Clarklift was leaking cash. Though the profits on the brisk forklift sales were strong, they weren't enough to cover accounts receivable and the cost of inventory. When Reece opened the Tampa dealership and took on the Mitsubishi line, the cost of inventory doubled overnight, and the previous loans didn't close the gap. He borrowed another $600,000 from the Associates, but even that wasn't enough to keep him afloat for long.
Reece recognized that if he was going to pull himself out of the hole, he wouldn't be able to do it alone. So in October 1994 he recruited a chief financial officer: Ken Daley, a young financial whiz who had helped to grow a local Wendy's franchise from 17 stores to 57. If Reece, with his wide smile, substantial midsection, and hearty handshake, resembled the consummate salesman, Daley looked the part of the friendly bean counter, right down to his blue suit, slicked-back hair, and steel-rimmed glasses. Together the duo began a mad scramble to find another source of capital, and Daley quickly opened talks with Citicorp's Global Equipment Finance Division.
But Citicorp wasn't interested in tracking every forklift on the premises. The bank wanted Reece to track his own inventory and send in a monthly status report. There was just one sticking point: Reece would first have to prove that his computer systems were up to snuff. "It's simple," explains Citicorp's Hilton. "If clients don't have the proper systems to automatically generate the sorts of financial reports we need on a monthly basis, this sort of loan would overwhelm them."
In February 1995, Citicorp dispatched CMS Management Services Co., a South Bend, Ind., technology consulting firm, to audit Clarklift's information systems. By then Reece had invested some $100,000 in an IBM AS/400 running a proprietary inventory and accounting system created by Fetner Associates, of Asheboro, N.C. Even better, Daley knew technology: he had once owned a software company.
For a week straight, CMS hit CFO Daley with a barrage of financial questions that had to be answered quickly by culling the data from the computer. It was rough going. While most of the information was there in the system, it wasn't easily accessible. For example, when CMS asked Daley to produce a list of accounts receivable that were between 60 and 90 days past due, he knew that the database would spew about 500 pages of green-and-white-striped computer paper cluttered with arcane codes and numbers. "None of the answers just popped out of the computer," says Daley.
But he chose that moment to take advantage of a little-used software package already installed on his system--a program called Monarch, produced by Datawatch Corp., in Wilmington, Mass. Monarch billed itself as a data-access tool that extracted information from customized reports and inserted it in standard Windows-based applications. Daley opened the user's manual and didn't leave his desk until the next morning. By then, he was pulling information from the Fetner system and importing it into neatly formatted Excel spreadsheets.
In the fall of 1995, the bank offered Reece a $5-million credit facility. The ability to pull concise reports out of the computer data didn't just qualify Clarklift for the loan, however. It also allowed Reece and Daley to discover some bad business practices that had become institutionalized throughout the company. Armed with his new information skills, Daley discovered, hidden on the parts department's shelves, $150,000 worth of returnable unused parts, which were promptly returned for a refund of $127,500 (after manufacturers' restocking fees).
Reece was suddenly accumulating a treasure trove of up-to-the-minute information about almost every aspect of his company. Before the new system, for example, if he wanted to know which forklifts were being rented and which ones weren't, he'd have to walk the lot, count forklifts, and ask questions. Now he could just glance at a spreadsheet column labeled "rental utilization." If he wanted to know the percentage of sales quotes that had turned into sales, he simply pressed a button and read the report, instead of poring over sales logs. "It only takes me a second to know who to congratulate and who needs a good talking to," says Reece.
In Reece's dimly lit office, a giant stuffed dolphinfish hangs on the wood-paneled wall across from an equally large caribou bust, and the musty air smells of cigarettes mixed with grease. Reece gestures toward the caribou and says, "That's a dog--you should see the one I have at home." Each year Reece, an avid hunter, prepares for his sojourns in the hinterlands by shearing off his hair and growing a beard, making him appear slightly raffish--in short, not anything like the CEO of a $29-million company.
The technological sprint started by Citicorp's requirements has continued unabated; if anything, it's picked up momentum. Clarklift is now stocked to the gills with PCs--40 desktop units and 20 laptops--and the whole staff has access to its databases, as well as to E-mail and the World Wide Web. Reece and Daley have employed computers in every aspect of the company's operations and decision making. For example, salespeople used to close deals without touching a computer. After visiting with potential customers, a salesperson would scribble down figures on a pricing form and then hand them to a sales coordinator, who would key the figures into the computer and calculate critical numbers, such as the salesperson's commission and the net profit for the dealership. If everything added up, a quote would be mailed to the customer, and a second copy would be put into a three-ring binder.
