Built to Last: Small businesses turn 50
Founder, CEO of two 50-year-old small businesses share secrets to longevity
Sunday, September 30, 2012
Dena Strong and Vern Peterson carved out their careers in two completely different businesses. But their small Clark County companies share something in common: They're turning 50 this year.
As longevity goes, that's nothing to sneeze at. Many small businesses would kill to last that long.
To be sure, plenty are going strong: In the U.S., there are more than 23 million small companies employing nearly 81 million workers and producing annual sales of more than $6 trillion, according to a recent analysis by the consulting firm Dun & Bradstreet.
Yet, the same Dun & Bradstreet report notes that, with a shaky housing market, "wavering consumer confidence" and slow job growth across industries, "small business failure rates have increased by 40 percent from 2007 to 2010."
So, with the stakes perhaps never higher, how does a company avoid failure? How do Strong — president and CEO of Vancouver-based custom manufacturer IGI Inc. — and Peterson — founder of the Peterson & Associates accounting firm — build businesses to last?
Their answers are many, but several stand out:
• Pay attention to your customers and your employees (sounds easy; it's not).
• Do the math (i.e., limit debt, ramp up your cash flow, keep good records).
• Hire talented people, then fight the urge to micromanage.
Of course, experts agree there's more to it than that. A blueprint for one company doesn't necessarily match the needs of another. It also goes without saying: If you don't have a product or service people actually want to buy, you won't have a business for any length of time.
You also need to believe in what you're doing, that your business will make a difference, according to Jan Harte, certified business adviser at the Washington State University Small Business Development Center office in Vancouver.
That's not a blind belief, by the way. It's seasoned with a humility that says you don't have all the answers, Harte said. If you've got that — and a penchant for reading and analyzing and watching where your market is headed — then you've got a shot at long-term success.
"You have to be able to be proactive and move in a direction that will sustain your business before you hit crisis," Harte said.
'There to guide them'
"I'm a doer," said Strong, 35, explaining her personality.
In fact, she's a doer who understands every bit of how IGI Inc. works, because she did nearly every job there before reaching the position of CEO.
The company, with about $10 million in annual revenues, works mainly in plastics and rubber, designing, cutting and crafting a variety of products. It has created shoe inserts for Dr. Scholl's, for example, and it has supplied products to Intel and Boeing contractors, including gaskets for sealing airplane windows.
"Most of our products go between something, to keep something from moving," Strong said, or "from getting too hot or cold."
As a "doer" who knows her company inside and out, Strong said she's had to learn when to step back and let employees get things done.
How? By paying attention to them, "picking up on cues" and "looking at their faces," she said, and recognizing when they understand her expectations.
"I'm there to guide them, and to listen to them," Strong said. She added: "I've found the right people and put them in the right positions and gotten out of the way."
Vern Peterson, 79, has a different story about the importance of paying attention.
Recently he and his wife, who uses a wheelchair, went to a restaurant for lunch. An employee greeted them, asking whether they preferred a booth or a table.
The question is asked millions of times at restaurants without much thought.
Nevertheless, the employee failed to notice the fact that a person who uses a wheelchair probably wants a table, not a booth, Peterson said. From his perspective, in that moment, the question equalled carelessness.
With a little investment in attentiveness — and sensitivity — to a customer's needs, the question never would have been asked.
Peterson tells the story to illustrate a larger point: Unless you're always working diligently to serve the people you want as customers, you're setting yourself up for failure.
By contrast, he said, if you're focused on what's best for the client, "that client will always come back."
Indeed, business success is based on trust, said Harte, the business adviser. When a business sets expectations and fails to meet them, it ruins its relationship with consumers.
But when it meets, and even exceeds, consumers' expectations, Harte said, a company bolsters its brand. Customers, she added, become "loyal for life."
Peterson & Associates, which launched in 1962 and has a staff of 12, offers accounting, tax and consulting services to businesses and individual clients.
A majority of the company's clients are local businesses and entrepreneurs. But the firm's long life hasn't been all about business. It has contributed to scores of local organizations and charities, including the Clark College Foundation, Clark County Food Bank and the Free Clinic of Southwest Washington.
"Clark County has been awfully good to me," said Peterson, who, in 2003, was named Clark County's First Citizen by the Community Foundation for Southwest Washington. "I like to try to give back to the community."
Nevertheless, a business won't succeed without also relentlessly focusing on its bottom line. It's simple, Peterson said. "Spend less money than you take in. Live within your income."
And, if you can, avoid a lot of debt. That's not to say you don't invest in new equipment and training as needed.
Patricia Eby, president of Peterson & Associates, said the firm's staff is "encouraged to take additional classes they feel will enhance their knowledge and increase their performance."
And sometimes you borrow to grow, as Peterson's firm did years ago when it secured a loan to build a larger office in Hazel Dell.
Ideally, Peterson said, if you've been in business for 15 or 20 years "you should have enough capital that you don't need a banker."
What you will need to build a long-haul small business is other people who support you, who open doors of opportunity.
Just ask Strong.
The company she leads — IGI Inc. — is one of several companies that belong to a parent,in this case, Mikatomi Holdings LLC, owned by Mike Smith.
Smith joined IGI in 1982 and bought the business from his father, Larry, in 2003.
When it came time to decide the future leadership of the company, Mike Smith offered Strong a chance to take over. She embarked on a five-year, intensive training program with the goal of enabling her to take the reins.
For Strong, it was the opportunity of a lifetime. "I didn't know if I was going to make it," she said.
But she did.
Smith isn't surprised. He said one of the keys to her success is that she's not afraid to ask questions. "She doesn't hesitate to call," he said, and share her ideas and ask for help.
And the ability to lay down your ego to ask questions — to acknowledge there's always more to learn — Smith said, is "very powerful."