Catering to consumer need

Starting a successful company is a difficult endeavor. Starting two successful companies only a month apart seems not only difficult, but nearly impossible. However, Dave Dickerson did just that when he founded Sauna Warehouse Inc. and Accurate Background Inc. in 1997.

What do these companies have in common? Nothing, really, besides the fact that they are both growing rapidly. Sauna Warehouse, an Inc. 500 company with 2003 revenue of more than $4 million, provides online shoppers with a variety of sauna options. Accurate Background is a background screening company that specializes in pre-employment screening.

Smart Business talked with Dickerson about the excitement of being part of a fast-growing company, or, in his case, companies.

What business strategies have helped you grow?

I think we basically stick to our plan, even when there are bumps in the road. We stick with what we think is the right thing to do. When we started Sauna Warehouse, we got, and actually we still get, a little backlash from the industry, because they just swore it would never work on the Internet.

They thought that people would never buy this sort of product over the Internet. It is kind of a niche market. We kept pursuing it and kept expanding the line, and eventually, we ended up being the largest distributor of the product in the United States.

How do you recognize business opportunities?

Demand — basically talking to your customers. You look for need. In all of the years that I have done this, I have never seen a business where someone thinks of an idea and people just gravitate toward it.

It is always because there is a need. If you can recognize a need in a customer, there is a lot of opportunity there.

How did you think of these two ideas?

I was in the sauna business and got out in the early 90s. I started doing consulting work and I started working for a company that sold database information to private investigators. One of the needs that the customers had was that they were looking for county criminal searches. I presented that as a wholesale business to the people I was working for. They weren’t interested, because they were interested in more database-type products. I decided that since there was a need I would just go ahead and do it on my own. It basically had a customer base already built in. That’s how the background business got started.

Right around the same time, I came across someone who has the URL, saunas.com, and my thought process was to go ahead and buy it from them. It’s a product that people are looking for, but there’s not a lot of branding in the sauna business. It’s not like when you go to buy a stove and say you want a GE. People want a sauna, but they don’t know any brand.

The thought process was to build a Web site and put the different manufacturers on this Web site and people could come to it to become educated. We started that process and then started building products according to what the customer wanted. We started expanding the line. The whole point was to give the customers a choice. A lot of the manufacturers wanted us to carry their products exclusively. We said, “No, we are going to give the customers a choice. We’re going to be completely unbiased.”

What challenges have you faced as CEO of two fast-growing companies?

You have to find good people. The challenge is always finding good people. It is hard to find people who share your vision and have a vested interest in your company. I’ve been very fortunate because I have surrounded myself with really great people who have allowed me to do different things.

People always say, ‘You have two great companies, how can you do this and be one person?’ The answer is people. The joke around here is that more work gets done when I’m not around.

If you give people a lot of freedom, then they are going to rise to the occasion. We have a good group, and they’re all motivated.

How do you get employees to buy into your vision?

A lot of them get excited about the prospect of a fast-growing company. Here is a good story. I knew our EVP at Accurate Background from a previous company. Her name is Catherine, and she was a VP at another company I was with. I didn’t really know her, but when I left that company, it was making $40 million in annual revenue.

They sold that company for $100 million. She was with that company when they were only $800,000 in sales. I called her up and said, ‘Hey Catherine, when you were with this other company, you started out with an $800,000 company, and then you grew it to $40 million and sold it. That was a lot of fun, wasn’t it? Do you want to do it again?’ And she did.

She is someone who really enjoyed the process of growing a company. You have stability working for a large corporation, but there is also something that gets into your blood when you start off with a small company and grow it.

The company ends up having a life of its own and you see the growth of it. You get people who get real excited about that. It’s just finding the right chemistry of people to do that.

We have an incentive program that all employees participate in. It is called GRIP, which stands for Growth Retention Incentive Program. Growth is not only growing our company, but also growing our revenue, customer base and employees. The retention part is keeping our customers and employees.

We take a percentage of the growth over previous sales for last year for the same period. And they get a percentage of that and it is split equally among all employees. It’s a clean slate every month. What we did in June this year is compared to June 2004.

The employees really buy into that because they track the numbers and know when they are on track. Once they hit a certain number, they know that they are going to get their bonus next month. It is self-policing, too. If you have someone in operations who is working really hard in their cubicle trying to get the numbers to work, and then the person next to them is on the Internet and they know that person is going to get a bonus, too, you’re not very happy about that.

They end up weeding themselves out. It creates more efficiency. If management thinks that we need another person, the people inside say — and this has happened more than a couple times —‘We don’t really need another person. We’re just not working smart.’

Although at some point you do need to hire more people because you can’t keep up with the growth. This program has been the best program. We have had other companies talk to us about it. It’s great because employees get really excited about it, and it is all based on growth.

How to reach: Sauna Warehouse, (800) 906-2242; Accurate Background, (800) 216-8024