Since I launched my first company in 1985 I’ve started a total of six SBEs. Each company was in the B2B space selling to the Fortune 1000. In each case I closed a large order with a F1000 that was the catalyst for significant growth. And each time I went through the process I learned a bit more about how to handle the ramp-up. Here’s a sample of the progression:
Corporate Multi-Media – January 1985: Stamford, CT – In our 2nd year we grew from $215K to ~$650K on the strength of a $200,000 contract to produce a national sales meeting for MCI International. We went from 4 employees to 15 in a few months. My criteria for hiring was to put a mirror under their nose, if they fogged the mirror (and had a seemingly valid driver’s license) they were hired. I was 25… What did I know?
I had a refined organizational structure called The Wagon-Wheel… very effective. Everyone reported to me. If I was on a sales call, people sat and waited for me to return (see 1986: life without cell phones). If I ran to the bathroom, a line formed outside the door. Real efficient (and a little embarrassing, I might add). It’s no wonder I regularly doubled-up with stomach cramps and employee turnover was so high.
I closed CMM in the “great recession of the late 1980’s”, spun my production department into a new multimedia company and merged with a “no-technology” 35mm slide production company with a staff of 4 artists—only one who could use a computer. Total combined sales of $500,000…
Visual Services, Inc. – November 1990: Norwalk, CT – Within a few months I closed a $245K contract with Playtex Family Products to produce their national sales meeting. Mayhem ensued. Our staff went from 8 to 16 people. We invested in the best computer network available, “Sneaker-Net”… Everyone ran from workstation to workstation with floppy disks. We needed a traffic light to reduce accidents. The volume of work was high, the software and computers were slow—so heroic employees pulled all-nighters. The lobby couch always had someone sleeping on it when I’d arrive early each morning.
(Once while producing a Stock Offering for General Motors/Hughes Electronics, their divisional President, C. Michael Armstrong visited the office for an early morning review. As he entered our “meager” facility he said “Dan, I can smell the entrepreneurial spirit!” To which I responded, “No… that would be Roger, he’s been here all night.” Good times.)
The Playtex sales meeting had multiple elements, but margins on a few items were very tight. To improve the profit margin I wrote, directed and produced the 12 video segments instead of hiring a freelance producer. To save more money I also sourced/interviewed/hired the actors/dancers, choreographed the live show, and wrote the skits required to hold the meeting’s theme together. In fact, for almost four months I was so busy producing the meeting I could do little else. I had a great time producing the show, but by the end of the project we had almost no sales pipeline and two of the leanest revenue months of the year.
Mentor Communication Group, Inc. – December 2000: South Norwalk, CT – In December 1998 we divested of all other services to focus solely on our software product, Mentor, which delivered just-in-time multimedia streamed over a network to any PC– a bleeding edge innovation, now “old hat” (aka Electronic Performance System Support-EPSS). In mid-2000 I heard GE was launching a major just-in-time support site and were looking for lots of content—in multiple languages. We’d already built/owned almost half of what they needed, knew a strategic partner who met another 20%, and priced out the remainder of the build-out.
I worked with our team to review the requirements. We integrated our budget spreadsheets with MS Project to create a detailed project plan that allocated the proper resources to meet GE’s delivery deadlines. We then negotiated the contract as a licensing agreement, allowing us to own and continue to sell all new products developed for the project, and it was topped off with a customer requested 3-year maintenance agreement that covered the conversion of the titles we owned into several languages to meet their international requirements.
The total contract exceeded $6M. Based on our project plan we knew the exact resources we needed to meet GE’s requirements, growing from ~60 to 100 fulltime employees. And we were able to claim almost half the order as 2000’s revenue. We also negotiated payment terms matched against meeting specific milestone delivery dates.
GE got what they wanted – the highest quality EPSS content available on the market delivered faster and cheaper than they could build. We got what we needed – another Fortune 20 anchor account, a ton of revenue, more new products to sell and the cash flow to build them, and more industry credibility than you could shake a stick at. And, no “all nighters” or sleepless nights. Good times.
The lessons I learned have everything to do with the preparation and operating processes required to properly ramp-up to handle a large contract. In Part II I’ll detail what I believe to be the 5 phase process that leads to success.
* * * * * *
SBEs are a journey… Be safe!
Managing Director, The Allasso Group
The Allasso Group, LLC