When Tariq Farid founded Edible Arrangements in 1999, he viewed the idea of edible fruit arrangements as an opportunity to combine his experience in technology and retail with an untapped market space with little competition.
Leaving the floral business, Farid started Edible Arrangements as a 600-square-foot store.
“Most of the people told us that it may be difficult because if it was something that was successful, if it was something that was going to be very popular, others would have done it,” Farid says.
But Farid wasn’t listening to the naysayers.
“I think all the stars were aligned for a small store,” he says. “Not necessarily a great company. But, that small store turned into a great company.”
In its first year, the company made $190,000. Farid reinvested the revenue to open a second store. It didn’t take long before the idea blossomed, and Faird began franchising the concept. Today, there are more than 1,000 stores throughout United States, Canada, Puerto Rico, United Kingdom and United Arab Emirates.
Smart Business sat down with Faird to discuss strategy and relationships.
Q: When you started franchising, how did you identify people who you believed were capable of taking your idea and making it their own?
If you put your processes and operations together properly, and if you lay the tracks down properly and you’ve tested it out, then whoever you find is only the starting point. You’re going to have to tolerate, grow or nurture.
And, if you’ve done those things right, most of them, the ones who are very motivated, will grasp on and be successful. And the ones who struggle? Because your systems are good and your franchisees are going to have the tools to be successful, you’ve put them in a good position, too.
So it became about giving the successful ones tools, systems and things that they had never thought of while, at the same time, for the ones who were struggling, providing a lot of hand-holding and one-on-one attention. They became successful, as well.
Systems are very important. You can’t just go out there and say we’re going to build stores without understanding how, what it will take, and how all these new elements and new ways of doing business apply to your business. It was out with the old at that time.
Q: What about relationships? How do you approach relationships with your customers and vendors?
The first thing I saw when I was about 15 years old and starting my first part-time job was that the customer is king. I grasped onto customer service from the beginning. Even now, our focus is always on the customer.
We go with the most important, working our way down after that. Our most important customer may be the customer who is buying our product. After that, our most important customer is going to be our franchisee. We will make sure they are all serviced properly, and that the products are something that they will relate to very easily.
You don’t just say “great customer service,” you practice it more and let the customer say how great it was. I actually go out to my people and say, ‘I don’t want you to tell me how many complaints you have. I want to know now many compliments you got.’
You have to work on getting compliments. If you are forced to focus on compliments, you will never have any complaints.
How to reach: Edible Arrangements, www.ediblearrangements.com
Interviewed by Dustin S. Klein / Story by Jessica Hanna
Ron Seide used to work for Cisco Systems in its wireless network business unit making products for manufacturers of data collection. What he did was part of a relatively small niche market, and as a result, Cisco put less and less focus on it until ultimately deciding to stop that line of business.
Seide and some colleagues saw this as an opportunity and formed Summit Data Communications Inc., a Wi-Fi solutions company.
“Something that was relatively small for Cisco was actually quite substantial for an independent company,” says Seide, president of Summit Data Communications. “As a result we were able to convince customers that worked with Cisco to work with former Cisco employees who were looking to bring to market a successor product to what Cisco was doing.”
Smart Business spoke to Seide about how Summit Data Communications has exploited a niche and is looking to continue expanding its reach.
Find a niche. It’s good to find a niche and fill it, but it’s even better to create a niche and fill it. It all comes from having an understanding of the market you want to serve. You have to understand the markets that you want to serve and then create a unique set of products or services that you can then hold up as being your very own niche.
It’s really no secret. It’s really talking to customers. Between myself and our sales staff and technical staff, we have a very permeable membrane in the organization where information constantly flows back and forth between ourselves and our customers, ourselves and our partners, ourselves and our supply chain. It really is about openness and willingness to speak with external parties on a very regular basis and that will help you understand what the market is all about. No amount of reading, no amount of studying or looking at reports really gives you that sort of rich, deep set of knowledge of the marketplace than just being in constant contact with external parties.
Grow organically. The initial start of the company was an incremental step from what Cisco was doing, but having then established that beach head, we have now expanded that into new technology and new markets. It’s those new technologies and those new markets that will fuel our growth going forward.
This technology is used in bar code scanning, factories, warehouses, distribution centers and big box retailers, all of which are supply chain applications. One driver of growth for us is the increasing automation of organizations’ supply chains. The bar code becomes an increasingly integral part of an organization as they try to gain efficiency.
At ball games and concerts, tickets are now being scanned commonly by handheld computers with bar code readers on them. That’s just one example of how bar code readers and handheld computers, which use our radio module are being found in new applications and therefore new growth opportunities for the industry and new growth opportunities for us.
In terms of identifying new growth opportunities, oftentimes your set of products and services that works in one market may play well in other markets. It’s a great way to gather low-hanging fruit and build incremental revenue. It doesn’t necessarily require new products or new capabilities; it just requires the willingness to move out of your comfort zone.
Brand your business. Following our customers and responding to our customers requirements caused us to indentify a whole new class of devices that we could access and a class of devices that had requirements for our unique set of capabilities.
When we started out, we were targeting all of our marketing and sales efforts on the parties that were directly one step up stream from us. You have to build up a brand. What we did was with each Summit radio that we sell that comes along with a software application, which runs with the device. On that software application is the Summit name, the Summit logo and a variety of different ways to identify to the end user that the device contains a Summit radio.
By doing that we are able to build a pull-through demand. You can establish a preference amongst the customers of your customers. It sets up an entrance into other markets because you have a brand and others don’t. It’s not enough to have a unique set of capabilities. Beyond that you have to also make it known who the provider of that unique set of capabilities is, not just to your direct customers but to customers down stream from your customers.
HOW TO REACH: Summit Data Communications Inc., (330) 434-7929 or www.summitdatacom.com
Philip Rielly and Eric Hill co-founded a small private company and they run it like a small private company. Every decision they make, they ask themselves, “Is this big-corporate stupid?”
“Large bureaucratic businesses often make decisions that are far removed from where the decision should be made,” says Hill, vice president and co-founder of BioRx LLC, a national provider and distributor of specialty pharmaceuticals. “We internally say that those practices are ‘big-corporate stupid.’ We don’t have to make a big corporate decision; we have to make a small business decision.”
Making those decisions aren’t always easy, but Rielly and Hill work well together.
“You have to be respectful of each other’s leadership,” says Rielly, who serves as president of the $55 million company.
Smart Business spoke with Rielly and Hill about how they have managed growth of a small company.
Manage cash flow
Hill: One of the primary challenges is access to capital and finding the right corporate structure environment and partners to get the business started from a funding standpoint. We have to make sure we manage within our capital structure and don’t allow the growth to exceed our ability to fund it. You have to absolutely know what it’s going to cost to enter a certain market. Is it a new product, a new sales rep or employee, a different product line? There’s no one-size-fits all, but the commonality amongst all those things are: Do I know within some reasonable degree of certainty what that’s going to cost me and what my timeline is to recoup it, and do I have currently, on hand today, the ability to fund it?
Rielly: Just like any business, we have typical growing pains, and just trying to stay ahead of the line of credit has been the biggest challenge. It’s day-to-day collecting your cash on time, it’s managing and watching your inventory and being very precise about when you hire and when you expand. Don’t underestimate the importance of having a good banking relationship and don’t underestimate the importance of managing your cash flow because it’s obviously critical.
Find what customers need
Rielly: Now, more than ever, you need to focus on your customers, and now, more than ever, you need to show them how much you appreciate their business.
Hill: When we viewed this market, I’m not sure that we viewed it as a market where we had to be revolutionary in the way of product services and delivery. Rather, we viewed the market as having a deficiency in terms of high-quality customer service that can be delivered quickly with decisions made at a field level. If you’re just going to enter a market and just do what everybody else has done, it may work — the market may accept you just because of shear effort in the marketplace. But if you can go into the market delivering a service that’s needed but not being provided or even
used to be provided, your acceptance and uptake and revenue growth is going to be a lot higher than if you just go out and try to plow with the same model.
Rielly: When you do find the right people, you have to really empower them to make decisions that impact their job and impact the business. You have to empower people to do their job and let them go. Let them fail from time to time and let them make mistakes and let them learn from their mistakes. As an organization, you will be better five years from now, because they’re actually growing a lot faster because they’ve been kicked down and brought back up.
Hill: It also helps to think about how you can adjust your managing style. Be the manager that you would have always wanted to have. Meaning, when you weren’t a manager but thought, ‘If I was ever a boss, I would do this.’ Well, do those sorts of things because it probably has some merit.
Build strong infrastructure
Hill: Make sure that you have an infrastructure in place to anticipate the growth. Try to hire maybe not way in front of your growth curve but in line with your growth curve. You have to set expectations that you’re going to manage for a year or two out, not just for today. You have to be thinking … in advance in terms of policy setting, staffing, structural procedures that you have to manage on a day-to-day basis and preaching that mantra to the organization that what we do today not only has to work today but has to be productive two years from now.
How to reach: BioRx LLC, (866) 442-4679 or www.biorx.net
Mit Shah was enjoying the fruits of his labor.
As Shah, founder, senior managing principal and CEO of Noble Investment Group, a company that invests in and manages hotels, he had successfully gotten the business past the struggles that followed the Sept. 11 attacks when travel and tourism dollars fell. Everything was back on track, and the company had been growing, earning spots on the Inc. 5,000 list through the years, and in 2008, it recorded $325 million in revenue.
But things have slowed from the pace Shah and his team are used to.
“We’ve built this model over 17 years — great people, great human characteristics — but clearly the last two and a half years have created a real pause of how we approach our business,” Shah says.
One of his challenges is having extremely talented people, which most wouldn’t think is a problem, but in tough times, it proves to be.
“How do you keep a group of highly successful, highly talented, highly motivated, passionate leaders engaged and focused on the ability to manage what we have when you’re an organization that’s truly built for continuous investment and continuous growth, and that’s how you’re structured?” Shah says.
He’s also been challenged by looking for opportunities to grow the business and figuring out how the market will shake out.
“That has been a big part of my responsibility to continue to surround myself with people who internally and externally will give me good insight as it relates to how do we see opportunities going forward,” he says.
And then it’s been just hunkering down on the business basics.
“Continue to do what the books say you’re supposed to do — stick to your core values during times of great opportunity and during times of crisis, take care of people, make sure that you continue to commit to things that are part of who you are and who you espouse to be,” Shah says.
Over the past three years, by building a solid group of peers to rely on, focusing on his people and looking for opportunities, Shah was able to successfully move Noble forward — earning $346 million in revenue in 2009 — and prepare it for future growth.
Build your peer group
One of the aspects of business that Shah says has been particularly critical the past few years has been forecasting out where the market would go and how things could change, but he can’t do this alone. He’s come to rely on a core group of people that he’s built over the years to help him better make decisions about his company.
For example, he may have dinner with the CEO of Hilton Hotels one day and the president of Wake Forest University on another, and they both play a critical role in his life.
“I always stayed very close to a group of people that I viewed could help me on a broader basis,” Shah says. “It goes back to this peer group — never being the smartest person in the room, always having the smartest room, and always finding people who I could befriend and I could build a relationship with and build a partnership with, who, in essence, I could learn from and build a base of knowledge that I wouldn’t get in just running my company.”
Having a group of people to get feedback and ideas from has also helped him bring in the best people when those openings arise. To build his group, he got out on the road and met with people continuously, and this went back as far as 18 years ago. Over the years, his group has also evolved and today includes top executives of the world’s major hotel chains, basketball coaches, people in service businesses and manufacturing as well as investment bankers.
“That’s really helped me think about things, both then and now, in a way that helps me lead more effectively,” he says. “I have the power of and the benefit of a broad range of thinking, and then I can take those thoughts, and I can incorporate them into my own and lead through that manner.”
To create a group for yourself, Shah suggests getting out more to build those relationships with people.
“Go to meetings, go to conferences, find out the best industry events,” he says. “Walk around, shake people’s hands, get to know people, and take every opportunity that you have to understand those in whatever business and industry are at the tip of being visionary, of being organizations that have had sustainable track records, that are respected among a group of people that you respect, and find opportunities to establish relationships.”
Sometimes that means you have to make the tougher decision in the here and now. You may want to go do something fun, but instead, you need to choose to do what will be most beneficial in the long term.
“There’s been times all across my entire career where it’s an opportunity to either go have a dinner or to be in the same room or to go to a meeting or a conference, and you have no idea what you’re going to get out of it,” Shah says. “But spend those times as opposed to saying, ‘Let’s go find the best place to watch the game tonight,’ and really go and find an opportunity to establish a friendship.”
When you meet people and get to know them, it’s important to remember that they’re people just like you, so use that as a base to build that friendship.
“It doesn’t matter if someone is the CEO of a big Fortune 100 company or if they’re just your golfing buddy,” he says. “At the end of the day, when you peel back everything, people are just, if you find good human beings, decent people. They’d much rather go have a barbecue sandwich than have something fancy. They’d much rather have a beer together and talk about your families than always be talking about how you’re going to win market share here and how you’re going to do that. That all comes, but break it down to just finding quality human beings and building friendships with them.”
Focus on your people
During the downturn, Shah didn’t cut his 401(k) match, community service programs or the company Christmas party. Instead, he doubled the budget for his employee engagement committee so it could plan things like bowling outings and have a really nice holiday party.
“Let’s be honest, this is a tough labor market,” he says. “People aren’t jumping jobs right now, so we get that. You can’t use that as a crutch, because as soon as the market comes back, they’ll leave for a better opportunity once available.”
Despite the challenging times, it’s crucial to make sure you continue to focus on your people and how you can support them. Look at the people that aren’t your senior managers — just your everyday, salaried employees — and reflect on what their intentions are.
“Do they have the character and confidence, and then do they care about the company’s best interest?” Shah asks. “If they do, then making that decision is very easy.”
If you have employees that would leave to go across the street for 5 percent more, then Shah understands not wanting to put the resources out to support them, but at the same time, he also questions why that is.
“What does that mean?” he says. “That means that if you haven’t brought in that person who has that character and if you haven’t done the things to promote that loyalty, whose fault is it? Is it the team member’s fault or the employer’s fault that they’re not loyal?”
When you face yourself with this kind of a situation, that’s when it becomes difficult to decide whether to put money toward your people or to keep it for the company.
“If employers are in that situation, then it’s hard for them to part with their dollars because — they’ll never admit it and they’ll never sit in front of a town hall and say, ‘All of you employees are commodities,’ — they would never say that, and if they feel that, they’ll make a decision and say, ‘We’ll just hoard the cash,’” Shah says. “But if you really believe in your team members, and if you really believe they have the organization’s best interest and they’re going to be there for the long haul, then you take care of them. You always take care of them.”
In fact, as 2009 came to an end, Shah was anticipating a surplus in the budget and predicted that they would be creating a supplementary bonus program with it in addition to putting some of that back into the company as a buffer for this year.
“You always go to the denominator of what’s the right thing to do,” he says.
The economy has changed business the past few years, so you can’t just rest on your laurels and expect clients to come your way.
“You’ve got to look through a number of different avenues,” Shah says. “It’s far different than it ever was. Generating business in general is different than what it was before — in any industry.”
Over the past couple of years, Shah has been diligent about looking for new opportunities, and that starts with knowing your market.
“It’s really about having a very good understanding of your marketplace so you don’t have to be a big national organization or global organization,” he says. “We could be just the best hotel group in Atlanta, but we need to know Atlanta like the back of our hand.”
Knowing your market also goes back to your peer group and having people you can talk to about how the market is going so you can better predict how things may shift. On top of that, it’s important to have a niche.
“You have to find a niche in the business,” Shah says. “I think that companies of the future that are going to be very successful will have a niche. They aren’t broad-based companies that do a lot of things. They’ll find a couple things they do really well, and they focus on those things, and they outperform the competition there. It’s way too difficult to be good at many different things.”
For example, Shah knows that his company is good at hotels, but he also recognizes that it isn’t cut out to go into, say, grocery stores or office buildings.
“You can’t just, all of a sudden, wake up one day and say, ‘I think we’re going to be grocery-anchored retail,’” he says. “There’s some smart leaders in our organization, but we don’t know anything about grocery-anchored retail, and I can’t just go hire someone who knows about grocery-anchored retail and pretend we can be a great company overnight.”
Instead, you have to look at what your company already does and what expertise you already have within the organization.
“You have to say, ‘What are you built to go do that’s as good as or better than the best people that do it in your business?’” Shah says. “Based on that, how do you build that if you have not already? If you think you have it already, how do you go and execute around that area?”
If you see that the opportunities aren’t in that area and you do think you have to explore a different area, you need to do it in a smart way.
“If we don’t know how to do something, we always go get the talent first and go and build a model around it, and then start with one and continue to grow,” he says. “That’s what we’ve historically always done.”
The key is you have to be able to live with whatever consequences come as a result of the direction you head.
“Understand what your downside is,” Shah says. “Know what you can live with. It’s hard. How do you be visionary, be aggressive, be strategic and also manage risks without just being completely paralyzed by it?”
How to reach: Noble Investment Group, (404) 262-9660 or www.nobleinvestment.com
The Shah file
Founder, Senior Managing Principal and CEO
Noble Investment Group
Born: Morristown, N.J.
Education: Bachelor’s degree, economics, Wake Forest University
As a kid, what did you want to be when you grew up?
I wanted to be a basketball coach. If I can’t be a coach, I want to be an announcer.
I’m first generation American. My parents are both immigrants. I’m the eldest child of immigrants. They think about education and stability, and you’re like, ‘Hey! I’m going to be a basketball coach or announcer.’ They’re like, ‘What are you talking about? You’re going to be a doctor.’ I was like, ‘All right, I guess I’m going to be a doctor,’ — until I got to college and took bio and chem and physics and hated all three with a passion.
Did you get the chance to coach at all?
I used to coach kids basketball when I was in college. One of the first things that really helped me think about what I wanted to do with my life was when a friend of mine was going to be the head coach, and he asked me to be the assistant, and he transferred schools, so I ended up becoming the head coach before the first game, and it was the most thrilling thing to me.
I was coaching these 11- and 12-year-old kids, but these kids were just wide open. They listened, they cared, they were good enough where you could teach them things. I was like, ‘This is really great.’ They’re 12, so they’re going to listen to you, and they don’t care that you’re 18 — they’re 11, so they look at you as a leader. I was like, ‘Wow. This is the first time anyone’s listened to me.’ It got me really excited about the opportunity to lead and the opportunity to be somewhere where I could teach and help people maximize their potential.
What’s the best book you’ve read?
I’ve got a number — Jim Collins’ ‘Good to Great.’ It’s kind of a pat answer. It was the first book I ever read that gave real tangible evidence of what companies did over time to help them not only survive but thrive through multiple periods of economic volatility. It helped me think about my business in ways I never had thought about it before.
If you’re looking for something less business-oriented, ‘The Last Lecture’ by Randy Pausch was a great book because it really touched on things that, to me as a human being, we should always think about.