Business Ownership: Would You Do It Again?
Sanitary Maintenance has covered the unique challenges of jan/san distributor ownership for more than 60 years, but there is one question we have never asked: Would you do it again?
In an unprecedented era of shrinking margins, skyrocketing health insurance costs, slow-moving inventory and sleepless nights, would owners choose the same career — and life — path?
According to a recent survey of SM’s readers, the majority of respondents — 85 percent — said that, yes, they would do it all over again. The remaining 15 percent said that if they could, they would go back and choose a different career entirely.
“Owning a sanitary supply company isn’t for everyone,” says Paul James, owner of Cleaning Essentials, a jan/san distributor in Spring, Texas. “I think the best measurement of whether or not you’re cut out for being an owner is how much fun you have doing it. You have to enjoy working with customers and getting products out the door. Sure, there are weeks when it’s not fun, but, overall, you should look forward to going to work.”
Making the Grade
But what makes ownership appealing to some and difficult for others? SM asked jan/san distributor owners a series of wide-ranging questions. What we found was that formal education often plays a small part in the success of a distributor, and industry experience is the biggest advantage for both veteran and novice owners.
Most readers — 41 percent of the total respondents — said that industry experience is the No. 1 prerequisite for success as an owner of a sanitary supply company.
“Don’t enter the business ‘cold,’” says Barry J. Cohen, president and co-owner of Monterey Sanitary Supply Inc., Monterey, Calif. “You must have some knowledge of your customer base, including some all-important contacts.”
“If you have no industry experience, you need to get that first,” says Michael Boarman, president and owner of Bortek Industries Inc., Mechanicsburg, Pa. “Don’t start from scratch unless you’re very young and used to being poor. It’s very unlikely that you will stay in the business, let alone make a decent living.”
Although industry knowledge and contacts often prove to be invaluable for distributor owners, it’s beneficial to have experience outside the industry as well, says Roger Parrott, president and owner of RoVic Inc., Manchester, Conn.
“I wish I would have gotten some training in another career before I entered the family business,” Parrott said in a recent panel discussion focused on industry mentoring, sponsored by International Sanitary Supply Association’s Young Executives Society (YES). “There are insights and perspectives in other industries that can significantly benefit owners in our own industry.” Because the jan/san industry is heavily influenced by family-owned businesses, it’s easy for owners to stick to the status quo, he added.
“My wife and I did an exchange program with people from another country, and it helped me grow more than anything else in my life,” said Parrott. “You need to get outside your comfort zone and push yourself to grow if you want to be successful in this business.”
After industry experience, 31 percent of survey respondents indicated that “people skills and personality” were necessary traits for success as a distributor. New owners often have a vision for where they want the company to go, but they have to be good at communicating that vision to their subordinates, says Terry English, vice president of sales for United Sanitary, Baltimore.
“It doesn’t do any good if a distributor owner has a great vision that he can’t pass on to anyone else in the company,” he says. “I’ve worked with many owners, and the best ones have been people who could infuse the whole company with the same passion and vision that they have. If employees understand where the company is headed, then they’ll work to see that the owner’s goals are met.”
Distributor respondents also recognized the importance of product knowledge (23 percent). Notably, no respondents chose education as the top prerequisite for success as a jan/san distributor. “The most important education is in your blood,” says Mark Newhouse, owner of Laymen Global, a jan/san distributor in Rahway, N.J. “There’s no question that a formal education helps, but the real thing you need is a deep desire to keep going and not quit. I think it’s really something you have to be born with, and then you have to develop that ability with the industry experience that you get on the street.”
Someone to Follow
While it’s important for distributor owners to get industry experience, the best guidance that a young executive can receive is through an industry mentor, says Andrew Brahms, owner of Armchem International Corp., Ft. Lauderdale, Fla. “I’ve been an owner for 23 years, and I’d do it all over again,” he says. “But if there was one thing I could go back and change or adjust, I wish I would have had some professional guidance.”
Brahms always knew that jan/san distribution was about buying and selling, but there was a sharp learning curve when it came to understanding the financial details of being an owner. “When I started, I didn’t know that I needed an accountant or that I had to have a good relationship with the bank,” he says. “I didn’t know much about staying on top of invoices. There was just a lack of professional guidance and mentoring that I wish I’d had access to.”
Although no one taught Brahms about financial details, he quickly saw how imperative they were to being successful. When he finally combined sound accounting with his insatiable thirst for product knowledge and spirited people skills, his business took off. “Believe it or not, I was in Guam in 1979 when I started selling cleaning supplies,” he says. “Then, I branched out to much of Southeast Asia, and I did that for 20 years, selling specialty cleaning chemicals. Most owners today start a company as an offshoot of another company, but I had to do and learn everything on my own.
“Being a jan/san supply owner isn’t the kind of thing you go to school for,” adds Brahms. “You have to have a deep desire to be successful, and you have to understand the importance of the cleaning industry. That’s what keeps me going.”
Not For the Faint of Heart
There’s a reason why so many people who commit themselves to becoming jan/san distributors never realize their dream. Although employees face pressure to perform well, the owner is really the one responsible for turning a profit, says Newhouse.
“When you’re an owner, you have no one to blame but yourself when things go wrong,” he says. “Ultimately, it’s your problem — whether it’s health insurance costs or shrinking margins.”
When asked to name the most difficult aspect of being a distributor owner, readers offered a variety of answers: economic uncertainty (22 percent) and the emotional toll (19 percent) topped the list. Then came personal investment capital (19 percent), the amount of time involved (18 percent), keeping up with new products and technology (13 percent), and “other” (9 percent).
In line with distributors’ foremost concern — economic uncertainty — we asked SM readers, “Is the current economic climate (the past two or three years) the most difficult you’ve experienced as a jan/san distributor owner?” Respondents were divided: 55 percent said that they’ve experienced tougher economic struggles in the past, while 45 percent answered that this recent recession has proved to be the toughest.
The Right Staff
One thing they agreed on: every distributor owner SM spoke to mentioned hiring and firing as critical ownership skills. “It’s true that owners are responsible for the direction of their companies, but the good ones have a knack for hiring the right people who contribute to the company and keep it on course,” says English.
Several owners said that hiring and scouting potential hires is the most important aspect of being an owner. It makes sense to take great care in making informed personnel decisions, says James. “You have to like the people you work for — as far as customers and suppliers — and you have to like the people you work with — meaning your employees,” he says. “I entered this business when I was 18, and the successful owners I’ve seen have surrounded themselves with good people.”
Just as it’s important to work hard at finding the right people, it’s also important to fire the wrong people, and quickly. Keeping the wrong people around — whether they’re bad for the atmosphere within the company or they’re just not productive — is what many owners said they regret most about past decisions. Unfortunately for owners, firing is often difficult in the jan/san industry.
“We’re still an industry that is filled with family businesses, like mine,” says Parrott. “In a family business, it’s very hard to let someone go. However, owners need to do what’s best for the company — that’s what makes them good owners.”
“You need a group of employees who care as much about the company as you do,” adds Newhouse. “It’s true that the owner is the one responsible, but if you hire good employees, they’ll help you learn to be a good owner.”
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