B&F Fastener reports
nice numbers in first leg
of growth marathon
Loren O’Brien showed up at the second of two Upsize Growth Challenge workshops armed with impressive statistics, which in a manner typical for him he had broken down in detail for each of his company’s nine locations.
Second quarter revenue was up 19 percent from the same quarter a year ago, at the Minneapolis-based B&F Fastener Supply, which distributes nuts and bolts and all sorts of other supplies to construction and industrial customers. Third-quarter revenue was up 27.4 percent from a year ago. Year-to-date revenue was up 17.4 percent from last year. And the whopper: Year-to-date profits were up 78 percent from a year ago.
“So we’re trucking along,” he says, as the expert panelists gathered to hear his report express their congratulations. A big portion of the bottom line improvement has to do with the company’s new branches. “In 2009 they are profitable. In 2008 they weren’t,” O’Brien says.
With the company’s 10th location, recently opened in Iowa, the company is paying closer attention to profitability, which will be key as it aims to open two to three facilities a year for the next five years, on its way to its overall goal of doubling in revenue: to $40 million from its current $19 million mark.
“We toned it down a bit. We went in leaner” in Iowa than in previous new locations, he reports. “Our goal there was to turn a profit in six months, then add people and trucks. In 2008 we expected to take a year to reach profitability, and it ended up taking 1 1/2 years,” O’Brien says. The new approach will be the one to follow with future openings.
Bridget Manahan, the banking and financial expert for the Upsize Growth Challenge, and a commercial banker for Western Bank in St. Paul, was impressed. “You certainly are to be congratulated on the level you took this company to date. As an industrial company, and undertaking growth at the time you did, it speaks to your leadership and the team you have put together,” Manahan says.
She notes two significant actions that O’Brien took since participating in workshop 1, in July, to address basic issues that every growing company must face. “You have focused on some fundamental infrastructure challenges, on what needs to happen to get from Point A to Point B.”
She cites O’Brien’s re-do on installing a new information and ordering system, which ended in disaster the first time around. Last spring, B&F Fastener tried to convert its system, but had to revert to the old one a day or two into the process when the new system wouldn’t allow customers the flexibility to purchase goods in odd quantities, for example.
For the second attempt, O’Brien says, he had a frank conversation with the vendor, asked for and received many specific changes to the system, and invested a significant amount of time and money into additional training. Unlike the first time around, this installation, planned for late November, will run parallel to the old system for a few days so any bugs can be worked out.
Manahan also mentions O’Brien’s work on adding to his management team; specifically, she believes he would benefit from adding a chief financial officer who could plan strategically for the company’s future. At this point, O’Brien says, he’s simply thinking about that idea, something he hadn’t considered before attending the first Upsize Growth Challenge workshop in July.
Manahan believes he’s right to take his time on such a decision, but urges him and all other business owners to beef up their teams as needed. “That’s something you don’t decide overnight,” she says, adding that she encourages him to add leaders to his team that will fit with the collaborative style of his current staff.
Karen Bertulli, an attorney at Winthrop & Weinstine in Minneapolis and the Upsize Growth Challenge legal expert, echoed Manahan’s positive words. “First, congratulations,” she says. “These financials are great at any time,” she says, adding with a laugh that in the current tough economic period his report would make many of her clients jealous.
But as any business owner knows, the next question is inevitable. “You have double digit growth. How will you sustain it?” Bertulli asks. “You’ve had a measured approach so far, which is really smart. I’m curious: You had a 78 percent increase in profits. Are you going to sustain that? Will you grow the existing branches first or add more? What benchmarks do you have now?”
O’Brien has answers for her individual questions, but takes their overall meaning to heart. He and his staff will need relentless focus each quarter, with each new and existing location, and with each customer to continue the positive march. He believes that in more than two decades of existence they’ve seen, and handled, whatever has come their way. “If we haven’t run across it already I don’t know that we will,” he says.
But he acknowledges the company grew complacent in the fat years, prior to the financial collapse of 2008, and they can’t afford to do so again. His major challenge: “Making sure that we have qualified people to move up the ladder and buy into” the B&F way of doing business.
Meanwhile, O’Brien says the biggest lesson he learned from participating in the 2010 Upsize Growth Challenge is to take pride in his company’s accomplishments and to show gratitude to the employees and customers who helped make those gains. “Thank you to employees, thank you to customers – I don’t say it enough,” says O’Brien.
“This was a big deal for our company to be featured in your magazine. We had humble beginnings. Being in the publication, it made us feel proud.”
boss finds rest in
company’s status quo
Stacy Anderson was roiling with ideas and concerns when she participated in the first Upsize Growth Challenge workshop, in July.
Her 10-year-old company, which designs and installs traditional paving projects and related ecological projects to conserve rainwater, was changing into “something else,” as she put it.
But she wasn’t sure exactly what that something should be.
Idea one: a consulting company that phased out the heavy equipment and labor worries that installation requires. Idea two: a new showroom where customers could visit and see their products and where employees and equipment could all be in one place. Idea three: a Martha Stewart-like company focused on education and offering products that consumers would enjoy buying.
Armed with advice from the Upsize Growth Challenge experts, Anderson began examining her financials in detail, forecasting cash flow for different scenarios in the future, and talking with customers, employees and advisers like her banker. The result is something she says she didn’t expect: a Zen moment for the founder of Earth Wizards Inc.
“What the business has become-it’s perfect. We’re uniquely positioned,” she says, speaking at the second workshop, in October. In the daily scrum of running a company, “you don’t even realize that you’re where you need to be. I just need to revel in it.”
Anderson says her new focus is looking for internal improvements to make, rather than chasing a new growth trajectory or a different business model. For example, she wants to focus on going deeper with services to her existing customers.
“Our customers don’t know what all we do,” she says. She wants to put in formal communication plans so that first a paving project might happen, then a year later a rainwater diversion project might happen (with a reminder from Earth Wizards), and so on.
For another example, she wants to engage an outside accountant to help develop and operate a complete system from initial sales lead to final walk-through, including what labor hours should be and other details that are standard in her industry.
She wants to get more comfortable with public speaking events, as she gets invited more and more often to community centers, ecological groups and many other venues. She realizes that such gigs are great marketing for her firm, but only if she expands to other media like Facebook, podcasts and Twitter, and then augments the efforts with follow-up. For that effort and some of the above, she plans to hire an administrative person to be the taskmaster.
As for her plan to build a showroom, which was by far the most expensive idea she was considering just a few months ago, she has decided against getting a loan and a new location, because when she ran the numbers she realized it wouldn’t pay off. “I’ve looked at an SBA loan, but I’d have those payments for 20 years. So it caused me to pause,” she says.
Instead, she has talked with her current property owner, where she leases space and keeps equipment, to see if she could display some of those products right on that spot. That will happen this winter. She’s working on a separate Web site to display products as well, to add a virtual showroom to the bricks-and-mortar one. Along with her company’s publishing efforts, that site may turn into a separate business one day, she muses.
Not a no-brainer
Anderson pauses as she talks through her plans, and begins to apologize for what she sees as obvious choices. “I know, these are no-brainers, right?” she says with a laugh.
But Bridget Manahan, a commercial banker with Western Bank and the Upsize Growth Challenge financial expert, says the opposite is true. “It’s not necessarily a no-brainer at all, no,” she says. “It’s a creative solution. It’s a creative resolution to a stated challenge that allows you to move forward.”
In fact, achieving clarity is the exact result Manahan predicted when advising Anderson in July to put specific numbers to various iterations of her ideas. “You’ve done some great work,” Manahan adds.
Karen Bertulli, attorney at Winthrop & Weinstein and the Upsize Growth Challenge legal expert, remarks on Anderson’s calm demeanor at the second workshop, in October. “I feel like there’s a lot percolating and that’s exciting. You seem a little lighter about it. I felt I kept hearing worries” from Anderson when she spoke in July. “It seems like you’ve come out of the tunnel.”
Bertulli wants to know more about the controls that Anderson is developing, and emphasizes that keeping focused on those controls, and enlisting the aid of other trusted advisers to help implement and monitor them, will keep the company on track. “Do you feel you’ve put in place a more formal structure,” she asks, urging Anderson to follow through.
Anderson replies: “Not in place, but going there. And it’s freeing. I feel like I don’t have to work as hard,” if a process can take the place of “re-creating each thing, each time.”
Anderson sums up the biggest lesson she learned from participating in the 2010 Upsize Growth Challenge, this time quoting Marv Levy, the former Buffalo Bills coach. He recently gave an inspirational talk at Anderson’s alma mater. His quote, according to Anderson: “Where else would you rather be than right here, right now?”
Her most important realization: her company, her employees and her customers are playing an important role in conserving water, that crucial resource that Anderson is most passionate about. “When you’re in college you feel like you can change the world,” she says. “Maybe I still can.”