Breaking Into Business
An Ohio VAR shares the ups and downs of starting a new business, including how to manage growth when revenues double expectations in the first year.
Starting a business isn't easy. But, according to Steve Bricker, it can be rewarding. He and his partner, Mike DeLaet, started ProTec Concepts, Ltd., a systems integration company, in October, 1996. The pair's strengths are complementary, says Bricker. His background includes 23 years in the Air Force, while DeLaet was a software developer with a proven track record. Bricker concentrates on the management of the business, while DeLaet deals with the more technical aspects of applications.
The ProTec partners provide solutions for the entire information technology environment. They design, develop, sell, install, and service hardware and software for POS systems, automatic data collection applications, networks, and database management. The company exceeded its first year sales goal of $500,000 in the first six months of operation and now project $1 million in sales for the year. Bricker attributes this steady growth to well-laid plans. Here, he details the challenging first year.
The Best Laid Plans
Bricker and DeLaet met while working for another company and together came up with the idea to start ProTec. They began by mapping out a business plan. "It was a month of hard, concentrated effort. We worked day and night to put it together," says Bricker.
The original plan mapped out two company divisions, defense and commercial. Bricker would be in charge of the Department of Defense contracting side, while DeLaet, already experienced in software development for large grocery store and warehouse chains, would handle commercial accounts. "We had talked about other areas being part of our business focus. What we hadn't counted on, was that areas like network services would become a niche ProTec could successfully fill. Performing the smaller ‘pieces' of larger installations, such as the networking, were great opportunities to prove that ProTec could get the job done," says Bricker. These smaller jobs led to repeat business from these customers. Moving into network services required a modification of the original business plan. ProTec expanded from its original two divisions to four divisions, adding network services and products divisions.
As with any new business, Bricker and DeLaet had to contend with all the start-up basics: selecting a site, hiring employees, obtaining necessary licenses, choosing an attorney and a certified public accountant and setting up office furniture, as well as a more challenging necessity, financing. Despite having a well-developed business plan, Bricker and DeLaet were turned down by two banks, both apparently unwilling to back a new company based only on its founders' talents. Rather than give up, both Bricker and DeLaet put up their personal assets to start the company.
Selecting an office site needed to be done quickly. Bricker admits that the site he chose "needed some work."
"Walls were literally being torn down and rebuilt around us to make the space work. We had programmers sitting in front of their computers, covered with plastic sheeting to protect them from the dust. But that's what we had to do to keep working," says Bricker. When it came to securing office furniture, having good contacts paid off. Bricker says that any time he meets someone new and they exchange business cards, he follows up with a brief note or phone call. By letting his contacts know he was setting up a new business, he was able to trade all the office furniture he needed from a company that was downsizing in exchange for office space. "Bartering works when it's a win-win situation for the parties involved. Let people know what your needs are and follow through with contacts," suggests Bricker.
Bricker feels fortunate to have known some talented people that agreed to "go with him," when ProTec began. Likewise, DeLaet was able to convince a few talented technical people to join ProTec. Because ProTec is so new, employees are aware of the challenges the company faces. Bricker is proud to say that they are all "givers," willing to put in the time and go the extra distance to make things work. In exchange, Bricker and DeLaet let employees know that if the company does well, they will do well, in the form of bonuses. "The carrots we use are real and identifiable," he notes.
ProTec employees are trained in a manner that fits the company's style. The technical personnel specialize. For example, one ProTec employee is the house expert on networking. Bricker says that since customers' needs overlap within company divisions - networking and POS, for example - ProTec employees from the divisions work closely together. "When we have a new installation, the employees involved in any part of it meet to discuss it. We draw it out on a white board before we actually do it," says Bricker. "When we're done, the white board is full and we are all working from the same page." This team approach helps ProTec provide a total solution that is integrated to meet the customers' needs as well as their budgets, says Bricker.
Bricker feels very strongly that ProTec employees be trained on the products they use. He takes advantage of training offered by vendors and always requests manuals and brochures for the products he handles. Bricker recommends that other VARs take advantage of vendor-sponsored training, such as Novell engineer certification. One drawback to training employees, he notes, is that it sometimes leaves the office short-staffed, especially when other employees are out installing systems. But, because ProTec employees use cell phones and pagers to keep in touch, Bricker notes there have been few, if any, problems.
One department that Bricker and DeLaet didn't expect to expand so quickly was their sales force. Starting with two sales people, they have since hired two more. Two things led to this growth: becoming a distributor for hospitality software and the landing of the BW3 account, a large sports bar chain with more than 40 sites, many outside of Ohio. "We wanted to have one designated person for the software and another for the BW3 account in order to provide excellent customer service," says DeLaet. "In the restaurant industry, service is critical." DeLaet also notes that expanding into the network services area made having knowledgeable people on board who are willing to take calls at all hours very important.
In the month prior to ProTec's opening, Bricker and DeLaet laid the ground-work to acquire customers. One of Bricker's biggest challenges was to position ProTec as a subcontractor for government projects. He had the background, but he needed what is known as a "task vehicle" or "prime," which is a company that is eligible to be awarded government contracts and to receive the money. The "prime" can channel a certain portion of the money to subcontractors to complete the job. ProTec could handle many parts of larger installations. Once "primes" knew ProTec was open for business, the subcontracting work came in. "We were able to make the first sale our first two weeks in business because of all the planning we had done ahead of time," says Bricker.
With cash flow and limited financing, it was vital that the first few sales be made quickly, he adds. Now that ProTec is up and running, Bricker and DeLaet can focus on new business. ProTec has successfully developed and installed two inventory and control systems for Air Force bases in San Antonio, TX. The Initial Clothing Issue system at Lackland, Air Force Base, uses bar coding and RF wireless data collection for all new recruit uniforms and supplies. The Plating Inventory Control System at Kelly Air Force Base uses the same technology for total asset visibility of jet engine parts receiving depot refurbishing.
Bricker says, "Now we are developing a system for two large USAF mobility centers that maintain thousands of mobility bags (containing necessary supplies, equipment, clothing, etc.) for worldwide deployment during a crisis. In addition, we have been asked to customize this software for other defense areas." Bricker admits his company has done things the old fashioned way. One method that has worked to ProTec's advantage is to use the Sunday paper classified ads. According to Bricker, the ads for positions in management information systems (MIS) often mean a company is backlogged with work. ProTec offers to step in and help with the backlog, at least until an MIS person is in place. Because the markets demand VARs provide quality service, Bricker cautions against companies moving into only hardware or only software, ignoring the total environment of the customer. He says that many companies are not set up to operate this way. The result is missed opportunities to provide customers with additional services such as Web site development and networking.
Bricker's and DeLaet's plans for ProTec's future include expanding business within the company's divisions. Networking services and Web site development have great growth potential, says Bricker. Many companies want Web sites but don't know how to go about setting one up, he adds. "The business is out there if you want to find it." Bricker's goals for ProTec are modest. "If we can grow to support 150 employees and their families with our sales, and have a good set of customers and everyone is happy with the quality, that's fine with us. We don't need to be a Fortune 500 company," says Bricker. If Bricker and DeLaet have any regrets about starting ProTec, it is this: "We wish we had started it sooner," they say.