November was National Entrepreneurship Month as started by presidential proclamation under President Obama in 2016. Since the Bridgeworks Enterprise Center at Allentown Economic Development Corporation is focused on helping startup manufacturing entrepreneurs grow their businesses in the Queen City, we thought we’d talk to three of our business incubator graduates to get their insights on some of the lessons they’ve learned as startups.
Meet Michael Grather, President of LightLab International Allentown LLC (and former president of Luminaire Testing Labs, which was the very first Bridgeworks client, Stephen Maund, President of Demco Automation, and Terry Rufer, President of ColdEdge Technologies. We asked each of them for their thoughts on the following three questions:
1. What is one thing you did that really helped the company take big steps forward in growth?
Mike Grather – We stepped outside of our comfort zone and pursued some research opportunities that required the purchase of new equipment. Although the research work itself didn’t generate a lot of income, it opened the door for some other types of work that later became a large percentage of our revenue stream.
Stephen Maund – Setting recurring corporate goals – Setting goals are not just for large corporations! They don’t have to be overly complicated, and as a matter of fact, shouldn’t be. Goals should be easily understood by everyone on the team. By setting three basic goals and a frequency by which to measure progress, we are able to have a consistent double-digit percentage revenue growth year-over-year. Our goals are measured in annual or biennial timeframes and target new customer/partner acquisition, new technology advancements, and product development. For us, new long-term customer/partners and keeping in front of technology are paramount to long-term growth and success.
Terry Rufer – There wasn’t one thing, per se. It is a combination of all aspects of a business from legal, finance, and marketing, to production and hard-working people. You have to do them all, even the ones you don’t like! As they say, “cash flow is king,” and Engineering Manager and Treasurer Ajay Khatri, in particular, stayed on top of that, which kept us going.
2. What is the one thing that you thought was a good idea at the time but didn’t work out as well as you expected it would?
Mike Grather – We continued to expand for many years without spending the resources necessary to create the infrastructure for expansion. There’s only so much work that a company can handle while also working evenings and weekends. It seemed like a good idea at the time because we weren’t sure that the demand was going to continue to increase. At a certain point, however, it becomes imperative to have faith that the demand will continue, and invest in the infrastructure that will allow the company to grow.
Stephen Maund – Self-Financing a move to a new facility – We’ve been in a consistent growth phase as a company and were in dire need of a facility expansion. After reviewing the moving/improvement cost budget, business disruption, impact to projected cash flow, and operating line of credit, it seemed that self-financing the move was the way to go. In retrospect, keeping cash available for expanding other aspects of the company operation would have been a much better decision. A term loan for facility expansion would have been the wiser choice.
Terry Rufer – I guess a comprehensive business plan seemed like a good idea, but after a month or two it completely changes as you engage the market and spend your time and money. A comprehensive business plan is good for getting a loan, but not for a fast-changing business environment. Small business does not have time for comprehensive plans and it eats up way too much time. Simple PowerPoint bullets and roadmaps that can quickly be adapted to the fast changes most small business startups have to deal with works much better with far less time invested. If it is simpler you tend to do it more regularly, which also is why we ended up with this process. Planning is important, so for us, the simpler approach of continuously updating plans work very well because we are more inclined to do it.
3. If there was something you could do over again with your company, what would it be and why?
Mike Grather – I would focus more energy on the development of processes and systems, and less energy on the day-to-day work of the business. Although the day-to-day work is very important, if you spend your energy creating processes around your main activities, you can begin to scale your operations for growth. In my opinion, this balance between day-to-day work and working on infrastructure has always been one of the biggest challenges.
Stephen Maund – Grow a little faster – Developing one-of-a-kind advanced technology systems is a risky venture. It’s challenging to balance aggressive growth and risk mitigation. Growing a little faster and not being too risk-averse would be one thing I’d change.
Terry Rufer – We were sued shortly after we started and it slowed us down dramatically by years. Make sure you meet with a good lawyer before you start, and don’t think no one will sue you. We did not do this and got caught off guard in a surprise attack and it dragged on for 8 years. If we had been properly protected and ready with a good lawyer it would have been over fast and without gobs of money spent. And it does not matter if you are in the right, so don’t fall for that since being right does not matter in court realistically. The legal system is designed to generate money for the legal system and bleed you and the other party of cash, so the entity that has the most money wins, which is never the new startup because it’s always short on cash and time.