With personal savings, a home equity loan and the part-time help of former colleagues who had already retired, Jerry Jost founded Jost Chemical Co. in 1985.
His creative ability to identify gaps in the marketplace drove the company’s success in manufacturing high-purity chemicals for pharmaceutical, nutritional, food and other specialty markets. Initially, Jost realized a need for domestically produced pure ingredients for baby formulas. So he created a cost-effective process to satisfy the need, establishing the company as a competitive alternative.
When Pfizer exited the calcium citrate market, Jost saw the opportunity to modify his ammonium citrate production process to capture the market left behind by his competitor.
Then in 2007, citric acid producers struggled against the challenges of cheaper Chinese production and pricier raw material due to shortages. Faced with losing the edge on his niche, Jost differentiated his products and grew into other areas. Today, Jost Chemical manufactures 160 high-purity specialty chemical products.
But Jost, the company’s president, refuses to take credit, focusing instead on his work force which has never seen a layoff. By building a flat organization and providing resources to help employees use their talents freely, he builds long-term engagement.
Jost devotes company resources to employee training, even obtaining two consecutive Customized Training Grants from the state of Missouri to further develop skills. In turn, employees share in the company’s success. For all but two years, they received 15 percent contributions to a simplified pension program.
Jost’s foresight to diversify and his continued investment in people set the company apart. Despite the downturn, the company has expanded with new accounts and products, additional territories and more employees. In 2008, sales increased more than 33 percent while sales at 10 of their largest customers dipped an average of 22 percent.
How to reach: Jost Chemical Co., (314) 428-4300 or www.jostchemical.com
Shortly after being named president and CEO of BATS Global Markets, Joe Ratterman wrote a letter to the industry saying the small upstart trading technology firm wouldn’t relent on its plans to capture a sizeable market share.
Well, Ratterman is a man of his word. In his three short years at the helm of the global financial markets technology company, BATS has become a dominant player in the exchange landscape in the United States and Europe.
The name BATS might not be as recognizable to you as the New York Stock Exchange, Nasdaq or the London Stock Exchange, but Ratterman’s leadership has led the company to provide an important alternate venue for U.S. equity trading that is both technologically advanced and inexpensive for users.
In 2008, BATS’ growth seemingly took off overnight. Ratterman and his team filed for SEC approval to become a U.S. securities exchange. BATS Exchange was soon launched and, in October of that same year, BATS Europe went live.
To put the company’s success into numbers, among global exchange operators, BATS Exchange ranks in the top three worldwide by notional value (total dollar value of shares traded). It handles $20 billion to $40 billion in notional value daily, which is more than either the London or Tokyo stock exchanges.
Ratterman uses the same enthusiasm for growth as he does to maintain the entrepreneurial spirit of the company culture. BATS works to keep its employee count lower than most exchange operators. That stand allows for the staff to engage in informal interaction during catered lunches. And it allows the company to provide competitive quarterly bonus incentives.
While BATS’ mission is “Making Markets Better,” it also tries to better its communities. Employees are given paid time off to participate in community service.
How to reach: BATS Global Markets, (913) 815-7000 or www.batstrading.com
We would like to express a very special thanks to all of the judges of the Ernst & Young Entrepreneur Of The Year Central Midwest 2010 program for their commitment. The insight, experience and point of view each one brought to the process was invaluable.Tim Barton
chairman and CEO, Freightquote.comRobert Ketterer
chairman, president and CEO, HDA Inc.Michael D. Peck
managing partner, Open Prairie VenturesMark D. Leeker
managing director, The Harbour GroupSuku Radia
president and CEO, Bankers TrustWilliam Scheffel
executive vice president and chief financial officer, Centene Corp.Steve Wood
chief financial officer, Becker Underwood Inc.
In 1989, Pasquale Trozzolo had a stable job with a large insurance and tax services firm, where he made a quick observation. As regional vice president of that company, his region was often the highest performing, and a big reason for that was his belief that recognition improves performance. He had a monthly newsletter for his region where achievements were celebrated and rewarded. As a result, the region’s performance took off, and soon the publication idea spread to the entire company.
But he left that stability to found Trozzolo Communications Group because he had an entrepreneurial itch. With a son entering private high school, he took out a second mortgage on his house and maxed out his credit cards to start the company he had always dreamed of.
TCG quickly found a niche in targeted newsletter publishing after its founding in 1990. Trozzolo wanted a sustainable organization for future generations, so he began to transition the firm toward a full-service communications agency. He looked to embrace the new world of convergence communications before much of the industry recognized the trend.
In 2003, the firm merged with Blades & Associates Public Relations as a step toward providing all services in the marketing mix.
In 2008, TCG began looking for strategic acquisitions to broaden its scope and stability. Trozzolo led the firm in two major merger and acquisition moves that have been critical to its success. Properly positioned for success, despite the downturn, the agency had a 12 percent increase in revenue last year. Today, TCG is a reflection of its founder and leader. His entrepreneurial spirit as the CEO is contagious throughout the organization and inspires his team members to treat his company as if it were their own.
How to reach: Trozzolo Communications Group, (816) 842-8111 or www.trozzolo.com
Robert Weiner believes that in order to be successful in business, you have to go after what you want with a passion, and then maintain focus and take action to achieve your goals.
It’s an approach that has helped Weiner turn PAS Technologies Inc. into a growing force in maintenance repair and overhaul solutions for the aerospace, oil field and industrial markets.
Originally, PAS Technologies was known in the aviation business for its wear-resistant proprietary coatings and cold-section component repair, but over time, as the customers’ needs changed, PAS’ leaders decided to branch out into other forms of repair. As president and CEO, Weiner knew a complete transformation of PAS was required to survive and prosper.
Weiner has directed his passion for what he does into developing an innovative mindset at PAS, forming a company that can change with the ever-evolving needs of the markets it serves. Over the span of two years, the company has transitioned to hot-section component repairs and significantly increased the number of different engines that it can service. PAS has also added accessories and airframe repairs to its cache of offerings, becoming a full-service provider of maintenance solutions to its customers.
Diversification is a key to PAS Technologies’ long-term growth. Weiner has pursued a focused strategy to diversify his company’s business mix. The platform to building on the past successes and future growth hinges on the strategy of four diversified business segments: commercial aviation, military aviation, industrial gas turbine and oilfields. Investing in these markets is right in what Weiner calls the company’s “sweet spot” providing customers with high-technology capabilities and services in industries operating in high-wear, high-heat and corrosive environments.
How to reach: PAS Technologies Inc., (816) 556-4600 or www.pas-technologies.com
Though her official title is president and chief operating officer of Gateway EDI LLC, Charlotte A. Martin will tell you she’s the chief cultural officer. Her goal is to maintain the flexibility and intimacy of a small company as Gateway EDI grows.
And grown it has. Since she stepped into the position in 2000, the electronic medical claims management company a clearinghouse that ensures providers get paid has seen consistent 30 percent top-line revenue growth. In nine years, the company has added 200 jobs.
Martin maintains a close-knit environment by hand-delivering paychecks to each employee in the St. Louis headquarters. When she began, it was a 10-minute task. Today, it takes about an hour and a half.
She also fosters a culture of risk-taking, open communication and idea-sharing by empowering employees. Instead of focusing negative attention on mistakes, she looks for training opportunities and helps employees identify ways to improve and develop. Now, thanks to the Process Improvement Team she created, employees are taking initiative on their ideas to improve processes within the company.
In 2005, Martin served as an example for her philosophy of learning from difficult situations and moving on to succeed. That year, Gateway EDI was struggling with HIPAA regulations and accelerated growth. Their inability to plan for those changes cost them a large reseller. Martin took the loss personally but learned from the situation and, after four years, re-engaged the client, who is now one of the company’s top five resellers.
By increasing market share in a fragmented industry thanks in part to two acquisitions in 2007 and another in late 2009 Martin has grown the roster from 5,000 medical office clients in 2005 to more than 14,000 today. Gateway EDI also opened satellite offices in Atlanta and Seattle, securing a local presence from coast to coast.
How to reach: Gateway EDI LLC, (314) 802-6700 or www.gatewayedi.com
When Christopher H. Atayan arrived for his first day on the job at AMCON Distributing Company, he was met with utter chaos. The business had negative availability of $2 million on its bank lines, it was being sued in four separate jurisdictions, it was being delisted by the American Stock Exchange, it was behind on taxes, it was losing business, and it was more than $65 million in debt. Those are just some of the details.
Atayan was brought in as chairman and CEO to get rid the mess and save the Omaha-based company from total destruction. That was in 2006. In 2008 and 2009, AMCON, a wholesale distributor of consumer products to retail outlets and convenience stores and an operator of health food stores, achieved two record years of profitability.
How did he do it? Atayan developed a simple strategic plan. The strategy was divided by needs, with the first priority being crisis management, followed by debt reduction and growth. Atayan created a small corporate staff that would handle the crisis, while the operating units would focus on their respective businesses and customers.
To quell the crisis, AMCON shut down a money losing division and sold a bottled water operation. Atayan installed a new team of auditors and developed a financial department that had seven CPAs on staff. The attention to detail allowed the company to gain reinstatement on the NYSE and begin down a path of financial stability.
While these decisions took place, Atayan installed a culture centered on putting one foot in front of the other. It was his ability to align management to the corporate financial and cultural objects that proved to be the key ingredient in turning the company around.
In 2009, Atayan bought out the company’s founders and made a significant personal investment in AMCON.
How to reach: AMCON Distributing Company, (402) 331-3727 or www.amcon.com
It’s a dangerous time for businesses, and even those with decades of operating experience can find themselves facing bankruptcy or liquidation as flaws in their business plans become apparent.
“Most business owners and managers have not seen times like this before, and they are not sure how to manage through it,” says Barry Worth, director of mergers and acquisitions and turnaround consulting at Brown Smith Wallace LLC. “It’s a brand new world of change. Businesses that are not really looking at their business models and thinking ahead may not exist in the future.”
A weak business model that worked in good times may not hold up in more turbulent ones, and businesses must recognize their problems and seek help to get back on track before it’s too late.
“Essentially, that means a business owner or manager has to admit to failure,” Worth says. “Their emotions are wrapped up in their business, and seeing the situation clearly is nearly impossible. They just don’t know how to get out of the spot they’re in. They can meander on and eventually go out of business, or they can seek help from advisers who can see them through their situation.
“By seeking out valuable professional help, most can pull out of it, reorganize their business and retain their family wealth over time.”
Smart Business spoke with Worth about how to get a troubled business back on track.
What’s the first step that companies in trouble should take to get back on track?
First, they must recognize and admit that they are in trouble, and then seek help from a turnaround consultant or other trusted advisers who can provide guidance. Businesses should bring in a third party to assess the situation and help them design a plan for recovery — or for whatever the owner’s goals may be for the business.
While many business owners hesitate to discuss tough times with their bankers for fear of losing financing, bankers are well connected with turnaround consultants and can provide helpful referrals. Banks want to help the businesses they’ve entrusted their money with, so reach out in times of hardship and be honest with your banker about the situation.
Also, consider speaking to an attorney, who may also be able to suggest consultants who can help.
Once a company admits financial hardship and seeks help from a turnaround consultant, what is the next step?
A turnaround consultant’s role is to first come into the business and immediately stabilize the situation, improve the cash flow and get the company to the point where it is not bleeding. After that, the consultant will begin to conduct an in-depth analysis to determine what is creating problems in the business.
The consultant will look at the organization as a whole and determine what is generating the problems. There’s no one-size-fits-all plan, and finding a solution requires the involvement of ownership, managers, supervisors and, to some extent, staff.
The overall process can take 30 to 45 days, sometimes longer. That’s why it’s critical to seek help early on. Continuing to run the business ‘as usual’ could result in having a business that no longer exists down the road.
What solutions can businesses consider to help them deal with extreme financial hardship?
Businesses could file Chapter 7, which is liquidation, where assets are sold off. Another option is Chapter 11, which is reorganization, where consultants help the company get back on sound financial footing and the courts rule on the plan. Chapter 11 is designed to allow a company to continue operating into the future but leave behind certain debts, and the courts may dismiss various types of company liabilities, such as loans or accounts payable.
Or, companies can seek additional equity to help sustain cash flow by bringing in private investors or equity groups. Refinancing is also a possibility for some businesses. This can be accomplished through private equity groups, asset-based lenders or banks.
Finally, an owner can sell the business to another owner.
How can a company determine the best direction for its current situation?
Owners should engage in heart-to-heart discussions with advisers while examining their goals for the business. Some owners become so emotionally burdened and worn out from running a financially crippled organization that they are ready to move on. They want to file bankruptcy, liquidate or sell.
Others want to preserve the jobs they created for so many employees. They see a future in the business, but they need a fresh start.
For many businesses, there is hope for turning around their situations. It’s just a matter of seeking professional help so they can pull out of the mess they’re in, retain their family wealth and jumpstart a company they’ve invested in emotionally and financially.
An outside adviser can bring in a clear perspective, fresh ideas and a plan for action. As a result, many of these troubled business stories can and do have happy endings.
Barry Worth, CPA/ABV, CVA, CM&AA, is director of mergers and acquisitions and turnaround consulting for Brown Smith Wallace LLC. Reach him at (314) 983-1202 or email@example.com.
Disaster can strike a business at any time, making it critical that a company have the right insurance.
But you can’t just buy a policy and forget about it. You need to stay on top of your policies and make sure that you know them inside and out, says Anthony V. Palumbo, Director, Client Services at Aon Risk Services Central Inc.
“When it comes to the insurance policies you have on your business, you should review them carefully and understand exactly what is covered and what is not in the event of a disaster,” says Palumbo. “This is important because, if a loss should occur, you will need to know whether or not you can make a successful claim. It may be a good idea to re-evaluate your current coverage to make sure that you have adequate protection.”
Smart Business spoke with Palumbo about how to implement a business continuity plan and how having the right insurance in place can help minimize the damage to your business in a disaster.
In case of a disaster, how can a business avoid interruption and stay up and running?
You can greatly diminish the possibility of an extended business interruption event by having a comprehensive and tested business continuity plan. Such a plan can encompass an entire company or just one critical location or aspect of the business.
This allows an organization to proactively respond to a loss event, prioritizing and directing internal and external resources to ensure quick recovery and continued operations.
When a company is faced with a catastrophic event such as a hurricane or a widespread flood, a rush to secure resources typically follows. Having a comprehensive business continuity plan in place can provide a competitive and strategic advantage that places your company in a position of strength, well ahead of other companies, at a time when everyone is clamoring for limited resources.
By having a strategic plan in place, you have already identified and quantified potential vulnerabilities to your operations, completed an impact analysis, analyzed your potential supply chain and logistic weaknesses, and completed business interruption assessments, both upstream and downstream. This head start will help conserve your client base as well as your market share.
How soon after an incident should claim preparation begin?
Once the loss event takes place, you should take immediate action, including, but not limited to, focusing on employee and visitor safety, property preservation, notifying your broker and insurance carrier, conducting an assessment of physical damage and identification of affected operations, including customers, suppliers and any other critical business functions.
Your broker can help you organize and design protocols to respond to claims. This includes identifying any external resources, emergency responders and/or experts that may be needed.
Your broker should be at the loss site immediately to assist with the coordination of the response and recovery efforts and should spearhead each aspect of the claim preparation. Your broker should also interface with the insurance company throughout the process.
With its insurance carrier, a company should request advance payments as it completes and documents portions of its claim. These advances will allow an organization to collect insurance proceeds prior to the final submission of the overall claim, thus fostering a quick repair or replacement of critical equipment, as well as providing funds to cover expenses incurred as a result of the loss.
Claim preparation involving property damage can seem simple, but the evaluation of certain types of property can be complex. Claim preparation for loss events involving business interruption and loss of revenue may take a great deal of time and effort.
Your broker should be able to negotiate a final settlement to ensure that your insurance covers what it was intended to and all applicable policy terms and conditions are analyzed and considered prior to the final payment.
When does the relief process begin?
It begins immediately upon notifying the carrier of the loss event. The process from initial notification to claim settlement will vary depending on the size and complexity of the loss. Losses involving significant property damage, business interruption or extra expense can sometimes take more than a year to resolve. Advance payments are commonplace and should be obtained as frequently as portions of the claim can be submitted to the insurers in order to get money flowing.
The key is to make certain that your company and broker are driving the claims process and analyzing and documenting each component of the claim that is covered by your insurance program.
How often should a company’s business continuity plan be reviewed?
At a minimum, plans should be tested annually, and by that I mean fully exercised and tested. This exercise can be coordinated by your business continuity plan specialist, by someone designated as the ‘owner’ of the plan within your organization, or a combination of both.
Another method is to do what is referred to as a tabletop exercise, which is a scaled-down test of your business continuity plan that can be performed by identifying critical pieces or components of that plan that you want to prioritize from a testing perspective.
Anthony V. Palumbo is Director, Client Services at Aon Risk Services Central Inc. Reach him at (314) 854-0724.
As consumers rely more on debit and credit cards as opposed to cash, merchants are facing increased risk exposures if they don’t have proper security measures in place. Cyberthieves troll for information on merchant networks, which has resulted in significant security breaches that have made headlines.
In 2004, a consortium of credit card companies, including Visa, MasterCard, Discover and American Express, banded together to set Payment Card Industry (PCI) Data Security Standards. These standards direct merchants that process, store or transmit credit card information to maintain a secure environment. And if your business accepts credit or debit cards, the standards apply to you.
“Business owners have to comply with those security standards and implement safeguards to protect customer information,” says Ron Schmittling, security and privacy practice leader at Brown Smith Wallace LLC.
Smart Business spoke with Schmittling about how your company can meet PCI standards and protect against security breaches.
What is PCI compliance, and who must comply?
The three keywords for PCI compliance are process, store and transmit. If your organization processes, stores or transmits credit card information, you must maintain a secure environment as laid out by the PCI standards. So, if customers or vendors use debit or credit cards to make purchases from your business, you must be compliant. This includes meeting 12 standards, which can be broken down into six key areas: building and maintaining a secure network; implementing safeguards to protect cardholder data; maintaining a vulnerability management program; applying strong access control measures; regularly monitoring and testing network security; and enforcing an information security policy.
Your policy will ultimately drive the compliance process, so the first step is to take a security inventory of your business to determine how compliant it is, what security measures are in place and what weak spots must be addressed. An outside adviser with experience in security and privacy can provide feedback on how to structure a plan. This framework will set the tone for your internal compliance strategy and help protect your business.
PCI security standards are not laws; they are a method of self-imposed regulation by the consortium of credit card companies. There are no federal mandates in place, but there is a move in that direction since some states have started to pass laws or require organizations to comply with PCI Data Security Standards. This trend is expected to continue in association with the Data Breach Notification Laws movement.
What are the consequences of failing to comply with the standards?
At their discretion, payment brands such as Visa or MasterCard can fine acquiring banks $5,000 to $10,000 a month for PCI compliance violations. Banks are likely to pass these fees on to noncompliant merchants. Many banks have begun notifying noncompliant merchants of their need to comply or face fines.
You should review your merchant agreement and note any penalties and fees for noncompliance, which can include prohibiting merchants from processing credit card transactions, higher processing fees and other restrictions. Any fraud loss associated with a compromise in security may be borne by the merchant starting on the date of the security breach. Depending on the level of security negligence, the FTC could become involved and impose significant federal fines, up to $250,000 and/or up to five years in prison.
Not knowing is not a viable excuse for noncompliance and could cost you and your organization. It is your responsibility to understand your merchant agreement and what the PCI standards mean to your organization.
What steps can a company take to become PCI compliant?
Compliance responsibility depends on your merchant level, and there are four levels as defined by PCI Data Security Standards. Level 1 merchants are those that process more than 6 million transactions a year. It is important to note the annual transactions are measured in volume, not dollars. Level 2 includes merchants that process 1 to 6 million transactions per year. Level 3 covers merchants with 20,000 to 1 million e-commerce transactions per year. Level 4 includes any merchant with fewer than 20,000 e-commerce transactions per year, and all other merchants with fewer than 1 million transactions annually.
Companies in Levels 2, 3 and 4 follow the same compliance process that includes completion of an annual self-assessment questionnaire and having quarterly network scans performed by a PCI Approved Scanning Vendor (ASV). The results are submitted to the merchant’s bank. Level 1 merchants follow similar procedures, but also are required to have an annual on-site review completed by a Qualified Security Assessor (QSA), a PCI-certified provider and have an annual network penetration test performed. The QSA will submit the merchant’s Report on Compliance to its merchant bank. The PCI Council lists ASVs and QSAs at www.pcisecuritystandards.org.
Where should an organization start on its PCI compliance initiative?
The most important step is to set an internal policy of how you’ll address PCI compliance and information security. Too many times, organizations rush into identifying a new product they think will fix PCI compliance or information security problems instead of organizing their efforts around the organization’s overarching policies and processes.
Once that policy has been defined and implemented, an organization can begin to enforce it and truly drive its compliance initiatives. But compliance starts with your information security policy and security controls. Many organizations struggle with where to start, as PCI compliance can be a daunting and complex task. Reaching out to a QSA to kick-start your PCI compliance efforts is a great first step.
Ron Schmittling, CPA/CITP, CISA, CIA, is the security and privacy practice leader at Brown Smith Wallace LLC in St. Louis, Mo. Reach him at (314) 983-1398 or firstname.lastname@example.org.