Street Smarts: What's New?
Never underestimate the importance of luck in business. I don't know what Bernie Goldhirsh would have said about the role luck played in the founding of Inc., but it was an active participant in the launch of my first company, Perfect Courier, which is also celebrating its 25th anniversary this year. I got lucky the very first morning I went looking for office space.
I'd taken the train from Long Island, where I lived, to Penn Station in Manhattan. As I walked out onto Seventh Avenue, I happened to look up at the building across the street. There, on the second floor, was a big "Offices for Rent" sign. Perfect, I thought, and went to investigate. A guy was standing by a desk in the lobby. I told him I was looking for office space. "Do you have any money?" he asked. I said I did. "Great," he said. "Come on, I'll show you around."
"Who are you?" I asked.
"I own the building," he said.
His name was Arnold, and he wanted to show me the second floor. It was a huge space, more than 3,500 square feet. "You'll take this whole floor," he said.
I just laughed. "I don't think so," I said. "All I need is 300 square feet."
"No, no," he said."This is where you want to be. Now come upstairs and meet my wife." We took the elevator up to his office, where his wife greeted us. She suggested we all go to lunch. I said I'd love to, but I really had to keep looking for space. "Don't worry about it," Arnold said. "You're going to be my tenant."
We went to lunch, and I sat there thinking, What's wrong with this picture? Finally I said, "Okay, Arnold, what's the story?"
"I'll tell you," he said, "but first you tell me how much money you have in the bank." I said my investors had put up $200,000. "Can you get me proof of that?" he asked.
"What are you, the IRS?" I asked. "Why do you need proof?"
"I need it so that I can offer you the deal of a lifetime," he said. It turned out that Arnold didn't quite own the building. The closing was set for the following day. To secure his financing, he needed a tenant for the second floor, but the one he'd lined up had just backed out. "If I go there without a tenant for that whole floor, my deal's going to fall through," he said. "I want you to take it. If all you need is 300 square feet, that's all I'll charge you for in the beginning, and I won't lease the rest of it. As you grow into it, you'll pay more. I just need proof of your financing."
It was an offer I couldn't refuse. A few days later, I moved into the second floor and started my messenger business. Eventually I did, in fact, take over the whole floor, and another one as well. Arnold, who is still my friend, says I was his good-luck charm. I think he was mine.
When I look back over the past 25 years, I can't help but think about what's changed and what hasn't. Consider, for example, the way we found our first customers: by cold-calling businesses in the office building across the street. We got our sales up to almost $1 million just by knocking on our neighbors' doors. In 1979, you could still do that--walk into a building and sell door-to-door. Now you can't get past the security guards in the lobby without an appointment, at least not in New York City.
My mother was aghast when I told her I was starting my own business: "Why would you waste your education?"
Attitudes toward entrepreneurship have also changed. Before I started Perfect Courier, I was a lawyer. In those days, people looked at lawyers the way they look at entrepreneurs now. My mother was aghast when I told her I was starting my own business. "Why would you waste your education like that?" she said. For years, she continued to refer to me as "my son, the attorney."
And I had similar feelings. When I was asked what I did, I'd say, "I'm a lawyer. I do some business." Being an attorney got you respect in 1979. Being an entrepreneur got you nothing--until the Inc. 500 came along. My company placed No. 47 on the 1984 list. I vividly remember the conference Inc. put on for the winners in Dearborn, Mich., where we were welcomed by the governor and honored in a black-tie awards ceremony. After seeing the recognition that entrepreneurs like me were getting, I decided I didn't need the lawyer label anymore.
That conference also introduced me to another change in the culture. I was sitting at a table in the Henry Ford Museum. Feeling rather pleased with myself, I turned to the woman sitting next to me and said, "I'm in the messenger business in New York. We do almost $20 million annually, and we're No. 47 this year. Where did your husband's company come in?"
She gave me a look I will never forget and said, "Actually, it's my company." It turned out she had more sales and ranked higher than I did. I wanted to crawl under the table. It was the last time I made the mistake of assuming anything about the women I meet at Inc. 500 conferences--or anywhere else.
Of course, some things haven't changed since 1979, especially the basics. You still have to make the sale. You still have to earn a profit. But what it takes to do those things has changed dramatically. When I look at my own businesses, I can see two areas in particular that have become far more important than they used to be.
The first has to do with the role of employees. Twenty-five years ago, you could get away with taking employees for granted. Most owners didn't spend five minutes thinking about the quality of life in the workplace. The term "corporate culture" didn't exist. But in the 1980s, the bonds between companies and employees began to unravel. With all the turmoil in the economy--hostile takeovers, downsizing, the emergence of whole new industries--people could no longer count on staying with the same company all their lives. They adjusted, becoming a lot more mobile and a lot pickier about the places they worked. Then came the labor shortage of the 1990s, which allowed employees to be pickier still.
Along the way, I became concerned about work force stability. We'd hired a lot of welfare-to-work mothers and young men and women from inner-city neighborhoods, along with more experienced people. Once we'd found and trained them, we didn't want to lose them. So we began paying an enormous amount of attention to our culture. We wanted to create a family atmosphere. We wanted an environment people would enjoy. We offered good benefits and unusual perks. We went out of our way to make sure that--as long as people did their jobs--they could feel secure, even when times were tough.
And it worked. Our culture has helped us attract and keep first-rate employees. What we didn't expect was the effect it would have on customers. When they visit our facility, as they all do, they invariably notice the spirit of our people and the way we treat them. That gives us a huge competitive advantage.
The other big change also stems from increased mobility, but of customers rather than employees. In 1979, customers didn't move around much, especially if they regarded you as their friend. You could hold on to accounts by taking people out to dinner and sending gifts when their children got married. Customers would seldom drop you for a competitor offering a few bucks off their bills or promises of better service. "Value-added" wasn't part of the business vocabulary.
Today value-added is almost everything. If you don't add value, you can't get customers or keep them. Price is also more important than it was, but providing value is critical. I'm not saying that personal relationships aren't important anymore. They just aren't enough. Customers don't want dinner; they want to know what you're doing--or intend to do--for their business.
That's where I think technology has had its greatest impact. While computers and the other tools of the information age don't change the basics of business, they do give you the ability to add more value. They've had a huge effect on speed and quality. You can do things faster, and you can do them better. As long as you stay up-to-date on technology--and ahead of your competitors--you have a real advantage.
But it's an advantage you can keep for only so long. Sooner or later, the competition will catch on, catch up, and start matching what you're offering. What happens then? You go right back to competing on the intangibles. When all the vendors are offering similar products or services at similar prices, customers will buy from the people and companies that they like best and trust most. They always have, always will. I can't tell you how often a prospective customer has come to us and said, "We want to do business with you, but you're a little high. Here's the proposal we got from the other guys. What can you do for us?" Ninety-nine times out of a hundred, we wind up landing the account.
All of which just proves the old saying: The more things change, the more they stay the same.
Norm Brodsky (email@example.com) is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.
NORM BRODSKY | Columnist
Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.