I think of success in two ways one is the very objective measures of sales volume, sales dollars and, of course, net income. But I measure success in other ways, as well.
As I have been in this business for the last 13 years, I’ve often found some years where we are achieving more of the fundamental successes for the business, such as planting seeds and fertilizing those plants, which bear fruit in years ahead. Those are extremely important measures that we watch, knowing that in the coming years, the seeds we plant will bear fruit.
While you plant the seed by achieving an initial visit to communicate with a prospective account, the reality is you then have to maintain regular contact and provide them with examples of the services you provide. All the while you are not doing business; rather, you are confirming the kinds of activities you initially promised.
It could literally take months, possibly years, before the right confluence of events takes place that you have established yourself, you have maintained that contact, they have seen on a regular basis the services you provide, and they have made a decision to contract with you.
Review your goals.
We have a formal once-a-year process of establishing a business plan that looks at the upcoming year and establishes concise, clear and achievable goals for each of our businesses. We formally audit our results against that plan on a quarterly basis, but we look at it more often than that to see if we need to make adjustments as the year unfolds.
It’s very necessary for any CEO to establish that, and more importantly, to communicate that to employees in its totality so they can provide input and have a clear understanding of what should be accomplished.
We have constant communication with employees. We think that as events unfold in either a positive or negative way, that there should be immediate feedback to those involved. Formally, we get together once every four months and review our plan. We communicate with our employees, but also seek their advice on business.
A leader needs strong communications skills, both in the spoken and written word. It’s very important to keep your organization informed on your strategy, but not in too complex a way (so) that it’s confusing and makes it difficult to establish clear, concise, achievable goals.
If you cannot provide a clear and concise strategy, I think the organization can get off track and involve itself in too many different activities that could cause you to not achieve what you set out to achieve in the first place.
Establish a code of ethics.
A business leader should establish a code of ethics that creates an umbrella for how the company and all of its employees conduct themselves in daily business life.
I try to establish that code of strong ethics here, and following that, I leave the day-to-day business in the good hands of the very good people we have selected to run the company. We have provided them clear goals, provide them overall direction and strategy for the company, and let them go to work.
(A leader) is a type of person that has that capability to recognize when someone is knocking and to answer the door. It’s been my experience that it takes a particular kind of individual.
With others, frankly, opportunity could be banging the door down, and that person simply doesn’t hear it. But you should use all the tools at your disposal to recognize the knock at the door. It consists of being well-informed and using your contacts, your relationships and the Internet to stay abreast of opportunities that may exist.
Find employees who also recognize opportunities. In an employee, I look for a strong ability to communicate. That’s very important in business. The other is, try to ascertain if they have the special trait for hearing opportunity knock. I try my best to identify if that person has that trait or not.
We have grown in a very limited way. We are able to do our business with a small number of employees. We follow our motto closely: ‘Focus on what you do best, and outsource the rest.’
In our case, we focus on marketing. We outsource advertising, legal and payroll all sorts of things we determined not to be central to core marketing effort.
Balance your life.
I can’t say there is a standard answer for balancing your life. There are individuals that make life decisions to invest quite heavily in certain aspects of life, such as work.
I don’t think one should go against their desire to do as they wish, but I believe much more in the balanced lifestyle. I make a concerted effort to manage all parts of my life in a way that ensures that I don’t get bogged down in any single one of my activities.
HOW TO REACH: The Plaza Group, www.theplazagrp.com
But not Eugene Martineau. He sees in the concrete industry not only an opportunity to be a consolidator, but an opportunity to start competing against other building materials industries.
Martineau, president and CEO of Houston-based U.S. Concrete Inc., has made accommodations for its acquisition-oriented growth strategy from the beginning, starting with a clear vision of being an industry consolidator and creating a solid foundation to build on.
“Unlike a lot of consolidators or rollup-type companies, we have been building infrastructure almost from Day One to support a much larger organization,” says Martineau.
The acquisition strategy is straightforward: Assemble a leading position in as many target markets as possible. This leading position is vital, because besides added buying power, it gives the company a platform from which to educate consumers about how concrete can be used in new ways, all in an attempt to try to take market share from other building materials, such as wood and steel.
“We are competing against other building materials,” says Martineau. “If you get into a market and start competing against other concrete companies, you are not as focused as a company. We want to be the leading player and consequently offer the customer the best value.
“Everybody nickels and dimes on price, and the customers ultimately suffer because they do not get the advantage of the different types of concrete available.”
The strategy of being the leader in any given market helps U.S. Concrete avoid having its products become nothing more than commodities.
“We want to be sure we can execute a leading position,” says Martineau. “We believe the real opportunity is to help the industry stand out. We have a valuable product that is not being marketed and sold at levels that it could be.”
The company was formed in 1998 and went public in 1999. In its relatively short history, U.S. Concrete has made nearly three dozen acquisitions and increased revenue from $395 million in 2000 to $576 million in 2005.
U.S. Concrete’s management evaluates potential targets on market share and a host of other factors, such as construction activity in the market, projected population growth in the region and other trends.
But one of the most important factors is people.
“Our process is to really understand if there is a good reason for these companies to get together,” says Martineau. “Is there a cultural fit? Can you change the culture if necessary? There’s a real need to understand the culture of the company one is thinking of acquiring.”
To analyze a company’s culture, Martineau and his executives talk with the sellers and find out what they want from the sale and where they are coming from. It is also important to get a feel for key managers.
“You want to have people that have somewhat of a common philosophy to you in doing business,” says Martineau.
Martineau looks for people who have similar views to his on the concrete industry or who are trying to execute a similar strategy on a smaller scale.
“Maybe they are frustrated by the fact of the fragmentation in the market and that somebody is always wanting the market as a commodity,” says Martineau. “One of the other characteristics we look for is for people that are progressive and thinking outside the box in how they use the product and how they compensate people.”
In one case, Martineau found two brothers running an operation in California. They were very progressive in their marketing and sales, focusing on educating customers on ways to save money, while making investments in customer service and product development. It’s a philosophy similar to his own, which makes the integration process much easier.
“Fly out personally,” says Martineau. “If you are a growth company and have a vision, you better make sure they understand the vision.”
Once the acquisition is made, integrating the new company into U.S. Concrete becomes the next challenge, and is critical to have a plan for the early stages of the integration.
“You have to know exactly what you will do during the first 90 days,” says Martineau. “The way you start will have a lot to do with your ultimate success.”
He says that if you don’t have a plan for the first 90 days, it is hard to implement one later because people start developing their own plan.
One of the gains from acquisitions is being able to apply best practices at every location to maximize potential, and it’s something that’s implemented as soon as possible.
“The business lends itself to standardization,” says Martineau. “We find the best mousetrap and then we try to duplicate it everywhere.”
But integrating a company goes beyond machines and processes.
“The biggest challenge is people,” says Martineau. “You have to make sure people understand that things are going to change. Things are not going to be done exactly the way they were before. A lot of people will listen and nod their heads, then when something changes, they go ballistic. You have to continually reinforce the message and not just change for the sake of change.”
During that initial period, employees of the acquired company who aren’t willing to follow the new best practices should be removed from the organization.
“Find out who will buy in to the ticket and who won’t,” says Martineau. “It’s a process that takes time. Start with everybody. You have to talk to them, lay out your plans and talk to them some more. You keep communicating and answering questions.
“Some people I’ve told the same thing to 20 times before they started believing it. If you find one person that will not get on board, even though they nodded their head, then you have to figure out a way to move along without them. Try to do it in a manner where people know you made the effort, but remember that a lot of other people will be looking to see how you react. You have to be consistent.”
To get the message across, U.S. Concrete uses slogans to communicate complex ideas in simple ways.
Slogans such as, “We drive out fear of the unknown” and, “We are they” are easy ways to reference the company’s commitment to answering questions so that everyone knows what is going on and its emphasis on teamwork.
Martineau says most of his slogans are variations of things he’s picked up over the years from other sources and put his own spin on.
“Go to outside sources and find something that you really believe in and excites you,” says Martineau. “Then apply it to your situation.”
In addition to the slogans, the most important communication tool is face-to-face contact.
“Don’t be dependent on computers and e-mails,” says Martineau. “Try to get face-to-face with the people. I think in today’s world, we have lost an awful lot because we don’t understand what people are trying to communicate. There’s no personal contact, so you miss body language and other cues.”
U.S. Concrete has become the largest independent purchaser of cement and aggregates in the United States. That increased buying power has obvious benefits, but Martineau says the company’s size also means that suppliers are willing to work as partners to solve problems.
“The way we do it is you start out with trust,” says Martineau. “We sit down and look at things strategically. What are the opportunities for both companies?”
Building a trusting relationship means sharing intimate data with the supplier so it can fully evaluate the opportunity.
“We put all the parameters out there, and a blueprint is laid out of how everything would work,” says Martineau. “The other things you have to do are stay in constant communication and have leadership from the top. We pledged an alliance that would be supported by the top levels, and it would take the involvement of the CEOs and other key executives to make sure it wasn’t watered down.
“People find reasons not to make things work. Stay involved. We meet on a quarterly basis with the companies and make sure there aren’t any issues.”
The end result is a solid relationship and a situation in which both companies come out ahead.
“We can lower our costs and their costs, rather than us just trying to beat them up for a low, low price,” says Martineau.
Acquisitions are always a challenge, but Martineau and his team have shown that having a clear plan and a commitment to communication can dramatically improve the success rate of an acquisition strategy. But he says it’s important not to forget to have fun.
“There was a lot of excitement here after the first deal, and there still is today,” says Martineau. “You have to keep people excited, have some fun and don’t forget to celebrate your victories.”
How to reach: U.S. Concrete, www.us-concrete.com
“Companies have little or no control over factors such as competition, inflation, and rising interest rates,” says Bonnie Johnson, principal business relationship manager at Wells Fargo. “However, technology allows a company to gain greater control over its business operations by improving productivity, lowering overhead, and managing cash flow.”
Smart Business spoke with Johnson about the importance of leveraging banking technology for your company’s advantage.
How can banking technology increase productivity?
Electronic applications provide a business with real-time information that can be downloaded directly to the company’s payable and receivable systems. A company can interface with its financial services provider electronically seven days a week, 24 hours a day. This gives a business immediate access to accurate information, which in turn allows it to make quick, cost-effective decisions. With this technology, a company can also drastically reduce direct costs for mail, check stock and paper reports.
Why is sophisticated online banking essential to businesses?
Today’s businesses are competing in a global economy. They need real-time information that only online banking can provide. Regardless of location, a business owner can access financial information 24/7.
A single sign-on using state-of-the-art online security helps a company manage its finances with greater efficiency and ease. With online banking, a company can determine account balances, transfer funds from one account to another, place a stop payment on a check, verify that a receivable has been collected, pay down a line of credit, send a wire and perform other functions. Online access is more efficient than a phone call for the business, and because the service also provides efficiencies for the financial services provider, fees may be reduced.
How can technology increase the efficiency of the accounts payable process?
Managing the time value of extending payables and accelerating the collection of receivables is an important part of the monthly business cycle. According to a recent study by Deloitte & Touche, companies using a traditional accounts payable system spend an average of $50 to $150 per transaction. A free expense management system is an excellent tool to reduce these costs and increase productivity.
This system allows employees to use a business bank card to pay for expenses, which reduces the amount of time employees spend on processing invoices, making purchase orders and generating reports. Reports can be transmitted electronically to the company’s payable system, so it is not necessary to manually key in data.
Because payables are consolidated in one monthly billing, businesses can reduce costs of checks and mailing and reduce the expense of reconciling bank accounts and storing canceled checks. When the vendor accepts the card, the payment to the bank may actually extend from 1 to 28 days past the vendor’s payment due date.
How does technology facilitate the accounts receivable process?
Technology also can accelerate the collection of receivables through the acceptance of credit/purchase cards and the ability to electronically debit customers’ bank accounts. Most banks provide merchant card services that allow a business to accept credit/purchase cards. Card service technology ranges from low-tech desktop machines to high-tech Internet acceptance. Businesses benefit from receiving their cash within 24 hours from processing the card.
Automated Clearing House (ACH) services frequently are used for periodic debiting for services such as utilities, membership dues and shareholder dividends. They also can be used for business-to-business receivables. With an Internet-based system, business receivables can be debited directly from the customer’s bank account.
What types of banking technology streamline the check deposit process?
Technology has improved the retail lockbox system, in which banks collect checks directly from their post office and deposit them into accounts several times a day. Banks now offer check conversion into ACH debits, which accelerates availability of the funds. Banks can scan remittance checks, invoices and accompanying documents, and the images are available online the same day as receipt. This technology streamlines check deposit services.
A new service is available for companies that receive checks at their business. As a result of Check 21 legislation, companies now can electronically transmit check deposits to the bank. Companies benefit by reducing the time, costs and risks of physically transporting check deposits. Technology requirements for this process include a bank-authorized check scanner, a computer and an Internet connection.
Electronic deposit transmission also can improve the ROI of the company’s existing account receivable system. Discretionary data fields allow the company to enter customized information about the checks deposited. Reports can be downloaded in a variety of standardized formats (CSV, HYML or PDF) and/or uploaded to the company’s receivable system.
BONNIE JOHNSON is principal business relationship manager at Wells Fargo. Reach her at (713) 319-1551 or firstname.lastname@example.org.
Education: Attended Rice University, University of Houston
What is the biggest business challenge you’ve faced, and how did you overcome it?
Establishing a legal framework for our service. When we started the company, we had to start not just a business but an industry because there really was no outsourcing of the human resources function at that time.
We had to battle the regulatory environment and get legislation passed. That’s a pretty formidable challenge. The challenge was overcome through perseverance and having the right people. Bring the right people together and give them the right tools and the right reasons to succeed, and you can overcome challenge.
What is the most important business lesson you’ve learned?
Keeping the faith and looking to the future with faith and optimism. And then persevering until you accomplish your goals.
Sarvadi on leadership:
People don’t want to be managed, they want to be led. And you lead people through developing personal influence that comes from caring about them and helping them put their talents and capabilities to work and helping them see the direct result of their efforts.
Having an effective reward system and communication system with your people and setting realistic but challenging objectives and equipping people to get there is what leadership is about. That’s really what the CEO’s job is.