The Entrepreneur of the Year Register

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Employees: 450

Projected 1993 revenues: $70 million

Phil Johnson capitalized on the booming growth in the premium- and specialty-coffee market by pioneering, in the early 1980s, a previously untapped distribution channel -- supermarkets. Undeterred by the failure of a previous start-up in the food-brokerage business, he mortgaged his home, used his family savings, and even borrowed money from his mother to found Millstone Coffee.

Combining a high-end product with a Frito-Lay-style marketing strategy, Millstone started out as virtually a one-man show, with Johnson buying and roasting fresh premium beans, delivering them directly to supermarkets, providing merchandising displays, and supplying and maintaining the coffee grinders. Plus, he made the setup a no-lose proposition for retailers by taking back any unsold product. The only thing a supermarket manager had to do was check the coffee in on delivery and check it out at the register.

The profitable turnkey operation is appealing to small chains because it effectively gives them a premium house brand. Millstone's quality is safeguarded because the company controls every phase of production and distribution. Company reps track inventory and service in stores daily. Although several competitors have entered the fray, Johnson's preemptive control of the direct-to-supermarket channel has left him in a good position to defend his considerable market share. -- Vera B. Gibbons

John H. Chuang

MacTemps Inc.

Cambridge, Mass.

Founded: 1986

Business description: Provides placement for temporary personnel with Macintosh skills

Employees: 80 full time, about 7,000 temps

Projected 1993 revenues: $28 million

While John Chuang's Harvard classmates were fielding lucrative offers from investment-banking firms, Chuang was making about $300 a week, but at the helm of his own company. Chuang and his two freshman-year roommates had started a desktop-publishing business in their junior year, taking turns manning the shop between classes. They hit upon the idea for MacTemps when they saw clients having trouble finding temps with Macintosh skills. Although they knew nothing about the industry (well, Chuang had temped a little in high school), Chuang and his partners used the back room of their print shop to start their first MacTemps office. MacTemps overtook their desktop-publishing business within months.

According to Chuang, "people are seeing that their job security no longer comes from the security and good graces of a Fortune 500 company." Many large corporations and quite a few smaller ones are downsizing, keeping a core staff and outsourcing a number of peripheral functions. Chuang hopes to capitalize on the shift toward more workers' making their livelihood as full-time "professional" temps. To make the transition easier, Chuang offers his long-term temps benefits (a pioneering concept in the industry), including health and dental coverage, a 401(k) plan, and paid vacations and holidays. How can he afford it? His long-term temps are more highly skilled than most temps and command higher margins.

Chuang is starting to see more interest in his industry in offering benefits. But their interest notwithstanding, Chuang thinks it would be hard for giants like Kelly and Manpower to match the kind of benefits he offers, because most of them "don't make as much per temp as we do."

-- Christopher Caggiano

Chuck Peterson

Direct Transit

North Sioux City, S. Dak.

Founded: 1985

Business description: Provides trucking services

Employees: 2,300

Projected 1993 revenues: $155 million

In 1972 Chuck Peterson, CEO of Direct Transit, started his first refrigerated-carrier trucking service. Ten years later he sold the $32-million business and signed a two-year noncompete agreement. In September 1985 he bought 75 tractors and 130 trailers. Without an office or a single employee, Peterson says, "I packed my bags and went on the road and started selling." Peddling dry-van trucking services in the meat-packing center of the United States was no easy task, but it didn't take long for him to land a local gelatin manufacturer's account to help get his company off the ground. Peterson continues to spend 30 to 35 hours a week on the road, face-to-face with his customers, which he believes gives him an edge over the competition.

Investing in technology has also helped boost the company's sales to $150 million. Direct Transit recently spent $6 million to create a satellite-equipped fleet. It can pinpoint the location of any of the fleet's trucks in North America within 200 feet. The technology enables larger customers to gain direct access to Direct Transit's computer system, giving them instant information and reducing Peterson's personnel costs. The system automatically reports the trucks' positions every hour, suggests load switches, and predicts lateness before it occurs. Peterson says that allows his customers to take a proactive approach to business. -- Stephanie Gruner

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