Abby Cymerman

Monday, 03 October 2005 09:17

Expansion financing

Chip Weinberg keeps a file that says, “Things to remember in future deals,” based on his experience with past deals, such as the recent acquisition of a service provider to international cargo carriers coming into the JFK and Houston airports.

Although a typical deal takes three to five months, Weinberg says this acquisition by The Weinberg & Bell Group, a Cleveland-based middle-market private investment firm, took more than a year to complete because his firm had to wait for the Port Authority to approve a building into which the firm was going to expand.

“Literally, we were waiting around for quite some time, holding the deal together, working with everyone and being patient because of that holdup,” says Weinberg, a managing partner of The Weinberg & Bell Group. “It speaks well to our team being able to keep the deal together.”

Weinberg says the service provider’s management team is staying in place.

“The goal was for us to help get them growth capital and to expand both internally at this new building and to help them fan out to other airports,” he says. “Through our capital, we can help them grow.”

Based on his experiences and his notes in his “Things to remember” file, Weinberg offers seven tips for persevering during a year-long acquisition process.

  •  Flexibility is a must. It’s important to consider the seller’s needs and demands rather than have a template into which everything has to fit. “It may be some demand that sounds unreasonable — more money, more perks. Whatever it is, you should always act like you’re willing to consider it, and many times there’s a way to bridge the gap,” he says.

  •  Regular face-to-face communication. Weinberg says the more you sit face-to-face with people involved in the deal, the more comfortable they become with you. “They can look at your body language, and they can see that you’re not dodging the issues,” he says. “It helps foster relationships, and it’s that relationship which is going to help smooth over tough periods of time.”

  •  Stay up to date on the numbers. “Let’s say that you have a four-month delay, and you’re pricing your deal off December,” he says. “You don’t want to find out in February the run-rate is a lot lower.”

  •  Be thoughtful. The accounting firm working with the buyer should also be sensitive to the seller’s concerns. “A lot of them don’t know how this whole process works, and they would get pretty put off if someone just came in and started firing questions like they were on a witness stand,” he says.

  •  Know what issues need attention once it’s a done-deal. “Have a ready playbook so that you’re using your operational experience and know-how to improve the company to grow it, because at the end of the day, that’s really what you’re trying to do,” he says.

  •  Run a tighter ship than prior to the new financing. “You’re going to be borrowing money to some extent, and you’ve got to make sure you’re not spending more than the cash needed to pay back some of your interest, to finance all the capital that you need to spend, if any, to make payroll and to do what needs to be done,” Weinberg says.

  •  Have a good financial team. Weinberg says the way to keep a close eye on finances is to have a top-of-the-line CFO, controller or financial team that watches and manages the company’s cash position on a daily basis. HOW TO REACH: The Weinberg & Bell Group, (330) 225-1602 or http://www.weinbergbell.com

Thursday, 29 September 2005 13:25

The right moves

During the dot-com craze, companies were swept up in the grow-at-any-cost climate, and Michael Valentine’s transportation management services company was no exception.

“Then about three years ago, my management team and I made a strategic decision that we wanted to focus our growth on managed and controlled growth with profitability,” says Valentine, president and founder of Group Transportation Services (GTS.) “That was probably one of the best strategic moves we’ve made.”

Rather than add 30 to 40 sales reps around the country within a year-and-a-half as previously planned, Valentine decided to open one or two markets at a time.

“That’s working. We pay our bills, and we make some money at the end of the month,” he says. “It’s a good thing.”

Smart Business spoke with Valentine about his vision for GTS’ future and how he plans to get there.

How will GTS’ recent move from Twinsburg to Hudson accommodate future growth?

When we moved to Twinsburg five years ago, we had eight people; today, we have about 45 people. The facility we bought is actually the old call center which used to hold about 200 people, so we can grow quite nicely here. We can double our size.

I don’t get too terribly upset about setting corporate goals. We try to take every year with a target ... versus getting into five- or 10-year type goals. We know we’re in a niche right now, and the market that we provide services to is growing, so we balance both technology and people to service our clients. We have a proprietary operating system that helps facilitate (the services) we provide to our clients.

We go into clients that are currently managing their own transportation, and they outsource it through our company. We primarily are involved in shipments over 150 pounds. Those are larger than UPS and FedEx.

We do have some programs for small package users. Technically, in the transportation world, we’re a third-party logistics firm providing outsourced transportation management.

How did you work with Hudson city officials to find a new location?

We worked with the economic development director.

We have employees who drive from Wadsworth, Alliance, Akron and Canton, and some up in the Cleveland markets. We promised our employees that we would probably stay within the Twinsburg-Streetsboro-Hudson-Macedonia area.

So we went to each of those communities and started the search to see if we could find facilities that would accommodate our current needs and our future needs.

(The Hudson economic development director) informed us of some properties and some things that were going on with properties that they were aware of ... so it’s a win for them and it’s a win for us. This facility had been vacated about one-and-a-half years prior. It was suitable for our needs.

We did our due diligence — our checklist of the facility — and we acquired the facility back in May, renovated it through May and June and then moved in. We’re very pleased. The transition went very smooth, and everybody’s happy.

As you add more employees, how do you expect that to affect your corporate growth plan?

We’ve added 11 positions since the beginning of the year; most of them are in transportation. As we acquire new clients, our formula is based upon the type of transportation and how hands-on we have to be with the clients; we may have to add more people to manage their business.

We have three service offerings for our clients, the full-service Total Solutions Programs (TSP), Integrated Solutions Programs (ISP) and Direct Solutions Programs (DSP.) (With) TSP, we will supply all the services to the clients; they’re pretty much outsourcing everything to us, so that requires a little bit more people-power on our side to make that happen. Then the ISP is not as much, and then DSP is very little direct intervention with them from a people standpoint. So we give a little bit of a menu-type offering but we usually do the analysis for the client and recommend which solution we believe is the best for them. They ultimately choose what they want, and then that affects our staffing needs.

How do you get employees to buy into the breadth of your company’s services?

From a business standpoint and a growth standpoint, we invest quite a bit in our people, and in return, we expect a lot. We communicate to them quite a bit. They have job descriptions that they’re involved in; everybody gets a quarterly review, and they also get quarterly bonuses. We have quarterly company meetings that I run.

Their direct supervisors are involved with them all the time so there should be no excuse for someone to walk out of our facility and not know what’s expected of them —and that they can accomplish it in a reasonable timeframe. If they aren’t, we’re there to support them and to see if we can make that happen.

That’s probably as big of a part of our growth — which is an intangible — but it’s something that we pride ourselves on doing very well.

HOW TO REACH: Group Transportation Services, (330) 342-8700 or http://www.onestopshipping.com

Thursday, 29 September 2005 12:04

Home grown

Rick Angheld founded the Rick Angheld Real Estate Group in 1985, but about 10 years ago, he decided to branch out into other areas of his field.

In addition to selling real estate, he now manages a mortgage company, title company, commercial real estate business and management company. He also runs a development company that buys dilapidated houses near the University of Akron, tears them down and builds new student housing. He’s currently building his last student-housing complex in Akron and is looking at the Kent State University student-housing market.

“I’d never build something that I wouldn’t personally live in, so all of our apartments are one- and two-bedroom,” he says. “Each unit has a range/oven, microwave, washer, dryer, central air, deck and dishwasher, so they’re really laid out. It’s upper-end, price-wise, but there are security cameras on the buildings, and parents feel comfortable about having their (children) rent in our complex.”

This diversification into the various niches of real estate has kept his company safe in the often-choppy waters of the home-buying industry.

“It’s a learning process for me. I’ve always been a self-employed individual that kind of learns through experience, no MBA or anything,” he says.

Over the last five years, the company has grown from four employees to more than 20 to staff these new divisions. To accommodate the growth, Angheld and his staff recently moved into their new office building at Miller Road and West Market Street in Fairlawn.

“You always need new faces, new ideas and new blood in the company, or it just gets stale,” Angheld says. “I’ve been working in my business instead of on it ... so that’s what we plan on doing more in the future — spending more time recruiting other agents.”

Angheld and his agents are known for their attention to customer service. He often allows his customers to borrow his company van to move when they buy a house, and he has even bought a customer’s house when that person was having trouble selling it and had already entered into a contract on another house.

“Our employees always try to be fair, upfront, honest and have integrity,” he says.

HOW TO REACH: Rick Angheld Real Estate Group Inc., (330) 836-0300 or http://www.rickangheld.com

Thursday, 29 September 2005 11:39

Polymer pro

Over the past 40 years, there have been many challenges and advances in the field of polymer chemistry, and nobody understands that better than Rick Organ, president and CEO of Kent-based Schneller Inc.

“In the past couple years, the No. 1 item has been weight consideration, taking more weight out of the aircraft and, in turn, out of our products. And No. 2 has been addressing the environmental considerations and ensuring more environmentally-friendly products,” Organ says.

Schneller Inc. develops and manufactures engineered decorative laminates and nontextile floor coverings for the transportation and architectural industries. Its 200 employees work from its sales and support facilities in Kent and Paris, France, and a production facility in Pinellas Park, Fla., and in January, Schneller’s Asia sales and support will move to Singapore.

Organ says companies in today’s manufacturing world can’t compete on the basis of quality because quality is a given.

“It’s part of being in the game. If you don’t have quality within your products and, in turn, within your processes, then you’re not going to be able to even compete in the marketplace,” he says.

Smart Business recently spoke with Organ about how he keeps his company competitive and his customers happy.

How does ISO-9001 certification keep your company competitive?

We made the decision in 1999 to become certified to the ISO standard. We did it not because we wanted to tell everybody that we were ISO-certified, to put it on our business cards and to carry the logo.

We did it because we really felt that what we wanted to assure is that the systems and processes that we used to produce our products were built around quality, so we were going to be assured that that product met the quality expectations of our customers. Fundamentally, our systems and processes were designed and followed in such a way that they would assure that outcome.

How have you measured success?

The traditional measure is when we start to look at the impact on the bottom line as it relates to scrap reduction, rejection rates by customers and lead time reduction.

In each case, we’ve been able to achieve a dramatic improvement. In every measure, there has been multiple times improvement over where we had been previously.

It is the essence of who we are. ... We don’t think of it anymore as, ‘We’re an ISO-qualified system.’ It’s just the way we run our business. It’s part of our culture, and I’m confident that you (can) go to any person within this company, regardless of their position, and they’ll tell you the same thing I just told you in terms of the importance of our quality systems to the current and future success of Schneller.

How do you provide fast turnaround in meeting customer deadlines?

One, we spend a good deal of time on the front end working with our customers to best understand what their needs and requirements are. Once we have a clear understanding, (it enables) us to go into production and make the products that meet their needs, and we’re not going to get delayed in the process.

Two is the quality system. It’s very rare for us to have a rejection in process or in final for our products. Consequently, we don’t have to start jobs over again. That probably is the biggest single reason for our ability to produce and turn things around in a timeframe.

We made it a mission in 2000 to reduce our lead times and improve our on-time delivery reliability. From the time we began that to today, we’ve cut our lead times in half. We’ve taken our delivery reliability from below 80 percent to where, on a consistent basis month in and month out, we’re approximately 98 percent.

I really believe it’s because we put in place the quality systems, processes and business procedures that we did.

What concerns led you to think that implementing those processes would help your company?

It wasn’t as though we were getting a lot of feedback from customers that was resulting in negative feedback, but instead it was much more of, ‘We’re the leader in our industry. What does leadership mean, and in order to stay in the lead, what do we need to do?’

We felt that was something we could own in the industry that would be relevant and meaningful to the customer and prospective customers to enable us to continue to win business away from the people who otherwise compete with us.

How are you able to offer economical minimum orders?

Everything we make is custom-produced for our customers; it’s to their specific requirements. We don’t make or stock any standard product, so everything is driven by order.

In doing so, the average order size is very small because today, people are much more inclined to order what they need, when they need it, as opposed to years back, when they ordered large quantities, put them in inventory, held them and used them over time.

Our business at $60 million (in annual revenue) is made up of a very large number of very small orders. We go into production for each and every one of those orders, so it becomes very important for us that ... when we begin committing materials and people to produce that product, we’re dialed in to produce a final good quality product.

We’re able to produce short-run quantities very efficiently, very effectively and most importantly, very cost-effectively.

How do you manage that?

Shortly after we did the ISO implementation, we embraced lean manufacturing and lean techniques. We really put a lot of our resources into set-up reduction time, quick turnarounds, quick turnovers, and reduced a lot of the upfront cost that is otherwise associated with setting up equipment and people, and looked at ways in which we could adjust our procedures and our equipment to be able to come up to speed rather quickly without loss of time or materials. We started the lean techniques in 2002, and we actually did it with CAMP (a Cleveland-based professional services organization that helps companies achieve growth, bottom-line savings and improved profitability.) We brought CAMP in to help us, and we’ve done as many as a dozen projects since then with CAMP. They’ve been a very valuable partner and resource to us. CAMP’s objective from the day they arrived was to train and enable us to become self-sufficient in this area. That was very important to us because what we didn’t want to do is end up in a situation where we’re dependent upon them or anybody else to be successful.

It had to be our success, and we had to embrace it ourselves.

HOW TO REACH: Schneller Inc., (330) 673-1400 or http://www.schneller.com

Thursday, 01 September 2005 06:28

Rear window perspective

It’s been a long 10 years for Bob Fairchild but it was worth the wait; the president of Fairchild Chevrolet has finally opened the doors of his newly constructed 45,000-square-foot Westlake dealership.

“We were in a facility in Lakewood that was built in 1948, which my dad purchased in 1960 — so therefore, a building that was completed in 2005 just has very little in connection with an old building like that,” he says.

Shortly after Fairchild’s father passed away in 1994, General Motors asked him to consider moving the dealership to the I-90 area.

Fairchild optioned property, General Motors gave its blessing and GM’s approved national architectural firm began drawing up the site plan for what turned into a $6 million building project. The dealership, set on 7.5 acres, can inventory about 500 units on site, while the old location was maxed out at 275.

Fairchild hired 12 new employees in the first 10 days in the new building and expects to add another 15 to 20 within two years as an element of his financing with the U.S. Small Business Administration’s Certified Development Company (504) loan program.

Fairchild says there are three pieces of the construction puzzle that business owners need to have in place when building a new facility.

An approved city plan. ”The city is very careful in the planning processes, and they want the outcome to be excellent,” he says. “They have a process that is rigorous and difficult, and it takes time.
“We had to work through the city — with the planning department and city council — and get everything approved. By the time we got through all those various committees, it added up to 10 years.”

A secure site. Fairchild spent six of the last 10 years in court, fighting a protest of his opening a dealership within 10 miles of another Chevrolet dealer.
“They have the right to protest, although not the right to stop it,” he says. “I won at every level ... and believe it or not, it went to the U.S. Supreme Court. They refused to hear it, which meant it was over.”

Not long after that, the owner of a neighboring manufacturing company sold his land to Fairchild, who demolished the building and inherited a severe environmental problem. It took time to remediate the problem and get a clean bill of health from the Environmental Protection Agency.

A solid financial relationship. Without the support of a financial institution, the job won’t get done. Fairchild worked with Fifth Third Bank to put his financing package together and with Growth Capital Corp. to receive the 504 loan.

One of the biggest lessons Fairchild learned during this process was patience.

“I worked and concentrated on this project almost every day of my life for about eight-and-a-half or nine years. You’d think with that much effort, you could move things along a little bit more promptly,” he says. “But there were issues, like the protest and the EPA.

“No matter how hard you try, they have a life of their own. I don’t care how hard you work, sometimes you’ve got to live with the timeframe that the various entities allow you to have.”

HOW TO REACH: Fairchild Chevrolet, (440) 899-8888 or www.fairchildchevy.com

Tuesday, 23 August 2005 06:14

Updo redo

Sam Lehman calls his business “an overnight success that took 30 years.” Thirty years ago, Lehman began his career as a hair stylist; today, he heads up a team of 300 employees as president of Philadelphia-based Jean Madeline Inc.

The company owns three full-service Jean Madeline salons and two high-end Adolf Biecker Spa/Salons, and last fall acquired the 3,600-square-foot Salon NormanDee in Northeast Philadelphia. The company also runs Jean Madeline Aveda Institute cosmetology schools in South and Northeast Philadelphia.

“We do all of our training the same way, educate the people the same and hold them to the same standards,” Lehman says.

Smart Business spoke with Lehman about his newest acquisition and his plans for a third cosmetology school opening next summer on the University of Pennsylvania campus.

How have you dealt with the challenges of growth?

We’re in the people business, so that’s our biggest challenge. Fortunately for us, we do have the two schools, so we constantly have a pool of fresh talent coming out of the schools, which gives us an advantage.

All of our people are home-grown (at our schools). It takes us a little longer to get them up and running, but we eliminate a lot of the other headaches from importing them (from other salons).

When you acquired Salon NormanDee, how did you communicate your corporate culture to those new employees?

We met the employees when we had a definite deal in place. We did a presentation on what they could expect from Jean Madeline — the history of the company, how many people were with the company, how we pay, the training we offer, the benefits we offer — and reassured them that we weren’t going to come in and upset everything they were doing but that it would be a gradual process.

We’re doing that now; we’re there almost eight months now. We’re keeping what was good there and introducing the things that have made Jean Madeline successful — creating more value. One of the areas (where) we saw tremendous opportunity for growth was in the resale of retail products. We knew that if we went in and spruced it up and put a good-looking retail center in there and focused on one line, that we would see the retail sales increase. And that’s worked out perfectly for us.

How are you managing the addition of your new cosmetology school within the next year?

When we opened the first school, there was so much government involved with funding that we really had to have it together. Then when we opened up the second school, it was a matter of having the teachers in place because we just had to duplicate all the government issues for the second school.

We also offer a teacher training program. After (students) have done their 1,250 hours and get their license to be a hairdresser, they can come back and do another 500 hours and get their teacher’s license. Hopefully we can keep two or three teachers every year from each school, and they will fund the next school with teaching staff.

It’s like a little nucleus; we have the school, we have the spa, we have the salons. They’re all relying on the experience from the salons to filter into the school, and the population of the school we try to filter into the salons.

It creates good growth opportunity within our company. If they don’t want to do hair anymore and they’re qualified, they can come in and be a school teacher. Or if they don’t want to, they can go out into the salon and be a hairdresser.

Or they can forget both of them and go into management. Each salon has a business manager who runs the salon. There’s a general manager who handles both schools. There’s a manager in each school. We have a financial aid department and we have a high school recruitment department.

What is the biggest lesson you’ve learned about managing growth?

Any real challenges that I may encounter are because I don’t have the right people in place. Before you start expanding, make sure that you have a qualified team in place.

Funding we can take care of; there are lending institutions out there that’ll lend you the money, but it’s really about the people. You need to have loyal people and qualified people.

Because of the size of our company, we handle about 5,500 phone calls a week for appointments. It makes more sense to me that we centralize all the phones. If (an employee) is in the salon answering phones, they have to be short-changing the client that’s standing in front of them or they’re not paying attention to the flow in the salon because they’re getting such a high volume of phone calls.

So we’ve invested in a central booking room at our corporate office.

We went outside of the industry to hire the phone center manager. We’re investing so much in this that we want it to work, and we don’t want to drop the ball on this. (Employees) now should be able to offer much better customer service, which creates more value for us.

HOW TO REACH: Jean Madeline Inc., (215) 238-9998 or http://www.jeanmadeline.com

Wednesday, 29 June 2005 06:49

On the move

Most people take cruising around town for granted, but hitting the road isn't always easy for people who use scooters or wheelchairs. That's where MobilityWorks comes in.

This Akron company provides converted vehicles worldwide and has the widest selection of adapted vehicles in the Midwest. Formed in 1997 by president and CEO William Koeblitz and principal Taylor Clark, MobilityWorks' revenue has grown from $2 million to $35 million with internally-generated capital.

Koeblitz says the biggest challenge is identifying customers and educating them about adapted vehicles. The company provides maintenance and repair capabilities at its Akron facility and a national service network program. It offers counseling regarding assistance and financing options, a 24-hour helpline, new and used vehicle inventories and trade-in availability.

MobilityWorks uses direct mail to educate customers, sending out newsletters with offers "so we're creating movement to action," Koeblitz says. The company's representatives also meet with occupational therapists, physical therapists, neurologists and rehab hospitals to show them products available to their patients.

Inventory is also featured on MobilityWorks' Web site so potential customers can get information on wheelchair and scooter lifts and on handicap-accessible vans.

"It's a high-dollar item. They want to see the vehicle or talk about it, so they usually do some research on the Internet and then call us," Koeblitz says.

His next move is to determine how much the company is going to grow and how to raise capital to achieve that goal. He's also considering franchising and company-owned locations.

"We're improving on the model of how we run each store so that we can take more risk out of opening new locations (and be) more certain of the results," he says.

HOW TO REACH:

MobilityWorks, (800) 638-8267 or www.mobilityworks.com

Friday, 22 April 2005 09:33

It's your move

For 25 years, CPA firm Brott Mardis & Co. was housed in the First National Tower in downtown Akron, growing to fill two floors. Last year, president Denise Griggs decided to relocate the firm several blocks away into the O'Neils Building, the former home of the iconic department store.

During the weekend of Dec. 3, 2004, the Brott Mardis team moved in, joining Roetzel & Andress, Ernst & Young, McDonald Financial Group and the Harry Buffalo restaurant in the O'Neils Building.

Rather than reinvent the wheel, the firm used timelines provided by the Association for Accounting Administration for moving an accounting firm. Sporting T-shirts that read, "Move Your Assets," the Brott Mardis CPAs closed up shop Friday afternoon and began the trek down Main Street with the help of a moving company and their technology vendors.

Griggs says the move could have taken weeks if she had allowed it, but she wanted to have the firm up and running by Monday morning.

"It was really dependent upon our space being finished here at the O'Neils Building, so once it was finished, we wanted to get in as soon as possible prior to the busy season," she says.

With Brott Mardis settled into its new home, Griggs shares advice for ensuring a successful office relocation.

* Let your employees own the project. Staff members were assigned to pack up their own spaces as well as a common area within the office. They worked Friday and Saturday, and on Sunday, several brought food into the new office and had an unpacking party.

* Hire a reliable moving company. The movers met with the staff and provided color-coded boxes and numbers corresponding to each office.

"They really helped us a lot with that because, of course, they'd done it many times before, and we hadn't," Griggs says.

* Have a good construction manager and architect on your side. Griggs' construction manager handled the subcontractors, giving her one less task to manage. She also met with an architect to ensure an efficient office layout for her staff and the way they work. As a result of the move to a single-floor setup, employees experienced a smoother tax season.

* Keep communication flowing. Griggs held staff meetings each week before the move to update employees and let them know how they could prepare for the move, including what their new space would look like, how many boxes they could bring and information on record retention -- which client-sensitive documents could be shredded and which miscellaneous papers could be tossed.

"Those were the things that people wanted to know so they could feel involved with the move, and by doing that, they were definitely more enthusiastic about all the extra effort," Griggs says.

* Maximize your PR. The firm hosted an open house the Thursday after the move, which promoted its relocation and motivated employees to get organized.

"We were able to use the atrium of the second floor, have a big party outside and then take people on individual tours throughout the offices," she says. "Knowing that was coming up, everybody got in their office space, got it all set up, and it looked nice and neat. Of course, we can't have client files or anything lying around while you're touring people through the office."

HOW TO REACH: Brott Mardis & Co., (330) 762-5022 or www.brottmardis.com

Friday, 22 April 2005 09:26

Just in time

Ted Swaldo and his team at ASC Industries Inc. in North Canton used to be forecasters. In the past, they'd guess how many aftermarket water pumps their automotive and light truck customers would buy, then manufacture those pumps and store them until an order arrived.

"That became very inefficient for us because no matter what we tried to forecast, they always wanted something different," says Swaldo, ASC's president and CEO, and one four engineers who founded the company.

After two years of examining its methodology and assembly processes, ASC implemented just-in-time manufacturing, and today, receives an order, pulls the components, assembles the pump and ships it within three days.

ASC adopted a more sophisticated computer system, connected company departments and redesigned fixtures and tooling so employees could change setups quickly during an eight-hour shift.

"Normally, setting up a machine used to take us two hours," Swaldo says. "Now we do it in eight minutes."

Other changes included bar coding to find inventory quicker and move it faster, as well as the installation of computers on forklifts.

Convincing employees to change the way they worked might have been a challenge, but ASC's in-house training center divided the new system into parts and trained small groups at a time.

"Everybody bought into it. They understand it, and they're functioning quite well with it," Swaldo says.

The overhaul at ASC was designed to satisfy the demands of its customers, Swaldo says.

"Before, (lead time) used to be seven to 10 days; we cut that down to three to five days, so they were happy because they got the order sooner," he says.

Implementing a more efficient manufacturing process is ASC's key to success.

"For a water pump that's assembled in China, there are probably five to 10 people involved in building it, and they would build one about every minute," Swaldo says. "We have been able to create robotic assembly equipment where we build a water pump in less than 15 seconds with two people."

The price of raw materials may be comparable worldwide but Swaldo says the one variable companies can control is the amount of labor that goes into processing components.

"(You) have to study it and see how you get the same production with less manpower. It's all about efficiency if you want to compete on a global basis," he says.

HOW TO REACH:

ASC Industries Inc., (330) 899-0340 or www.asc-ind.com

Friday, 22 April 2005 07:26

Flourishing fashion

The operators at J. Marco Catalog are happy to take your order. But don't ask to speak to Mr. Marco unless you want to make president Cory Smith laugh.

The Seville-based company was started in 1979 by Smith's mother, a single mom who named the company after her three children -- a daughter with the middle name Jo and sons Mark and Cory -- all of whom serve on J. Marco's executive team.

"Sometimes salesmen will call in and say, 'I talked to Mr. J. Marco just a week ago, and I'm returning his call.' And we're like, 'OK, sure, hold a minute, will ya? We'll get right back to you,'" Smith says.

Since 1979, J. Marco, a seller of women's clothing, accessories and jewelry, has evolved into a national mail-order catalog company and Web retailer. It created 14 jobs with the addition of its Seville facility, bringing the number of employees to 65, and has increased sales by more than $5 million over the past five years for total sales of about $20 million. With ideas in the works for a personalized Internet experience for customers, company-manufactured goods and full-price retail stores, J. Marco is eyeing future growth.

Smart Business spoke with Smith about innovation and managing growth.

How do you juggle the strategy of the print catalog and online store?

We really try to keep them synergistic as well as we can -- the catalog promotes the Web site and the Web site promotes the catalog. We have many instances in our catalog that point to the Web site to find products we may have on sale, to look for upcoming products that are not yet in the catalog, weekly sales and specials. We'll send out a preview e-mail as to what's going to be arriving soon so they get first dibs on products in upcoming catalogs.

Although they're different modes of taking an order or advertising our products, we rely on them both heavily for our continued growth and success. You really just can't have one without the other, especially in today's market.

How do you manage the company's growth?

Our total facility is about 2,300 square feet, but that's three times the size we had two years ago. We're at the point where we probably need to expand in the next year. It's a good problem to have. Our corporate goal is to maintain 20 percent growth per year. We've been hitting that.

You have to be careful with that level of growth that you've got everything else covered. You want to make sure your customers don't see any lapses in service from such strong growth, where you may have longer hold times because you don't have enough employees in place to deal with the surge.

You really need your infrastructure set up to maintain those levels of growth. Everyone's got to be on board, from ordering enough product to having the people in place to fulfill the orders. But you don't want to grow too fast, where you're overpurchasing or you've got too many people on staff and your expenses run way overboard.

Our company is small enough where we can make changes quickly when we see that things aren't going the way we predict them to be. We print eight to nine different catalogs a year, depending on the year, so they're coming out every six weeks or so.

So as a catalog hits, we can really predict (within the first two weeks) how that catalog's going to perform and make changes on the next catalog. That's what has allowed us to stabilize at that 20 percent. In our infancy, our growth was far higher than 20 percent a year, but when you're small, to double one sale is easy. When you're doubling 200,000 sales, it gets to be more difficult.

We can almost predict growth based on our circulation size of our catalog. We can add an extra 20 percent circulation, and that will almost correlate into sales. We've got enough data over the past 12 years (when the catalog started) to know when we add X amount of catalogs to our circulation run what that's going to mean when it comes to call volume and sales.

(That formula) is beautiful for what we're doing because we can be prepared for those spikes because we generate them.

How do you adapt to changing consumer demands?

After every catalog run, we look at product categories, price points, styles, color palettes, and we compare them season to season, year to year, and try to get a feel for what our customers are buying. Our products adapt to those customer purchases.

In this world of marketing, everyone's data is floating around. There are database companies that will interview different populaces of people. If you've ever filled out a warranty card, it accounts for your interests, age bracket or if you're male or female.

All that data goes into a central database. Not everyone allows it to be out there, but (with) those who do, you can match back the people who purchase from you ... and try to match your products to those consumers.

We can analyze that on a per-catalog basis internally. We don't know who's buying it but we know what they're buying, and that is probably the most important way that we determine the products we carry in our catalogs.

How do you communicate your vision to your employees?

We try to sit down twice a year and set goals for ourselves. It really trickles down to each individual person -- all the way down to the person taking calls and the person packing boxes.

But it starts at the top with what we think our corporate vision should be, where we want to be with sales and what we want to accomplish in our Internet and Web department, as well as product styling and down the line. ... Our executive team does the larger corporate goals, and then each individual person sets goals within each department to reach those corporate goals.

Sometimes, someone might say, 'We can't do this but we can do something else,' and we make modifications to those corporate goals based on what each departmental team comes up with. The goals kind of flow down but they also flow back up, depending on what we can and cannot do.

Some ideas that other people have may be better than what our executive committee comes up with. You just have to be (open to employee suggestions.) Anybody can have an idea that can literally change the company; it won't happen overnight but it can spark off a set of ideas and make a lot of change.

The person who thinks he or she is too good to listen to someone else's advice -- no matter who it is -- isn't going to last very long.

HOW TO REACH: J. Marco Catalog, (800) 948-3100 or www.jmarco.com