Thomas Kirkpatrick, a 19-year veteran of the Procter & Gamble Co., had an urge to try his hand at entrepreneurship. In 1998, he bought the assets to Eco Engineering LLC, a lighting energy services company.
Kirkpatrick saw big potential for the service his company provided, but it was lacking an organizational culture. The values that Procter & Gamble used touched home with him, and he figured those same values could work for his small business.
“Those ethics fit well with my own beliefs, so I tried to establish those same values here,” says Kirkpatrick, president and CEO. “I wanted to develop the organization to create a culture that would bring the good things I experienced at P&G and leave behind some of the things that could plague a larger organization and prevent it from being a nimble, customer-focused organization.”
By following core values and his company’s vision and mission, Kirkpatrick revitalized Eco Engineering, which saw 2009 revenue of $15 million.
Smart Business spoke to Kirkpatrick about how he runs his business by sticking close to the values he knows can create success.
Establish cultural values.
As the CEO of a small business you have the sole responsibility in being the leader to establish the vision, the values and the culture to set the tone for your organization. It surprises me every day how carefully people observe what you do, whether or not you’re setting high personal standards. It is absolutely essential and critical to communicate well and make certain that you are sharing your own personal character and standards.
As a CEO, you need to make sure that you communicate clearly the mission and vision of the company. [Employees] need to have something they believe in with passion and something they can get excited about.
You’ve got to decide what kind of an organizational culture you want to have, your values. You need to establish honesty, openness and integrity and create partnerships. Once you get a clear mission and core values set up, you will be able to get an organization in place that can go to work. You have to put together a set of measures so that you have something you can look at to see if you are achieving what you set out to do. You then have to evaluate what you have established, and from there, you set out to try and be the best.
Record and update values.
One of the first things I did back in ’98 was put down on paper a vision, a mission and core values. Most small business owners might say they don’t need a vision, mission or values. But they would agree that they need to provide written guidelines on how the work needs to be done. Some have very basic guidelines and others just use an apprentice program where new people learn just by watching. They need to formalize that and instead of letting new people learn by observing, they need to force themselves to put the process down on paper, and as a result, they can have specific measures of how they’re succeeding or where they’re falling short. That will help them become a better company.
It’s important to continually be looking for the best practices from outside your own company. Participate in a CEO round table to share ideas with other CEOs or keep up on the latest business books. It’s making sure that the CEO doesn’t get so caught up in running the business day to day and that you’re taking time for your own personal development. If you’re not out there looking for the best practices and bringing those to your organization then you’re going to be stagnant.
Reinforce core values.
Every three to four weeks, I meet with all 53 employees, and every quarter, I meet with my leadership team, and we review our values and how we are doing. Have we made progress over the last quarter in working toward our vision and our mission? Are we living up to our core values? I reinforce the fact that our whole focus is customer satisfaction and that we are proud of ourselves and we want to be the best. The only way to do that is by focusing on getting better. As I review these values, it hopefully empowers every employee to live up to those.
HOW TO REACH: Eco Engineering LLC, (513) 985-8300 or www.ecoengineering.com
Since Normandy Catering Inc. opened its doors, the company has been on a continuous hunt for new areas of business it can break into. Not satisfied with simply filling its 500-person banquet facility on Friday and Saturday nights, the food service company has been growing in niche areas.
Ryan Baker, general manager, and James Carmigiano, vice president, have been expanding Normandy Catering’s niche business in both catering and in food service management.
“Normandy is a family-owned business that started in 1978,” Carmigiano says. “We started doing school food service in 1984, and from there, we started in delivery business and expanded our food service into other schools and higher education.”
It has been the food service side of the business that has really taken off.
“The focus that has caused our growth has been in the food service area versus the catering,” Baker says. “We’ll actually run your kitchen, manage the employees that are there, and we’ll manage the procurement procedures with all of the vendors and produce the food.”
Normandy has seen a lot of growth in this area with schools in Northeast Ohio.
“We can run a public school kitchen by delivering food cheaper than they can actually manage and run their own kitchen with their own people and realize substantial savings while increasing the participation rate that the children are purchasing,” Baker says. “It’s been a win-win and there’s been a lot of growth and a tremendous amount of activity in that section of our business.”
Normandy has also been expanding its service to schools that don’t have kitchens.
“What we’re doing is we’re actually catering the food,” Baker says. “We cook every morning and we deliver breakfast. We set up and have equipment there to serve it. Our people serve it, we clean up and we come back here, load up again and we head out and do lunch. We’re doing a couple thousand a day in those types of meals and there’s been a lot of growth in that area for us.”
The growth Normandy has seen has been due to the effort to find new niche areas that others can’t compete in.
“We decided that there’s only so many Friday’s and Saturday’s in a year for us to load people into our facility and so we’ve gone out and went after this section of the business,” Baker says. “We’ve been here for a long time, but we’re a young, progressive, forward-thinking and hardworking company that really sees a strong future.”
HOW TO REACH: Normandy Catering Inc., (440) 585-5850 or www.normandycatering.com
Founded by Dan Hanlon in 1976 under the principles of hard work and dedication to doing a good job, Allen Keith Construction Co. has been continuing to expand and grow its business.
Lonnie Hanlon, Dan’s son, took over as CEO in early 2010, but he has worked at the restoration company since he was a little boy only 10 years old.
“I started out sweeping the floors of the warehouse,” Hanlon says.
He’s now putting all his experience, knowledge and the company’s good name into continuing to grow the 48-employee restoration company.
Smart Business spoke with Hanlon about how he looks to keep growing Allen Keith Construction Co.
What are the keys to being successful?
Basically, it’s just about working hard. If things aren’t going right and you want to be successful, you’ve got to get in here and you’ve got to put time in. It’s about getting out and seeing people and getting involved. You have to make sure you keep an eye on everything, whether it’s a specific construction project or the overall financials of the company. It’s going out and seeing our customers and talking to them and making sure we are doing a good job. You have to also know the trends of your industry. Knowing when your busy season is and being prepared for it is important.
How do you grow your company?
There’s so many different ways to grow. It’s helpful finding niche businesses that relate to ours. Finding a niche is important because it’s tough out there. It’s a tough economy. It’s hard to find places to grow. If you’re the only one that offers something, you can control the market for that and charge whatever you want. By getting into that same business it can cut down costs and turnaround time and allow you to provide better customer service.
We are expanding into southwest Florida. We saw a market in Florida where construction is completely different than construction up here. They move a lot slower, and things are not as professional as they should be. We thought if we could bring the professionalism of Allen Keith and the quality of work down to southwest Florida, then there would be a huge opportunity for our business to grow.
You’ve got to be resourceful in this kind of economic climate. I think 80 or 90 percent of why businesses fail off the bat or when they are trying to grow in new areas is because they have too much overhead. One of the most important things my dad has taught me was to keep your overhead low. We have a 36,000-square-foot facility [in Canton] and we didn’t go down [to Florida] and just go all in and build a huge place. We are starting small and are going to work our way up.
You have to take your time when making decisions about new markets. You have to research every aspect and get to know that market. You have to talk to a lot of people. Who are your customers? If you do decide to go to that market, take it slow. Keep your overhead low until there is a need for it. Obviously, once you are growing, you’ve got to add more people to get more production and get your sales up, but don’t go in guns blazing.
How important is it for a company to keep up with technology?
Technology is obviously a very important part of growth. If you don’t keep up with technology, you’ll die. You have to know your industry. You’ve got to have foresight and you’ve got to be able to see down the road — whether it’s doing research or just talking to people.
You have to also know your competition. Look at your competition and see what they do. Are they doing something that you should be doing? Are you losing business because they have a new technology that’s making everyone’s life easier and you’re not doing it?
What can prevent a company from growing?
You have to avoid being shortsighted and not being able to see what’s ahead of you. Whether you’re talking about your industry or you’re talking about your market or the economic climate, not having that vision can prevent growth. If you’re not able to see that someone is doing something that may revolutionize your industry and you’re not on it, the people that do that stuff first can take a lot of your business away from you.
HOW TO REACH: Allen Keith Construction Co., (330) 455-5451 or www.allenkeith.com
When Michael Fetsko lands a contract to build a train system, it’s not because he is the best salesman in the industry. He gets contracts because he has dedicated himself to driving industry-leading innovation that has helped build Bombardier Transportation’s reputation as one of the best rail transit manufacturers in the world. When Bombardier was awarded the Hartsfield-Jackson Atlanta International Airport job, it was the innovation of Bombardier Transportation and its Systems Division’s automated people mover train system that won them the job at one of the world’s busiest airports.
Bombardier’s Systems Division faces a tough competitive market for their products. Fetsko, vice president of the Americas regions for Bombardier Transportation’s Systems Division, is constantly focused on innovative ideas and ways to stay ahead and on top of his industry.
“Ideas are encouraged, and our company encourages the divisions to do exactly that, to develop the next idea, the next game changer,” Fetsko says. “That philosophy is instilled throughout the company, and I think it is one of the foundations to our success.”
Innovation is ingrained in the roots of Bombardier. Even when Bombardier was just a small snowmobile maker, innovation and entrepreneurship is what led them to where the company is today. The Systems Division saw annual revenue greater than $1.3 billion in 2009, just a slice of Bombardier Transportation’s total annual revenue of more than $10 billion that year.
Here’s how Fetsko’s continuous drive and dedication to leading innovation at Bombardier has helped establish it as an industry leader.
Due to Bombardier’s commitment to being the best at what they do, Fetsko and his team need to always have an ear to the ground about prospective projects. A commitment to excellence and their ability to create strong business relationships help get them in the door.
“When we find out about projects, in this type of business, you really can’t walk into a particular city at the last minute and say, ‘Hey, I’m here to bid on your project,’” Fetsko says. “Our strategic plans take us out five plus years. We are already looking at the cities where we think and know transportation systems will be built. And we are going in and meeting with the decision-makers, the customers, the politicians and really trying to secure our foothold in that particular location. What it comes down to is building the relationships with the right people and making sure the community sees you as a viable player.”
Companies in big industries and companies that face tough competition have to rely on their ability to offer strong products that come with the support of the company from multiple areas. Bombardier is often selected because of its ability to provide the best price and the best value for the customers’ money. Bombardier’s drive for innovation is also a key factor.
“Over the last two years, for us in the Systems Division, (innovation) has become a core part of our workload,” Fetsko says. “We have 100-plus people working on various forms of innovating our products and making them better. For us, it really comes down to trying to stay ahead of the competition. It also impacts cost savings. We are working on product development right now called energy storage. We are trying to push the envelope to try and make our systems faster, more cost-effective, more energy-efficient, more environmentally friendly, and it takes a team of people to do that.”
Innovation is not just a one-off thing. If a company doesn’t work hard and continue to innovate, then it is not an innovative company. Fetsko and the Systems Division work continuously to encourage and drive innovation. Finding ways to innovate and ways for employees to bring new ideas forward are keys to the company’s success.
“It really starts at the group level, the transportation group level, and it gets pushed down through all the divisions,” Fetsko says. “Bombardier has an innovation website where we encourage employees to submit their new ideas. Each idea gets reviewed by a committee and a team, and, of course, not all of them can get implemented but many of them do. They could be simple ideas on how we might be able to save more labor hours to do individual tasks, or they could be ideas on how to create the next big product breakthrough. It’s highly encouraged, and there are a number of mechanisms we have in place for employees to submit their ideas and creativity on how we could better the business.”
Ideas like an innovation website and innovation meetings are smart and fun ways to encourage employees to submit their ideas. Without these mediums for employees to speak what’s on their minds, innovative ideas can go to waste and will only hurt your company. Three years ago, Fetsko even created a full-time position for someone to head up their innovation efforts.
“You’ve got to encourage innovation,” Fetsko says. “Part of that is you have to have people who are dedicated to leading the effort. You can’t just talk about it and hope it’s going to happen. I think that’s one of the reasons that we have been successful. Companies may not want to do it, because it’s an overhead kind of position, but we have found that it more than pays for itself in a lot of the ideas we’ve already implemented and things that we’re doing to better the business and better the product. You’ve got to have a person or a small team of people that are responsible for it and committed to driving it throughout the business.”
At Bombardier, they also have quarterly meetings where the top-level executives from the company’s numerous locations gather for a two-day discussion that is strictly focused on innovation, product development and product improvement.
“You have to look at where you want to go and what you’re trying to strive for your business to achieve,” Fetsko says. “If you want to achieve big things, you’ve got to dream big things, as well. You’ve got to put time into it. You have to run your product improvements like you would a particular project. They all have budgets they have to meet, and they all have schedules they have to meet, and finally, you have to make sure you drive it to completion.
“When we say innovation here, it’s not necessarily the next big breakthrough on a train system. It could be things on how we could manage our business better. It can even be discussions on a particular task and whether we can do it with less people and still accomplish the same thing. Can we get it done on time with the same quality perhaps for a lesser amount of hours? That all translates to cost savings. Innovation relates back to us being able to offer customers a lower price for a product in the future. When we say innovation, it’s more than just product innovation, and that’s why it’s encouraged by everybody. If you have ideas on how to make the business more efficient or how we could improve the business, that’s how we make better products.”
Of course, with any new product or innovative idea, testing has to be done before that idea can be declared innovative and useful to the company and to its customers.
“Some customers are reluctant to be the guinea pig for some things that are new,” Fetsko says. “One thing that we do here very well within our division is our expertise to build a transportation system from the ground up. Integration, testing and commissioning are our core areas of our expertise. When we put something new into a project and the customer says, ‘Yes, I’ll take it,’ from our standpoint, it goes through a rigorous level of internal testing and external testing. We go through rigorous design reviews with our customers, so these types of ideas if they are new and get implemented, really go through a high level of scrutiny.
“Everything has to pass through our safety group as part of our governance. They are the ones that have to give the final blessing that a system is safe to carry passengers. Anything that gets implemented that’s brand new or might get integrated into a system goes through that sequence of testing and conditioning, so both the customer and Bombardier are confident it’s going to work.”
Bombardier uses test tracks to make sure its products are up to the company’s high standards and are tested a second time once the product gets shipped to a customer.
When innovation plays a big part in your company, it is often very difficult for only one person to overlook the entire operation. Fetsko says that he encourages and expects his employees to know how to do their jobs and to be independent enough to make their own decisions.
“My philosophy is to allow for accountability for running your part of the business,” Fetsko says. “I’m not going to step in and tell people what they’re supposed to do on a daily basis and how they’re supposed to go about it. We have levels of governance and reviews that are put in place so that we can review what is going on in every part of the business. The people here are empowered and are expected to run their part of the business. My style is not to micromanage at all, but I will routinely walk around the building and interact with the employees. To them, it really shows a sense of caring and says, ‘Hey, here’s the guy that’s running the business, but he spends a lot of time with the employees.’ Not necessarily telling them what to do — I don’t do that — but rather asking them how I can help and asking them how things are going and really telling them and showing them your appreciation for what they accomplish for us every day.”
Establishing a culture where employees know that they are empowered to do their jobs is critical for a corporate environment that is innovative.
“The one thing you have to focus on is to set up a structure so that people feel empowered to do their work,” Fetsko says. “You have to make sure those parts of your business and leaders of those areas can handle the work and that they’re not too overburdened with trying to manage too much. You verbally and physically have to tell people what you expect from them.
“I’ve got monthly meetings with all the folks on my team. They are very short meetings, face to face, not through e-mail and not through the phone, to really interact on that basis is very important. If they come to me with a problem, I want them to come to me with three solutions or more, as well. I try to tell them, ‘Don’t expect me to solve all your problems.’ You’ll always have the folks that come in and say, ‘Hey, I’ve got a problem, what do you want me to do?’ My response to them is, ‘What do you think we should do?’ Certainly, I could give them my opinion, but I really try to encourage our folks and help them find solutions to their own problems. It comes down to empowering people and telling them that it’s theirs to do, it’s theirs to run. It raises a level of passion and it all translates to results.”
How to reach: Bombardier Transportation, (412) 655-5700 or www.us.bombardier.com
The Fetsko file
vice president, Americas regions
Bombardier Transportation, Systems Division
Education: Bachelor of arts degree and a master of science degree both in environmental sciences, from the University of Virginia; master’s degree in civil and environmental engineering from the University of Pittsburgh
What was your first job out of college, and what did you learn from it?
My first job out of college was working for a company called Ensr, and I worked as a geologist. They were an environmental engineering consulting firm. What I learned was how important it is for projects to meet their deadlines and their goals. I also got a lot of chances to travel and meet with customers.
What is the best piece of business advice you’ve received?
The best advice is the importance of relationships and developing relationships in your business, both with internal customers and external customers, and having that face time with them. People really appreciate that level of interaction versus conversing through phone or e-mail.
If you could choose one person, past or present, to have a conversation with, whom would you speak to and why?
Going back to my athletic days of playing football for the University of Virginia, one person I would really like to have a conversation with would be Lou Holtz. I have read some of his books and I am a fan of his style of leadership and what he has been able to accomplish as a football coach and what he has been able to accomplish with people who have played for him and passing on the values he’s lived by.
If you could have any superpower, what would it be and why?
If I could have a crystal ball and I could see into the future of what’s going to happen, that would probably help, as far as being able to make the right decisions and growing the business.
Shawn McGorry survived the days of the Wild West-like dot-com boom when employees enjoyed free Mountain Dew, foosball tables in every office and nonexistent dress codes.
So when he was charged with incorporating the cultures of the dot-com boom and a more serious corporation at Expedient Communications, he knew just how to handle it.
“The role in that kind of transition, especially a traumatic transition, is to be a very competent and thick-skinned man in the middle,” says McGorry, president and COO. “I spend a lot of time assuring, comforting and explaining to the management group and the employees of Expedient that things are different and there’s a reason.”
Expedient Communications, a network of data centers and a provider of managed services, has successfully steered through acquisitions while continuing to thrive. With 150 employees and annual revenue just shy of $100 million, Expedient offers a culture that most companies can’t.
Smart Business spoke to McGorry about how he successfully united different company cultures with compromise and communication.
Be honest. I try to have a very open and honest culture in the organization and make sure that not only the managers that oversee the different departments and functional groups but also the employees themselves feel empowered, feel engaged and understand what accomplishing their objectives means to the growth and success of the overall organization.
We have a longstanding practice of having open, all-employee meetings every quarter. We’ll have a luncheon and spend half a day sharing with all of our employees our successes, our shortcomings, our challenges, down to the financial numbers and sales numbers. We open up the kimono and let everybody in the company feel like they’re privy to everything that’s going on, good and bad.
Don’t be afraid to discuss and address company business or concerns directly, factually and confront any rumor mill that might be purveying or brewing that may not exist. Honestly address any concerns or any information that might be out there, whether it’s factual or false. If it’s factual, even if it’s concerning your bad news, acknowledge it and outline what you and the management team are going to do about it and take it on as a challenge. If it’s false, acknowledge that you’re aware of it and explain the reasons why it’s not true. Present data that demonstrates why that’s not the case.
Be available. I’m more often than not disappointed when I hear employees say, ‘Well, they were afraid to come to you or they’re a little nervous about coming to you, or what do you expect, you’re the president, they’re not going to come to you.’ That makes the challenge a little stiffer because there is a cultural protocol that is built in to our society that has these walls that get more impenetrable as you move up the management title chain.
I’ve done a lot to soften those walls and knock them down where I can. You have to keep your door open. Be very visible. Get to know everyone’s names that you could possibly get to know. It’s important that you have at least a congenial, friendly, nonassuming relationship with every employee you encounter. Periodically invite yourself to lunch with some of the lunch groups that inevitably form in every organization. Take the time to spend five minutes to exchange pleasantries, whether it’s asking an employee how vacation was or how their kids are doing or just discussing sports events.
Compromise. You have to manage the cultural clash from both ends and ask both sides to make compromises. It didn’t work in all cases. Some people didn’t survive. We have had employee turnover where the employee said, ‘Forget this; it’s not worth it to me. I’d rather go work somewhere where I could do what I want.’ People feel like if they can go work for a more liberal company, they can have more freedom and that’s what they want.
You have to look at all of the things that go with the work experience and look at them in a big basket. That is really your compensation. It just doesn’t include the paycheck in that basket, it includes benefits, it includes the work experience, it includes the opportunity, it includes some of those freedoms, it includes the people you work with, the friendships you have at work and travel time to and from work. You compare what’s in that basket to what’s in the basket somewhere else. I think we have a pretty doggone good basket.
How to reach: Expedient Communications, www.expedient.com
Armed with the knowledge of a financial analyst, Charles Chanaratsopon knows what makes a successful business and how to manage that success. In 2004, he took that knowledge and applied it to an advantageous investment market and founded Charming Charlie, a women’s boutique and accessories store.
“I saw an opportunity, not only in an operating store but also in the realty business,” says Chanaratsopon, founder and CEO. “The capital or investment market was very frothy. So you could quickly develop shopping centers on leverage and build quickly.”
Deciding to break into the market for women’s accessories, Chanaratsopon saw an opportunity for big growth with little competition, and his plan has worked. Since 2008, Charming Charlie has been opening new stores at a furious pace, and today, it is one of the fastest-growing private companies in the country.
“The operating business had a lot of demand,” Chanaratsopon says. “A lot of customers were coming in and buying product from us. We had lines outside every day before the stores opened. People just loved the product. I wanted to figure out a way to grow even faster.”
For the last six years, that’s exactly what he has gone out and accomplished. He knew that with the right mix of employees, strategy and innovation, Charming Charlie could be big.
“From the very beginning, when we had three stores, I always thought we had the potential to be all over the country,” he says. “People always talked about how I had big aspirations and thought I was crazy, when at three stores, I thought we could be all over the country. Now we are all over the country, and I think we could be all over the globe.”
Listen to the consumer
Chanaratsopon saw an opening in the market for women’s accessories, due to a lack of stores that strictly focused on accessory needs instead of clothing. Only large department stores offered those products to women.
“Once we saw what the market looked like, we knew we had an opportunity to create a specialty store around it,” Chanaratsopon says. “We saw it as an opportunity that we could exploit, so we did.”
As Charming Charlie took off in the Houston area, Chanaratsopon knew he could grow the business quickly if he continued to offer what customers were looking for and wanted to see in the store.
“That thesis worked out and held very well for the first two or three years,” Chanaratsopon says. “As we opened stores, stores were very busy and business picked up. We went out and built another center and then another center and went out and did it again and again. As we focused on listening to the customer and building our team out, that was basically the steps for our success.
“The key thing is, you need to listen to your customers before you break into a market,” he says. “You can’t really go until you do a market feasibility or market study about what they need. Does it make sense for Charming Charlie to come; do they like the concept? We always explore to see what opportunities are out there before we do a big push. We test the different markets to see if the concept will work. Our concept is very portable, so we are able to now move quickly through the different markets.”
It’s all about making sure there is a net demand for what you sell, before you go out and start something.
“I think that is just moral hazard,” he says. “Whatever you plan, plan on not meeting it. Have a worst-case, base-case and an upside-case plan, because most of the time, it’s very unpredictable in the beginning. You have to mitigate the downside and make sure that you have contingency plans if things don’t go well in the beginning, because capital will be a constraint.
“In our first year or two as we solidified our playbook, we had a lot of key takeaways in ‘learnings’ and mistakes. So before we could go out and do a cookie-cutter approach, it took us a few years to make sure we had the right recipe for success.”
Everything starts and ends with the customer.
“My best advice is to go out and learn the customers, and make sure there is a need before you go out and build anything,” he says. “You survey your current customers and your noncustomers, and you ask them questions about what you can do better to improve. At the end of the day, our boss is the ultimate shopper. We just listen — that’s what we do. I don’t mean to make it sound so simple, but it is. We listen to what they need, and we do it, often. We spend a lot of money listening to their needs, and we try to give them what they want.
“We are not a tech company or a research group. We sell on experience and what we do is listen to our customer and make sure we deliver the best that we can, and that’s our mantra.”
Innovate and adapt
Growth in any industry naturally causes issues that must be overcome. The higher the rate of growth, the quicker a company has to adapt to that growth in order to succeed.
“You’re running at red line all the time,” Chanaratsopon says. “What I mean is when your car is running at 6,000 rpm, to get everybody used to running at that speed and understand what you’re doing is challenging. Not many companies grow this quickly, and that’s evidence that shows the percentage of retailers that can actually go out and do what we’re doing [is small].”
Charming Charlie has seen revenue grow from $9.2 million in 2006 to $51.9 million in 2009, a three-year growth rate of 463 percent. Chanaratsopon expects 2010 revenue to be around $140 million, and he realizes just how special his success has been.
“The odds are against you,” he says. “Five percent of businesses make it, and 5 percent of businesses only make it to $5 million. A very low percentage of businesses make it to a critical mass. So it’s very challenging to move at the current pace we are doing. It’s also very hard to change the mindset of your team when you’re managing three stores to now managing 100 stores. Your management team has to be open to change. When you don’t innovate and adapt to the business, I view it as binary. Either you innovate and you win, or you lose. There’s no common ground these days.”
In today’s economy, innovation and adaptation are very important to a company’s success. Chanaratsopon pointed to the examples of Linens ‘N Things and Circuit City, both of which went out of business within the last few years.
“That’s one of the great things about American capitalism,” he says. “You’ve got to be very sharp and very on, or there’s no room for you. You have to have the mindset to implement your information technology ahead of time and to plan for that is very challenging.
“You need an ability to split up what’s needed during your day-to-day part of the business. You also need to be cognizant of planning for the future and future roadblocks. You need to be able to set up radar or a systematic view for upcoming issues and be ahead of the curve. Have a cognizant view of how you spend your time between your short- and long-term strategy. Depending on what your long-term strategy is, set a blueprint to that plan and measure yourself constantly so you hold yourself accountable to your own business and personal plan.”
Hire smart, build smart
Since the founding of Charming Charlie in 2004, the company has grown to roughly 3,600 employees and has stores in 23 states. Continued success and the ability to keep opening stores in new markets, takes hiring more employees — and good ones at that. Chanaratsopon says the hardest part about getting the business up and running was finding the right people.
“This is a people business,” he says. “It’s hard finding the right team members to help you facilitate growth. There are a few things that are very challenging. No. 1 is finding the right people to help build a team. Whatever you do, be creative in the way you find people.
“We have gone through different people in the organization, and most businesses are team businesses, and without the right team, you can’t do it. You should overhire. If you think you have conviction in that your product or business will succeed, go out and get the best people that you can. Don’t be cheap on it.”
Start by focusing on attitude.
“You need to have people with good attitudes, specifically in a growing business. Attitude is half the battle. You also want people who have the same set of core values. A lot of people undermine that. When you have a small business that’s growing, you have to do many different things that you’re not accustomed to coming from a big retailer. People have to be able to adapt, and hiring on ability alone is not enough.
“My focus is trying to hire experts that are smarter than me in their specific function. I try to find people who are passionate about what they do and the business. I try to just give them the tools and support to help grow the business.”
A fast growth rate and an equally fast hire rate caused Chanaratsopon to adapt once more and create ways for his team to focus on common goals and visions.
“As you get more people, there’s a lot more people to build, as we call it, an ACA model with,” Chanaratsopon says. “That’s alignment, commitment and accountability. What we try to do now to achieve one goal is to find a team dynamic.”
In order to get his management team all on the same path and chasing after the same goal, Charming Charlie holds weekly one-on-one meetings and they build a company goal.
“That’s our road map to success or our blueprint to our business,” Chanaratsopon says. “That gets us all aligned and committed to the business, and we build accountability by having published goals that we need to achieve. It’s during these types of meetings that you need to follow up on your company goals. You need to make sure that people are executing to your goal. If I said, ‘Hey, I want to meet you in Florida.’ I’m sure you’ll get there. But if I said, ‘Hey, I want to meet you in Florida, and here’s a map.’ I’m sure you’ll get there faster. You need to have something mapped out. It may not be a perfect map, but you can change it along the way.”
One way that Chanaratsopon maps out his company’s future is by hiring ahead of time in order to acclimate new employees to the company and the goals it has set moving forward.
“Growth is challenging, but we weather through it by planning ahead,” Chanaratsopon says. “I invest in the future knowing that we are going to grow. I try to put our team players on early so that we can jell before we grow fast. A lot of people talk about what’s your capital budget plan. I talk about what’s my human capital budget plan. I need all these different team members to do this if we are going to open another 100 stores next year. I’m going to hire the overhead or infrastructure today, so we don’t have to do it last minute.”
Chanaratsopon emphasized that having fun and recognizing when employees do a good job are valuable aspects of creating a good rapport within your team. It also helps company culture to provide employees with ways to give feedback.
“Have a good feedback system,” Chanaratsopon says. “Your company is your customer. You want to survey about how your management team is doing. The same way you listen to customers, listen to employees.”
How to reach: Charming Charlie, (713) 579-1936 or www.charmingcharlie.com
The Chanaratsopon file
founder and CEO
Born: Houston, Texas
Education: I attended Loyola Marymount University in Los Angeles and received my MBA from Columbia University in New York City.
What was your first job out of college, and what did you learn from it?
I was a financial analyst at a bank, and I learned how to access money, how to put capital together, and how to understand a balance sheet and the ins and outs of financing businesses. I also learned about what makes a business work and what makes a business fail and the different metrics and how to measure against it.
If you could have a superpower, what would it be and why?
I wish I could fly. I always had dreams of flying as a kid. It felt pretty real in my dreams, so it would be pretty interesting to be able to fly around like Iron Man or Superman.
If you could invite any three people you wanted, living or not, to a dinner party, whom would you invite?
Rodger Federer, Warren Buffett and Barack Obama. I would be curious about how they think.
Deciding when or how to transform a small company into a global company can be a tough task, but James Tallman took the reins of Datacert Inc. at the height of the economic downturn in 2008 and made a tough task a reality.
As president and CEO, Tallman took the company from a modest provider of software and services for the legal industry that had 2007 revenue of $21.5 million to a global company with 2009 revenue of $33.7 million.
“Datacert was an entrepreneurial company, 10 years old, and they needed someone to come in and bring the company to the next level,” Tallman says. “The company had done well, but it had reached the point where we needed to take a different approach to the marketplace, and we needed to do things in a more scalable fashion.”
Smart Business spoke with Tallman about how he grew a small company into a global success during one of the toughest economies since the 1930s.
Reassure employees. My first challenge had nothing to do with the company, it really had to do with the people and the economy, and it was getting my team to understand that a downturn in the economy could actually be the greatest opportunity for a company. I was really blessed because over the past two years, I’ve had a really outstanding board and I’m surrounded by an outstanding management team. We really had to rally the troops who, for a lot of them, were going through personal strife, where their husbands and wives were losing jobs in the marketplace. My challenge as a leader was to get them to understand that a downturn in the economy, when other companies and your competitors are struggling, winds up being a tremendous opportunity for you to take the market and grow.
When you transform from an entrepreneurial-based company to a professionally managed company, the key challenge was spending time with the employees and spending time helping to develop the skill sets that they needed to get the company to the next level.
Plan for the long term. Do what you say and say what you do. As you lay out a clear plan and you tell people this is what we’re all going to do, make sure you stay the course. During bad economic times, your tendency sometimes can be to react to a short-term market force and not stay with the long-term strategy. I made a commitment to the employees that I was going to invest in them and I was going to reinvest 30 percent of our revenues, and yes, I didn’t know what the economy was going to do, but we were going to stay the course. If I invested in them and we invested in the new technologies and where we were going, the benefits would come.
As the sales and the revenue of the company started to grow and [employees] saw the reaction from the customers, at first, they were open to the plans that we had, but they were also skeptical. As they started to see the results, they became believers. The reactions I started to get were people coming by my office and thanking me and saying, ‘Everything we said we were going to do, we’re doing and we’re winning and we’re dominating the market now.’
Develop growth. Make sure that the company isn’t entirely dependent upon you. Put your ego in check and recognize that to grow a great company, you need a great team around you. Any company that’s driven by one person or just a couple of people, although you can exhibit short-term growth, you’re never going to achieve a long-term sustainable growth strategy if you don’t surround yourself with people who are better than you are.
As a CEO, the first thing you have to do is look in the mirror and ask yourself, ‘What am I really good at and what am I not good at?’ I have a small company and I want to make it a global company. I need to ask myself, ‘Do I really understand what it takes to go to the next level, do I have the talents within myself, and what kind of people do I need to surround myself with that have talents that I don’t have to be able to do that?’ It’s one of the biggest failings that I’ve seen of CEOs that I’ve worked for. The CEOs who truly understand that they don’t have the answers and they need to hire people who are better than them in a lot of different aspects of the business is a critical thing for a CEO who is trying to transition from a small company to a large company.
The past few years have brought about the worst economic climate we have seen since the 1930s, and for Steve Cuntz, president and CEO of BlueStar Inc., the situation was no different.
However, Cuntz saw the economic downfall coming and prepared his company for the worst. His actions have helped BlueStar not only get through the downturn relatively unscathed but put it in a growing position and expanding globally.
“We have been successful beyond my wildest dreams,” Cuntz says. “I really anticipated more problems than we have experienced. Having been in the electronics industry long enough, the one thing you can guarantee is change.”
BlueStar is a national business-to-business distributor of point-of-sale and auto-ID products. Its ability to adapt to ever-changing conditions played a big part in its success through tough times and in its growth.
“Any time you’re growing, it’s anticipating the strain that scaling causes on an enterprise,” he says. “In any organization, your growth can put you in a position where the things you never would have dreamed of doing, now you’re going to have to do.”
BlueStar’s ability to adapt and keep its 370 employees hard at work through the downturn resulted in 2009 revenue of $365 million.
Here’s how Cuntz created a company that can weather tough economic times.
As a private company, BlueStar has sometimes had trouble getting suppliers to pay attention to it as a viable distributor.
“Since we are a privately held business, [suppliers] have a tendency to sometimes question your capability,” Cuntz says. “We manage to overcome it one supplier at a time. There’s nothing like performance that wins somebody over. It takes awhile for people to drink the tea, but once they get a taste of it, they understand what we are about. Usually in business, especially in distribution when you are doing order fulfillment and things like that, it’s just take the order and fill it. We go out and try to find new orders and try to develop new customers for our manufacturing partners, and over time, that has helped us create a major difference.”
During a time when a lot of companies were losing money and struggling to keep business, BlueStar was growing. The company used its position to help its customers, and in return, BlueStar gained valuable relationships.
“During the last recession, we bent over backward to extend credit terms and find ways of creating a business flow of capital that allowed our customers to live and keep their credit ratings while we continued to try and expand the marketplace,” Cuntz says. “That was a bit unusual, which may have had an impact to our suppliers, because during the recession, our sales actually went up. It’s ironic because a lot of what we sell is exactly what an enterprise needs to do to cut expense overhead.”
Cuntz didn’t think twice about stepping in and helping customers through their tough times. In fact, that kind of effort is a company philosophy.
“Going above and beyond is just part of our organization’s philosophy, which is ‘Give more than you receive,’” he says. “It provides a differentiator in so many ways. In the long term, it provides an advantage. Providing that extra value also provides you extra recognition, notoriety and opportunities that might not exist otherwise. You have to create a unique difference for yourself. Fill a need or a void that currently isn’t being filled. It depends on the business you’re in, but always be good for the money and always create a value-add difference for your business, and it will work.”
Hire strong employees
During the recession, companies like BlueStar had to keep people motivated by keeping them busy at work.
“It became very activity-based,” Cuntz says. “Call the customers up and let them know that if they have a deal, we want to help them close it. Call them up and tell them the good news that we’ve got extended credit. Call them up and tell them that we’ve got inventory. We didn’t cut our purchase orders, we stayed the course. We became one of the few distributors that actually had product available. They saw an immediate return on their investment because of increased activity. So it wasn’t hard to keep people motivated because they were writing orders as fast as they could.”
That motivation was also fueled by strong leadership and employees who were hired because they would grow within BlueStar and help the company succeed.
“We’ve got substantial managers in our organization,” Cuntz says. “Our philosophy is you can’t move up until you replace yourself with someone better. Our management team has continued to get better because we keep hiring better people than we are ourselves and after awhile that becomes attractive to talented people who look for a career path.
“You have to create an environment where you lead by example. Every day, people are watching you, and unless you have somebody better than you sitting behind you pushing, it’s easy to fall into that yes-man trap, and we haven’t had that. It’s very important in a growing company that you have people that want to grow.”
BlueStar’s challenge quickly changed from “How do we stay motivated?” to “How do we meet goals in this down economy?”
“You have to be honest and communicate with your employees,” Cuntz says. “You should tell them what you expect them to be doing. We use budgetary goal setting to discuss our future plans and growth. Sometimes we will use weekly meetings depending on what things are happening within the company. We have weekly meetings with our sales and marketing teams, and we communicate through terms of budgetary accomplishment and feedback loops and what we expect. Are we hitting our goals? Are we not hitting them? Why do you think that is? You have to ensure that employees are doing the things necessary to succeed. If you’re not meeting goals, then you need to communicate with staff and see what things need to be changed.”
Cuntz and BlueStar are also constantly combing for people who will bring drive and the desire to grow to the company.
“Hiring people is kind of like Glengarry Glen Ross with the ABCs of selling, ‘Always be closing,’” Cuntz says. “We use the term ‘Always be recruiting.’ I think you have to always be in the frame of mind when you see a talented person who expresses a desire to be a little bit more in life or has some desire to make a change; we just try to be sensitive to that and keep our ears open. Networking is critical. With the nature of our business, we are constantly at trade shows, and we work with hundreds of suppliers, so we are constantly networking with folks. We try to carefully define what we are looking to accomplish and what kind of skill sets and characteristics it’s going to take to fill that position. It’s not just a saying, ‘Always be recruiting.’ We are always thinking of that.”
Grow and invest
In the world of technology, the industry is never quiet. It is constantly changing and progressing forward, and it is crucial for companies like BlueStar to be able to grow, adapt and invest within those changes.
“The things that seem intuitively obvious with an enterprise package are not,” Cuntz says. “That was a real challenge for us, and it continues to be. We knew coming in that we will face change. How you change and how you succeed with that change is the real key. With a flexible mindset and a flexible business plan, you have to expect that it’s going to happen and you have to be willing to make the investments. You have to invest in change. I’m always thinking about what’s our next investment.
“You have to have some expectations of three things when you think about investing. First of all, you have to understand what the investment is thoroughly. I don’t care whether that’s stock of a Fortune 5 company or a small business. You need a real thorough understanding of who that company is and who the people that are managing the company are. The second thing is does the company have the capacity to do better than it’s currently doing? Look for the missing links. What could you do to bring about change that would help make this company or this investment more than it is? The third thing you should look at is does it fit with your culture? Also, is it attractively priced? If all those elements are in place, then you could probably move forward with that investment.”
In recent years, BlueStar has grown to a level where it has been looking to expand globally and make acquisitions that will augment and enhance its business. However, with global growth comes more changes and challenges.
“The one thing I didn’t plan on was the organizations’ cultures,” Cuntz says. “Different parts of the world have different customs, labor laws and things like that. The biggest challenge to us has been to understand not so much that the business appears to do the same kind of work that we do but to understand the underlying business development of that organization and what the thought process of those employees are. Those are the challenges of understanding if you bought a company that doesn’t match up philosophically with yours.
“You have to focus on companies that are in the core market of the kinds of products you sell. If you’re going to look for a merger or key acquisition, you have to look for key managers that are going to stay on that share your corporate philosophy. And you really have to know what it is you want to accomplish. You have to look for similarities where you don’t necessarily have to reinvent the wheel but where you can offer them something that they need that will help both of you grow.
“You have to understand the market you’re getting into and the culture of that market. Does the market have the potential to grow? What’s the economic climate? The U.S. is not the best benchmark for how most of the other parts of the world operate. You have to understand that there are other costs involved of managing foreign entities that we are not aware of. You have to have a team in those regions that can clearly explain to you what those costs are and what those opportunities are so you can make a valid decision whether that’s going to fit your business model.
“We can determine pretty quickly whether they’re of a like mindset or not. You have to sit down and say, ‘Here’s where we want to go, and here’s how far we have reached.’ And if they’re not in agreement with that, then sometimes you have to make a change. It’s going to come down to communication. Communication is not a quantifiable formula. It’s a skill set on both ends of the communication.”
If you’re the investor, it’s your job to make sure that you are being understood. And it’s your job to make sure that you understand what’s also implied or said or inferred in a relationship.
“It’s an art form, a skill set to make sure that you know your partners,” Cuntz says. “That’s something there is no formula for. You have to be completely unassuming. My method is I assume that I was not clearly understood and there’s the old saying, ‘Inspect what you expect.’ My first inclination is maybe I didn’t say it right, so I’m going to monitor the response to the communication to make sure that I’m seeing the results to the request. You have to be very, very specific.” <<
How to reach: BlueStar Inc., (866) 830-0140, or visit www.bluestarinc.com.
The Cuntz file
President and CEO
Education: Received a bachelor’s degree in accounting and a master’s degree in finance at Xavier University
What was your first job, and what did you learn from it?
My first job was as a night manager for a fast-food restaurant called Burger Chef. What I took away from that job was that I found out I didn’t have any ability to know I was making a correct hiring decision at the time I was making it. Some people interview well and wind up being terrible employees, and some people are terrible at being interviewed, but they make tremendous employees.
What is the best piece of business advice you’ve received?
Always spend less than what you make. The gentleman I heard that from was my loan officer, Bob Herman, who actually helped BlueStar get going when I became CEO. I asked him, ‘What advice do you have for me, because I don’t want to ever let you down?’ He said, ‘Steve, you’ve got to spend less than what you make and you got to set money aside for contingencies, and the businesses that fail to do that usually don’t make it.’
What do you enjoy most about your job and why?
I really enjoy setting budgets and goals and then hitting them. I’m a very goal-oriented person. It’s kind of an architectural thing. You put it up on the board, and you look at it and wonder if you can build that thing, and then you put together plans to achieve it.
If you could invite any three people, past or present to dinner, whom would you invite and why?
I would love to have George Washington, Albert Einstein and Lou Gehrig to dinner. I would be curious to know how Washington kept it together in the face of that kind of adversity. His skills and leadership just floored me.
Guys like Einstein, I’ve admired my entire life, because I wish I’d been a better science student. Einstein was able to take really complex ideas and make them really simple. I still don’t understand half of what Einstein talked about. And Lou Gehrig, to me, was an icon. He was a natural-born leader and had the respect of his teammates and was one of the first truly great athletes that also was a role model.
Dale White Sr. came to the United States in 1975 with nothing but a few dollars in his wallet and aspirations to become successful. After cutting his teeth at a construction company for 16 years, he founded D.A.G. Construction Co. Inc. in 1990.
Much the same way that White learned his trade before breaking out on his own, his company has grown through experience.
“Over the years, we partnered with larger construction companies to learn how they did their work,” says White, founder, president and CEO of D.A.G. “We mentored and grew, and now, we are trying to be a (mentor) for smaller companies to help them grow, too.”
Today, D.A.G. is one of the leading construction companies in the area and saw revenue of roughly $20 million in 2009.
Smart Business spoke to White about how honesty and communication grow a business.
What traits make a good leader?
Be honest with your clients, do a quality job and have open communication. When we start working with a client, we openly communicate with them. Sometimes we tell them the things they may not like to hear. We would rather be upfront and tell them, ‘This is what’s going to happen and this is how it happens,’ rather than them having surprises at a later date. Tell them the problems that exist right now — ‘Here’s a problem and here’s a solution.’ We give them the problem and the solution and being upfront with them shows them we have the characteristic of being honest and not trying to nickel and dime them.
How do you gain client trust?
If you want to build a clientele and you are a company that is growing, you want to show your clients that you care about them very much and that devotion may provide you recommendations to other companies. Personal touch goes a long way in promoting your business. It’s the cheapest way of advertisement for a company, word-of-mouth. Clients will say, ‘This guy came down here, and he’s the CEO. He came to the job site and met with me; he discussed the project with me and told me the problems and solutions and saved me so many dollars by doing this.’ This goes a long way in building that reputation.
How do you create working relationships?
Be open and communicative. Get them to tell you their problem — ‘Here’s my problem and here’s what I’m trying to do.’ How can you help them get through this? Unless I know you are having a problem, I can’t help you. That’s one way we try to get into their minds and try to give them advice. All we can tell them is how we solved that problem and then they build upon that.
How do you deal with tough competition?
The competition in the market has been extremely difficult. I look to grow my company by diversifying the business opportunities that I have. You have to get into other areas of your work and find a niche market and excel in that niche. You have to build a relationship with various clients. You have to be honest with your clients and tell them what it is that makes you different from your competition. You have to tell them why they should choose you and feel comfortable that they are not getting a raw deal. Give them that personal level of satisfaction that they are always trying to find. We try to be that extra arm for our clients and go beyond just being a contractor.
What is something that could prevent growth?
Not listening to your employees. Saying, ‘Let’s do this’ when you know you’re not capable of doing it. Growing too fast and not being structured. If you try to climb that ladder too quickly, you’ll come down real quick. You have to know the capacity of your company and what you can handle. Just because another company grew a certain way doesn’t mean you should.
How to reach: D.A.G. Construction Co. Inc., (513) 542-8597 or www.dag-cons.com
Mark Gore, general manager of Firestone Country Club, says that customer service is what is most important at the prestigious country club.
“What really sets us apart is when you ask people that have experienced it what’s special about this place, it's about the employees and what they created from an experience standpoint,” Gore says.
Firestone employs about 350 people and serves 950 members, and it is Gore’s main objective to make sure each and every employee provides the best possible customer service to anyone who walks onto the Firestone property.
“Our staff puts forth an effort to create warm welcomes, create magic moments and create a fond farewell,” Gore says. “That’s what we call our three steps to service. We try to portray that to every single person that comes to the club.”
Companies in the customer service industry strive to provide service that no one else can provide. Firestone encourages employees to consistently go above and beyond what their job titles say they should do as part of the club’s Star Recognition program. The program was designed to allow members, guests or other employees to recognize a Firestone employee who is deserving of being rewarded for providing great service. The employee being recognized earns points that accumulate year to year and gets rewarded accordingly.
“The STAR program is something that really holds them accountable and makes them want to provide the service,” Gore says. “We wanted to find something that was appropriate where we could reward and recognize all employees for good work habits. It’s about trying to keep your employees engaged and keep their morale up.”
The program is an ongoing recognition system for employees who are going the extra mile. Gore says that the recognition and reward are what encourage employees to continue that quality of service.
“You’ve got to stay positive and be somebody that’s smiling and doing the right things,” Gore says. “It doesn’t cost anything to walk up to an employee and shake their hand and say, ‘Thank you for a good day, thank you for what you did today and thank you for what you’re doing this year.’ It’s all about staying in front of it and recognizing them in front of their peers. I think that goes a long, long way.”
The members and guests at Firestone constantly ask how they can say thank you to employees who made their day at the club special and the Star program gives them an easy way to do it. It has proved to be a great way to keep employees coming back each year, as well.
“We’ve kept the staff pretty much in check,” Gore says. “We’ve had the same staff and haven’t had too much turnover and what turnover we have had, we’ve done a great job of bringing good people on.”
The executive and management team at Firestone also recognize employees for outstanding service whenever they get a chance or during employee meetings.
“You have to recognize that a compliment like that coming from an executive or a department head, especially in front of other people is huge,” Gore says. “The more you can do it and recognize good performance, the better your experiences will be and the better the service will be. It just gives the employee a warm feeling inside. In the service industry, if you can recognize your employees as much as you can, I think you’ll find that your results will be extraordinary.”
How to reach: Firestone Country Club, (330) 644-8441 or www.firestonecountryclub.com
Employees of Firestone Country Club understand that great customer service and an overall great golf experience is what people come for. The management team at Firestone appreciates the effort shown by employees and rewards them whenever possible.
“I think surveys have shown that people being recognized versus pay is more important to most people,” Gore says. “You’ve got to be recognizing people all the time and do it in front of other people. Communicate with your employees. You should recognize employees’ anniversaries, birthdays and accomplishments and give employees a chance to take advantage of company benefits. We let our employees bring a guest out to play golf. We have a nice employee golf outing series that gives an employee an opportunity to come out with a guest, have lunch and enjoy the day. Keeping them active in the club and recognizing them in tough times is the key. If you hide behind the door because you can’t deal with the day and deal with the staff because there is some grumbling, [that] isn’t the way to do it. You’ve got to nip it in the bud, be positive about it, smile and do the right things and recognize people for doing a good job.”