Ready, Set, Grow

Tweet

Chapman and Louis, who had started a venture-capital boutique called Parson Capital Corp., wound up supplying $7.2 million during the company's first two years. Weinfurter himself put up another $800,000 for a total start-up fund of $8 million. But the investors supplied much more than just capital. They spent several weeks vetting Weinfurter's strategy with area executives. They then helped Weinfurter lay out a detailed business plan.

What's more, once it became clear that the plan was a go, Louis and Chapman drew on a wide network of contacts in the local business community and assembled an outside board of directors. Among the high-profile members: Jerry Pearlman, the former chairman and CEO of Zenith Electronics Corp.; Donald Perkins, the former chairman of Jewel Cos., one of Chicago's largest grocery chains; and Sam Chapman's father, Alger, vice-chairman of global-banking giant ABN AMRO.

The board operates much as it would at a public company: it convenes to hear quarterly reports from Weinfurter, and it has the power to remove him if the company's performance flags. In Weinfurter's view the discipline of having to report to the board has actually helped him keep the company focused. Plus, he says, the board has supplied lots of valuable advice.

When Current Assets was officially launched, in July 1995, competition was beginning to stir in the high-end accounting-staffing market. But Weinfurter took a couple of critical steps to differentiate the company. For one, unlike many other staffing firms, Current Assets decided not to pitch its employees as potential permanent hires. "If you're trying to build a professional-services firm, you want to keep your best people," says Weinfurter. "Why encourage clients to hire them away?"

In addition, Current Assets consciously steered clear of handling tax returns and conducting audits. Offering those services would have thrown the company into more direct competition with the top accounting firms and would have required paying far steeper costs for professional-liability insurance. Keeping overhead down would, in turn, allow the company to offer its customers more competitive pricing. Current Assets, however, still had to sell that proposition to the accounting world.

One primitive prospecting tool was a list of CFOs at Chicago-area Fortune 1,000 companies. Roberta Hancock, an account manager who was one of Weinfurter's first hires, vividly remembers working her way down that list, making cold call after cold call to try to set up introductory meetings. "It was really a lot of perseverance," she recalls.

Of course, the company also had its high-profile board of directors, and from the start it leveraged board members' contacts and reputations to woo customers. Louis recalls that at early sales meetings he and Weinfurter always brought along the brochure that listed the board of directors. "It really gave us instant credibility," Louis says.

Within its first year, the company had lined up engagements with some of the Chicago area's biggest companies. Plus, the company's efforts to build on connections that Chapman and a handful of company employees had with partners at major accounting firms were starting to pay off. It began landing referrals for work that the then-Big Six firms were precluded from handling because of auditor independence issues. Big Five referrals now account for roughly 10% of the company's revenues. "For any firm that's trying to grow," Weinfurter says, "partnerships have to be a huge part of the strategy."

"We were talking about carving out a whole new niche," says J. Jeffry Louis. He and partner Samuel P. Chapman invested $7.2 million in Parson Group.

Just as critical, the CEO believed from the start, was the company's ability to expand quickly. Having identified a relatively wide-open niche, he wanted to get off the ground in Chicago and then quickly establish a national presence. "Ultimately, what we do is not rocket science," says Nelson Head, senior vice-president of operations. Soon others in the industry "would have decided that we have a really cool strategy, so we pushed ahead as fast we could."

In October 1995, Weinfurter chose Minneapolis, a relatively small market that had the added advantage of being fairly close to Chicago, as the company's second office. But from the start "we had real struggles," recalls Weinfurter. Part of the trouble, he says, was that Minneapolis "tends to be a little more parochial" than Chicago.

In hindsight, though, the bigger problem was that the new office manager was "the wrong person for the job," he says. That manager, whom Weinfurter had hired through a newspaper ad, was replaced in late 1995. Minneapolis is now the company's seventh-largest market, behind Chicago, Boston, Dallas, New York City, Atlanta, and Stamford, Conn.

The problems in Minneapolis taught Weinfurter a valuable lesson. From the start he wanted to expand into the top 20 markets in the country. After Minneapolis, he decided that the order in which offices opened didn't matter. When the company found the right leader in one of its target markets, then that office would be rolled out. Thus in March 1996, when an account manager at Alternative Resources agreed to open an office in Dallas, the company was launched there. Likewise, in August of that year, when Weinfurter found a good candidate in Boston, he opened an office there.

 PREV  1 | 2 | 3  NEXT 

Read more:

Sign-up for our Leadership and Managing Newsletter

Email Address: