Economic Vitality Corporation Newsletter Feature by Robin Dudley August 22, 2004
While San Luis Obispo County has long been a small business incubator and haven for entrepreneurs, starting and running a business on the Central Coast – and in California in general – has been a challenge for most in recent years due to the persistent economic recession, over-regulation by various levels of government, and skyrocketing Workman’s Compensation and other insurance costs. Local issues like a lack of affordable housing and head-of-household jobs, a low paying service-based economy, and a low unemployment rate make it difficult to attract (and keep) quality, skilled employees in this area. To survive and be competitive, many businesses have been forced to choose difficult alternatives like staff reductions, outsourcing work, shifting operational services off-shore and even physically moving their companies out of the area (or often out of the state) to more business-friendly environments. And while there has been recent cautious optimism that the national economic recovery is on a solid path, improvement in the labor market recovery has been spotty at best.
However, as a bright spot in this reported “jobless economic recovery,” some Central Coast companies have not only weathered the economic turmoil, but are growing by leaps and bounds in spite of it. These “gazelle” businesses – fast-growing companies that grow at least 20% a year for at least four years – are run by determined, high-spirited entrepreneurs who are defying the odds, ignoring the business exodus, and succeeding in adding revenue, new jobs and a refreshing dynamic energy to our local economy and the region.
The Economic Vitality Corporation recently spotlighted four of these local “gazelles” at the EVC’s Annual Event in May 2004. As a follow up, the panel of presenters: Bryan Sarlitt, President and Founder of TechXpress, Aaron Stead, Co-Owner and Director of Sales & Marketing of Meathead Movers, Tom Adamski, President/CEO of Web Associates, and Steve Cegelski, President of Slime (a dba of Accessories Marketing Inc.) agreed to share some of the “secrets” they attribute to their growth and success.
TechXpress Inc. specializes in providing “one-stop” computer, network, Internet and website solutions for local commercial and residential computer users. Founded in 1999 by then 20-year old Bryan Sarlitt as a home-based start-up company with one part-time contractor, the company now employs 20 full-time and six part-time staff, has offices in both San Luis Obispo and Santa Maria as well as a new Computer Training Center opening this month. TechXpress was recently ranked as one of the largest Information technology service operations on the Central Coast.
Web Associates also provides professional internet web services. However their focus is on a more global corporation customer base. Started in 1995 by founders Dave Dahl and Mark Tuttle with an original offering of website hosting and development services, the company soon grew to include business consultation and Web applications for companies like Hewlett-Packard and Apple. Now with 47 employees, Web Associates builds successful Web sites, intranets and extranets for mid-market enterprises and business divisions of Fortune 500 companies.
Meathead Movers was founded in 1997 by two young brothers, Aaron and Evan Steed, who defied the odds and turned part-time work designed to fit around their high school and athletic schedules into what is now the busiest moving company in the San Luis Obispo, Santa Barbara and Ventura County area. They are also the youngest professional licensed movers in the United States. With three offices, 129 staff and approximately 240 moves per month, the “Meatheads” are becoming well known as a hard-working, polite, and honest student-athlete moving team. The company has won several local “Best of” awards including recognition by Cal Poly as an Emerging Entrepreneur for 2004.
Accessories Marketing Inc., better known by the brand name “Slime” for their distinctive line of neon green tire sealants, was started in 1990 by Cal Poly graduate Steve Cegelski. Headquartered in Grover Beach, the company now has four brand families, and over 300 different tire sealants, repair kits and flat tire repair accessories for bicycles, cars, trucks, motorcycles, recreational vehicles, lawn movers and more. With 48 employees (including twelve promotions and new jobs since May), they distribute their products to a variety of markets in 50 states, and export to over 43 countries.
Although these four companies and their founders are from diverse backgrounds and industries, a side-by-side comparison reveals interesting parallels and commonalities in their business approaches, including (1) a clear vision and mission, (2) a solid strategic plan, (3) effective execution including aggressive marketing, strong leadership and relationship building, and (4) a willingness to invest in their companies, their employees and their communities to increase their chances for long-term success.
Rule #1: Know where you’re going. A clear vision and strong desire to succeed seems to be the driving force behind all four of these “gazelle” companies.
Bryan Sarlitt started TechXpress because he saw a “big need” for a quality local firm that could provide a variety of computer, web technology and training related services, and also communicate in simple language (versus “techno-babble”) to computer users. He plans to develop and take his “one stop” business model nationwide.
Dave Dahl and Mark Tuttle shared a strong vision to “deliver business solutions using emerging Internet technologies” when they started Web Technologies. The company’s goals are based on controlled growth coupled with the constant search for world-class consulting talent, and achieving a growing level of competency in their core service lines. That will enable them to successfully fulfill larger contracts with their global customer base.
The vision for Meathead Movers was equally clear and simple: “To have young, energetic student athletes providing superior moving services and a unique customer experience.” Their goal is to eventually expand to every major college town across America. According to Aaron Stead, “In spite of the company’s incredible growth and diversification, the original purpose of supporting student-athletes and providing superior moving services has not changed.”
Steve Cegelski’s vision behind Slime was to produce the highest quality, environmentally safe (non-toxic, non-aerosol) and easy to use tire sealant and repair products in their target markets, and become the name brand consumers know and trust when they think of flat tire prevention and repair.
Rule # 2: Know how you’re going to get there. Having a strategic plan and/or business model was also critical for each company to turn their visions into reality.
For example, TechXpress’ on-going strategy includes sustained community involvement, a customer-oriented focus and a strategic branding and marketing program. By the end of 2005, Bryan Sarlitt says he hopes to aggressively duplicate the TechXpress “one-stop” business model into similar geographic markets like Santa Barbara, and then throughout all appropriate markets.
Slime’s strategy involves a big commitment to their quality policy. Early on in the history of the company, tire sealants weren’t a very big market making sales difficult, so they started with one product and built up trust and their reputation in the bicycle industry. Then they branched out. According to Steve Cegelski, their greatest strategy technique is to involve their buyers in everything they do. “If they are involved with the process, they are more likely to participate and sell the product.” The company also adopts and crafts ideas they see from retail and other merchandise to improve their products and advertising.
Rule #3: Be relentless in carrying out your plan. Aggressive or unique marketing is essential to build the brand awareness of each company, as is the importance of being a “good citizen” in the community.
TechXpress has used aggressive marketing and high visibility to target consumers and small business customers. They also are very involved in the community, from Chamber of Commerce support to donating to local charity foundations. Bryan Sarlitt founded Computers 4 Kids which donated approximately 100 refurbished computers to underprivileged kids last year, and collaborated with local business associates to raise over $5,000 and 100,000 pounds of donated goods for victims of the 2003 Southern California wildfires.
Meathead Movers actively promotes the unique aspect of their service that movers are required to jog when not carrying items. Aaron Steed personally calls every client to check up on the move, and make sure they were delighted with their service. Finally, each branch office makes it a priority to give something back to the community. According to Aaron, “The community involvement that I am most proud of is moving women in domestic violent situations out of their homes for free. Meathead will offer this service to every area where we expand.”
Other important aspects of the “gazelle” companies include strong leadership, and the importance of building relationships and business allies.
The talents and efforts of Web Associates’ management team are cited as being at the core of their success, continuing to define the company as a leader and innovator within the industry. They also understand the value of relationships to achieving strategic business objectives. By fostering long-term partnerships with leaders in technology like HP and Apple Computer, Web Associates established an annual growth rate of over 100% per year by 1999. According to Tom Adamski, “Service businesses are about relationships. That being said, staff your organization with a level of talent beyond what your customers require.” Many of their first clients are still clients today.
Aaron and Evan Stead’s management and leadership style is based on a coaching philosophy of encouraging excellence in every member of the growing Meathead team. Their methods are greatly influenced by their backgrounds as dedicated athletes. Their business was, and continues to be, based on relationships. After they first helped a friend’s parents to move, resulting in the subsequent start of their business, Aaron and Evan enlisted their other athletic friends to help with the jobs.
Rule #4: It takes a penny to make a penny. Like most successful entrepreneurs, the local “gazelle” business owners acknowledge they are willing to take risks, and commit to the large amount of time, energy and financial resources necessary to further their business ventures. In addition to externally visible costs such as marketing campaigns or building new facilities to expand into new markets, they invest in equally important internal issues such as quality control, acquiring new technology, attracting and training employees and making capital expenditures as needed to take their businesses to a new level. (For example, Slime had to invest a “couple of million dollars” in new products and staff before large retailers would consider carrying their products.)
TechXpress invests in gaining, and retaining, long term loyal employees by offering aggressive compensation packages, team building strategies and various loyalty programs. Meathead Movers invests in their employees, their quality control and customer satisfaction by extensively training their movers. This includes initial observation, on-the-job training, a quarterly in-depth 9-station training program for all Meatheads, on-going evaluations and a 3-step OSHA approved Vehicle Safety Training Program for all drivers.
Finally, Meathead Movers invests heavily in Customer Service Incentive and Safety Incentive programs. After every move, customers are asked to fill out a survey. The higher the scores – the more money the movers will be paid. Every quarter that a mover goes without damaging any household goods, they will receive more money from Meathead Movers. Does it work? Meathead Movers’ “Breakage-to-Move Ratio” is over 6 TIMES BETTER than the industry average at protecting their customer’s goods, and over 85% of the company’s business is derives from word-of-mouth and repeat customers.