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The changes have also made Zane more focused on cash flow. Although he's paying Trek more than he ever has -- for an increasing number of bicycles -- he's also found a way to make that work to his advantage. He always pays his bills early and consistently captures discounts for doing so. "I make my salary on the discounts we get from paying our vendors early," he says. Even if he needs to draw on his line of credit, he typically makes more from paying early than he pays out in interest. "I've always tried to pay cost-effectively," he says. "But now it's an important part of our business."

Staking a claim
Two years after entering the premiums market, Zane now has 24 reps nationwide and has leveraged his long-term relationship with Trek to become its exclusive distributor in special markets. Zane projects that sales, which reached $2.2 million in 1998, will increase to $5 million by the end of this year, with premiums sales accounting for two-thirds of revenues and an even greater percentage of profits. He has 20 full-time employees in the fulfillment warehouse now, bringing his total staff to 40, and has even hired a director of special markets, Heather Boardman. And he is coping with more stress and uncertainty than he ever could have imagined back when he took that first incentive job from Chesebrough-Ponds. "I've got a full head of gray hair," says the 35-year-old.

Zane's emphasis on service and speed is what allows him to differentiate himself in the marketplace, but it also puts a huge burden on Zane's Cycles. While many companies that sell their products as premiums take six to eight weeks to deliver, Zane's promises fulfillment in two weeks. That means it needs to have inventory ready to go. "Tomorrow, I could get an order for 5,000 bikes or no order," Zane says. "But I still need to build 100 bikes a day to keep my staff busy and happy. No matter what, the machine is in motion, and there's no way to stop it. I have to make sure we sell the stuff. We need to stay limber, and that's trying." The fast delivery and meticulous assembly-and-shipping process make special markets an expensive proposition for Zane; he spent $200,000 setting up the system. But his methods, he thinks, also help insulate him from competition. "You'd have to make a huge capital investment to be competitive with us," he says.

Corporate customers have asked him if he'd consider working with other products, such as inline skates, but he's flatly refused. He's learned a little something about picking and choosing among opportunities. "You put them in a box, and you send them out," he says about the skates. "Where's the service point of difference? I wouldn't have the assurance of knowing I'm bringing something of value to the table." So he's passed on that one.

It hasn't escaped his notice that he could also sell bike accessories, such as helmets and pumps, to premiums recipients by mail order, thus capturing potentially loyal customers outside his New Haven County market. But he's rejected that opportunity as well. "I don't want to take business away from other bike shops outside my market," he says. "And I don't want to take Trek sales away from other dealers." Indeed, while Zane gleefully boasts of putting other Trek dealers in his own market out of business, he'd be in trouble with Trek if he threatened established dealers further afield.

And so he finds himself evaluating opportunities using an increasingly complex set of considerations. In the meantime, Zane's increased involvement in the premiums market has elevated him to the higher playing field he has always envisioned being on. It has turned Zane's Cycles into a company that befits its owner. As a 16-year-old kid who thought it would be cool to own a bike shop, Zane was never really in danger of having his company outgrow him. But once in his thirties, Zane could have outgrown the bike shop. As things have turned out, he now spends less time in the shop and a great deal of time and money visiting corporations and traveling with his reps. And when he is in his shop, he thrives on "the hot and cold of corporate sales," negotiating deals that may or may not come to pass, committing to long-term programs without knowing what products he'll have to sell, and shooting from the hip. And he has every intention of transforming his shop into a $12-million company. All he needs now is a little luck.

Donna Fenn is a contributing editor at Inc.

Please e-mail your comments to editors@inc.com.

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Donna Fenn

Inc. contributing editor Donna Fenn is the author of Upstarts! How GenY Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009). Both this blog and the book examine the ways in which GenY is changing the entrepreneurial landscape with new approaches to starting, growing, and managing their companies. Learn more at http://www.upstartsrock.com/.

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