STRATEGY

Diary of a Small-Company Owner

Part two of the journal of a company owner, who, with the help of an outside board, struggles to grow her company.
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Part Two I'm changing, and my company is changing with me. The employees want to see regular client-feedback sessions, get more recognition, and have a customer newsletter that they help with; they have definite and good ideas about how to market the company. I feel proud to be a part of this. It doesn't seem like just me alone anymore

Anita F. Brattina founded Direct Response Marketing Inc. in 1984. She was one of two female business owners in Pittsburgh selected to receive a high-powered board of directors that would meet quarterly in 1992. The board was awarded by PowerLink, a local nonprofit organization set up to help female business owners catch up with their male peers. The first installment of Brattina's "Diary of a Small-Company Owner" ran in our May issue ([Article link]) and chronicled the first six months of her company's ups and downs in 1992, as she strove to increase sales, renegotiate a major contract, and keep personnel issues on an even keel. By midyear Brattina was still tussling with the board's pointed and repeated suggestions that she set down her long-term vision for the company. But if nothing else, the board had opened her up to the notion of seeking the advice of outsiders. And she had hired her first professional manager to oversee day-to-day operations.

* * *

JULY 2, 1992 Tonight I pull out the business plan I wrote last October. It is already outdated. I still don't know what I want out of this business. I need to sit quietly and think about it. Since I've been working 60 to 70 hours a week lately, when exactly do I do that? My husband, Bill, is going away in September for four days. Decide to take four days off at the same time, go up to our cottage at the lake with the dogs, and write a new business plan.

JULY 6, 1992 Take Sarah K. to lunch. She announced at our April board meeting that she is leaving Pittsburgh and her job as a quality-control manager. This is the last time we will see each other. I ask her what she thinks of our company and the board experience. I still hold my breath after those kinds of questions.

She is straightforward. I need to be more clear about what I want from the board. She is right. I haven't really thought through how to best use their talents. And because some of them have never sat on a board before, they wait for me to lead, to tell them what it is I need from them. Then, when they do give suggestions, they expect me to drop what I am doing and act immediately. Adding the board to my life is on the verge of being overwhelming. [Note: Again, the feeling that running this business is like being the juggler on "The Ed Sullivan Show" who balanced spinning dinner plates on the ends of tall sticks, with more plates being added by the minute.]

JULY 8, 1992 Have lunch with Cathy R., CEO of a manufacturing company that was on the Inc. 500 last year. I've been polling people who have advisory boards to see how open they are with them. "I tell them everything," Cathy says. "Why should I hold back? I want them to know everything so they can help me."

I am uncomfortable with that still. After keeping everything to myself for eight years, after never telling anyone the full scope of my deepest fears . . . not even my husband knows about all the nights I lay in bed chewing on a problem. This idea of verbalizing everything is new and difficult, though I can't put my finger on why.

JULY 10, 1992 Ilana D. from PowerLink calls in response to my memo. [Note: I'd done a six-month evaluation of my relationship with the board for my own review and had sent a copy to her.] We talk on the phone for almost 45 minutes. Why did I need to be told what kind of questions to ask the board? she asks. Isn't that obvious?

I remind her that the reason I asked for a board in the first place is that I feel I need help to get "unstuck."

* * *

My personal vision of success for the business is when we are doing $10 million in sales from an office 10 times the size of our current one, with a huge list of satisfied clients and employees who stay around for a long, long time. Only, I am having trouble getting there.

* * *


I tell her I am still reluctant to present full financial statements at the board meetings. She is amazed. She insists that financials are the only scorecard that makes sense. That my primary focus and the board's should be how to maximize profitability with the financial statement as the tool to determine that. I counter that my goal is to get help in planning a well-run company in terms of marketing, operations, and management. And that I will worry about profitability. She insists I am missing the whole point and that therein may be the key to my problem of being stuck. "If you are not looking at how to maximize profitability, you'd better have a damn good other reason," she says.

Think about the call all afternoon. I respect her opinion and realize what I have been doing up to now has not been good enough. I am willing to shift my focus at least for the remainder of the year. I call her back. Will she agree to be the substitute board member in place of Sarah K.? Ilana agrees. She also recommends I add Larry R., her boss at Price Waterhouse, to the board. I agree.

AUGUST 10, 1992 Business has been building steadily. We have rehired all the people laid off in April. Also set up a more careful analysis of DRM's performance and job profitability. And devised a weird mathematical formula that has been evening out our cash needs. Payroll for two weeks must be at 80% of one week's billings or we will be in trouble a few weeks down the road.

Diane N. is becoming more comfortable in her new job as operations manager. She gives me a list of 50 goals she'd like to achieve by year-end. We agree not to initiate a formal marketing program until her three-month trial period as operations manager is over and until her department is ready to handle it.

I had sent a meeting agenda and packet of information to each board member (and to my accountant, attorney, banker, financial consultant, insurance agent, and marketing consultant). My accountant calls me today. Will I need financials for the September board meeting? He has never asked me that before. I guess the board makes him feel accountable, too. I accept.

AUGUST 24, 1992 Mike P., a board member and CEO of a multimillion-dollar metals-brokering firm, calls. Says his telemarketing friend has a contract that may require our services. It is teleselling, he says happily. That's the idea he suggested at the very first board meeting, in February -- selling products directly over the phone. I call. The proposal will exceed $80,000. We'll know in October.

AUGUST 25, 1992 Lunch with Dwight F., a longtime client, handpicked by me to be on the board. He has referred a substantial amount of business to me over the years. He says I don't need to be so worried about the health of the company. Even after looking behind the curtain, he says he knows I am a good businessperson and that I am responsible to my clients and creative in my work, and he has no doubts that I will meet any objective I set for myself.

I can't tell him how much I appreciate his words. I rarely get that kind of unadulterated praise from an insider. It feels wonderful. I vow to keep his advice and counsel near me for my next depth-of-despair day. [Note: One of those awful days when I'd like to walk away from the whole business and join Wal-Mart as a cashier.]

SEPTEMBER 1, 1992 Third board meeting. Only two board members attend. The rest cancel at the last minute. I am used to this. My regular contacts with the board between meetings are so valuable that I do not begrudge the ones who cancel. I will have my own board next year, though, selected by me. And will pay a small stipend, $50 or $75 per meeting attended.

We go ahead with the meeting anyway because I have a problem I want help with. A woman -- Molly P. -- has approached me about taking our languishing direct-mail operation and building it into a much more profitable division over the next five years, for a piece of the action. She feels she can do $200,000 in the first year and $100,000 more a year for each of the next four years. Am I interested? I asked her to put it in writing for the board meeting.

The two board members think her proposal is thin and that we have not hammered out enough financial details to initiate anything serious.

* * *

I am surprised. I like her offer and like her. They arm me with a list of 20 questions to review before I make my final decision. The most important is the one that keeps resurfacing: What is your vision for this company? What do you really want to do?

* * *


I admit to them that when I wrote my business plan last fall, I had decided that telemarketing had less competition and better profit margins, and that I enjoyed selling it more. Then, Ilana D. says, that should give you your answer. Don't do it. Mike P., having been through a rough experience himself, cautions against taking on a partner without getting to know her better. (He suggests knowing a potential partner for at least 10 years.) I don't have 10 years, but I agree to put Molly off for two weeks and to draft a new business plan and a new agreement.

The final board agenda item arrives. We review the financials, and I wait for comments. I get surprisingly few. It is not the reaction I expect.

SEPTEMBER 4, 1992 We will have our best quarter in the history of the company.

SEPTEMBER 8, 1992 I leave for the lake, determined to finish my list of personal business goals while Bill is golfing in Myrtle Beach.

SEPTEMBER 9, 1992 I sit with pen and journal, writing around the goals, and then start a list. I tear it up and start over. The goals keep sounding like a business plan for the bank or my staff or the board. Hard to write goals for myself. In some ways I feel the business is bigger than I am. Suppose I decide that my real goal is to live at the lake on Bill's income and read all the Great Books? Suppose I decide that I want to become a rock star? Who cares? I have employees who count on me for their livelihood, I have clients who rely on us. I come in every day, work hard until the day is over, and start again the next day.

SEPTEMBER 10, 1992 I put my personal business goals aside. So that the time here is not a total waste, I write a statement of philosophy about the company. It is the first time I have put a lot of these ideas into words. At least I feel I have accomplished something. I also rewrite the agreement with Molly P. We will do a 12-month trial to see how it works out. If we are both happy, we will spin off the division and she will have to buy in.

SEPTEMBER 22, 1992 I review minutes from the last board meeting. There are two main things I need to do. First, Mike P. insisted I need to get our accounting computerized and offered to find a local consultant to help us.

Second, the minutes state that "Mike and Ilana were concerned about whether expanding the existing direct-mail service fits into DRM's vision for the future." [Note: My new business plan is only halfway done. I've found it easier to write at our cottage by the lake, so I've moved a computer up there. I will take a stab at finishing it the last weekend in September.] But here's the catch: Molly P. started with us September 17. I know that sounds like the preboard Anita, charging ahead, not doing the necessary planning. Yet I feel much more comfortable with the compromise.

SEPTEMBER 25, 1992 Mike P. has invited me to attend a meeting of company CEOs who meet monthly at one of the most exclusive clubs in the city.

When I walk into the room, I see Barb M., the cofounder of PowerLink and the friend who recommended I apply for the board. She is there as a guest. We sit together and introduce ourselves to the mostly male crowd. Mike also attends. The meeting is a presentation by four authors of business publications. The author getting the most questions is Robert Kelley, who wrote The Power of Followership. He asks how many people in the room consider themselves good followers. I am surprised that most of the people raise their hands. I struggle to think of a personal example.

Actually, I sit on someone else's board as a "follower." One of 10, I was invited to the position by the owner of a private club where I am a member. With a fresh kind of clarity I can see this owner sitting at the club's board meetings, talking with authority for so long without in-terruption that finally no one bothers to interrupt. Instead, we sit quietly, looking at our watches. Our independent ideas are not really needed. That sets me to wondering, How many times have I asked for opinions and then raced ahead without listening to the answers of my board? Of my employees? How many times have I withheld information that I didn't think they were ready to hear or that I didn't want to bother explaining?

As I sit looking around the table at these men, I wonder how many of them have built their companies by having all the answers. Or how many have let other people come up with ideas that they have listened to with great interest and enthusiasm and then followed. How hard is it, really, to let go of your own company? I order Kelley's book.

* * *

SEPTEMBER 27, 1992 Weekend at the cottage is over. I cannot seem to flesh out a personal vision that satisfies me. I decide to freshen up our mission statement, distribute it to the staff, and get back to work -- which is what I seem to do best.

* * *


SEPTEMBER 29, 1992 Meet with Diane N. and Mary Z., my two top people. It is all I can do to keep my mouth shut and listen. These two women have worked so hard for the company and their employees all week, and they are bringing me up to date on their progress. Am I letting them run the company and keeping out of their way? It is very, very hard. I find myself scheduling time outside the office lately. It is easier not to make decisions if I am not forced to confront them. I go on sales calls, and take work home to my home office. I read over the reports and think of ways to ask questions without second-guessing decisions.

OCTOBER 19, 1992 I meet with Mike P.'s friend who asked us for the telemarketing quote. We did not get the job. Our price was competitive and our references were excellent, but his client had gone directly to a vendor without his knowledge.

Over lunch he tells me how he grew his business. (It has become a standard question I ask anyone who owns a business.) It is a fascinating story about a great success and a few setbacks. I do not know him well enough to ask him if he ever sat down and wrote out his personal business goals.

OCTOBER 22, 1992 We are expanding the telemarketing department, and I offer to clean out the area it will move into. In jeans and a sweater, I sit on the floor, sifting through boxes of files taken out of the old sales office. This is where nine salespeople have come and gone over the last eight years.

It's a little like looking at the history of the company compressed into "general correspondence." Letters to companies no longer in our market, proposals long forgotten because they were filed by someone who is no longer here. I wonder how a huge company prevents this from happening. Who sits on the floor weeding out sales-proposal files at Westinghouse or Apple? Who makes sure all those prospective customers are treated well, not lost in the shuffle during employee turnover?

OCTOBER 26, 1992 Business is going well. Yet my work load seems to be more and more overwhelming. I bring all my paperwork home tonight in a big box. We have more employees than ever, I feel I am delegating more than ever before, and yet, I have never felt busier. Can't figure it out.

OCTOBER 29, 1992 In the last week I have received inquiries for our business-to-business telemarketing that put my lack of long-term objectives to the test. If 50% of the inquiries from this month alone turn into jobs, we could expand from 25 employees to 50 employees by the end of the year.

* * *

Today I meet with James S., one of three partners in a 12-year-old computer-supply company that is grossing more than $1 million per month. He is reviewing our computer needs because we may have to buy more equipment. Yet I cannot tell him how many computers we may eventually need, because I have not decided how fast I want us to grow or where we want to be in three years.

* * *


I share my problem with him. He admits that planning for growth sounds good but is not always so easy. Even at a company the size of his, he and his partners work on it constantly. [Note: My board has helped me to open up and share insights like never before. I see that the companies doing $5 million, $10 million, $20 million look and act like mine. The owners are not geniuses or unique by some entrepreneurial definition that could not apply to me. They admit that grave mistakes mark their histories. But they also share great ideas.]

In James's case, he and his cofounders began working in partnership with one of the largest computer manufacturers in the world six months after they formed the company. They have been asking for help from that manufacturer -- also a client of ours -- and getting it for 12 years.

NOVEMBER 10, 1992 Lunch with my banker, Jim S. He is the one who championed my line of credit and equipment loan last fall. He calls me periodically to see "if the patient is healthy." Mostly I tell him about proposals we are working on and new contracts. We are meeting our loan payments easily these days. That feels very good to me. Jim does not mention it. He had suggested we hire business students from the University of Pittsburgh to help us with daytime projects. We had done that and found a great employee. I thank him for the idea. [Note: We are in the sixth month of a major newspaper strike, so it is not easy to find people to keep up with our growth. Our turnover rate is less than 25%, excellent for telemarketing. Hiring full-time people and paying benefits seem to be paying off.]

I tell Jim we may want to extend our line of credit next spring, based on increased receivables -- but that I'd like to see if we can meet payroll without it. The idea of borrowing money still goes against the grain with me. I still don't know how to do a cash-flow analysis.

NOVEMBER 13, 1992 Mary Z. buys pizza, and I buy champagne. Everyone wears jeans. Lunch is in the conference room, and we stop work at one o'clock to celebrate the past month. Bills are all paid, receivables are at their highest point in the year, and we have two new contracts that could mean more than $250,000 of work next year if the initial tests go well. Molly P. has brought in three small contracts from existing clients for direct mail and has more than $250,000 in pending proposals.

* * *

It is time to pat each other on the back. I do not do this enough -- let people know how much they are appreciated. We all go home early. I still take work to do over the weekend, but willingly. These are the times when I cannot stop smiling. I feel so lucky to own my own business.

* * *


NOVEMBER 15, 1992 Finish Joline Godfrey's book, Our Wildest Dreams. She touched on a subject that has been disturbing me ever since I started working with the board. I keep wanting to talk about running a good company, and they keep talking about money. I keep talking about empowering employees, and they keep talking about profits. It is a little as if they are speaking Italian and I know only a few words and have to use hand signals. Joline's research among other women in business tells me I am not alone. That is a comfort.

NOVEMBER 17, 1992 Mike P. has invited me to my second CEO Club meeting at the Duquesne Club. The guest speaker talks about negotiating skills. I am sitting next to Cathy R., the Inc. 500 business owner I had lunch with this summer. She joined the CEO Club last year and urges me to join. The dues are $1,700, and I have to think about it. I have new chairs, desks, and phones on order. I want to computerize my accounting, which may take up to $2,000 in consulting expenses.

The four negotiating styles the speaker talks about are familiar to me. I wonder if men negotiate differently with women than they do with other men, but in this room of mostly gray suits, I do not bring it up.

One of the business owners asks me to sit at his table for lunch. He may need our services and wants to talk further. Perhaps I can squeeze the $1,700 out of the bank before year-end after all.

NOVEMBER 19, 1992 Received a note of apology from Steve M., board member and marketing manager for a local cultural organization. He had been immersed in a tough work schedule but wanted to get caught up on the board. We agreed to meet this morning at his office. In reviewing the past four months, I find myself telling him about the lack of focus I have been accused of by the board. It is something I have been wrestling with on paper. If nothing else, I have come to one conclusion in my personal business plan.

To me, the most important thing is to create a growth company that is exhilarating to work for. Growth means I can afford to pay employees better, I can be more generous with benefits, I can provide a career track. I feel that if I can recruit great employees and keep them, we can do absolutely anything! I feel we have that kind of culture now. And I am furiously working on my goal of getting the turnover below 10%. [Note: I have continually seen the effects of turnover: systems abandoned when an employee leaves, clients having to be reintroduced, projects having to be relearned, mistakes repeated by a new person.]

Steve listens. I can see he finds this interesting, and he agrees with me on one major point -- the board doesn't need to be told the entire rationale for my wanting to grow. All they need to know about and help with is the growth itself. I can do the rest within the company.

NOVEMBER 28, 1992 It is two days after Thanksgiving, and Bill and I are visiting my family in Philadelphia. Of the four kids, three of us own our own businesses. We've never really talked about why that happened, but we often use the time together to compare notes. Tonight my brother Ed and I went to visit a family friend who started his consulting firm in 1985, a year after I founded Direct Response Marketing.

Tom S.'s progress interests me, but I do not want to pry. So instead I find myself talking about my own company. We sit talking far into the night about how hard it can be to make decisions about so many things when you are alone. Tom and Ed ask me about the board. It is still difficult for me to explain this arrangement. No, I don't do everything they tell me. Actually, if I were keeping score (which I'm not), I would say I have followed their advice less than half the time. But what I have overcome is the urge to keep absolutely everything to myself. I no longer consider it a sign of weakness to ask for help.

DECEMBER 15, 1992 At three o'clock today the heart of our computer network goes down. The technician I had hired full-time only a month ago tells me he has called in our equipment supplier but that it doesn't look good.

DECEMBER 16, 1992 I find out that the hard drive on our file server is defective and that we don't have adequate backup to replace the data. Our part-time technician had been assigned to do backup the previous four weekends, I am told, but never got around to it. Another Wal-Mart moment. One of those times when I feel for a split second like walking out the door and applying for a cashier's job.

We are sitting in the conference room. The full-time tech, John D.; our operations director, Diane N., and her assistant, Mary Z.; our computer supplier, Bill G.; and me.

As I have felt many times in the past, I hold all the cards. There is no question about who is running the meeting or who will pay the bills when it is all over. If I appear furious or distraught, no one will be able to think clearly.

* * *


"So what are our options?" I ask. Bill says there is a company in California that can probably retrieve 99% of the data. The hard drive is under warranty and can be replaced. He apologizes for not reminding us to do backups daily after receiving a memo I had sent him a month before on that very subject. John apologizes for not taking the backup more seriously. He knew it had not been done the previous weekend and had just been too busy to do anything about it. Diane and Mary are quiet. They know that they too are responsible.

I realize that no matter how many tasks I delegate, the most important ones have to be clearly tagged by me with fluorescent markers -- THIS IS IMPORTANT! Backups? Well, I just didn't say it loud enough. [Note: That computer "lesson" cost $4,100 that we didn't really have, and we lost three and half weeks of working time on the system.]

DECEMBER 28, 1992 We spend all day downtown at a training facility. It is the Monday after Christmas, and I close the office and let voice mail handle the calls while the entire staff meets with me to set our 1993 goals.

By the end of the day we have more than 25 sheets of flip-chart paper taped to the walls and filled with ideas. We narrow those down to 70 ideas, and each person takes two goals to work on. It takes a lot of effort not to jump in and volunteer to do half the goals, but I decide not to take any myself. Instead, I write down major issues that seem to crop up that will go on my list. Employees want to see regular client-feedback sessions that can be monitored by them; they want more employee recognition; they want more of our policies in writing; they want notice of job openings before we go outside the company; they want to see us send out a newsletter that they help with. They have definite and good ideas about how to market the company.

I feel so proud to be a part of this. It doesn't feel like just me alone anymore.

JANUARY 5, 1993 Tonight is my last meeting with the PowerLink board. Eight people squeeze around the conference table in the room we used to use for meetings. [Note: Last week we installed six more workstations in that room. We also officially rented space across the hall. By the end of February we will be able to handle 84,000 calls a week from our offices. Last January we were at 25,000 a week.]

I finally feel comfortable with these people. I have spent hours and hours in phone calls, meetings, lunches, and more meetings with each of them. We sit tonight with the financials. Our preliminary numbers show that we will hit $484,046 in sales for the year. Up from $367,422 in 1991. Although we have grown by 32%, we have not hit my goal of $750,000 yet, but I am not disappointed. We spent the year doing important work -- improving operations, training new management, establishing procedures and quality controls.

Most of the meeting is devoted to marketing. I want to reach a million in sales by year-end. What do I need to do to get there?

We end up talking mostly about the very topic that started the year -- focus. I watch eight heads nod. Going from $500,000 to $1 million is a no-brainer, according to Mike P. and Steve M. "Just keep working with the customers you have now and find similar companies in similar markets."

"Did you do a market analysis yet?" Larry R. asks. I'm not sure what that is. "You write down how much business you expect to get from each customer for the year, which determines your budget. Then analyze the source markets and look for like business in those markets." It sounds simple, but I have never done it. Steve offers to help me construct one.

Again, I realize that getting where we are has not taken marketing brilliance on my part. We are in a needed industry. We do our work well. People find us. But that does not make for a great marketing strategy.

* * *

For us to keep moving forward, I will have to revive what I did to get from zero sales to the first $100,000: pick the companies I want to work with and go after them. The sheer determination you get when there are no customers and you are creating something from nothing never really goes away, I guess. We are back to sheer determination, but with more zeros on the end.

* * *


The last board member leaves at close to 9 p.m., and I return to my office. I am kind of jarred by their comments, as usual. I had listed eight ideas to hit the million-dollar mark. Eight different services we could offer in addition to what we already do. They nixed almost all of them. Most of the board members work for major companies, and they look at my tiny firm and wonder why I need help with this issue of growth.

For a moment I see these last eight years and nine months very clearly: I love variety. I love challenge. I am good at executing ideas. So there I am with a bunch of sticks and some saucers back in 1984. I toss a saucer up in the air, catch it on the end of a stick, and start rotating. It is tricky at first, but I catch on. Sometimes it slips and I catch it. Sometimes I drop the saucer and it breaks. Doggedly, perhaps, I keep throwing saucers up there until I have the hang of it. Then I put up a second stick and throw up a . . . dinner plate!

No . . . no . . . no . . . the board is telling me. Not a dinner plate -- throw another saucer in the air. In fact, toss up 10 saucers and hire a saucer manager to watch the sticks for you. And find a volume-discount supplier who can sell you more saucers. And set up inventory control of those saucers and get really, really good at spinning hundreds of saucers. THEN YOU CAN SWITCH TO DINNER PLATES.

Boring. Too easy. I can feel myself resisting. But slowly and with great effort I am willing to fight this resistance. Someday I want us to have thousands of employees, each part of a team working on telemarketing and direct-mail projects for customers all over the world. So for this year, if they think it is that important, I will do what does not come so easily. I will work on saucers.

* * *

EXECUTIVE SUMMARY

Founder: Anita F. Brattina

Company: Direct Response Marketing Inc., Pittsburgh

Formed: April 1, 1984, as a direct-marketing consultant

Last updated: Jun 1, 1993




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