseen. The ad on the Web site does not include a photo.
He said in his e-mail that a client owed him $30,000, $11,000 more than our asking price of $19,000. He said he would have that client make the check out to me, but would I kindly send him the $11,000 difference so he could arrange to have the car shipped.
Red flags went off in my head and I didn't respond to this e-mail. After discussing it with several interested parties, including my sister, we agreed to sever contact with this person.
I have tried since then to do something about this potential con with little success. The Web site posts various warnings and disclaimers advising users to exercise the same common sense they would in other transactions, but it doesn't advise users that this type of scam could occur.
I also called the Columbus Police, who assured me that because a crime did not occur, neither they or the FBI (I was told it only deals with very high dollar amount scams) could do anything about it -- even though the detective I spoke with told me he had received a report of a similar nature a few months ago. That person did send the money to the "buyer."
So it falls back on us to always beware, and to spread the word. There are a lot of honest people out there, but the ones out to con us are using every opportunity they can.
But the 23-year old Chan felt something was missing.
So he left the stock broker business and got a job as a laborer with a very small firm, Durable Slate Co..
"It was understood from the beginning that I was there to learn the business and take it to another level," says Chan.
That's exactly what he, his brother, John, and Ed De Long did. They acquired Durable Slate from its founder in 1986, and what started as a four-employee company is now a firm with more than 100 people and sales of $10 million.
Chan and his brother John, executive vice president, credit their success to doing business ethically and exceeding customer expectations, which led The Better Business Bureau to recognized= the company with its 2003 International Torch Award for Marketplace Ethics.
"If you conduct business the right way -- the way it's supposed to be done -- good things will come your way," says John Chan.
What hurdles have you overcome since taking over the company?
Michael Chan: I started as a laborer about 16 years ago when the company consisted of just a couple of guys and their helpers. I knew nothing about construction or managing a business. I went from making more than $10,000 a month to about $800 a month.
I saw that so many businesses were one or two dimensional. They either focused entirely on making money or they were totally customer-focused at the exclusion of everything else. After researching many businesses, I settled on the slate roofing business, a business that I felt I could learn and that had a lot of potential. So my challenges were learning the business and learning how to manage people.
Being Chinese, I also experienced some discrimination. But I worked my butt off, working 80 hours a week, listening and learning. I hired others that were like me -- they were interested in growing the company, and most of them had no construction or management experience.
What policies, initiatives or values led to the Better Business Bureau recognition?
Michael Chan: One of the things we strive to achieve is the Hubbard Management System.
In that system, there are four types of customer exchanges. The first is the kind that is criminal, where the customer pays the company, which does little to nothing in return. The second is a partial exchange. The company tries to get ahead by doing less than you say you are going to.
The third is doing exactly what you tell the customer you will do, and the fourth is giving the customer an abundance of what you promised. We try to live in the fourth exchange, not just with customers but throughout the company.
An example of this is, if we tell the customer that the job will take a week, then we try and finish it in five days. Or if we thought a repair job would take 25 slates and it takes 31, we use 31 without charging more. That's the culture we try to play up.
We have a few employees that do not want to function that way and leave the company, but we rarely get rid of anybody. Our quality control department checks everything, and if it isn't right, we fix it, at the job and with the employee, so it doesn't happen again.
How difficult is it in today's business environment to maintain business integrity?
Michael Chan: It's very difficult. Our sales come probably about 70 to 80 percent directly from customers and the other 20 to 30 percent from contractors. It's hard keeping up with where we've been in this business environment when others are having a difficult time selling.
We try to do our best -- sending the same number of people out when we're not making enough money --that's when integrity comes in. It's easy to do what's right when the money is there. You have to just maintain that level come hell or high water. It takes a lot of self-discipline.
It's expensive sometimes, but you can't look at it as an expense. If you want to survive long term, you have to be persistent, and that includes integrity.
A business won't survive long without integrity. It depends on how long the company wants to succeed. Enron was the seventh largest company in the world when it went bankrupt.
I didn't start out wanting to be the leader of the company, but out of necessity, became an owner. And conducting business ethically leads to a happy life -- it gives you day-to-day happiness.
What are the company's goals for the next five years?
John Chan: We set the company's goals in 1998, and we've little more than doubled our business in the last five years. We set our target sales and then set up numbers in each of our seven divisions to back them up.
We did a lot of long-term planning. We broke each goal down to calculate how each division could contribute to the goal -- how many jobs it would take, how many people -- all across the company. Each division knows what it has to do to achieve our goals.
How do you emphasize your business ethics with employees?
John Chan: We emphasize ethics in a number of ways. In all of our meetings with everyone, we go over everything pertinent to the company and the job.
We've shared a lot of stories about how ethics in business leads to success. We've seen case after case of high-profile companies that have done something underhanded to get ahead. They lose sight of their original intention.
Sometimes they just take a short cut. But a short cut often takes you down the wrong path and leads to problems. We have courses offered in a classroom setting. We train employees in roofing, safety, orientation to the business, and we have a course in ethics.
It is a challenge when I hire someone that isn't used to operating that way. It is a challenge instilling in newer guys that are sometimes used to looking for ways to give less to the customer rather than more. That's what we run up against.
What are the biggest changes you've seen in your industry, and how have they affected the company?
John Chan: The biggest changes I've seen are mainly on the legal front. OSHA regulations are much stiffer than they were 10 years ago. That's something that seems like it hurts us sometimes.
Recently, we went out and broke down a job for an insurance company. They turned us down because we needed to use scaffolding. The person I dealt with asked us if we couldn't just use big ladders, but it was against OSHA regulations. He said the other company he asked about the job would go without them, and he went with them.
But we didn't want to risk our company or our guys. I've found that we might lose one job, but cutting corners comes back to bite you later. If you conduct business the right way -- the way it's supposed to be done -- good things will come your way. How to reach: Durable Slate Co., (800) 666-7445 or www.durableslate.com
But watch out for the pitfalls. The tax benefits you receive can depend on a number of factors.
"Hiring family members offers a good opportunity to reduce the business owner's income tax," says Joseph Saloom, tax partner at Crowe Chizek's Columbus office.
Children under 14 who earn income from an outside job or investments are taxed at the adult rate. But when you hire and pay your child out of your business, that income is subject to a lower children's rate.
Saloom says hiring children under 18 also provides the opportunity to reduce payroll and self-employment taxes.
"Children under 18 are not considered self-employed if paid by the parents," Saloom says.
The child does not have to pay the 15.3 percent Social Security tax, and neither does the parent. But these benefits only apply when the company is solely owned by one or both parents; any type of corporation must pay Social Security taxes.
Paying a spouse out of your business can help him or her plan for retirement.
"The spouse can take those earnings and put them in an IRA," Saloom says.
But if the spouse is considered a highly compensated employee, there are limits on how much of that income can be put toward retirement, says Tracy Kaufman, client service representative with Rea & Associates Inc. Employees are considered highly compensated if they paid $80,000 a year or more, or own 5 percent or more of the company.
If you hire your spouse and he or she has family health insurance coverage, the entire premium is tax deductible, say Saloom and Kaufman. Other items, including travel expenses incurred by the spouse, are also tax deductible.
Again, however, there are exceptions. The spouse of someone who owns more than 2 percent of S Corporation stock is also treated as someone who owns more than 2 percent, and is therefore unable to take the benefit deductions.
Even aunts, uncles and other family members outside the nuclear family can get into the act, says Saloom.
"It's very popular right now to offer directorships of corporations to aunts, uncles and cousins," he says. "They then have the opportunity to receive income to fund a retirement vehicle, typically a Keogh plan, which is a retirement fund for self-employment income." How to reach: Crowe Chizek, (614) 469-0001; Rea & Associates, (614) 889-8725