The No. 1 Company: TerraHealth
Every entrepreneur should have a mother like Frances Terrazas. Married to an Army man, Mrs. Terrazas moved her family to military bases around the country during the 1960s. At every new posting she'd buy a failing restaurant and revive it. "My mother would manage the staff, waitress, cook, run the cash register," says Ted Terrazas, founder and CEO of the medical services company TerraHealth, No. 1 on this year's Inner City 100. (The company, based in San Antonio, has $15 million in revenue and four-year growth of 7,449 percent.) "When my father was reassigned she'd sell that restaurant and buy another."
Sensing her son might share her entrepreneurial genes, Frances Terrazas would lend him money to acquire items to resell at flea markets. He bought bayonets for $5 and sold them for $15. When the family settled in California, Frances Terrazas launched a company that supplied treats to ice cream trucks, and also operated her own. "Whenever I was home she'd have me out on the trucks," says Terrazas.
However, his father's genes were ascendant in 1976, when Terrazas joined the Air Force. He trained as a dental technician, cleaned teeth for six years, then taught leadership to noncommissioned officers. In 1980 Terrazas took advantage of the ROTC program to study political science at Montana State and briefly was assigned to become a missile officer. He later joined the Medical Service.
For the next decade Terrazas struggled to create efficiencies in the military health care system and helped introduce managed care in military hospitals. After retiring from the military at age 40, he hopped to a company that consulted to the Department of Defense. A promotion landed him in San Antonio, but when the company ran into problems with its Medicare claims, Terrazas became disillusioned and left. He belatedly set back in his mother's footsteps.
As company founders go, Terrazas bloomed late, but maturity didn't dim his chutzpah. Using $20,000 from a family trust, he launched TerraHealth in 2001 as a consultant to government health care programs, displaying a multi-branched organizational chart on his website to mask his solo status. "Sun Tzu says the warrior should look bigger and more formidable than he actually is," says Terrazas, who quotes fluidly from The Art of War.
Still, clients hesitated to engage an untested company, so Terrazas needed legs fast. A prospective customer complained to him about losing a valued vendor, a small vocational placement service whose owner was retiring. Terrazas swooped, offering the owner no money but agreeing to keep the business intact. Within two months, he had gone from fledgling soloist to CEO of a seven-person company with a 13-year history.
The next years were tough for the country but good for TerraHealth. Recession cut loose talented people, whom Terrazas snatched up. The company developed expertise placing health care personnel in military facilities; as doctors and nurses streamed to Afghanistan and Iraq, TerraHealth supplied medical versions of Rosie the Riveter to domestic bases. The company's proximity to three military bases--in a neighborhood Terrazas says is "between undesirable and desirable areas"--has only helped.
Dan Shackelford, associate director for small business for the U.S. Army Medical Command and a TerraHealth customer, praises Terrazas as a conscientious and concerned businessman. "He is very ethical," says Shackelford. "They discovered some labor laws they were not entirely in compliance with, voluntarily disclosed that, and made corrections even though it was very expensive."
Terrazas also credits factoring--a financing strategy whereby companies sell accounts receivable to a third party--for helping him grow. He likes factoring so much that last year he launched a factoring business, run by his CFO's wife, a former banker.
Terrazas is involved in three new ventures, including a supplier of medical and IT staffing to businesses and an equipment company. The third is a think tank called the Center for Strategic Studies of the Americas. Concerned that the government's preoccupation with the Middle East is shortchanging affairs south of the border, Terrazas recruited 10 former U.S. ambassadors and generals to study hemispheric issues like immigration and post-Fidel Cuba.
The chairman of the think tank is retired Lieutenant General Rick Sanchez, former commander of the coalition forces in Iraq. "Our vision is to make an impact on what America is doing in Latin America," says Sanchez. Terrazas has another agenda for the think tank: He hopes it will raise San Antonio's reputation as a center for intellectual capital. "That's something I can give back to this city," he says.