Survey responses from Inc. 500 CEOs on a variety of small business and economic issues.
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THERE'S NO PLACE LIKE HOME
Do you have any international sales?
While many CEOs report doing some business overseas, and more are planning on it, most of the companies that made the list this year continue to play strictly on the home field. Sixty percent posted sales that were exclusively domestic. That leaves 40% that are transacting at least some business overseas. Few, however, report more than token sales abroad. For almost half the companies with global ambitions, international sales account for less than 5% of revenues.
The reasons for going less-than-global? Too much business right here at home, CEOs tell us. Companies also cite financing problems, currency fluctuations, shipping costs, language barriers, and foreign regulations as obstacles to selling overseas. "There's a lot of red tape," says Stephen Tygh, CEO of Tygh Silicon (#231), in Pleasanton, Calif. "It's a lot easier for me to sell COD to an import/export firm here than to bother with the hassle of selling overseas myself."* * *
Do you have any plans to go public?
When we surveyed Inc. 500 companies in 1986, nearly half regarded a public offering as a viable option for cashing out. But our survey of the latest crop of Inc. 500 applicants revealed that only 23% harbor any plans at all for going public.
"We saw a lot of companies that went public in the '80s get into trouble with Wall Street and try to go private again," notes David C. Lu, CEO of Diamond Flower Electric Instrument (#9), in West Sacramento, Calif. "We're not desperate for cash, and I'm too young to retire, so why go public?"
Those who are bearish on going public cite a reluctance to surrender control, a discomfort with the personal and financial disclosures required, and an unwillingness to spend their time wooing investors and analysts.
Those who find the public markets more attractive point to the dearth of capital available elsewhere, the liquidity offered by the public markets, and the fact that a public offering might free them to (what else?) start more companies.* * *
Do you use a PC every day for business? A laptop? A car phone?
The CEOs running this year's Inc. 500 are one plugged-in bunch. Seventy-three percent of those surveyed confess they use a PC every day for business. Although only a third would admit to taking laptops or notebooks on trips, most wouldn't dream of leaving home without a phone. Seventy-four percent say they have car phones. Fifty-eight percent own mobile phones, though they are loath to use them in public. (Only 26% do.)
For all the tele-mastery these entrepreneurs display, none compares with Jack Kent Sr., CEO of Marine Shale Processors (#476), in St. Rose, La., undisputed winner of this year's Great Communicator Award. In addition to the multiline phone in his office and the phone in his car, Kent keeps a phone in his Lear jet, another in his helicopter, and yet another in his pocket. There's a phone, a fax, and a PC on his boat -- it's called The Office.
NOT AT ALL IN THE FAMILY
Do you think of your business as a family business?
A considerable majority (73%) of CEOs responded no. This, despite the fact that nearly half (44%) have relatives working for them. Their responses suggest a distaste more for the image of a family business than for the reality. Ken Wells, who founded Key Construction (#367), in Wichita, with his brother, wanted none of the perceived nepotism that he says clouds a family business and drives away talented outsiders. "Other employees don't feel they have real opportunity in a family business. They see no chance for growth in a company where upper-level positions are a birthright for relatives."
To companies such as Van Mar (#219), in East Brunswick, N.J., there is no tarnish to being family-run. In fact, there are clear advantages, strategic as well as personal. "We literally eat, sleep, and live this business," says Marilyn Schulman, whose husband and two sons share her passion for their lingerie company. "I don't have to worry about it alone."
TIME IS ON THEIR SIDE
Do entrepreneurs work too hard?
CEOs express relief and faint regret that their businesses consume less of their time as time goes by. All have stories to share about how hard and how long and how happily they had worked in the early days. "There were times when I slept on the floor by the phone so as not to miss a call," recalls Ken Ryan, CEO of Airmax (#75), in Bensenville, Ill. Now that his company is "gradually growing up," he's less prone to spending weekends and every night at the office, although he may always, he says, have the feeling that he's never doing enough.
Whereas 66% remember working at least 70 hours a week when they started, only 13% say they are doing so now. The distribution of their labors -- then and now -- follows:
Percentage of CEOs that
|No. of hours worked per week||work those hours now||worked those hours when starting|
|Fewer than 30||1%||3%|
|More than 80||5||40|
PAR FOR THE COURSE
Is playing golf important to your business?
Don't look for these CEOs crowding the fairways. You won't find many closing deals on the ninth hole. Although all report entertaining clients on expense accounts, only 23% who answered our survey say playing golf is important to their business. There is nothing wrong with wining and dining customers, they unanimously agree, but who has time to play golf in the middle of the day? Corporate mavericks like John Kojak even defend an inalienable right not to play golf. "I left the last company I worked for because they told me I had to play golf," says Kojak, the founder of Phoenix Millwork & Manufacturing (#428), in Beaumont, Tex. Most CEOs, however, see nothing wrong with wooing customers on the golf course, even if they have little time for it themselves. "It's a very civilized way to get acquainted with clients," says L. O. Ward of Ward Petroleum (#125), in Enid, Okla.
WIMPS OR WHAT?
Are today's workers losing the work ethic?
If there's a productivity problem in this country, don't blame the employees working on the line. U.S. workers aren't wimps. U.S. managers are. That's what more than two-thirds of the CEOs surveyed tell us, in a surprising critique of corporate leadership. Sixty-four percent say their employees don't want too much; 70% say employees aren't losing their work ethic; and 68% say employees don't deserve to have their bosses ride them harder. Instead, what U.S. companies need to compete is better leadership. "Mediocre management is epidemic," says Ron Daugherty of Digital Systems Consultants (#110), in St. Louis. "The problem is that managers often fail to give clear direction and show how success will be measured." Maybe the demands of fast growth have made these CEOs more appreciative and empathetic. "When bosses perform all the tasks in the business, they learn what it's like for an employee," says Jack Robinson, CEO of Nutech Laundry & Textiles (#457), in Hyattsville, Md.* * *
Have attitudes changed about the importance of small companies?
Sixty percent of the CEOs surveyed say that, no question about it, the status of small companies isn't what it used to be. They report being treated differently by government, by large companies, and by banks. But the question remains: are the changes for better or worse?
One-third say they detect a new attitude in government, but they can't agree on whether there has been an improvement. In contrast, more than half indicate that big companies' attitudes toward smaller partners have improved. As a result, it's easier doing business with the Fortune 500, they say. When it comes to banks, alas, the love -- if it ever existed -- has long grown cold. A disappointed majority (78%) complain that banks have turned sour on small companies. That's been true even for profitable, $20-million companies such as Technology Works (#4). Of course, calling (Austin) Texas home doesn't help matters. CEO Mike Frost uses one word to describe the status of small-business banking there: "Nonexistent."* * *
QUOTATIONS FROM THE CHAIRMEN
If you became chairman of General Motors, what's the first thing you'd do?
When we put that question to our Inc. 500 CEOs, most answered decisively:* * *
"Put on a suit. I've never worn a suit."
-- Jim Miller,
The Rigging Co. (#385),
"I wouldn't close any plants in Flint, Michigan."
-- Mike Frost,
Technology Works (#4),
Austin, Tex.* * *
-- Thomas Casten,
Trigen Energy (#70),
White Plains, N.Y.
"Test-drive the latest Corvette on the track."
-- William Dolan,
Marlton, N.J.* * *
-- Jim Juranitch,
Farmington Hills, Mich.* * *
"Make the best damn resignation speech ever."
-- Don Soults,
Routing Technology Software (#232),
NO NEW CANDIDATE
Is there anyone you would prefer to George Bush as president?
With an election year upon us, we couldn't resist inquiring about the presidential preferences of these decision makers. We asked CEOs of growth companies to name one leader from any field -- candidate or not -- whom they would favor over George Bush. Relax, George, many say they'd vote for you, anyway -- although one respondent would rather have the First Lady take command. Here's how the votes were cast:
George Bush, 22%; Lee Iacocca, 12%; don't know, 9%; Ross Perot, 6%; Robert Dole, 5%; Norman Schwarzkopf, 4%; Colin Powell, 4%; Dick Cheney, 3%; James Baker, 2%; Sam Walton, 2%.
Dispelling pollsters' suspicions about the validity of our survey are three CEOs who took the question seriously and suggested themselves for the Oval Office. Our favorite picks include Madonna, Clint Eastwood, Warren Buffet, Billy Graham, and should that most final of retirements prove too dull, the return of Abraham Lincoln and Malcolm Forbes Sr.
Has the United States lost its competitive edge?
More than half the CEOs we asked agree with critics who say that the answer to this question is yes. "I don't drive an American car; I don't listen to an American stereo; I don't watch an American TV; and I don't use an American microwave," says Stuart E. Salot of CTL Environmental Services (#341), in Harbor City, Calif. "We've lost our ability to compete."
The 54% of respondents who see a decline in the nation's economic standing attribute it to poor education, insufficient trade protection, and ineffectual government policy.
However, the 46% who dispute the notion that ours is a second-rate nation find countervailing strengths in people mainly like themselves: entrepreneurs starting companies and pioneering industries. Quality and innovation continue to distinguish U.S. companies, they argue. "Bash away, but when all the beans are counted, we're still number one," says Manny Menendez of Deneba Systems (#84), in Miami.
DEATH OF THE SALESMAN
Do most businesses underrate the importance of selling and focus too much on marketing?
More than half the CEOs surveyed lament the lowly station of sales in U.S. business. Too many companies neglect humble selling and focus instead on marketing, the respondents tell us.
"It's as if management doesn't want to get their hands dirty and get too close to the actual sale," notes Ed Schairbaum, who makes sure nothing is more important than sales at TNG (#331), in Bedford, Tex., where, as he puts it, "you either sell or you help sell, or you are out."
Despite their fervor for face-to-face selling, only 15% of the CEOs who responded spend more than half their time making sales calls. Thirty-nine percent report spending less than one-tenth of their days selling. Still others claim that taking the time to make sales calls helps them stay in touch with their markets and their customers. "I learn so much from walking into someone's office just in the first five minutes, I can't afford not to," says Robert A. Fries, president of Data.Com RESULTS (#302), in Rocky Hill, Conn.
What's the one problem that has caused you to lose the most sleep?
"Cash flow. Hands down. without a doubt," says Ed Schairbaum of TNG (#331), in Bedford, Tex. Meeting payroll wins a landslide victory in the "toss-and-turn" category, competitive though it is, with managing people coming in a close second. The insomniac's hit parade follows:
Cash flow, 31%; personnel, 27%; financing, 8%; containing growth, 4%; government regulation, 3%.
Of course, there are additional worries about continued growth, vendors, partners, sales, the recession, and failure. "It's never-ending," Schairbaum notes. A few even tell us it's the sheer thrill of running a business that keeps them up at 3 a.m. "Excitement!" cries Chad Olson of Pro Image (#160), in Bountiful, Utah. "Sometimes I get up in the middle of the night and go back to work because I'm just so excited."
Are big-company executives overpaid?
Although 38% of Inc. 500 CEOs say big-company executives are indeed overpaid, nearly half argue that the titans with the trophy take-homes get what they deserve. "They're not overpaid," asserts Gordon Dickens of Dickens Data Systems (#90), in Norcross, Ga., "if their companies are stupid enough to pay them that much and they're smart enough to get it."
While many had qualms about jumbo pay for executives -- "I'd be ashamed to cash the checks some of those guys take home," says Robert Kelliher, CEO of MRI Manufacturing and Research (#242), in Tucson, Ariz. -- four out of five object to compensation caps. Let the boards, the shareholders, and the CEOs' performance determine pay, they say. Opinions are mixed when it comes to egalitarian formulas that set a CEO's salary as a fixed multiple of workers' wages. Thirty-seven percent favor a ratio; 43% oppose it. "Sounds too communistic," says Bruce James of Barclays Law Publishers (#234), in South San Francisco.
DOING THE RIGHT THING
Are you getting tired of being told your business has to be more socially conscious?
Seventy-two percent of inc. 500 CEOs assert that businesses have a strong obligation to be socially conscious. It is not enough for businesses simply to pay their taxes and create jobs and wealth. Companies should "give something back," we're told.
While some are inspired by the social activism of companies such as Ben & Jerry's or the Body Shop -- Peter Saloom, founder of Saloom Furniture (#272), in Gardner, Mass., feels a "certain kinship with those hippie ice-cream guys" -- others find it divisive. "It can just get in the way of business," says Marbeth Shay, president of East Coast Computer Systems (#366), in Tinton Falls, N.J. "I wonder, do I have the right to impose my biases and my politics on our organization or our employees?"
A few are openly critical. Thomas Barnard of Signature Graphics (#320), in Porter, Ind., resents the moralism the two guys from Vermont serve up with their marketing. "I'm sick of Ben & Jerry's," he says.